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Auditor Report of Morarjee Textiles Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of MORARJEE TEXTILES LIMITED("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the

Standards on Auditing specified under Section 143(10)of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2015, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act ("the Order"), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 29(A) to the financial statements;

(ii) The Company does not have any long-term contracts including derivative contracts for which there are any material foreseeable losses.

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 under paragraph "Report on Other Legal and Regulatory Requirements" of the Independent Auditors'' Report of even date)

1. (a) The Company has maintained proper records showing full partic -ulars, including quantitative details and situation of fixed assets.

(b) There is a regular program of physical verification of fixed assets which in our opinion is reasonable having regard to the size of the Company and the nature of fixed assets. No material discrepancies have been noticed in respect of the assets physically verified during the year.

2. (a) The inventory excluding stocks with third parties has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. In respect of inventory lying with third parties at the year end, written confirmations for the same are obtained.

(b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its buisness.

(c) The Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

3. The Company has not granted secured/ unsecured loans, to companies / firms / other parties covered in the register maintained under Section 189 of the Act.

4. In our opinion, and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its buisness for the purchase of inventory and fixed assets and for the sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across, nor have been informed of, any continuing

failure to correct major weaknesses in the aforesaid internal control system.

5. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Sections 73, 74, 75 and 76 or any other relevant provisions of the Act and the Rules framed thereunder to the extent notified, with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

6. We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government of India for the maintenance of cost records under sub-section (1) of Section 148 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

7. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing the undisputed statutory dues, including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities.

According to the information and explanations given to us and the records of the Company examined by us, in our opinion, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable were in arrears as at March 31, 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, wealth tax, service tax, duty of customs duty of excise, value added tax or cess as at March 31, 2015 which have not been deposited on account of a dispute, are as follows:

Name of the Statute Nature of Dues Financial Year

Central Excise Act 1944 Interpretation of Act 1979-80 to 1985-86 1990-91 1993-94 to 1995-96 1999-2000 to 2008-09

Central Excise Act 1944 Interpretation of Act 1976-77 1990-91 to 1991-92 1995-96 to 2005-06 2006-07 to 2008-09

Central Excise Act 1944 Interpretation of Act 1997-98 to 2001-02

Central Excise Act 1944 Interpretation of Act 1981-1984 1999-2000 to 2002-03

Maharashtra Value Added Interpretation of Act 2003-04 Tax Ach 2002 2006-07 to 2007-08

2010-11

2003-04

Name of the Staute Amount Forum where Dispute is Pending Rs in lacs

Central Excise Act 1944 6.84 First Appeal 0 09 (Commissioner Level)

Central Excise Act 1944 146.49

Central Excise Act 1944 417.81

Central Excise Act 1944 0.19 Second Appeal 235 (CESTAT)

Central Excise Act 1944 586.66

Central Excise Act 1944 218.14

Central Excise Act 1944 3.19 High Court

Central Excise Act 1944 296.14 Supreme Court

Central Excise Act 1944 540.65

Maharashtra Value Added 119.70 Joint Commissioner of Tax Act2002 Sales Tax

Maharashtra Value Added 66.20 Tax Act2002

Maharashtra Value Added 23.47 Tax Act2002

Maharashtra Value Added 112.06 Sales Tax Tribunal Tax Act2002

(c) The amount required to be transferred to Investor Education and Protection Fund has been transferred within the stipulated time in accordance with the provisions of the Companies Act, 1956 and the rules made thereunder.

8. The Company has no accumulated losses as at the end of the financial year and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

9. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

10. The Company has not given any guarantees for loans taken by others from banks or financial institutions during the year.

11. In our opinion, and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

12. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For Manubhai & Shah Chartered Accountants (Firm''s Registration No.: 106041W)

Kshitij M. Patel (Partner) (Membership No.:045740)

Mumbai, 8th May, 2015.


Mar 31, 2014

We have audited the accompanying financial statements of MORARJEE TEXTILES LIMITED ("the Company"), which comprise the Balance Sheet as at 31 March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

(b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books .

(c) The Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013.

(e) On the basis of the written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

1 (a) The Company has maintained reasonable records showing full particulars including quantitative details and location of the Fixed Assets.

(b) As informed, there is a regular program of physical verification, which in our opinion is reasonable, having regard to the size of the Company and the nature of fixed assets. No material discrepancies have been noticed in respect of the assets physically verified during the year.

(c) The Company has not disposed of substantial part of fixed assets during the year.

2 (a) According to the information and explanations given to us, inventory has been physically verified by themanagement during and at the year end. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its business.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification between the physical stocks and the book records.

3 The Company has neither granted nor taken any loans, secured or unsecured, to or from Companies, firms or other parties covered in the register required to be maintained under section 301of the Act. In view of the above, clauses 4(iii){b, c, d, f & g) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the company.

4 In our opinion, and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials, plant & machinery, equipment & other assets and with regards to sale of goods and services. Further on the basis of our examination and according to the information and explanations given to us, there is no major weakness in the internal control procedures.

5 (a) In our opinion, and according to the information and explanations given to us, the particulars of all contracts

and arrangements referred to in section 301 of the Companies Act, 1956 have been properly entered in the register maintained under section 301of the Act.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of '' 5 Lacs with any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6 In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from public during the year and hence provisions of clause 4(vi) of Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

7 In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8 We are informed that the cost records are required to be maintained by the Company under section 209 (1) (d) of the Companies Act, 1956 for textile product of the Company. We have not reviewed the cost record maintained by the Company, but we are informed that the Company has maintained the prescribed cost records.

9 (a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund,

Employees '' State Insurance, Income Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, cess and other statutory dues with the appropriate authorities during the year except some delay. There are no undisputed statutory dues outstanding as on 31st March 2014 for the period of more than six months from the date they became payable.

(b) According to the records of the Company and information and explanation given to us, there are following disputed dues on account of Income Tax, Service Tax, Custom Duty and Excise duty dues which have not been deposited with respective authorities.

Name of the Statute Nature of Dues Financial Year Amount in lacs Central Excise Act 1944 Interpretation of Act 1979-80 to 1985-86 6.84 1990-91 0.09 1993-94 to 1995-96 146.49

1999-2000 to 2008-09 605.85

Central Excise Act 1944 Interpretation of Act 1976-77 0.19 1990-91 to 1991-92 2.35 1995-96 to 2005-06 586.66

2007-08 to 2008-09 83.13

Central Excise Act 1944 Interpretation of Act 1997-98 to 2001-02 3.19 Central Excise Act 1944 Interpretation of Act 1981-1984 296 .14 1998-99 to 2002-03 839.54

Name of the Statute Forum where Dispute is Pending

Central Excise Act 1944 First Appeal (Commissioner Level) Central Excise Act 1944 Second Appeal (CESTAT)

Central Excise Act 1944 High Court

Central Excise Act 1944 Supreme Court 10 The Company does not have any accumulated losses as at the end of the financial year and has not incurred cash losses in the current financial year and in the immediately preceding financial year.

11 According to the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank during the year. Also Company does not have any debentures.

12 According to the information and explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 As the Company is not a chit fund, nidhi, mutual benefit fund or society the provision of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

14 As the Company is not dealing or trading in shares, securities, debentures and other investments, the provision of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

15 According to the information and explanation given to us, the Company has not given any guarantees during the year under review.

16 According to the information and explanation given to us, the term loans taken during the year are utilized for the purpose for which they were taken.

17 According to the information and explanations given to us and on overall examination of balance sheet of the Company, we are of the opinion that funds raised on short term basis have not been used for long term investment.

18 The Company has not made any preferential allotment of shares during the year.

19 The Company has not issued any debentures during the year.

20 The Company has not raised any money by way of issue of public issue during the year.

21 As per the information and explanation given to us, no material fraud on or by the Company has been noticed during the year.

For Shah & Co. Chartered Accountants Firm Registration No: 109430W

Ashish H. Shah Partner Mumbai, 23rd May, 2014 Membership No: 103750


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of MORARJEE TEXTILES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2013, the Statement of Proft and Loss and the Cash Flow Statement for the year then ended, and a summary of the signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the fnancial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control relevant to the Company''s preparation and fair presentation of the fnancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the fnancial statements.

We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our audit opinion.

Basis for Qualifed Opinion

On the basis of inquiries made under sub-section (1A) of Section 227 of The Companies Act, 1956, the Company has not accrued interest income on unsecured loan given to Integra Garments and Textiles Limited (Previously known as Five Star Mercantile Limited) – a company within the same management, amounting to Rs. 422 lacs for the year ended on 31st March 2013. The said loan is recovered in full during the year. (Refer note no. 42 in the fnancial statements). As a result of the same, the proft for the year ended on 31st March 2013 is lower by Rs. 422 lacs.

Qualifed Opinion

In our opinion and to the best of our information and according to the explanations given to us, the fnancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India except for non provision of interest income in the preceding paragraph:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

(b) in the case of the Statement of Proft and Loss, of the proft of the Company for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fows of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that:

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet, Statement of Proft and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the Balance Sheet, Statement of Proft and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act.

(e) On the basis of the written representations received from the directors as on 31st March, 2013 taken on record by the Board of Directors, none of the directors is disqualifed as on 31st March, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

AnnEXURE TO THE InDEPEnDEnT AUDITORS'' REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

1 (a) The Company has maintained reasonable records showing full particulars including quantitative details and location of the Fixed Assets.

(b) As informed, there is a regular program of physical verifcation, which in our opinion is reasonable, having regard to the size of the Company and the nature of fxed assets. No material discrepancies have been noticed in respect of the assets physically verifed during the year.

(c) The Company has not disposed of substantial part of fxed assets during the year.

2 (a) According to the information and explanations given to us, inventory has been physically verifed by the management during and at the year end. In our opinion, the frequency of verifcation is reasonable having regard to the size of the Company and the nature of its business.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verifcation of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verifcation between the physical stocks and the book records.

3 (a) During the year, the Company has received repayment of an opening unsecured loan to one party covered in the register maintained under section 301 of the Companies Act, 1956.

Name of the Party Relationship with Opening balance as at Balance as at 31st March

the Company 1st April 2012 (Rs. In Lacs) 2013 (Rs. In Lacs)

Integra Garments & Textiles Limited Company 3,749.51 NIL

(formerly known as Five Star under the same

Mercantile Limited) management

(b) The Company has not accrued interest income amounting to Rs. 422 lacs on the above mentioned unsecured loan.

(c) The principal amount is received in full during the year and the interest portion on the same is waived off. Thus clause 4(iii)(d) is also not applicable to the Company (Refer note no. 42 in the fnancial statements).

(d) The Company has not accepted any loans, secured or unsecured, from the parties covered in the register maintained under section 301 of the Companies Act, 1956.

In view of clause 4 (iii)(e) of the Companies (Auditor''s Report) Order, 2003, clause 4(iii)(f & g) are not applicable to the company.

4 In our opinion, and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials, plant & machinery, equipment & other assets and with regards to sale of goods and services.

Further on the basis of our examination and according to the information and explanations given to us, there is no major weakness in the internal control procedures.

5 (a) In our opinion, and according to the information and explanations given to us, the particulars of all contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been properly entered in the register maintained under section 301 of the Act.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 Lacs with any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6 In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from public during the year and hence provisions of clause 4(vi) of Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

7 In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8 We are informed that the cost records are required to be maintained by the Company under section 209 (1) (d) of the Companies Act, 1956 for textile product of the Company. We have not reviewed the cost record maintained by the Company, but we are informed that the Company has maintained the prescribed cost records.

9 (a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund,

Employees'' State Insurance, Income Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, cess and other statutory dues with the appropriate authorities during the year except some delay. There are no undisputed statutory dues outstanding as on 31 March 2013 for the period of more than six months from the date they became payable.

The Company does not have any accumulated losses at the end of the fnancial year and has not incurred cash losses in the current fnancial year and in the immediately preceding fnancial year.

11 According to the information and explanation given to us, the Company has not defaulted in repayment of dues to any fnancial institution or bank during the year. Also Company does not have any debentures.

12 According to the information and explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 As the Company is not a chit fund, nidhi, mutual beneft fund or society the provision of clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

14 As the Company is not dealing or trading in shares, securities, debentures and other investments, the provision of clause 4(xiv) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

15 According to the information and explanation given to us, the Company has not given any guarantees during the year under review.

16 According to the information and explanation given to us, the term loans taken during the year are utilized for the purpose for which they were taken.

17 According to the information and explanations given to us and on overall examination of balance sheet of the Company, we are of the opinion that funds raised on short term basis have not been used for long term investment.

18 The Company has not made any preferential allotment of shares during the year.

19 The Company has not issued any debentures during the year.

20 The Company has not raised any money by way of issue of public issue during the year.

21 As per the information and explanation given to us, no material fraud on or by the Company has been noticed during the year.

For SHAH & CO.

Chartered Accountants

FRN: 109430W Ashish H. Shah

Partner

M. No.: 103750

Mumbai : 28th May, 2013


Mar 31, 2012

We have audited the attached Balance Sheet of Morarjee Textiles Limited, ('the Company') as at 31st March 2012, and also the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis of our opinion.

On the basis of inquiries made under sub-section (1A) of Section 227 of The Companies Act, 1956, the Company has not accrued interest income on unsecured loan given to Five Star Mercantile Limited - a company within the same management, amounting to Rs. 221 lacs for the year ended on 31st March 2012. As a result of the same, the profit for the year ended on 31st March 2012 is lower by Rs. 221 lacs.

As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, ('the act') we enclose in the Annexure a statement on the matters specified in paragraph 4 and 5 of the said order to the extent applicable.

Further to our comments in the Annexure referred to above, we state that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement referred in this report are in agreement with the books of account;

(d) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement read with notes thereon dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of Companies Act, 1956.

(e) On the basis of the written representations received from the Directors of the Company as at 31 March 2012, and taken on record by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31st March 2012 from being appointed as a Director in terms of clause (g) of sub- section (1) of section 274 of the Companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read with notes thereon give the information required by the Act, in the prescribe manner and give a true and fair view in conformity with the accounting principles generally accepted in India except for non provision of interest income as mentioned in the preceding paragraph:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2012;

(ii) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

(iii) in case of Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 4 OF THE AUDITORS' REPORT TO THE MEMBERS OF MORARJEE TEXTILES LIMITED FOR THE YEAR ENDED ON 31ST MARCH, 2012.

1 (a) The Company has maintained reasonable records showing full particulars including quantitative details and location of the Fixed Assets.

(b) As informed, there is a regular program of physical verification, which in our opinion is reasonable, having regard to the size of the Company and the nature of fixed assets. No material discrepancies have been noticed in respect of the assets physically verified during the year.

(c) The Company has demerged the garment manufacturing division at Banglore into a separate company as per the demerger scheme. As a result of the same all the fixed assets of the said division are disposed off at book value to the demerged company as mentioned in notes 11, 29 & 30 forming part of the financial statements. The above disposal does not affect the going concern for the Company.

2 (a) According to the information and explanations given to us, inventory has been physically verified by the management during and at the year end. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its business.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. No material discrepancies were noticed on physical verification between the physical stocks and the book records.

3 (a) The Company has granted an unsecured loan during the year to one party covered in the register maintained under sections 301 of the Companies Act, 1956.

Name of the Party Relationship with the Amount Balance as at 31st Company (Rs. In Lacs) March 2012 (Rs. In Lacs)

Five Star Mercantile Limited Company under the same 3,749.51 3,749.51 management

(b) The Company has not accrued interest income amounting to Rs. 221 lacs on the above mentioned unsecured loan.

(c) The principal amount and interest on the same is not recovered as at the Balance Sheet date.

(d) The Company is in the process of taking reasonable steps for recovery of principal and interest amount.

(e) The Company has not accepted any loans, secured or unsecured, from the parties covered in the register maintained under section 301 of the Companies Act, 1956.

In view of clause 4 (iii)(e) of the Companies (Auditor's Report) Order, 2003, clause 4(iii)(f & g) are not applicable to the company.

4 In our opinion, and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials, plant & machinery, equipment & other assets and with regards to sale of goods and services. Further on the basis of our examination and according to the information and explanations given to us, there is no major weakness in the internal control procedures.

5 (a) In our opinion, and according to the information and explanations given to us, the particulars of all contracts and arrangements referred to in section 301 of the Companies Act, 1956 have been properly entered in the register maintained under section 301 of the Act.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs. 5 Lacs with any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6 In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from public during the year and hence provisions of clause 4(vi) of Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

7 In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8 We are informed that the cost records are required to be maintained by the Company under section 209 (1) (d) of the Companies Act, 1956 for textile product of the Company. We have not reviewed the cost record maintained by the Company, but we are informed that the Company has maintained the prescribed cost records.

9 (a) The Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Service Tax, Wealth Tax, Custom Duty, Excise Duty, cess and other statutory dues with the appropriate authorities during the year except some delay. There are no undisputed statutory dues outstanding as on 31 March 2012 for the period of more than six months from the date they became payable.

(b) According to the records of the Company and information and explanation given to us, there are following disputed dues on account of Income Tax, Service Tax, Custom Duty, dues which have not been deposited with respective authorities.

Name of the Statute Nature of Dues Financial Year Amount Forum where Dispute is Rs. in lacs Pending

Central Excise Act 1944 Interpretation of Act 1976-1977 00.19 First Appeal (Commissioner Level)

1979-80 to 1985-86 06.84

1990-91 00.09

1993-94 to 1995-1996 146.49

1999-2000 to 2008-09 475.32

Central Excise Act 1944 Interpretation of Act 1990-91 to 1991-92 02.35 Second Appeal (CESTAT)

1995-96 to 2005-06 747.71

2007-08 to 2008-09 84.27

Central Excise Act 1944 Interpretation of Act 1997-98 to 2001-02 03.19 High Court

Central Excise Act 1944 Interpretation of Act 1981-1984 296.14 Supreme Court

1998-99 to 2000-01 715.11

10 The Company has not incurred cash loss during the current financial year and in the immediately preceding financial year. The accumulated losses as at the end of financial year 31 March 2012 does not exceed fifty percent of the networth of the Company.

11 According to the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or bank during the year. Also Company does not have any debentures.

12 According to the information and explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13 As the Company is not a chit fund, nidhi, mutual benefit fund or society the provision of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

14 As the Company is not dealing or trading in shares, securities, debentures and other investments, the provision of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

15 According to the information and explanation given to us, the Company has not given any guarantees during the year under review.

16 According to the information and explanation given to us, the term loans taken during the year are utilized for the purpose for which they were taken.

17 According to the information and explanations given to us and on overall examination of balance sheet of the Company, we are of the opinion that funds raised on short term basis have not been used for long term investment.

18 The Company has not made any preferential allotment of shares during the year.

19 The Company has not issued any debentures during the year.

20 The Company has not raised any money by way of issue of public issue during the year.

21 As per the information and explanation given to us, no material fraud on or by the Company has been noticed during the year.

For SHAH & CO.

Chartered Accountants

FRN: 109430W

Ashish H. Shah

Partner

M. No.: 103750

Mumbai: 1st August, 2012

 
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