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Auditor Report of Sri Nachammai Cotton Mills Ltd.

Jun 30, 2014

Report on the Financial Statements:-

1. We have audited the accompanying financial statements of SRI NACHAMMAI COTTON MILLS LIMITED which comprise the Balance Sheet as at 30th June 2014, 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 Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s 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 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.

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 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:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 30th June 2014;

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

(iii) 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:

7 As required by the Companies (Auditor''s Report) Order, 2003 ("the Order"), as amended, 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.

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 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. In our opinion, the Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and

e. On the basis of written representations received from the directors as on 30th June 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 30th June 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 Independent Auditors'' Report

The Annexure referred to in paragraph 7 of our report of even date to the members of M/s. Sri Nachammai Cotton Mills Limited (''the Company'') for the year ended 30th June, 2014:

i) a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The fixed assets have been physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year and discrepancies noticed on such physical verification were not material and have been properly dealt with in books of accounts.

c) There were no sale of substantial part of fixed assets during the year and hence the going concern of the company is not affected.

ii) a) Physical verification of inventory has been conducted at reasonable intervals by the Management.

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

c) The company has maintained proper records of inventory and discrepancies noticed on physical verification of inventories as compared to book records were not material and have been appropriately dealt with.

iii) a) During the year, the Company has not granted any loans, secured or unsecured to parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence sub clauses b, c & d of clause (iii) are not applicable.

b) During the year, the company has taken unsecured loans amounting to Rs.3,73,84,000/- from five parties including Inter Corporate Deposit of Rs 2,39,86,000/- covered in the register maintained under Section 301 of the Act and the amount outstanding as on date is Rs.11,65,61,500/-. The Maximum amount outstanding during the year was Rs.11,47,11,500/-.

c) The rate of interest and other terms and conditions of the unsecured loans taken are not prima facie prejudicial to the interest of the Company.

iv) a) In our opinion and according to the explanation and information given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of the business for the purchase of inventory and fixed assets and forthe sale of goods.

b) During the course of our Audit no major weakness has been noticed in the internal controls.

v) a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of Companies Act, 1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered into the register maintained under Section 301 of the Act and exceeding the value of Rupees five lakhs in respect of any party during the year, which have been made at prices which are reasonable having regard to the Prevailing Market prices at the relevant time other than for Lease rent amounting to Rs.1,50,00,000/- for which no comparable Market prices were available and are considered to be of special nature as explained by the management of the Company.

vi) In our opinion and according the information and explanations given to us the Company has complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies [Acceptances of Deposits] Rules 1975 with regard to the deposits accepted from the public. Mo order has been passed by the National Company Law Tribunal or Reserve Bank of Indian or any Court or any other Tribunal,

vii) In our opinion and according to the Information and explanations given to us, the internal audit was carried out by an external Chartered Accountants Is commensurate with the size of the Company and the nature of its business.

Viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the order made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and are of the opinion that prime facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix) a) According to the information and explanation given to us and records examined by us, the company is regular in depositing , undisputed statutory dues Including Investor Education and Protection Fund, Income Tax, Value Added Tax, Wealth Tax, Service-Tax and any other statutory dues with the appropriate authorities.

b) According this information and explanation given to us, no undisputed arrears of statutory dues were outstanding as at 30th June, 2014 for a period of more than Six months from the date they became payable.

c) According to the information and explanation given to us, there are no dues of Sales tax, Income tax, Customs duty, Wealth tax Excise duty and Cess which have not been deposited on account of any dispute.

x) the Company has accumulated losses of Rs 5,47,22,670/- as at 30th June, 2014. The Company has not incurred any cash losses as during the financial year covered by our audit

xi) in our opinion and according to the information and explanation given to us the Company has not defaulted in repayment of dues to any of the banks.

xii) During the year, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion the Company is not a chit fund or a nidhi/ mutual benefit/society. Therefore, clause. 4(xiii) of the Companies (Auditors Report) Order 2003 is not applicable the Company.

xiv) In our opinion and according to the Information and explanation given to us, the Company is not dealing or trading in Shares, Securities, debentures and other In vestments.

xv) ln our Opinion and according to the information and explanation given to us, the Company, during the year has not given any guarantee for loans taken by others from banks or financial Institutions,

xvi) in our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

xvi) According to the information and explanation given to us and on an overall examination of the Balance sheet of the Company, we report that no funds raised on shorttime basis have been used for long term investment.

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

xix) The Company has not issued any debentures during the financial year and hence creation of security in respect thereof does not arise.

xx) The Company has net raised any money through public issue during the year.

xxl) 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 M.S.JAGANNATHAN & VISVANATHAN Chartered Accountants Firm Regd No: 001209S M.J.VIJAYARAGHAVAN Partner Membership No.7534

Salem 21stAugust, 2014


Jun 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Sri Nachammai Cotton Mills 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 ended, and a summary of significant accounting policies and other explanatory information , which we have signed under reference to this report.

2 M anagemenl is responsi bte lor the preparation of Ihese financial statements that gi ve a Irue and fair view of fce financier posfion arid financial performance of the Company*) acco rda noe with ha Accounting Standards referred to in sub-sectxn (3C) of Section 211 ftHhe Compan jeb Act. 1955 (''llie Acil. This fCBpMsiWSly incautfei the dssign, implementation and maintenance of tnleroal control relevant to the preparation and presentation or (he financial stalemenis that give a true and fair view 3nd are free Tram material misstatement, whetherdu e tofraudor emx

Auditors Responsibility

3 CurresponsWrty is toexpressan opinionon ftese tin uncial statements based on our audit. We conducted ouraudil in accordance with the Stendard&on Audfcng issued by the Lhsiitots of Changed Accoitnlantsof India: Those Standards requ*e trial weoomply with ethicsd requirements and plan and perform the audit to obtain reasanabte assurance abcul whether the feiancial statements are free from material missiatemenl,

4 An audit iirotves performing procedures to a&afn audit evidence about Ihe amounls anil dsctosures in the fmancial slaleinente, The procedufes selected depend on the audi tor''s judgment induding the assessment of the risks of material misstatement of the financial statements, whether due to fraud h error, In making those risk assessments, Ihe auditor considers internal control relevant to the Company''s oreparalion and fer presenlauonof ^he financial statements in order to deslgnj audi procedures lhat are appropriate in Ihe circumstances. An aod*l also includes evaluating the appropriateness of accounting pdiries used and the reasonableness of the accounting estimates made by management, as weS as evaluating tha overall presentation of the financial stalemenSs.

5 We believe ihst the audit evidence we have obtain ed is sufficient and appropriate to provide a basis for our audit opinio. Opinion

6 In our opink^ and to the best of our infarmaSofl and according to the explanations given to us. me financial statements give the information required by (he Ad in the manner so required and $v& a true end fair view in conformity with the accounting principles generally accepted In India:

(i) In (he case of the Balance Sheet, of the state of affairs of Ihe Company as at 3tf Jims 2TJ13; (a) In the case of the Statement of Profit and Loss, of ihe Profit for the year ended on that dale; (SJ In the case of the Cash Row Siatemeni, of the cash fltws for ihe year emded on that date, Report on Other Legal and Regulatory Requirements

7 As required by the Companies (Auditors Report} Order, 2003 ("ihe Order*), as amended, issued by the Central Government of India in Leans of sub-section {4A) of Section 227 of the Act, we give in the Annexure a statement on the matters spedSed w paragraphs 4 a-xf 5 of the Order.

8 As required by Section £37(3) of the Act, we report that

a. We have obtaSned atl (he formation and explanations vrfiich to the best of our knowledge and bel ief were necessary for the purpose of our audit;

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

c. The Balance Sheel, Statement of Profitand loss and Cash Flow Statement deal! with by ihfe Report are in agreement with ttie books of account;

d. In Balance SiieeV Sl&emerit of Profit end Loss and Cash Hob: Statemert comply ™fo the Accounfcig Standards referred to said

e. On Ihe written representations rece wed from the directors as on 30th 2013, and tolien en record by t"n& Board of Director none of ihe drectcrs is disqualtied as on 30" June, 2013, fom being appoHed gs a director En terms qE clause (g) nl afcaktin ft 1 of Section 274 of Hie CbraranfeisAct, i BS6,

Ann & we to the lnaepenaem au aito rs rcepo n:

TheAnoexure referred Id in paragraph 7 of our report of ertn date to the members of hVs Sri Nachamnrei Cotton Wis Limited Company'') tortheyesr ended 30* Jime. 2013-

a) The Company is maintaining proper rcccrds sharing full paiticufars, including quanlitafce det3its and situtlfonof fixed assets,

b) The fixed assets have been physisfly verified by the management according to a phased programme deseed 10 cover ail the lems over a period of fiiree yess, which in wt opinion, e reasonable having regard tofts size of the Comply and the: natureo] its assets. Pursuant tolhe programme, a portion eTUie toed assets hasbeen physical* verified by !he manag^nent; during Ihe year and discrepances rwieed on such phy sicaliierificafon were not material and navebecn properly dealt with ki, books of account &-

c) Thfirewere resale of aiKfanlia1! parltf faed asset during fheyEErand hencattie goingaKcem at tie company is net affected

ii} a) Physical verfeafejnofiiwwioiyh^ been ow

b] Tbe procedures ol physical verrTicaSon of inventory fdtowed by Itie roanagemenl are reasonable and adequate in ftfafcn to Ihe sizeot ihe company and the nalureof its business.

c) The company has maintatfied properreeerdsof inventory and discrepancies noticed on physical verification of inventories 94 tombed to bocfcrccoidswere notmateriaJ and have boon appropriately cto-cilt with.

u) a) During Ihe year, tteConraany has not granted any bans, secured or unsccy red io parlies covered in the register ircrjrrteftwd under SecGon 301 of the Companies Act, t £56 arcl hences^ dauses b. c 6 d of clause (iii) are nol appiDcabte. b) During the year the company has latan unsecured loans amounting io Rs.2,65.06,KW- from fou r parlies including foter Corpse DecosU of Rs ^^DOOkflvared in Ihe register maintained under Section 301 of Ihe At* and Ihe amount outstanding as on dateisRs.1 0.14,74,500.''-. The Maximum amounloulslandingdiaing the yearuras Rs.l0l31IQ2,5DD/-. o) The rate or iteresL and other terms and conditions of Ihe unsecured loanstakeo are not prima facte prgudiaal to the Interest of the company. prt a) In ouropinfcn and according Lo Ihe explanatioo and inrormafcfl gi ven to lis, (here are adequate intern^ central -procedures commensurate urita fflesize tf Ihe Company and thenatureof (hebusness Eortha purchase cTmeriiQfy sndfeed asseis and (or the sate of goods, b) During ihe courseof our AgdTi no major wc&kness has been noticed in Qte intemaJ<3jntrals. v) a) According loths information and explanations given to us, iffiaieoi ihe opinion {hdlnetfansacfcnsw^ifteed to be cntefed into the register mainlamed uncier Section 301 otCompanJes Act, 1955 have been soentered. b) Hi our opinion and according tolhe information and emanations given to us, Ihe wansactksi&Tnade in pursuance cA contacts or arrangements entered into Ihe register margined under Sect™ 301 of ihe Acl and exceeding the value of Rupees live W$ in respect of any party dining the year, which have been made at prices which are reasonable hawing regard to the Prevailing Market pros at the relevant time other loan for Lease rent amounting to Rs,1,27,50,000/- for Which w comparable Mantel prices iwefeavalabte and are considered to be ol special nature as explained by the menacetnent of, the Company.

vi) In uLrropTnion and[Wnlng fta Itfocmat''on and explanations given lo us foe company has complied v;fth the provisions of Section 50A and 68AAof Hie Companies Act, 1056 and the companies [Acceptances of Deposit] Rules 1 EPS with regard la mugm* cepted from liiepubtic. Noertcr haa been passedby (he National Company Law Tribunal or Resenrc Bankof j mnia orany Court ar any other Tribunal,

vii} InuLrropinwn and according to ho Information and 10 us, thointemal audit wascamed out by an gxtcinal f aiartwed Account t and is commensurate wi| h (he size of the company and Ihe natuf e of ils business.

maintained by Uis Company pursuant lo the order marie by Ihe Cemrat Govemmenlforlhe maintenance ofcoslrecords under Section 20B[l){d) ofJhc Companies Ad, 135& and sreof (IwopMon

nave been made and maintained. We have not, hoover, made a oeiaifw oxammaiion of (he records wilh a view Jo determine Mother they are accurals or complete.

And explanation given to us and records examined by us, llio compsdy is regular H deposiUng undisputed statutory dues including Investor Education and Prelection Fund, Income Tax, Value Added Tax Wealh W SwvloaTaKwd wy olhsrststijlDrydijQs wilh Hiaapproprla(eau[riwlll«. fc) toding totfie information and exolanalion given to us, no undisputed arrears of statute dues were outstandinn as at JO Juno, 2013 lora poncdofmoreih an SiKmonlhs from Ihe date tJiey became payaote, ''

c) According to the tnfarmrtion aid Sanation given lo ua, mere are nodues of Sales la*, Income lax Customs duty Wealth tax, Excise duly and cess which have not teen dopositod on amount of any di sputa, x) The Company has Mcjrmijated losses of RsoQFj.14P133/- as at 30* June, 2013. The Company has not incurred any cesli

xi) In our opinion and according to rjie information and explanation $m (q us Hie Company haa nol defaulted to repayment or dues to an/of [he banks. ¦

xii) During ine year, the Company has not granted loans and advances on the basis of security by way of pledge of shares debentures and oiliersccuntos. ^

xil) In our opinion the Company is nol a chit fund or a nidhi/mulual beneffteociety. Therefore, eJaugo 4(jdll) of Iho Company (AuditarsRejporl)ordcfM03lsnotapplic3bleto!iieCompany. '' v

xiv) In ou r opinion and ;j(xording to 0 te in form afon and emanation given to ua, Uio company is not deatotq or trad™ In Shares Securities, debentures and otherInveslrncnts.

Explanation 9iven to us- ¦* ™™r dutinatheyea/has not given any guarantee for loans laton by others Iron banks or (i nancial Insiilution a,

xvl) Incur opinion, and scoot ding lo (he information and explanations given lo us, on an overall basis, the lorn bans h ave bean applied forthe porposesforwh fch they were obtained.

xvii) According to Iho information and explanation givon lo us and on an overall examination of the Balance sheet of lhe company

we report that no funds raised on short time basis have been used tor long term investment

Register maintained under Section Ml ol the Companies Act, 1956,

k) Company has nol issued any deben tunes during Ihe financial year and hence creation of security in respod ih ereof does notarise.

xx) The Company has nol raised any money through public issue during the year. '','' xxl) Based upon the audit procedures performed and inlormatlon and emanations given by the management we report Ihalno fraud on or by the company J>as been noticed or reported during Ihecourso of ou r Audit.

For M,S. J AG AN NATHAN

VIS VA NATHAN

Chartered Accountants

Rtm Read No: C012095

M.J.JAYARAAGHAVAN


Jun 30, 2012

1. We have audited the attached balance sheet of SRI NACHAMMAI COTTON MILLS LIMITED as at 30th JUNE, 2012 and also the Statement of Profit and Loss Account for the year ended on that date annexed thereto and the Cash Flow Statement 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.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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,and as amended by the Companies (Auditor's report) Amendment order, 2004 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that;

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

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

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the Directors, as on 30* JUNE, 2012 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 30* JUNE, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on that said date.

5. In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act 1956, in the manner so required give a true and fair view in conformity the accounting principles accepted in India:

a. In the case of Balance Sheet, of the state of affairs of the company as at 30* JUNE, 2012;

b. In the case of Statement of Profit and Loss Account, of the LOSS for the year ended on that date; and

c. In case of the Cash Flow Statement, of the cash flows for the year ended on that date;

ANNEXURE REFERRED TO IN PARAGRAPH (3 ] OF OUR REPORT OF EVEN DATE

i) a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The fixed assets have been physically verified by the management according So a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year discrepancies noticed on such physical verification were not material and have been properly dealt with in books of Accounts.

c) There was no disposal of substantial part of fixed assets during the year and hence going concern of the Company is not affected.

ii) a) Physical verification of Inventory has been conducted at reasonable intervals by the Management. In our opinion, the frequency of verification is reasonable.

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

c) The Company has maintained proper records of Inventory and discrepancies noticed on physical verification of inventories as compared to book records were not material and have been appropriately dealt with.

iii) a) The Company during the year has not granted loans to a parties covered in the register maintained under Section 301 of the Companies Act,1956. b) The Company during the year has taken Inter Corporate deposit amounting to Rs. 2,69,46,500/- from a company covered in the register maintained Under Sec.301oftheCompaniesAct,1956 (The Maximum amount during the yearwas Rs. 7,86,71,500/-)

c) There is no stipulation for payment of periodical principal.

d) The Company has takerjjunsecured loans amounting to Rs.2,21,59,0007- from three parties coj/ered in the register maintained underSection301of the Companies Act, 1956. (The Maximum amount during the year was Rs. 16,67,10,000/-)

e) The rate of interest and other terms and conditions in respect of unsecured loans taken by the Company are not prima faces prejudicial to the interest of the Company.

iv) a) In our opinion and accordance to the explanation and information given to us there are adequate internal control systems commensurate with the size of the Company and the nature of the business for the purchase of inventory and fixed assets and for the sale of goods.

b) During the course of our Audit no major weakness has been noticed in the internal controls.

v) a) The transactions made in pursuance of contracts or arrangements, that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been recorded in the register maintained for the purpose.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered into the register maintained under Section 301 of the Act and exceeding the value of Rupees five lakhs in respect of any party during the year, which have been made at prices which are reasonable having regard to the Prevailing Market prices at the relevant time other than for Lease rent amounting to Rs.1,55,00,000/- for which no comparable Market prices were available and are considered to be of special nature as explained by the management of the Company.

vi) In our opinion and according to the information and explanations given to us the company has complied with the provisions of

Section 58Aand 58AA of the Companies Act, 1956 and the companies (Acceptances of Deposits] Rules 1975 with regard to the deposits accepted from the public. No order has been passed by the National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vii) On the basis of Internal audit report broadly reviewed by us, we are of the opinion that, the coverage of Internal Audit functions carried by a Chartered Accountant appointed by the Management is commensurate with the size of the Company and the nature of its business.

viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the order made by the Central

Government for the maintenance of cost records under Section 209(1 )(d) of the Companies Act,1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not. however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix) a) According to the information and explanations given to us and records examined by us, the company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income -tax, Sales-tax ,VAT, Wealth tax, Service tax and any other statutory dues with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 30* June, 2012 for a period of more than Six months from the date they became payable.

c) According to the information and explanations given to us, there are no dues of Sales tax, Income tax, Customs duty, Wealth tax, Excise duty and Cess which have not been deposited on account of any dispute.

x) The Company has accumulated losses of Rs. 11,62,50,770/- as at 30"' June, 2012, The Company has incurred cash loss during the financial year covered by our audit but has not incurred any cash losses in the immediately proceeding financial year. The Company's accumulated losses exceed 50% of the peak networth of immediately 4 preceeding previous years.

xi) In our opinion and according to the information and explanation given to us, the company has not defaulted in repayment of dues to any of the banks.

xii) During the year, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, Clause 4(xiii) of the Companies

(Auditors Report) order 2003 is not applicable to the Company.

xiv) In our opinion and according to the information and explanation given to us, the company is not dealing or trading in Shares, Securities, Debentures and other Investments.

xv) In our opinion and according to the information and explanation given to us, the Company during the year has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we - report that funds raised on short term basis have been used for long term investment to the extent of Rs. 6,17,52,291/-.

xviii) The Company during the year has made preferential allotment by issuing 10% Cumulative Redeemable Preferences Share to parties covered in the register maintained under section 301 of the Companies Act, 1956 and the terms of issue is not prejudicial to the interest of the Company.

xix) The Company has not issued any debentures during the financial year and hence creation of security in respect of debentures does not arise.

xx) The Company has not raised any money through a public issue during the year.

xxi) 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 M.S.JAGANNATHAN & VISVANATHAN,

Chartered Accountants,

Salem, Firm Regd.No.001209S.

23rd August, 2012. M.J.VIJAYARAAGHAVAN, Partner,

Membership No.7534.


Jun 30, 2010

1. We have audited the attached balance sheet of SRI NACHAMMAI COTTON MILLS LIMITED as at 30th JUNE 2010 and also the Profit and Loss Account for the year ended on that date annexed thereto and the cash flow statement 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,

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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,and as amended by the Companies (Auditors report) Amendment order, 2004 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that;

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

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, Profit and Loss Account and cashflow statement dealt with by this report are in agreement with the books of account;

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

e) On the basis of written representations received from the directors, as on 30th JUNE, 2010 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 30th JUNE, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 on that said date.

5. In our opinion,and to the best of our information and according to the explanations given to us,thesaidaccounts give the information required by the Compa nies Act, 1956, in the manner so required Subject to:

i. Non Provision of doubtful debts amounting toRs. 34,39,782/-, the effect of deviation is disclosed in Note 11.

ii. Non-availability of confirmations in respect of sundry debtors, sundry creditors and loans and advances (note 12(b)) give a true and fair view in conformity with the accounting principles accepted in India:

a) In the case of Balance Sheet, of the state of affairs of the Company as at 30th JUNE, 2010;

b) In the case of Profit and Loss account, of the PROFIT for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH [ 3 ] OF OUR REPORT OF EVEN DATE

1} a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. b} The fixed assets have been physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year discrepancies noticed on such physical verification were not materials and have been properly dealt with in books of Accounts. c) There was no disposal of substantial part of fixed assets during the year and hence the going concern of the Company is not affected.

ii) a) Physical verification of Inventory has been conducted at reasonable intervals by the Management. In our opinton, the frequency of verification is reasonable.

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

c) The Company has maintained proper records of Inventory and discrepancies noticed on physical verification of inventories as compared to book records were not material and have been appropriately dealt with.

iii) a) The Company during the year has not granted loans to a company covered in the register maintained under section 301 of the Companies Act, 1956.

b) The Company during the year has taken Inter Corporate deposit amounting to Rs. 3,35,98,645/- from a company covered in the register maintained Under Sec.301 of the Companies Act, 1956 (The Maximum amountduring the year was Rs. 7,80,85,000/-)

c) There is no stipulation for payment of periodical principal.

d) The Company has taken unsecured loans amounting to Rs. 1,44,90,000/- from three parties covered in the register maintained under Sec.301 of the Companies Act,1956. (The Maximum amount during the year was Rs. 11,90,78,000/-)

e) The rate of interest and other terms and conditions in respect of unsecured loans taken by the Company are not prima faces prejudicial to the interest of the Company.

iv) a) In our opinion and accordance to the explanation and information given to us there are adequate internal control systems commensurate with the size of the Company and the nature of the business for the purchase of inventory and fixed assets and for the sale of goods. b) During the course of our Audit no major weakness has been noticed in the internal controls.

v) a) The transactions made in pursuance of contracts or arrangements, that need to beentered into the register maintained under section 301 of the Companies Act, 1956 have been recorded in the register maintained for the purpose. b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Act and exceeding the value of Rupees five lakhs in respect of any party during the year, which have been made at prices which are reasonable having regard to the Prevailing Market prices at the relevant time other than for Lease rent amounting to Rs. 1,24,83,333/- for which no comparable Market prices were available and are considered to be of special nature as explained by the management of the Company.

vi) In our opinion and according the information and explanations given to us the company has complied with the pro visions of section 58A and 58 AA of the Companies Act, 1956 and the Companies [Acceptances of Deposits] Rules 1975 with regard to the deposits accepted from the public. No order has been passed by the National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vii) On the basis of Internal audit report broadly reviewed by us, we are of the opinion that, the coverage of Internal

Audit functions carried by a Chartered Accountant appointed by the Management is commensurate with the size of the Company and the nature of its business.

viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act,1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether the year accurate or complete,

ix) a} According to the information and explanations given to us and records examined by us, the Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees, State Insurance, Income-tax, Sales-tax,VAT, Wealth tax, Service tax and any other statutory dues with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 30th June 2010for a period of more than Six months from the date they became payable.

c) According to the information and explanations given to us, there are no dues of Sales tax, Income tax, Customs duty, Wealth tax. Excise duty and Cess which have not been deposited on account of any dispute.

x} The Company has accumulated losses of Rs. 62.26 lakh as at 30th June, 2010. The Company has not incurred any cash losses during the financial year covered by our audit but has incurred cash losses in the immediately preceding financial year.

xi) In our opinion and according to the information and explanation given to us, the company has not defaulted in repayment of dues to any of the banks.

xii} During the year, the company has not granted loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

xiii) In our opinion the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, clause 4(xiii) of the Companies (Auditors Report) order 2003 is not applicable to the Company.

xiv) En our opinion and according to the information and explanation given to us, the Company is not dealing or trading in Shares, Securities, debentures and other Investments.

xv) In our opinion and according to the i nformation and explanation given to us, the Company, during the year has not given any guarantee for loans taken by others from banks or financial institutions,

xvi) In our opinion, and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purposes for which they were obtained.

xvii} 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.

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

xix) The Company has not issued any debentures during the financial year and hence creation of security in respect of debentures does not arise.

xx) The Company has not raised any money through a public issue during the year.

xxi) 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 M.S. JAGANNATHAN & VISVANATHAN

Chartered Accountants

FirmRegd.No.001209S

M.J. VIJAYARAAGHAVAIM

Place: Salem, Partner

Date : 27.08.2010. Membership No. 7534


Jun 30, 2009

1. We have audited the attached balance sheet of SRI NACHAMMAI COTTON MILLS LIMITED as at 30th JUNE 2009 and also the Profit and Loss Account for the year ended on that date annexed thereto and the cash flow statement 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.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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,and as amended by the Companies (Auditors report) Amendment order, 2004 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that;

a) We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary forthe 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 Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the Directors, as on 30th JUNE 2009 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 30th JUNE 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956 on that said date.

5. In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act 1956, in the manner so required.

Subject to:

i. Non Provision of doubtful debts amounting to Rs.29,13,783/-, the effect of deviation is disclosed in Note 12. ii. Non-availability of confirmations in respect of sundry debtors, sundry creditors and loans and advances (note 13(b)) give a true and fair view in conformity with the accounting principles accepted in India:

a) In the case of Balance Sheet, of the state of affairs of the company as at 30th JUNE 2009;

b) In the case of Profit and Loss account of the LOSS for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH f 3 1 OF OUR REPORT OF EVEN DATE

i) a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) The fixed assets have been physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the management during the year discrepancies noticed on such physical verification were not materials and have been properly dealt with in books of Accounts.

c) There was no disposal of substantial part of fixed assets during the year and hence the going concern of the Company is not affected.

ii) a) Physical verification of Inventory has been conducted at reasonable intervals by the Management. In our opinion, the frequency of verification is reasonable.

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

c) The Company has maintained proper records of Inventory and discrepancies noticed on physical verification of inventories as compared to book records were not material and have been appropriately dealt with.

iii) a) The Company during the year has not granted loans to a company covered in the Register maintained under section 301 of the Companies Act,1956.

b) The Company during the year has taken Inter Corporate deposit amounting to Rs. 2,79,46,584/- from a company covered in the Register maintained Under Sec.301 of the Companies Act,1956 (The Maximum amount during the year was Rs. 5,18,23,000/-)

c) There is no stipulation for payment of periodical principal.

d) The Company has taken unsecured loans amounting to Rs. 1,74,76,000/- from three parties covered in the Register maintained under sec.301 of the Companies Act, 1956. (The Maximum amount during the year was Rs. 11,91,58,000/-)

e) The rate of interest and other terms and conditions in respect of unsecured loans taken by the Company are not prima faces prejudicial to the interest of the Company.

iv) a) In our opinion and accordance to the explanation and information given to us there are adequate internal control systems commensurate with the size of the Company and the nature of the business for the purchase of inventory and fixed assets and for the sale of goods. b) During the course of our Audit no major weakness has been noticed in the internal controls.

v) a) The transactions made in pursuance of contracts or arrangements, that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been recorded in the Register maintained for the purpose. b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered into the registered maintained under section 301 of the Act and exceeding the value of Rupees five lakhs in respect of any party during the year, which have been made at prices which are reasonable having regard to the Prevailing Market prices at the relevant time other than for Lease rent amounting to Rs. 1,12,50,000/- for which no comparable Market prices were available and are considered to be of special nature as explained by the management of the Company.

vi) In our opinion and according the information and explanations given to us the company has complied with the provisions of section 58A and 58AA of the Companies Act, 1956 and the companies [Acceptances of Deposits] Rules 1975 with regard to the deposits accepted from the public. No order has been passed by the National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vii) On the basis of Internal audit report broadly reviewed by us, we are of the opinion that, the coverage of Internal Audit functions carried by a Chartered Accountant appointed by the Management is commensurate with the size of the Company and the nature of its business.

viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the order made by the Central Government for the maintenance of cost records under section 209(1 )(d) of the Companies Act,1956 and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination the records with a view to determine whether they are accurate or complete.

ix) a) According to the information and explanations given to us and records examined by us, the company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, VAT, Wealth tax, Service tax and any other statutory dues with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 30th June 2009 for a period of more than Six months from the date they became payable.

c) According to the information and explanations given to us, there are no dues of sales tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

x) The Company has accumulated losses amounting to Rs. 581.68 lacs as at 30th June 2009. The Company has incurred cash losses amounting to Rs. 213.03 lacs during the financial year covered by our audit. The accumulated losses exceeds Fifty percent of the Net worth of the Company.

xi) In our opinion and according to the information and explanation given to us, the company has not defaulted in repayment of dues to any of the banks.

xii) During the year, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii) In our opinion the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, clause 4(xiii) of the Companies (Auditors Report) order 2003 is not applicable to the Company.

xiv) In our opinion and according to the information and explanation given to us, the company is not dealing or trading in Shares, Securities, debentures and other Investments.

xv) In our opinion and according to the information and explanation given to us, the Company, during the year has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that short term funds to the extent of Rs. 13.07 crores have been used for long term investments.

xvii) 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.

xviii) The Company has not issued any debentures during the financial year and hence creation of security in respect of debentures does not arise.

xix) The Company has not raised any money through a public issue during the year.

xx) 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 M.S. JAGANNATHAN

B VISVANATHAN

Chartered Accountants

M.J. VIJAYARAAGHAVAN

Partner

Membership No. 7534

Place: Salem

Date : 24.08.2009



 
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