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Auditor Report of Restile Ceramics Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of RESTILE CERAMICS LIMITED ("the Company") which comprise the Balance Sheet as at 31st March 2015, 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 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 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 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 there under. 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 financialcontrol 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 the 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 financial statements.

Basis for Qualified Opinion

1. The Company has generated negative operating cash flows, incurred substantial operating losses, significant deterioration in value of assets used to generate cash flows and its loans from bank have been recalled by lender all of which indicate existence of material uncertainty in the Company's ability to continue as a going concern for a reasonable period of time. The attached financial statements do not include any adjustments that might result had the above uncertainties been known.

2. The Company's building and plant and equipment are carried in the Balance Sheet at Rs.926.49 lakhs and Rs.5432.70 lakhs respectively. Independent valuation of the assets of the company in financial year 2010-11 had indicated impairment of Building (Rs.522.17 lakhs) and Plant and Machinery (Rs.119.87 lakhs). However, considering the lapse of time and the depreciation being charged on the basis of estimated useful life of assets, the aforesaid impairment in value of assets need to be recomputed. /As such, the possible impairment on assets and its effects on statement of Profit & Loss is to be taken as unascertained as on March 31, 2015.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matters described in the Basis for qualified opinion paragraph, 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 of the state of affairs of the Company as at 31st March 2015,and its loss 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 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, 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 Companies Act, 2013, 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 in so far as appears from our examination of those books.

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

d) Except for the matters described in the Basis of Qualified Opinion paragraph, in our opinion, the aforesaid 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, and taken on record by the Board of Directors, none of the directors are disqualified as on 31st March 2015, from being appointed as a director in terms of sub-section (2) of section 164 of the Companies Act, 2013.

f) With respect to the 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 explanation given to us:

i. The company has, in accordance with the generally accepted accounting practice, disclosed the impact of pending litigations on its financial position in its financial statements - Also Refer Note 28.01 to the financial statements.

ii. The company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

Refer paragraph 1 under 'Report on other Legal and Regulatory Requirements section' of our Report of even date on the accounts of Restile Ceramics Limited for the year ended March 31,2015.

In our opinion and on the basis of such checks as we considered appropriate, and according to the information and explanations given to us , the nature of the company's business/ activities/ matters specified in clauses (iii),(v), (vi),(x) and (xi) of paragraph 3 of the Company Audit Report Rules 2015 do not apply to the company. Further, in respect of other clauses, on the basis of such checks as we considered appropriate, we report that:

1. In respect of its fixed assets:

(a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.The same, however, needs to be updated.

(b) The fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its assets, and no material discrepancies have been noticed on such verification carried out during the year in terms of the phased programme.

2. (a) The inventories have not been physically verified at the year- end by the management.

(b) The question of our commenting on procedures of the said physical verification of the inventory followed by the management therefore does not arise.

(c) In our opinion and on the basis of our examination of the records, the Company is generally maintaining proper records of its inventory. The question of our commenting on the material discrepancies noticed on physical verification and whether the same have been properly dealt with the books of account does not arise, in view of our observation in (a) above.

3. In our opinion there is an adequate internal control system commensurate with the size of the company and the nature of its business for purchase of fixed assets and inventories, and for sale of goods and services and for payment of expenses. Further, on the basis of our examination of the books and records of the company, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

4. (a) Delays were noticed in depositing undisputed income tax, sales tax, service tax, excise duty and cess with the appropriate authorities during the year. The arrears of such dues outstanding as at March 31, 2015 for a period of more than six months from the date they became payable are -tax collected/deducted at source Rs.0.20 lakhs , sales Tax /Value added tax Rs.27.37 Lakhs, property tax Rs.2.50 lakhs and professional tax Rs.0.19 lakhs. Out of the above,sales Tax /Value added tax of Rs 4.60 Lakhs have subsequently been paid. We are informed that the delays were caused due to financial constraints.

(b) There are no dues of income tax, wealth-tax, service tax, excise duty, cess and customs duty, which have not been deposited on account of any dispute. Sales Tax dues not deposited on account of dispute are as under

Year to which Name of the Forum where the demand Statute Nature of Dues Dispute is Pending relates

Sales Tax Kerala Sales Tax Dy. Commissioner 2009-2010 (Appeals) Commercial Tax, Kerala

Sales Tax APVAT Dy. Commissioner 2010-2011 (Appeals)

Sales Tax APVAT Dy. Commissioner 2011-2012 (Appeals)

Amount of Tax Name of the Demanded(Rs. Statute Lakhs)

Sales Tax Tax-Rs.2899184 Penalty-Rs.5798368 Total - Rs.8697552

Sales Tax Tax - Rs.3023024 Paid - Rs.378000 Balance Rs.2645024

Sales Tax Tax - Rs.419876 Penalty - Rs.41988 Paid Rs.52500 Balance - Rs.410364

(c) The Company is not required to transfer any amount to Investor Education and Protection Fund in accordance with relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

5. The accumulated losses of the Company as at March 31, 2015 aremorethan fifty per cent of its net worth. The Company has incurred cash losses in the financial year ended on that date and in the immediately preceding financial year.

6. As per information and explanation given to us, the bank has called upon the Company to pay back the entire working capital loan of Rs. 409 lakhs and to close the account immediately.There are no dues to financial institutions or debenture holders.

7. Based on the audit procedures performed, we report that no fraud of material significance on the Company or fraud by the Company has been noticed or reported during the year.

For M.S.Krishnaswami & Rajan Chartered Accountants Firm regn No: 01554S

M.S.Murali- Partner Membership No: 26453 Place: Chennai Date: May 30, 2015


Mar 31, 2014

We have audited the accompanying financial statements of RESTILE CERAMICS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31,2014, and 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 13 th 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.

Auditor''s 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 misstatement.

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 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 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.

Basis for Qualified Opinion

(a) The Company has generated negative operating cash flows, incurred substantial operating losses, significant deterioration in value of assets used to generate cash flows and its loans from bank have been recalled by lender all of which indicate existence of material uncertainty in the Company''s ability to continue as a going concern for a reasonable period of time. The attached financial statements do not include any adjustments that might result had the above uncertainties been known.

(b) The Company''s building and plant and equipment are carried in the Balance Sheet at Rs.967.18 lakhs and Rs.5951.24 lakhs respectively. Management has not recognized estimated impairment in value of building (Rs.522.17 lakhs) and in value of plant and equipment (Rs. 119.87 lakhs) in the Statement of Profit and Loss as required by Accounting Standard 28 - Impairment of Assets referred to in subsec- tion (3C) of Section 211 of the Act. The Company''s records indicate that had management stated the value of building and plant and machinery after considering the impairment loss mentioned above, the net loss would have increased by Rs.642.04 lakhs and share holders fund would have reduced by Rs.642.04 lakhs.

(c) The liability for employee gratuity as on March 31, 2014 has been determined on the basis of Payment of gratuity Act, 1972 and the liability for leave encashment has been provided on actual basis instead of on actuarial basis as per mandatory Accounting standard 15 "Employee Benefits". The effects of non compliance of the Accounting standard 15 on the financial statement is not quantifiable

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matters described in the Basis for qualified opinion paragraph, 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 March 31,2014;

b) in the case of 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 Gov- ernment of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a state-ment 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) except for the matters described in the Basis of Qualified Opinion paragraph, in our opinion, the Bal-ance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13 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 Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

Re: Restile Ceramics Limited

Referred to in paragraph 8 under Report 0n Other Legal and Regulatory Requirements section of our report of even date In our opinion and on the basis of such checks as we considered appropriate, and according to the infor- mation and explanations given to us, the nature of the Company''s business/ activities/ results during the year are such that clauses (vi), (xiii), (xiv), (xviii), and (xx) of paragraph 4 of the Order are not applicable to the Company. Further, in respect of other clauses, on the basis of such checks as we considered appropri- ate, we report that

1. (i) the Company is maintaining records showing particulars including quantitative details and situation of fixed assets. The same, however, needs to be updated.

(ii) the fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its assets, and no material discrepancies have been noticed on such verification carried out during the year in terms of the phased programme.

(iii) the Company has not disposed off any of its fixed assets during the year and therefore our com- ment on whether the going concern has been affected by such disposal does not arise.

2. (i) inventories have not been physically verified during the year by the management.

(ii) the question of our commenting on procedures of the said physical verification of the inventory fol- lowed by the management therefore does not arise.

(iii) the Company is maintaining records of its inventories. Inventories have not been physically verified during the year by the management. The question of our commenting on the material discrepancies noticed on physical verification and whether the same have been properly dealt with the books of account does not arise.

3. (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other par- ties listed in the register maintained under section 301 of the Act. Consequently, the provisions of Clauses iii (b), iii(c) and iii (d) of the order are not applicable to the Company.

(b) The Company has taken interest free, unsecured loans from two companies listed in the register maintained under Sec.301 aggregating to Rs.240.65 lakhs during the year and the year end balance of such loans is Rs.238.15 lakhs. The other terms and conditions of the said loan are not prejudicial to the interests of the Company.

4. There is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets, payments for expenses and for sale of goods and services. On the basis of our examination of the books and records of the company, 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 to the best of our knowledge and belief the contracts or arrangements referred to in section 301 of the Act which need to be entered in the register maintained under the said section have been so entered. The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company did not have an internal audit system during the financial year.

7. 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 records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

8.

(i) The Company has not been regular in depositing undisputed provident fund, employees'' state insurance, income tax, sales tax, service tax, excise duty and cess with the appropriate authorities during the year. The arrears of such dues outstanding as at March 31,2014 for a period of more than six months from the date they became payable are - Employees'' state insurance Rs.3.00 lakhs, Tax collected/deducted at source Rs.3 lakhs, Sales Tax 20.88 lakhs, Property tax Rs.2.50 lakhs and Professional tax Rs.2.95 lakhs. We are informed that the delays were caused by unavoidable circumstances.

(ii) there are no dues of income tax, wealth-tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute. Sales Tax dues not deposited on account of disputes are as under

Name of the Nature of Forum where Dispute Year to Amount of Tax Statute the dues is Pending which the Demanded demand (Rs. Lakhs) relates

Sales Tax APVAT Before High court 2009-10 12.74 Andhra Pradesh

9. The Company has accumulated losses as at March 31,2014 and has incurred cash losses in the finan- cial year ended on that date and in the immediately preceding financial year.

10. As per information and explanation given to us, the bank has called upon the Company on February 28, 2014 to pay back the entire working capital loan of Rs. 500 lakhs and close the account immediately.

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

12. The company does not given any guaranty for loan taken by others.

13. Based on our audit procedures and as per information and explanations given to us we report that the Company has not raised any term loans during the year.

14. In our opinion and according to the information and explanations given to us and on an overall exami- nation of the financial statements of the Company, funds raised on short-term basis have, prima facie, not been used for long-term investment.

15. The Company has not issued any debentures during the year and hence the question of creating a charge in respect thereof does not arise. The creation of charge in respect of Deep Discount Bonds issued in an earlier year and outstanding is in progress.

16. According to the information and explanation given to us and based on the audit procedures per- formed, we report that no fraud of material significance on or by the Company has been noticed or reported during the year, nor we have been informed of such an occurrence by the management.

For M.S.Krishnaswami & Rajan Chartered Accountants Firm Regn. No. 01554S

Place: Chennai M.S.Murali-Partner Date: May 24, 2014 Membership No. : 26453


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of RESTILE CERAMICS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31,2013, and 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 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 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 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 misstatement.

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.

Basis for Qualified Opinion

The company''s building and plant and equipment are carried in the Balance Sheet at Rs.967.18 lakhs and Rs.5951.24 lakhs respectively. Management has not recognized impairment in value of building (Rs.522.17lakhs) andin value of plant and equipment (Rs. 119.87 lakhs) in the Statement of Profit and Loss as required by Accounting Standard 28 - Impairment of Assets referred to in subsection (3C) of Section 211 of the Act. The company''s records indicate that had management stated the value of building and plant and machinery after considering the impairment loss mentioned above, the net loss would have increased by Rs. 642.04 lakhs and share holders fund would have reduced by Rs.642.04 lakhs.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the Basis for qualified opinion paragraph, 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 March 31,2013;

b) in the case of 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.

Emphasis of Matter

We draw attention to note 27.7 of the notes to the Financial Statements regarding the financial statements having been prepared on going concern basis although the company has suffered recurring losses.

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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of1 account.

d) expect for the matter described in the Basis of Qualified Opinion paragraph, in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of theAct.

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 are disqualified as on March 31,2013, from being appointed as a director in terms of cfause (g) of sub- section (1) of Section 274 of the Act.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company. ''

Annexure referred to in paragraph 1 of ourReport of even date to the members of RESTILE CERAMICS LIMITED on the financial statements of the company for the year ended 31" March, 2013.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

1 (i) the company is maintaining records showing particulars including quantitative details and situation of fixed assets. The same, however, needs to be updated.

(ii) the fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its assets, and no material discrepancies have been noticed on such verification carried out during the year in terms of the phased programme.

(iii) the company has not disposed off substantial part of its fixed assets during the year.

2. (i) inventories otherthan stores and spares have been physically verified during the year by the management,

(ii) the procedures of the said physical verification of the inventory followed by the management are reasonable and adequate in relation to the size of the company and . the nature of its business.

(iii) the company is maintaining records of its inventories and discrepancies noticed on said physical verification at the end of the year have been dealt with by adopting the stocks as verified. .

3. 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 Act. Consequently, the provisions of Clauses iii(b), iii(c) and iii(d) of the order are not applicable to the Company.

4. The company had taken a interest free, unsecured loan of Rs.6 Lakhs from a company listed in the register maintained under Sec.301 which was also repaid. The other terms and conditions of the said loan are not prejudicial to the interests of the Company.

5. There is an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets, payments for expenses and for sale of goods and services, On the basis of our examination of the books and records of the company, we have neither come across nor have been informed; of any continuing failure to correct major weaknesses in the aforesaid internal control system.

6. In our opinion and to the best of our knowledge and belief the contracts or arrangements referred to in section 301 of the Act which need to be entered in the register maintained under the said section have been so entered. The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

7. The company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and provisions of section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 apply.

8. Internal audit has been carried out by an independent Chartered Accountant. We are informed, that the Internal Audit function is in the process of being strengthened to, include operations audit as well. ,

9. 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 records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

10. (i) According to the records of the company undisputed statutory dues towards investor education and protection fund, wealth tax, customs duty, and other material statutory dues as applicable have generally been deposited with the appropriate authorities.

Delays were, however, noticed in depositing undisputed provident fund, employees''state insurance, income tax, sales tax, service tax, excise duty and cess with the appropriate authorities during the year. The arrears of such dues outstanding as at March 31,2013 for a period of more than six months fromthe date they became payable are - employees'' state insurance Rs.5.11 lakhs sales tax Rs.27.00 lakhs, tax collected/deducted at source Rs.3.69 lakhs; property tax Rs.2.49 lakhs (paid in April''2013) and professional tax Rs.1.43 lakhs . We are informed that the delays were caused by unavoidable circumstances.

11. The company has accumulated losses as at March 31,2013 and has incurred cash losses in the financial year ended on that date and in the immediately preceding financial year.

12. Based on our audit procedures, we are of the opinion that the company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

13 The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

14. The provisions of any special statute applicable to a chit fund, nidhi or mutual benefit fund / societies are not applicable to the company.

15. The company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause (xiv) of the order are not applicable to the company.

16. No guarantees have been given during the year by the company, for loans taken by others from banks or financial institutions.

17. Based on audit procedures, we report that the company has not raised any term loans during the year.

18. On an overall examination of the financial statements of the company, funds raised on short- term basis have, prima facie, not been used for long-term investment. -

19. Based on our.audit procedures, we report that the company has not made any preferential allotment of shares during the year to any party.

20. The company has not issued any debentures during the year and hence the question of creating a charge in respect thereof does not arise. The creation of charge in respect of Deep Discount Bonds issued man earlier year and outstanding is in progress.

21. The company has not raised any money by public issues during the yean

22. Based on the audit procedures performed, we report that no fraud of material significance on or by the company has been noticed or reported during the year, nor we have been informed of such an occurrence by the management.

For M.S.Krishnaswami & Rajan

Chartered Accountants ''

Firm Regn.No. 01554S

Sd/-

M.S.Murali

Partner

Membership No.: 26453

Place: Chennai

Date: May 30,2013


Mar 31, 2012

1) We have audited the attached Balance Sheet of RESTILE CERAMICS LIMITED ('the Company') as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement together with the Notes to Financial Statements for the year ended on that date, annexed thereto (collectively referred to as the financial statements), signed by us under reference to this report. 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.

2) We conducted our audit in accordance with auditing and assurance 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 for our opinion.

3) As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) 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.

4) Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

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 appears from our examination of those books.

c) the financial statements dealt with by this report are in agreement with the books of account.

d) in our opinion, the aforesaid financial statements comply in all material respects with the applicable Accounting Standards referred to in section 211 (3C) of the Companies Act, 1956 (the Act) except that there has been no recognition of impairment in value of Buildings (Rs. 522.17 lakhs) and in the value of Plant & Machinery (Rs. 119.87 lakhs) as required under Accounting Standard (AS) 28-impairement of Assets.

e) in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements subject to non- recognition of impairment in value of Buildings (Rs. 522.17 lakhs) and in the value of Plant & Machinery (Rs. 119.87 lakhs) as required under Accounting Standard (AS) 28-impairment of Assets and its consequential impact on the toss carried forward, give the information required by the Act, in the manner so required and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

(Referred to in paragraph 3 of our report of even date on the accounts for the year ended March 31, 2012 of Restile Ceramics Limited).

As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Government of India in terms of section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

1. (i) the company is maintaining records showing particulars including quantitative details and situation of fixed assets. The same, however, needs to be updated.

(ii) the fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its assets, and no material discrepancies have been noticed on such verification carried out during the year in terms of the phased programme.

(iii) the company has not disposed off substantial part of its fixed assets during the year.

2. (i) inventories have been physically verified during the year by the management at the year end.

(ii) the procedures of the said physical verification of the inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(iii) the company is maintaining records of its inventories and discrepancies noticed on physical verification at the end of the year have been dealt with by adopting the stocks as verified.

3. the company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the register maintained under section 301 of the Act

4. there is an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and for sale of goods and services. On the basis of our examination of the books and records of the company, 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 to the best of our knowledge and belief the contracts or arrangements referred to in section 301 of the Act which need to be entered in the register maintained under the said section have been so entered. The transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. -

6. the company has not accepted any deposits from the public to which the directives issued by the Reserve Bank of India and provisions of section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 apply.

7. Internal audit has been carried out by an independent Chartered Accountant. We are informed, that the Internal Audit function is in the process of being strengthened and will, in the 'ensuing year, include operations audit as well.

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 records have been made and 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. (i) the company has been regular in depositing undisputed statutory dues towards investor education and protection fund, wealth tax, customs duty, and other material statutory dues as applicable with the appropriate authorities. Delays were, however, noticed in depositing undisputed provident fund, employees' state insurance, income tax, sales tax, service tax, excise duty and cess with the appropriate authorities during the year. The arrears of such dues outstanding as at the end of the year for a period of more than six months from the date they became payable are - Provident fund Rs. 0.56 lakhs, sales tax Rs. 29.60 lakhs, Tax collected/deducted at sourcp- Rs. 2.21 lakhs ; Property tax-Rs. 2.49 lakhs and Professional tax- Rs. 0.12 lakhs. We are informed that the delays were caused by unavoidable circumstances.

(ii) there are no dues of income tax/wealth-tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute. Sales Tax dues not deposited on account of disputes are as under:

Name of the Nature of Forum where Year to Amount of Statute the dues Dispute which is Tax Pending demand Demanded relates (Rs. Lakhs)

Sales Tax APCST Deputy 2008 - 09 166.61 Commissioner (CT) Appeals, Punjagutta Division, Hyderabad, Andhra Pradesh

10. The company has accumulated losses as at March 31, 2012 and has incurred cash losses in the financial year ended on that date and in the immediately preceding financial year.

11. The company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year.

12. The company has not granted loans and advances on the basis of security by way of Pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to a chit fund, nidhi or mutual benefit fund/societies are not applicable to the company.

14. The company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4 (xiv) of the CARO are not applicable to the company.

15. No guarantees have been given during the year by the company, for loans taken by others from banks or financial institutions.

16. The term loans availed by the company were prima facie, applied for the purpose for which they were obtained.

17. On an overall examination of the financial statements of the company, funds raised on short-term basis have, prima facie, not been used for long-term investment.

18. The company has not made any preferential allotment of shares during the year to any party.

19. The company has not issued any debentures during the year and hence the question of creating a charge in respect thereof does not arise. The creation of charge in respect of Deep Discount Bonds issued in an earlier year and outstanding, is in progress.

20. The company has not raised any money by public issues during the year.

21. Considering the size and nature of the company's operations, no fraud of material significance on or by the company has been noticed or reported during the year.



For M.S. Krishnaswami & Rajan Chartered Accountants Registration No. 01554S

M. S. Murali Partner Membership No. 26453

May 29, 2012 Chennai


Mar 31, 2010

1. We have audited the attached Balance Sheet of RESTILE CERAMICS LIMITED as at March 31, 2010, the Profit and Loss Account and the Cash Flow Statement together with the Notes to the Accounts (financial statements) for the year ended on that date, annexed thereto, signed by us under reference to this report. 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.

2. We conducted our audit in accordance with auditing and assurance 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 for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) 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.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

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 appears from our examination of those books.

c. the financial statements dealt with by this report are in agreement with the books of account.

d. in our opinion, the aforesaid financial statements comply in all material respects with the applicable Accounting Standards referred to in section 211(3C) of the Companies Act, 1956 (the Act).

e. in our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read with the Statement on Significant Accounting Policies and Note 9 of the Notes to the Accounts (regarding pendency of reconciliation of balances of certain creditors and debtors and its possible consequential impact on financial statements), give the information required by the Act, in the manner so required and also give a true and fair view, in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

(ii) in the case of the Profit and Loss account, of the loss for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date 5.0 On the basis of written representations received from the directors as on March 31, 2010, and taken on record by the Board of Directors, we report that none of the directors is prima facie disqualified as on March 31,2010 from being appointed as a director in terms of section 274 (1) (g) of the Act.

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)

As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Government of India in terms of section 227(4A) of the Companies Act, 1956, and on the basis of such checks as we considered appropriate and according to the information and explanations given to us, we report that:

1. (i) The company is maintaining records showing particulars including quantitative details and situation of fixed assets. The same, however, needs to be updated.

(ii) The fixed assets are being physically verified under a phased programme of verification, which, in our opinion, is reasonable having regard to the nature and value of its assets, and no material discrepancies have been noticed on such verification carried out during the year in terms of the phased programme.

(iii) The company has not disposed off substantial part of its fixed assets during the year.

2. (i) Inventories have been physically verified during the year by the management at the year end.

(ii) The procedures of the said physical verification of the inventory followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(iii) The company is maintaining records of its inventories and discrepancies noticed on physical verification at the end of the year have been dealt with by adopting the stocks as verified.

3. The company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under section 301 of the Act

4. There is an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets and for sale of services. In respect of the internal control system for purchase of inventory and sale of goods, the same needs to be strengthened. We are informed that the said controls have since been streamlined. On the basis of our examination of the books and records of the company, we have come across/ have been informed, of steps taken to correct major weaknesses in the aforesaid internal control system.

5. To the best of our knowledge there are no contracts or arrangements referred to in section 301 of the Act which need to be entered in the register maintained under the said section.

6. The company has not accepted any deposits from the public to which the provisions of section 58A and 58AA or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 1975 apply.

7. Internal audit has been carried out by an independent Chartered Accountant from September 2009. We are informed, that the Internal Audit function is in the process of being strengthened and will, in the ensuing year, include operations audit as well.

8. The Central Government has not prescribed maintenance of cost records under section 209(1) (d) of the Act for the products dealt with by the company.

9. (i) The company has been regular in depositing undisputed statutory dues towards investor education and protection fund, wealth tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate authorities .Delays were, however, noticed in depositing undisputed provident fund, employees state insurance, income tax, sales tax, service tax, with the appropriate authorities during the year. The arrears of such dues outstanding as at the end of the year for a period of more than six months from the date they became payable are -service tax- Rs.11.02 lakhs; Tax collected at source-Rs.0.09 lakhs; Property tax-Rs.0.20 lakhs, sales tax Rs.20.74 lakhs and Tax deducted at source-Rs.1.69 lakhs. We are informed that the delays were caused by unavoidable circumstances.

(ii)There are no dues of income tax / wealth-tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute. Sales Tax dues not deposited on account of disputes and pending with Andhra Pradesh Appellate deputy Commissioner (Commercial Taxes) are as under: Year Forum where Sales Tax Amount Paid Balance Due

dispute pending Demanded

2006-07 APCST 3,337,749 417,219 29,20,530

2006-07, APVAT 3,955,954 494,494 3,461,460

2007-08 & 2008-09

10. The company has accumulated losses as at March 31,2010 and has incurred cash losses in the financial year ended on that date and in the immediately preceding financial year.

11. The company has not defaulted in repayment of dues to any financial institution, bank or debenture holders during the year. The sum of Rs.34.13 lakhs being loan together with interest thereon outstanding at the beginning of the year was repaid on July 10,2009 with the concurrence of the said institution.

12. The company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute applicable to a chit fund, nidhi, mutual benefit fund / societies are not applicable to the company.

14. The company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of clause 4 (xiv) of the CARO are not applicable to the company.

15. No guarantees have been given during the year by the company, for loans taken by others from banks or financial institutions.

16. The term loans availed by the company were prima facie, applied for the purpose for which they were obtained.

17. On an overall examination of the financial statements of the company, funds raised on short- term basis have, prima facie, not been used for long-term investment.

18. The company has not made any preferential allotment of shares during the year to any party.

19. The company has not issued any debentures during the year and hence the question of creating a charge in respect thereof does not arise.

20. The company has not raised any money by public issues during the year.

21. No fraud of material significance on or by the company has been noticed or reported during the year.

For M.S. Krishnaswami & Rajan

Chartered Accountants

Registration No.01554S

M.K.Rajan-Partner

Membership No.4059

May 29, 2010

Chennai