Auditor Report of Oswal Yarns Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Oswal Yarns Limited ("the Company"), which comprise the Balance Sheet as at March 31,2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements

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 notified under 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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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

1. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 March 31, 2014

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

c) in the case of the Cash Flow Statement, of the 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, 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 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 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Companies 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 written representations received from the directors as on March 31,2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause

(g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to Independent Auditors'' Report

Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date

1. In respect of its fixed assets:

a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected.

2. In respect of its inventories:

a) The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

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 has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories by the management as compared to the book records.

3. In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

e) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has taken loans from two person, maximum balance of which was Rs. 39.16 lacs and balance as at the year end was 39.16 Lacs.

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 business for the purchase of inventory & fixed assets and for sale of goods & services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b) According to the information & explanations given to us and in our opinion, the transaction made in pursuance of contracts/ arrangements entered in the Register maintained under Section 301 of the Companies Act, 1956 does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does not arises.

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order 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 have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however; not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess, and other statutory dues have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st of March, 2014 for a period of more than six months from the date of becoming payable.

b) According to the information and explanations given to us, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

10. The has accumulated losses of the Company at the end of the financial year was Rs. 9.52 Lacs. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. In our opinion and according to the explanations given to us and based on the information available, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund or a nidhi /mutual benefit fund/society. Therefore, the provision of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

14. The company has maintained proper records of the transactions and contracts in respect of dealing or trading in Shares, securities, debentures & other Investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the company in its own name.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution.

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans during the year.

17. According to the information and explanations given to us and on an overall examination ofthe Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any monies by way of public issues during the year.

21. In our opinion and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year.

FOR SUBASH VIPAN & CO.

CHARTERED ACCOUNTANTS

Sd/-

Place : Ludhiana (SUBHASH JAIN)

Dated :29.05.2014 PARTNER

M. No. 85224 F.R. No. 012898N

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Oswal Yarns Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management''s Responsibility for the Financial Statements

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 principles generally accepted in India including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act''1). 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 ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and 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 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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

1. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 March 31, 2013;

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

c) in the case of the Cash Flow Statement, of the 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, 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 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 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure to Independent Auditors'' Report

Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date

1 In respect of its fixed assets:

a) The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information

b) As explained to us fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the Company is not affected

2 In respect of its inventories:

a) The inventones have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable

b) In our opinion and according to the information and explanations given to us, the procedures of physical venfication 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 has maintained proper records of inventones As explained to us, there were no material discrepancies noticed on physical venfication of inventories by the management as compared to the book records.

3 In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:

a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

e) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has taken loans from two person, maximum balance of which was Rs. 39.72 lacs and balance as at the year end was 35 34 Lacs 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 Business for the purchase of inventory & fixed assets and for sale of goods & services During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control system. 5 In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered

b) According to the information & explanations given to us and in our opinion, the transaction made in pursuance of contracts/ arrangements entered m the Register maintained under Section 301 of the Companies Act, 1956 does not exceeds five lacs rupees in a financial year therefore requirement of reasonableness of transactions does not arises

6. According to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of Clause (vi) of paragraph 4 of the Order 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 have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescnbed by the Central Government under Section 209(T)(d) of the Companies Act. 1956 and are of (he opinion that prima facie the prescnbed cost records have been maintained We nave, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. In respect of statutory dues

a) According to the records of the company, undisputed statutory dues including Provident Fund. Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess, and other statutory dues have been generally regularly deposited with the appropnate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st of March, 2013 "tor a period of more than six months from the date of becoming payable.

b) According to the information and explanations given to us, there is no amounts payable in respect of income tax, wealth tax, service tax, sales tax, customs duty and excise duty which have not been deposited on account of any disputes.

10 The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us we are of the opinion that, the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

12. In our opinion and according to the explanations given to us and based on the information available, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other secunties.

13. In our opinion, the Company is not a chit fund or a nidhi /mutual benefit fund/society Therefore, the provision of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

14 The company has maintained proper records of the transactions and contracts in respect of dealing or trading in Shares, securities, debentures & other Investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the company in its own name.

15 According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from a bank or financial institution

16. Based on our audit procedures and on the information given by the management, we report that the company has not raised any term loans dunng the year

17 According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short-term basis that have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has no outstanding debentures during the period under audit.

20. The Company has not raised any monies by way of public issues during the year.

21. In our opinion and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year. FOR SUBASH VIPAN & CO.

CHARTERED ACCOUNTANTS

Sd/-

Place : Ludhiana (SUBHASH JAINJ)

Dated : May 28th, 2013 PARTNER

M. No. 85224 F.R. No. 012898N

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Mar 31, 2012

We have audited the attached Balance Sheet of M/s. Oswal Yarns Limited as at 31st March , 2012 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto, These financial statement are the responsibility of the Company's management. Our responsibility is to express our 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 statement. 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 for our opinion.

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

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

(i) 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;

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

(iii) The Balance Sheet and Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet and Profit and Loss Account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as at 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;

(vi)In our opinion and to the best of our information and according to the explanations given to us, give the information required by the Companies Act, 1956, 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 2012; and

b) in the case of the Profit & Loss account, of the loss for the year ended on that date.

c) In the case of cash flow statement, of the cash flows for the year ended on that date.





ANNEXURE TO THE AUDITORS' REPORT

As required by the Companies' (Auditor's Report) Order, 2003 and according to the information and explanations given to us during the course of the audit and on the basis of such checks as where considered appropriate, we report that : i. a) The company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets.

b) The fixed assets have been physically verified by the management during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c) The Company has not dispossed off substantial part of Fixed Assets during the year.

ii. a) The inventories have been physically verified by the management during the year at reasonable intervals. b) The Procedures of physical verification of the inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

iii. a) The Company has not granted any loans to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Company has taken loans during the year from two person, maximum balance of which was Rs. 53.31 lacs and balance as at the year end was 39.72 lacs.

b) The rate of interest and other terms and conditions in respect of loans taken are given by the company are in our opnion, prima facie not prejudicial to the interest of the Company;

c) In respect of such loans where stipulations have been made, they have generally repaid the principal amounts as stiputlated and have been regular in payment of interest, where applicable.

d) In respect of such loans taken by the Company, there are no overdue amounts.

iv. There are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods. No major weakness in internal control came to our notice.

v. a) Therewere no transactions made in pursuance of contracts or arrangements, that need to be entered into the register maintained under Section 301 of the Companies Act, 1956.

b) There were no transactions of purchase and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 aggregating during the year to Rs. 5,00,000 or more in respect of each party.

vi. The Company has not accepted deposits under the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules framed thereunder.

vii. The Company has an adequate internal audit system commensurate with its size and nature of its business.

viii. We have been informed that the Central Government has not prescribed maintenance of cost records under Section

209 (1) (D) of the Companies Act, 1956 in respect of the products manufactured by the Company.

ix. a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including provident fund, Investor education and protection fund, Employee State Insurance, Income-tax, Sales-tax, Wealth- tax Customs Duty, excise Duty, Cess and other statutory dues with appropriate authorities. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31st March, 2012 for a period more than six months from the date they became payable.

b) We have been informed that there were no disputed amount on account of Sale Tax/Custom Duty/Wealth tax/ Excise duty/Cess which has not been paid.

x. There were no accumulated losses of the Company. Further it has not incurred cash losses during the year under audit and in the immediate previous financial year.

xi. The Company has not defaulted in repayment of its dues to financial institutions & banks.

xii. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

xiii. The provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company.

xiv. The Company is not dealing or trading in shares, securities, debentures or other investments and hence, the requirements of para 4

(xiv) are not applicable to the Company. xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

xvi. The Term Loan have been applied for the purpose for which these were raised.

xvii.On the basis of our examination of the Cash flow statement, the funds raised on short-term basis have not been used for long-term investments, similarly, funds raised on long term basis have not been used for short term investments.

xviii.The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

xix. No debentures have been issued by the Company.

xx. The Company has not raised any money by way of public issues during the year.

xxi. On the basis of our examination and according to the information and explanations given to us, no fraud, on or by the Company, has been noticed or reported during the year.



FOR SUBASH VIPAN & CO. CHARTERED ACCOUNTANTS

Place : Ludhiana (SUBHASH JAIN) Dated : September 1st, 2012 PARTNER M. No. 85224 F.R. No. 012898N

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Mar 31, 2010

We have audited the attached Balance Sheet of M/s. Oswal Yarns Limited as at 31st March, 2010 and also the Profit and Loss Account and the cash flow statement for the year ended on that date annexed thereto, These financial statements are the responsibility of the Companys 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 statement. 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 for our opinion.

As required by the Companies ( Auditors Report) Order, 2003 issued by the Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to above, we report that:

(i) 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;

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

(iii) The Balance Sheet and Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet and Profit and Loss Account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as at 31st March, 2010 from being appointed as a director in terms of Clause

(g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vi) In our opinion and to the best of our information and according to the explanations given to us, give the information required by the Companies Act, 1956, 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 2010; and

b) in the case of the Profit & Loss account, of the profit for the year ended on that date.

c) In the cash of cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT

As required by the Companies (Auditors Report) Order, 2003 and according to the information and explanations given to us during the course of the audit and on the basis of such checks as where considered appropriate, we report that : i. a) The company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets.

b) The fixed assets have been physically verified by the management during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c) The Company has not dispossed off substantial part of Fixed Assets during the year.

ii. a) The inventories have been physically verified by the management during the year at reasonable intervals. b) The Procedures of physical verification of the inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

iii. a) The Company has not granted any loans to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Company has taken loans during the year from one person, maximum balance of which was Rs. 55.35 lacs and balance as at the year end was 32.00 lacs.

b) Loan taken were non-interest bearing and other terms and conditions in respect of loans taken or given by the Company are in our opinion, prima facie not prejudicial to the interest of the Company.

c) According to information & explanation given to us, payment of principal amount in respect of aforesaid loans is regular. They do not bear any interest.

d) In respect of such loans or taken by the Company, there are no overdue amounts.

iv. There are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventories, fixed assets and for the sale of goods. No major weakness in internal control came to our notice.

v. a) There were no transactions made in pursuance of contracts or arrangements, that need to be entered into the register maintained under Section 301 of the Companies Act, 1956.

b) There were no transactions of purchase and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 aggregating during the year to Rs. 5,00,000 or more in respect of each party. vi. The Company has not accepted deposits under the provisions of Section 58A and 58AA of the Companies Act, 1956 and rules framed thereunder.

vii. The Company has an adequate internal audit system commensurate with its size and nature of its business.

viii. We have been informed that the Central Government has not prescribed maintenance of cost records under Section 209 (1) (D) of the Companies Act, 1956 in respect of the products manufactured by the Company. ix. a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including provident fund, Investor education and protection fund, Employee State Insurance, Income-tax, Sales-tax, Wealth- tax Customs Duty, excise Duty, Cess and other statutory dues with appropriate authorities. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at 31st March, 2010 for a period more than six months from the date they became payable.

b) We have been informed that there were no disputed amount on account of Sale Tax/Custom Duty/Wealth tax/ Excise duty/Cess which has not been paid.

x. There were no accumulated losses of the Company. Further it has not incurred cash losses during the year under audit and in the immediate previous financial year.

xi. The Company has not defaulted in repayment of its dues to financial institutions & banks.

xii. The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

xiii. The provisions of any special statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not applicable to the Company.

xiv. The Company is not dealing or trading in shares, securities, debentures or other investments and hence, the requirements of para 4 (xiv) are not applicable to the Company. xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institutions.

xvi. The Term Loan has been raised by the company.

xvii.On the basis of our examination of the Cash flow statement, the funds raised on short-term basis have not been used for long-term investments, similarly, funds raised on long term basis have not been used for short term investments. xviii.The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year.

xix. No debentures have been issued by the Company.

xx. The Company has not raised any money by way of public issues during the year.

xxi. On the basis of our examination and according to the information and explanations given to us, no fraud, on or by the Company, has been noticed or reported during the year.

FOR SUBASH VIPAN & CO. CHARTERED ACCOUNTANTS

Place : Ludhiana (SUBHASH JAIN) Dated : August 20th, 2010 PARTNER M. No. 85224