Auditor Report of Royal Cushion Vinyl Products Ltd.

Mar 31, 2015

1. We have audited the accompanying standalone financial statements of ROYAL CUSION VINYL PRODUCTS LTD ("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 significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements:

2. The Management and 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, 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.

Auditors' Responsibility:

3. 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.

4. 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 financial control relevant to the Company's preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company's Board of Directors, as well as evaluating the overall presentation of the financial statements.

5. 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.

6. (a) Basis for qualified Opinion

As in the past in current year also the company has not received bank statement/ bank advise / balance certificate from the financial installations /banks. Banks entries pertaining to banks and financial institutions and transactions and not reconciled. In absence of non reconciliation & non availability of such details of information amount payable to financial institution /Banks are not ascertained /yet to be reconciled.

(b) Under the micro, small and medium enterprises development Act, 2006 certain disclosure relating to amounts due to micro small and medium enterprises and remained unpaid principal or interest due there on, interest paid are required to be made. The company has not made such disclosure.

Qualified Opinion

7. 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 on the basis for qualified opinion paragraph above, 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 31,2015;

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 Case Flow Statement, of the Cash Flows For the Year ended on that date.

8. Emphasis of Matters

We draw attention to the following matters in the notes to the financial statements:

a) The company has suffered substantial losses and due to this its entire net worth has been fully eroded. The company has incurred a net loss during the current and previous year (s) and, the company's current liabilities exceeded its current assets as at the balance sheet date. These conditions, along with other matters. Indicate the existence of a material uncertainty that may cast significant doubt about the company's ability to continue as a going concern. However since operation are continued the financial statements of the company have been prepared on a going concern basis for the reasons stated in the said note.(refer note no. 30} b) The company has been registered with the board for industrial and financial Reconstruction (BIFR) since sept .2002 The company's scheme for reconstruction and other related matters are pending before BIFR.

Report on other Legal and Regulatory Requirements

9. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub section (11) of section 143 of the Companies Act, 2013, we give in Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

(a) We have sought and except for matters described in the basis for qualified opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) Except for the possible effects of the matters described in the basis for qualified opinion paragraph above, 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 Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) Except for the possible effects of the matter described in the basis for qualified opinion paragraph , in our opinion, the balance sheet, statement of profit and loss and cash flow statement comply with the accounting standards specified under section 133 of the act, rule 7 of the companies (Account) Rules,2013;

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

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

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statement (Refer Note 26 to the financial statements);

(ii) The Company did not have any material foreseeable losses, in respect of long term contracts including derivative contracts.

(iii) There is no delay in transferring the amount, required to be transferred to the Investor Education and Protection Fund.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ROYAL CUSHION VINYL PRODUCTS LTD, ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2015.

(Referred to in paragraph 9 under the heading of "Report on other legal and regulatory requirements" of our report of even date)

1. a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

b) Major portion of fixed assets has been physically verified during the year by the management in accordance with a programme of verification, which, in our opinion provides for physical verification of all the fixed assets at reasonable interval having regards to the size of the Company and nature of its business. No material discrepancies were noticed on such physical verification.

2. a) As explained to us, the inventories were physically verified by the management at reasonable intervals during the year.

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) On the basis of our examination of Inventory records, in our opinion, the Company is maintaining proper records of Inventory. The discrepancies notices on physical verification between the physical stock and book records were not material and have been properly dealt with in the books of accounts.

3. a) The Company has granted unsecured loan to Companies covered in the Registered maintain u/s 189 of the Companies Act. 2013.

b) In our opinion, the Companies to whom advance in the nature of loan is granted there is no stipulation for repayment thereof, and no interest is charged on the said loan granted. As per the information and explanation given to us the said loan is repayable on demand.

c) we have been informed that the Company is taking reasonable steps to recover the principal of loan in case where overdue amount is more than Rs. 1 lakh.

4. In our opinion and according to the information and explanations given to us, there are, having regard to the fact that certain items purchased /sold are of unique and social nature and suitable alternative sources do not exist to obtain comparative quotations, there are adequate internal control procedures commensurate with the size of company and the nature of its business, for the purchases of inventories and fixed assets and for the sales of goods, and services. During the course of our audit, we have not observed any major weakness in the internal controls.

5. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public during the year. Accordingly the provisions of clause (v) of the companies (Auditor's Report) order 2015, are not applicable to the company.

6. According to the information and explanations given to us, in our opinion , the Company have , prima facie, made and maintained the prescribed cost records pursuant to the Companies (Cost records and audit) Rules, 2014 as amended, prescribed by the cental government under sub section (1) of section 148 of the Companies Act 2013, wherever applicable. We have not, however made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7-a) According to the records of the Company, the Company is generally not regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Custom, Duty of Excise, Valued Added Tax and Cess other statutory dues with the appropriate authorities.

According to the information and explanations given to us, the are undisputed statutory due which have remained outstanding as at 31st March, 2015, for a period of more than six months from the day they become payable are as under.

NAME OF THE STATUTE NATURE OF THE DUE AMOUNT

Custom Act Custom Duty 76,92,34,686/-

b) The disputed statutory dues that have not been deposited on account of disputed matters pending before appropriate authorities are as under.

Sr. Name of the Status Nature of the due Amount No.

1 The Central Excise Act Custom Duty 21,05,053/-

2 The FERA Act Penalty 1,00,00,000/-

Sr. Name of the Status Period to Which Forum where No. the amount relate dispute is Pending

1 The Central Excise Various Year Commissioner Act Vadodara

2 The FERA Act 2002-03 Appellate Authority FERA New Delhi

c) according to information and explanations given to us, the amount required to be transferred to investor education and protection fund, in accordance with relevant provision of the Companies Act,1956 (1 of 1956) ad rules made there under has been transferred to such fund.

8) The accumulated losses of the Company as at the end of financial year are more than 50% of its net worth. The Company has incurred Cash Losses during the financial year covered by the Audit and also has incurred Cash losses during the immediately preceding financial year.

9) The Company has defaulted in repayment of dues to financial institution and Banks for the period exceeding 5 years The Company has been registered with the board for industrial and financial reconstructions (BIFR). The loan amount is payable after the final decision of BIFR.

10) In our opinion and according to information and explanations given to us the company has not given any guarantee for loans taken by others from bank or financial institutions during the year.

11) The company has not taken any term loan during the year.

12) To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the company was noticed or reported during the year.

FOR CHANDRAKANT & SEVANTILAL & J.K. SHAH & CO. Chartered Accountants PLACE : VADODARA. Firm Registration No. 101676W DATE : 30/05/2015 Sd/- (H.B. SHAH) PARTNER MEMBERSHIP NO. 016642

---

Mar 31, 2014

1. We have audited the accompanying Financial Statements of ROYAL CUSHION VINYL PRODUCTS LIMITED which comprise the Balance Sheet as at 31st March 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:

2. Management is responsible for the preparation of these Financial Statements that give 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 fair view and free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility:

3. 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.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The Procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the financial statement, 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.

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

Opinion

6. In our opinion, and to the best of our information and according to the explanations given to us, the aforesaid financial statements subjects to:

i) Non disclosure of amount(s) owned to small and medium scale industrial undertakings (Refer Note No.:- 29)

ii) Non reconciliation of accounts and balances in respect of Loans from Banks/Financial Institutions. (Refer Note No.: 33)

iii) Non provision for Gratuity liability as required by Accounting Standards 15 ''Employee Benefits''. (Refer Note No.: 39)

iv) Non-ascertainment and non-accounting of impairment loss of Assets of Unit-III as required by Accounting Standard 28 ''Impairment of Assets''. (Refer Note No.: 40)

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; and

b. In the case of the statement of Prof it and Loss, 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;

Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditors'' Report) order, 2003 ("the order") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the order.

8. 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 the 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 BalanceSheet,statement of Profit and Loss, and Cash Flows statement dealt with by this report are in agreement with the books of account.

d) In our opinion Subject to non-provision for Gratuity liability and non ascertainment and non accounting of impairment loss in respect of its Assets of Unit-III, 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 211of the Companies Act 1956;

e) On the bases of written representations received from the directors as on March 31st, 2014, and taken on record by the Board of Directors none of the directors is disqualified as on March 31st, 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 THE AUDITORS'' REPORT ON THE ACCOUNTS OF ROYAL CUSHION VINYL PRODUCTS LIMITED FOR THE YEAR ENDED 31ST MARCH, 2014.

(Referred to in paragraph 7 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date)

1. a) The Company has maintained proper records to show full particulars including quantitative details and situation of Fixed Assets but, they need to be updated so as to include in the said register the addition made during each year as also allocation of the expenses capitalized to the relevant items of Fixed Assets and year wise depreciation provided in respect of each Asset.

b) As informed, the Fixed Assets have not been physically verified by the management, during the current year. Accordingly, discrepancies, if any, cannot be ascertained and reported.

c) There has not been any substantial disposal of fixed assets during the year.

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

b) In our opinion, the procedures of physical verification of Inventory (excepting inadequate/no prescribed procedure for identification and determination of non-moving, slow moving and/or unusable or non saleable items of stocks) followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. a) The Company had taken unsecured loan from Twenty One companies and other parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 69,88,95,311 and the year end balance of loans taken from such companies and other parties was Rs. 68,24,28,992. As per the records of the Company it has not granted any loans secured/unsecured to companies, firms or other parties covered in the register maintained u/s 301 of the Companies Act, 1956.

b) In our opinion, the rate of interest, where applicable, and other terms and conditions on which loans have been taken from Companies and other parties, listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

c) The Company is regular in repaying the principal amounts wherever stipulated and has been regular in the payment of interest wherever stipulated.

4. In our opinion and according to the information and explanations given to us, having regard to the fact that certain items purchased/sold are of unique and special nature and suitable alternative sources do not exist to obtain comparative quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in internal controls.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956, have been so entered.

b) In our opinion and according to the information and explanations given to us, having regard to the fact that certain items purchase/sold are of unique and special nature and suitable alternative sources do not exist to obtain comparative quotations, the transactions made in pursuance of contracts or arrangements entered into the register in pursuance to Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5.00 Lacs in respect of each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time and at the prices at which the transactions for similar goods have been made with other parties.

6. In Our Opinion, the Company has not complied with the provision of Section 58 A of the companies Act, 1956 and the Companies (Acceptance of Deposits) Rule 1975 in so far as the return of deposit as required under Section 10 of the Act have not been filed with concerned authorities and the Company has not maintained the liquid assets as required by Rule 3(A) of Companies (Acceptance of Deposits) Rules, 1975.

7. The Company does not have an Internal Audit System.

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. a) According to the records of the Company, the Company is generally not regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income tax deducted at source, Sales tax, Customs Duty, Cess and other statutory dues applicable to it with the appropriate authorities.

b) According to the information and explanations given to us, undisputed amounts payable in respect of Wealth tax, Custom Duty, Sales tax, Excise Duty, Fringe Benefit Tax etc which have remained outstanding as at 31st March, 2014 for a period of more than six months from the date they become payable are as under:

Name of the Statute Nature of the dues Amount (Rs.)

Customs Act, (Refer Note No.30) Custom Duty for the various Years 73,14,09,612

Fringe Benefit Tax For the year 2007-2008 8,44,149

For the year 2008-2009 6,28,867

c) The disputed statutory dues that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Status Nature of Dues Amount (Rs.) Forum where dispute is pending

The Central Excise Appellate Tribunal, Act. Excise Duty 5,29,617 Mumbai

The Central Excise Commissioner, Act. Custom Duty 21,05,053 Vadodara

The Central Excise Commissioner, Act. Service Tax 2,92,730 Vadodara

The FERA Act. Penalty 1,00,00,000 Appellate Authority FERA New Delhi

10. The accumulated losses of the Company as at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current financial year and in the immediately preceding financial year.

11. The company has defaulted in repayment of dues to the Financial Institution and Banks for the period exceeding Five years. The Company has been registered with the Board For Industrial and Financial Reconstruction (BIFR). The Loan amount is payable after the final decision of BIFR.

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 Company is not carrying on the chit fund business; hence, the provisions of any special statute applicable to chit fund are not applicable.

14. The Company is not dealing in or trading in shares, securities, debentures or other investments.

15. In our opinion and according to the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions during the year.

16. The Company has not taken any term loan during 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 report that no funds raised on short-term basis have been used for long-term investments. No long-term funds have been used to finance short-term assets.

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. Since the Company does not have any debenture, the question of creation of securities does not arise.

20. Since the Company has not raised money by public issue, Clause (xx) of the Order is not applicable.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Chandrakant & Sevantilal & J.K. Shah & Co. Chartered Accountants Firm registration number: 101676W

(H. B. SHAH) Place: VADODARA Partner Date: 10th June, 2014 Membership Number: 016642

---

Mar 31, 2013

Report on Financial Statements

1. We have audited the accompanying Financial Statements of ROYAL CUSHION VINYL PRODUCTS LIMITED which comprise the Balance Sheet as at 31st March 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:

2. Management is responsible for the preparation of these Financial Statements that give 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 fair view and free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility:

3. 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.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The Procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the financial statement, 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.

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

6. In our opinion, and to the best of our information and according to the explanations given to us, the aforesaid financial statements subjects to:

i) Non disclosure of amount(s) owned to small and medium scale industrial undertakings (Refer Note No.: 29) II) Non reconciliation of accounts and balances in respect of Loans from Banks / Financial Institutions. (Refer Note No.: 33) ill) Non provision for Gratuity liability as required by Accounting Standards 15 ''Employee Benefits''. (Refer Note No.: 39) iv) Non-ascertainment and non-accounting of Impairment loss of Assets of Unit - III as required by Accounting Standard 28

''Impairment of Assets''. (Refer Note No.: 40) 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; and

b. In the case of the statement of Profit and Loss, 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; Report on Other Legal and Regulatory Requirements

7. As required by the Companies (Auditors'' Report) order, 2003 ("the order") issued by the Central Government of India in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the order.

8. 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 the 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 Flows statement dealt with by this report are in agreement with the books of account

d) In our opinion Subject to non-provision for Gratuity liability and non ascertainment and non accounting of impairment loss in respect of its Assets of Unit - III, 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 the Companies Act 1956;

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

ANNEXURE TO THE AUDITORS'' REPORT ON THE ACCOUNTS OF ROYAL CUSHION VINYL PRODUCTS LIMITED FOR THE YEAR ENDED 31st MARCH, 2013.

(Referred to in Paragraph 8 under the heading "Report on other legal & regulatory requirements" at our report on even date)

1. a) The Company has maintained proper records to show full particulars including quantitative details and situation of Fixed Assets but, they need to be updated so as to include in the said register the addition made during each year as also allocation of the expenses capitalized to the relevant items of Fixed Assets and year wise depreciation provided in respect of each Asset.

b) As informed, the Fixed Assets have not been physically verified by the management, during the current year. Accordingly, discrepancies, if any, cannot be ascertained and reported.

c) There has not been any substantial disposal of fixed assets during the year.

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

b) In our opinion, the procedures of physical verification of Inventory (excepting inadequate/no prescribed procedure for identification and determination of non-moving, slow moving and/or unusable or non saleable items of stocks) followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. a) The Company had taken unsecured loan from Twenty One companies and other parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 670249047 and the year end balance of loans taken from such companies and other parties was Rs. 616539064. The Company has granted unsecured loan to one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 2177812 and the year end balance of loan granted to such company was Rs. 2177812.

b) In our opinion, the rate of interest, where applicable, and other terms and conditions on which loans have been taken from/granted to Companies, listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company except interest free advance in the nature of loan given to the Company during the year aggregating to Rs. 2177812.

c) The Company is regular in repaying the principal amounts wherever stipulated and has been regular in the payment of interest wherever stipulated. The Company to whom advance in the nature of Loan is granted there is no stipulation for repayment thereof.

4. In our opinion and according to the information and explanations given to us, having regard to the fact that certain items purchased/sold are of unique and special nature and suitable alternative sources do not exist to obtain comparative quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in internal controls.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956, have been so entered.

b) In our opinion and according to the information and explanations given to us, having regard to the fact that certain items purchase/sold are of unique and special nature and suitable alternative sources do not exist to obtain comparative quotations, the transactions made in pursuance of contracts or arrangements entered into the register in pursuance to Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5.00 Lacs in respect of each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time and at the prices at which the transactions for similar goods have been made with other parties.

6. In Our Opinion, the Company has not complied with the provision of Section 58 A of the companies Act, 1956 and the Companies (Acceptance of Deposits) Rule 1975 in so far as the return of deposit as required under Section 10 of the Act have not been filed with concerned authorities and the Company has not maintained the liquid assets as required by Rule 3(A) of Companies (Acceptance of Deposits) Rules, 1975.

7. The Company does not have an Internal Audit System.

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. a) According to the records of the Company, the Company is generally not regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income tax deducted at source, Sales tax, Customs Duty, Cess and other statutory dues applicable to it with the appropriate authorities.

b) According to the information and explanations given to us, undisputed amounts payable in respect of Wealth tax, Custom Duty, Sales tax, Excise Duty, Fringe Benefit Tax etc which have remained outstanding as at 31st March, 2013 for a period of more than six months from the date they become payable are as under:



Name of the Statute Nature of the dues Amount (Rs.)

Customs Act (Ref. Note No. 30) Custom Duty for the various years 69,35,84,538

Fringe Benefit Tax For the year 2007-2008 8,44,149

For the year 2008-2009 6,28,867

c) The disputed statutory dues that have not been deposited on account of disputed matters pending before apporpriate authorities are as under:

Name of the Status Nature of Dues Amount (Rs.) Forum where dispute Is pending

The Central Excise Act. Excise Duty 529,617 Appellate Tribunal, Mumbai

The Central Excise Act. Custom Duty 2,105,053 Commissioner, Vadodara

The Central Excise Act. Service Tax 2,92,730 Commissioner, Vadodara

The Income Tax Act. Income Tax Penalty 28,562 Commissioner,Mumbai

The Fera Act Penalty 1,00,00,000 Appellat Authority FERA New Delhi

10 The accumulated losses of the Company as at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current financial year and in the immediately preceding financial year.

11. The company has defaulted in repayment of dues to the Financial Institution and Banks for the period exceeding Five years. The Company has been registered with the Board For Industrial and Financial Reconstruction (BIFR). The Loan amount is payable after the final decision of BIFR.

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 Company is not carrying on the chit fund business; hence, the provisions of any special statute applicable to chit fund are not applicable.

14. The Company is not dealing in or trading in shares, securities, debentures or other investments.

15. In our opinion and according to the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions during the year.

16. The Term Loans were applied for the purpose for which the Loan were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investments. No long-term funds have been used to finance short-term assets.

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. Since the Company does not have any debenture, the question of creation of securities does not arise.

20. Since the Company has not raised money by public issue, Clause (xx) of the Order is not applicable.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



FOR CHANDRAKANT & SEVANTILAL & J.K.SHAH & CO.,

Chartered Accountants

Firm Registration No. 101676W



(H.B.SHAH)

Place: Vadodara Partner

Date : 30th May, 2013 Membership No. 16642

---

Mar 31, 2012

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

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure 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.

1) As required by the Companies (Auditors' Report) order, 2003 as amended by Companies (Auditor's Report) (Amendment) order, 2004 (together 'the order') issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Companies Act, 1956, and on the basis of the information and explanation given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

2) FURTHER AND SUBJECT TO OUR COMMENTS IN THE ANNEXURE REFERRED TO IN PARAGRAPH 1 ABOVE

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, Subject to treatment of certain expenses as deferred revenue expenditure, non- provision for Gratuity liability and non ascertainment and non accounting of impairment loss in respect of its Assets of Unit - III, proper books of account as required by law have been kept by the Company so far as appears from our examination of the 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 of the Company.

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

e) In our opinion the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the other Accounting Standards as refereed to in the Section 211(3C) of the Companies Act, 1956 and

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subjects to:

i) Non compliance of Accounting Standard 26 "INTANGIBLE ASSETS "by treating certain expenditure as deferred revenue expenditure. (Refer Note No.: 29)

ii) Non disclosure of amount(s) owned to small scale industrial undertakings (Refer Note No:- 30)

iii) Non reconciliation of accounts and balances in respect of Loans from Banks / Financial Institutions. (Refer Note No : 34)

iv) Non provision for Gratuity liability as required by Accounting Standards 15 'Employee Benefits'. (Refer Note No. : 40)

v) Non-ascertainment and non-accounting of impairment loss of Assets of Unit - III as required by Accounting Standard 28 'Impairment of Assets'. (Refer Note No. : 41)

and read with the other notes appearing thereon, 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.

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

ii) in the case of the Statement of Profit and Loss of the Loss for the year ended on that date.

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

ANNEXURE TO THE AUDITORS' REPORT ON THE ACCOUNTS OF ROYAL CUSHION VINYL PRODUCTS LIMITED FOR THE YEAR ENDED 31st MARCH, 2012.

(Referred to in Paragraph 1 thereof)

1. a) The Company has maintained proper records to show full particulars including quantitative details and situation of Fixed Assets but, they need to be updated so as to include in the said register the addition made during each year as also allocation of the expenses capitalized to the relevant items of Fixed Assets and year wise depreciation provided in respect of each Asset.

b) As informed, the Fixed Assets have not been physically verified by the management, during the current year. Accordingly, discrepancies, if any, cannot be ascertained and reported.

c) There has not been any substantial disposal of fixed assets during the year.

2. a] The inventory has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion, the procedures of physical verification of Inventory (excepting inadequate/no prescribed procedure for identification and determination of non-moving, slow moving and/or unusable or non saleable items of stocks) followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. a) The Company had taken unsecured loan from fourteen companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 197994574 and the year end balance of loans taken from such companies was Rs. 188960674. The Company has granted unsecured loan to one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 2163829 and the year end balance of loan granted to such company was Rs. 2163829.

b) In our opinion, the rate of interest, where applicable, and other terms and conditions on which loans have been taken from/granted to Companies, listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company except interest free advance in the nature of loan given to the Company during the year aggregating to Rs. 2163829.

c) The Company is regular in repaying the principal amounts wherever stipulated and has been regular in the payment of interest wherever stipulated. The Company to whom advance in the nature of Loan is granted there is no stipulation for repayment thereof.

4. In our opinion and according to the information and explanations given to us, having regard to the fact that certain items purchased/sold are of unique and special nature and suitable alternative sources do not exist to obtain comparative quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in internal controls.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956, have been so entered.

b) In our opinion and according to the information and explanations given to us, having regard to the fact that certain items purchase/sold are of unique and special nature and suitable alternative sources do not exist to obtain comparative quotations, the transactions made in pursuance of contracts or arrangements entered into the register in pursuance to Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5.00 Lacs in respect of each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time and at the prices at which the transactions for similar goods have been made with other parties.

6. In Our Opinion, the Company has not complied with the provision of Section 58 A of the companies Act, 1956 and the Companies (Acceptance of Deposits) Rule 1975 in so far as the return of deposit as required under Section 10 of the Act have not been filed with concerned authorities and the Company has not maintained the liquid assets as required by Rule 3(A) of Companies (Acceptance of Deposits) Rules, 1975.

7. The Company does not have an Internal Audit System.

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. a) According to the records of the Company, the Company is generally not regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income tax deducted at source, Sales tax, Customs Duty, Cess and other statutory dues applicable to it with the appropriate authorities.

b) According to the information and explanations given to us, undisputed amounts payable in respect of Wealth tax, Custom Duty, Sales tax, Excise Duty, Fringe Benefit Tax etc which have remained outstanding as at 31st March, 2012 for a period of more than six months from the date they become payable are as under:

Name of the Statute Nature of the dues Amount (Rs.)

Customs Act Custom Duty for the various years 65,57,59,464

Sales Tax Act GOA Local Sales Tax for the year 2008-2009 10,48,810

Fringe Benefit Tax For the year 2007-2008 8,44,149

For the year 2008-2009 6,28,867

Provident Fund For the year 2011-12 4,80,199

c) According to the information and explanations given to us there are no dues outstanding in respect of Sales tax, Income tax, Customs duty, Wealth tax, and Cess on account of any dispute except the following disputed amount in respect of:

Name of the Status Nature of Dues Amount (Rs.)Forum where dispute is pending

The Central Excise Act. Excise Duty 529,617 Appellate Tribunal, Mumbai

The Central Excise Act. Custom Duty 2,105,053 Commissioner, vadodara

The Central Excise Act. Service Tax 2,92,730 Commissioner, vadodara

10 . The accumulated losses of the Company as at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current financial year and in the immediately preceding financial year.

11. The company has defaulted in repayment of dues to the Financial Institution and Banks for the period exceeding Five years. The Company has been registered with the Board For Industrial and Financial Reconstruction (BIFR). The Loan amount is payable after the final decision of BIFR.

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 Company is not carrying on the chit fund business; hence, the provisions of any special statute applicable to chit fund are not applicable.

14. The Company is not dealing in or trading in shares, securities, debentures or other investments.

15. In our opinion and according to the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions during the year.

16. The Term Loans were applied for the purpose for which the Loan were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investments. No long-term funds have been used to finance short-term assets.

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. Since the Company does not raised have any debenture, the question of creation of securities does not arise.

20. Since the Company has not raised money by public issue, Clause (xx) of the Order is not applicable.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

FOR CHANDRAKANT & SEVANTILAL & J.K.SHAH & CO.,

Chartered Accountants Firm Registration No. 101676W

(H.B.SHAH)

Place : Vadodara Partner

Date : 31st July, 2012 Membership No. 16642

---

Mar 31, 2010

We have audited the attached Balance Sheet of ROYAL CUSHION VINYL PRODUCTS LIMITED, as at 31st March, 2010 and also the annexed Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date. 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 disclosure 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.

1) As required by the Companies (Auditors Report) order, 2003 as amended by Companies (Auditors Report) (Amendment) order, 2004 (together the order) issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Companies Act, 1956, and on the basis of the information and explanation given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

2) FURTHER AND SUBJECT TO OUR COMMENTS IN THE ANNEXURE REFERRED TO IN PARAGRAPH 1 ABOVE

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, Subject to treatment of certain expenses as deferred revenue expenditure, non-provision for Gratuity liability and non ascertainment and non accounting of impairment loss in respect of its Assets of Unit – III, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books.

c) 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 of the Company.

d) On the basis of written representations received from the Directors and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 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.

e) In our opinion the Balance Sheet, Profit and Loss Account, and the Cash Flow Statement dealt with by this report comply with the other Accounting Standards as refereed to in the Section 211(3C) of the Companies Act, 1956 and

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subjects to:

i) Non compliance of Accounting Standard 26 " INTANGIBLE ASSETS " by treating certain expenditure as deferred revenue expenditure. (Refer Note No.: 5)

ii) Non disclosure of amount(s) owned to small scale industrial undertakings (Refer Note No: 6)

iii) Non reconciliation of accounts and balances in respect of Loans from Banks / Financial Institutions. (Refer Note No.: 11)

iv) Non provision for Gratuity liability as required by Accounting Standards 15 Employee Benefits. (Refer Note No.: 17)

v) Non-ascertainment and non- accounting of impairment loss of Assets of Unit – III as required by Accounting Standard 28 Impairment of Assets. (Refer Note No. : 18) and read with the other notes appearing thereon, 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.

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

ii) in the case of the Profit and Loss Account of the Loss for the year ended on that date.

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



ANNEXURE TO THE AUDITORS REPORT ON THE ACCOUNTS OF ROYAL CUSHION VINYL PRODUCTS LIMITED FOR THE YEAR ENDED 31ST MARCH, 2010.

(Referred to in Paragraph 1 thereof)

1. a) The Company has maintained proper records to show full particulars including quantitative details and situation of Fixed Assets but, they need to be updated so as to include in the said register the addition made during each year as also allocation of the expenses capitalised to the relevant items of Fixed Assets and yearwise depreciation provided in respect of each Asset.

b) As informed, the Fixed Assets have not been physically verified by the management, during the current year. Accordingly, discrepancies, if any, cannot be ascertained and reported.

c) There has not been any substantial disposal of fixed assets during the year.

2. a] The inventory has been physically verified during the year by the management. In our opinion, the frequency

of verification is reasonable.

b) In our opinion, the procedures of physical verification of Inventory (excepting inadequate/no prescribed procedure for identification and determination of non-moving, slow moving and/or unusable or non saleable items of stocks) followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) On the basis of our examination of inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and the book records were not material and have been properly dealt with in the books of account.

3. a) The Company had taken unsecured loan from Thirteen companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1781.92 Lacs and the year end balance of loans taken from such companies was Rs. 1748.90 Lacs. The company has granted unsecured loan to one company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 21.47 Lacs and the year end balance of loan granted to such company was Rs.21.47 Lacs.

b) In our opinion, the rate of interest, where applicable, and other terms and conditions on which loans have been taken from/granted to Companies, listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company except interest free advance in the nature of loan given to the Company during the year aggregating to Rs. 21.47 Lacs.

c) The Company is regular in repaying the principal amounts wherever stipulated and has been regular in the payment of interest wherever stipulated.

4. In our opinion and according to the information and explanations given to us, having regard to the fact that certain items purchased/sold are of unique and special nature and suitable alternative sources do not exist to obtain comparative quotations, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have neither observed nor have been informed of any continuing failure to correct major weaknesses in internal controls.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956, have been so entered.

b) In our opinion and according to the information and explanations given to us, having regard to the fact that certain items purchase/sold are of unique and special nature and suitable alternative sources do not exist to obtain comparative quotations, the transactions made in pursuance of contracts or arrangements entered into the register in pursuance to Section 301 of the Companies Act, 1956 and exceeding the value of Rs.5 Lacs in respect of each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time and at the prices at which the transactions for similar goods have been made with other parties.

6. During the year the Company has not accepted any deposits to which the provisions of Section 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder would apply.

7. The Company does not have an Internal Audit System.

8. The Central Government has not prescribed maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 for any of the products of the Company.

9. a) According to the records of the Company, the Company is generally not regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax deducted at source, Sales tax, Customs Duty, Cess and other statutory dues applicable to it with the appropriate authorities.

b) According to the information and explanations given to us, undisputed amounts payable in respect of Wealth tax, Custom Duty, Sales tax, Excise Duty, Fringe Benefit Tax etc which have remained outstanding as at 31st March, 2010 for a period of more than six months from the date they become payable are as under:



Name of the Statute Nature of the dues Amount (Rs.)

Customs Act, (Refer Note No.8) Custom Duty for the various years 59,90,21,853

Sales Tax Act GOA Local Sales Tax for the year 2008-2009 10,48,810

VAT Baroda For the year 2009-2010 14,63,504

Fringe Benefit Tax For the year 2007-2008 8,44,149

For the year 2008-09 6,28,867

Provident Fund For the year 2008-2009 12,50,647

ESIC For the year 2009-2010 28,246



c) According to the information and explanations given to us there are no dues outstanding in respect of Sales tax, Income tax, Customs duty, Wealth tax, and Cess on account of any dispute except the following disputed amount in respect of:





Name of the Status Nature of Dues Amount(Rs.) Forum where dispute is pending

The Central Excise Act. Excise Duty 2.42 Lacs Commissioner, Vadodara.

The Central Excise Act. Excise Duty 6.35 Lacs Appellate Tribunal, Mumbai

The Income Tax Act Income Tax 17.24 Lacs CIT (Appeal)



10. The accumulated losses of the Company as at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current financial year and in the immediately preceding financial year.

11. The company has defaulted in repayment of dues to the Financial Institution and Banks for the period exceeding Five years. The entire Loan amount including Interest is due for payment as shown in Schedule C forming part of Accounts.

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 Company is not carrying on the chit fund business, hence, the provisions of any special statute applicable to chit fund are not applicable.

14. The Company is not dealing in or trading in shares, securities, debentures or other investments.

15. In our opinion and according to the information and explanations given to us the Company has not given any guarantee for loans taken by others from bank or financial institutions during the year.

16. The Company has not raised any term loans from any party during 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 report that no funds raised on short-term basis have been used for long-term investments. No long-term funds have been used to finance short-term assets.

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. There are no debentures issued and outstanding during the year.

20. During the year, the Company has not raised money by public issue.

Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



FOR CHANDRAKANT & SEVANTILAL & J.K.SHAH & CO., Chartered Accountants

Firm Registration No. 101676W (H.B.SHAH)

Partner Membership No. 16642

Place : Baroda Date : 15 th July, 2010