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Auditor Report of Supreme Tex Mart Ltd.

Mar 31, 2015

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

2. MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

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

3. AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on these

standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made 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 misstatements.

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

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

4. Emphasis on matter

a) The Company has incurred a net loss of Rs.20834.44 lacs during the year ended 31st March, 2015, which exceeds the net worth of the company, and as of that date, the company's current liabilities exceeded its current assets by Rs.3445.82 lacs and its total liabilities exceeded its total assets by Rs.769.69 lacs. The lead bank (SBI) and member banks i.e. Central Bank of India and UCO Bank have not restructured their total debts upto 31st March 2015. These events cast significant doubt on the Company's ability to continue as a going concern. The appropriateness of the going concern assumption is dependent on the company's ability to establish consistent profitable operations and generate positive cash flows as well as raising adequate finance to meet its short term and long term obligations.

b) The management of the company has represented to us that they have devalued its inventory to the tune of Rs.5308.66 lacs as an exceptional item. The quantity and Valuation of Inventory has been verified by an independent Stock Auditor. Accordingly we are relying on his report and management's representation regarding stock valuation.

5. BASIS FOR QUALIFIED OPINION

Further we report that

i. The company has not arranged to make available the confirmations and/or reconciliations to verify the balances stated in the financial statements in respect of:

a. Trade Receivables Rs.7409.47 lacs( Net of provision)

b. Loans and Advances: Rs.4214.23 lacs

c. Trade payables: Rs.6962.64 lacs,

We have also not been able to perform any alternative procedures with regard to verification of the aforesaid balances and thereby have been unable to obtain sufficient appropriate audit evidence regarding the aforesaid accounts .We are unable to comment upon the difference, if any, which may arise upon the receipt of confirmations and/or the carrying out of such reconciliation.

ii. The company has made provision for doubtful debts of Rs. 2786.42 Lacs for which no suitable basis has been provided to us.

iii. The management of the company has represented to us that the recoverable amount of assets within the meaning of Accounting Standard 28 "Impairment of Assets" is more than their carrying value and as such no amount needs to be recognized in the financial statements for impairment loss. In the absence of the workings of impairment having been prepared and made available to us for our review, we are unable to comment on whether the company needs to make a provision in respect of impairment loss on such assets and the amount of such provision.

iv. The Company has not provided for the Interest on borrowings amounting to Rs. 1241.78 lacs and penal interest of Rs.21.08lacs pertaining to year ended on 31st March, 2015.

v. The earning (loss) per share for the year ended March 31,2015 would have been Rs.(30.99) against reported earning (loss) per share of Rs.(30.54).

vi. Provision for Gratuity is made on an estimated basis, without Actuarial valuation, which is not in accordance with Accounting Standard -15 on Employee Benefits.

6. QUALIFIED OPNION

In our opinion and to the best of our information and according to the explanations given to us subject to our comments in paragraph 5 above, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, and its profit and its cash flows for the year ended on that date.

7. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

As required by the Companies (Auditor's Report) Order, 2015 issued by the Central Government of India in terms of subsection (11) of Section 14 of the Act, we give in the Annexure a statement on the matters specified in Paragraphs 3 and 4 of the order, to the extent applicable.

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

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

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

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

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 except with the requirement of Accounting Standard (AS)-15 on "Employee Benefit" notified by the Companies (Accounts) Rules, 2014;

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

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

(I) The Company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note Note 27 to the financial statements.

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, and as required on long-term contracts including derivative contracts.

(iii) The company is not required to transfer any amount to the Investor Education and Protection Fund.

Annexure to the Auditor's Report

The Annexure referred to in our independent Auditors Report to the members of the company on the financial statements for the year ended 31st March 2015, we report that

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

(b) Fixed assets have been physical verified by the management during the year and no material discrepancies were indentified on such verification. In our opinion company does not have any reasonable program having regard to the size of the company and the nature of its assets.

(ii) a. The Management has conducted physical verification of inventory at reasonable intervals during the year. However the Scope and coverage of physical verification needs to enhanced to make it commensurate with the size and nature of the business of the company.

b. The procedures of physical verification of inventory followed by the management needs to be strengthened to make it reasonable and adequate in relation to the size of the company.

c. The company is maintaining proper records of inventory and material discrepancies were noticed on physical verification which have been properly dealt with in the books of account;

(iii) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act 2013.

(iv) The Company does not have adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly revived the books of accounts maintained by the company pursuant to the rules made by Central Government under sub-section (1) of section 148 of the Companies Act 2013, related to the manufacture of products of the company, and are of the opinion that prima facie, the prescribed accounts and reco rds have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) The company has not been regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax and any other statutory dues with the appropriate authorities.

In our opinion and according to the information and explanation given to us, undisputed dues in respect of provident fund, employees' state insurance and income tax which were outstanding at the year end for a period of more than six months from the date they become payable are as follow:

Nature of Statue Nature of Amount Period to Dues (Rs. In which the lacs) amounts relates

Income Tax Act, 1961 Income Tax 480.12 FY 2012-13 Employee 0.85 August 2014 State Insurance

Employees' State Employee 1.40 August 2014 Insurance Act, 1948 State Insurance

Employees' State Employee 0.43 September Insurance Act, 1948 State 2014 Insurance

Employees' Provident Provident 3.87 August 2014 Fund and Fund Miscellaneous Provision Act, 1952

Employees Provident Provident 3.40 August 2014 Fund and Fund Miscellaneous Provision Act, 1952

Employees' Provident Provident 4.52 September Fund and Fund 2014 Miscellaneous Provision Act, 1952

Nature of Statute Due date Date of Payment

Income Tax Act, 1961 3011112013 Not yet, paid

Income Tax Act, 1961 2110912014 0910412015

Employees' State Insurance Act, 1948 2110912014 2110412015

Employees' State Insurance Act, 1948 2111012014 2210412015

Employees' Provident Fund and Miscellaneous Provision Act, 1952 2010912014 1510412015

Employees' Provident Fund and Miscellaneous Provision Act, 1952 2010912014 Not yet paid

Employees' Provident Fund and Miscellaneous Provision Act, 1952 2011012014 Not yet. paid

b. According to the information and explanation given to us, the disputed statutory dues aggregating to Rs.4.15 lacs that has not been deposited on account on matter s pending before the appropriate authority in respect of Service tax and central Sales Tax are given below:

Name of the Nature of Dues Disputed Period to which Statute Amount (Rs. In the amounts lacs) relates

Central Sales Penalty 1.20 2012-13 Tax

Central Sales Penalty 1.13 2013-14 Tax

Service Tax Service Tax 0.88 2004-05, 2005 - 06

Name of the Statute Forum Where Dispute is pending

Central Sales Tax Joint director cum Deputy Excise and Taxation Commissioner (Appeal)

Central Sales Tax Joint director cum Deputy Excise and Taxation Commissioner (Appeal)

Service Tax Commissioner of Customs (Appeal)

c. According to information and explanation given to us the company is not required to transfer any amount to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 2013 and rules made there under.

(viii) In our opinion and according to information and explanation given to us, the accumulated losses at the end of financial year are more than fifty percent of its net worth. Further, the company has incurred cash losses of Rs.15626.66 during the financial year covered under audit.

(ix) According to information and explanation given to us, the company has default in repayment of dues to banks and financial institutions. The detail of default are as under:

Sr Particulars Amount (Rs. Nature of dues Period of default of No. in Lacs) repayment

1. State Bank of India 596.57 Interest (Term 01.08.2014 to loan 31.03.2015

784.00 Principal (8 months)

2. Central Bank of India 179.63 Interest (Term 01.07.2014 to loan 31.03.2015 (9 months)

423.00 Principal

3. UCO Bank 3.14 Interest (Term 01.02.2015 to loan 31.03.2015

18.75 Principal (2 months)

4. State Bank of India 661.95 Interest (worki 01.07.2014 to ng Capital 31.03.2015 (9 months)

5. Union Bank of India 19.10 Interest (worki 01.03.2015 to ng Capital 31.03.2015 (1 month)

6. Central Bank of India 56.46 Interest (worki 01.07.2014 to ng Capital 31.03.2015 (9 months)

7. SABER Bank 157.07 Interest (worki 01.09.2014 to ng Capital 31.03.2015 (7 months)

a) Interest includes interest accrued on long term and short term borrowing not provided in the statement of profit and loss (Refer note No.43)

(x) The Company had given guarantee to bank & financial institutions for loans taken by others to the extent of Rs. 440 lacs, the terms and conditions where of were prejudicial to the interest of the company to the extent company had not cpmplied with the relevant provisions of Companies Act. However the said guarantee was withdrawn during the year.

(xi) According to the information and explanation given to us, during the year the company has not taken any term loan;

(xii) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the period covered by our audit.



For Ashish Agarwal & Co Chartered Accountants F.R.N.: 010788N

sd/- ASHISH AGARWAL Place: Ludhiana Partner Date: 30th May, 2015 M .No.:089579


Mar 31, 2014

We have audited the accompanying financial statements of Supreme Tex Mart Limited ("the Company") which comprise the balance sheet as at 31 March 2014, the statement of profit and loss and the cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

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

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

Opinion

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

(i) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2014;

(ii) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

(iii) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. 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.

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

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

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

iii) The balance sheet, statement of profit and loss and cash flow statement dealt with by this Report are in agreement with the books of account;

iv) In our opinion, the balance sheet, statement of profit and loss and cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. ; and

v) On the basis of written representations received from the directors as on 31 March 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 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 our report to the members of Supreme Tex Mart Limited ("the Company") for the year ended 31 March, 2014. We report that:

1. In respect of fixed assets:

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

b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year. No discrepancies were noticed on such physical verification. In our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the company and nature of its business.

c) According to the information and explanations given to us, the company has not disposed off substantial part of its fixed assets during the year.

2. In respect of its inventories:

a) According to the information and explanations given to us, the inventories have been physically verified by the management at the close of year. In our opinion the frequency of verification is reasonable.

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

c) The Company is maintaining proper records of inventory. As explained to us, no material discrepancies were noticed on physical verification between physical stocks and book records.

2. a) According to the information and explanations given to us, the company has not granted loans secured or unsecured to companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

b) In respect of loans, secured or unsecured, taken by the company from companies, firms or other parties covered in the register maintained under section 301of the companies Act, 1956, according to information and explanations given to us:

The company has taken unsecured loan during different time of the year aggregating Rs. 9.25 crore from one party & paid Rs. 12.98 crore to two parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 22.23 crore and the year end balance of loans taken from such parties was Rs. 9.25 crore.

In our opinion, the rate of interest and other terms and conditions of the said loan are not, prima facie, prejudicial to the interest of the company. The loan is repayable on demand.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

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

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rupees five lacs or more in respect of each party during the year, have been made at prices which are reasonable having regard to the prevalent market prices at the relevant time.

6. According to the information and explanations given to us, the company has not accepted deposits covered under the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed the books of accounts relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. a) According to the records of the company, undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues except income tax, applicable to the company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2014, for a period of more than six months from the date they become payable except undisputed income tax payable of Rs. 4,80,12,000/- for previous year ended on 31.03.2013 has not been deposited with Income Tax Authorities & has been outstanding for more than six months.

b) According to the information and explanations given to us, there are no disputed statutory dues that have not been deposited on account of matters pending before the appellate authorities.

10. The company does not have accumulated losses. The latter part of the question relating to net worth is thus not applicable to the company. Further, the company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to banks and financial institutions.

12. According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the Companies (Auditor''s Report) Order 2003 are not applicable to the company.

13. The company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order 2003 are not applicable to the company.

14. According to the information and explanations given to us, the company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order 2003 are not applicable to the company.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks. Accordingly the provisions of 4(xv) of the Companies (Auditor''s Reports) Order 2003 are not applicable to the company.

16. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they 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 investment.

18. According to the information and explanations given to us, the company has made preferential allotment to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year. In our opinion and according to the information and explanations given to us, the price at which such shares have been issued is not prejudicial to the interest of the company.

19. According to the information and explanations given to us, the company has not issued debentures during the year. Accordingly the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order 2003 are not applicable to the company.

20. According to the information and explanations given to us, the company has not raised money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the above said order are not applicable to the company.

21. Based upon the audit procedures performed and the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year ended 31st March 2014.

For Ashish Agarwal & Co. Chartered Accountants Firm Reg. No.010788N

S/d- Ludhiana Ashish Agarwal May 30, 2014 Partner M. No. 089579


Mar 31, 2013

1.We have audited the attached balance sheet of M/s Supreme Tex Mart Limited as at 31st March, 2013, the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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. These 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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the ! overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3.As required by the Companies (Auditors'' Report) Order, 2003 issued by the Central Government 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 paragraph 4 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 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 purpose of our audit;

b)ln 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)ln 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)The Company has received written representations from the directors as on 31st March, 2013, except from the nominees directors under section 274(1 )(g) of the Companies Act, 1956, which have been taken on record by the Board of Directors. We have been informed that the nominee directors are not required to comply with the requirements of the aforesaid section 274(1 )(g) of the Companies Act, 1956 pursuant to the relevant notification issued by the Central Government;

We report that none of the director is disqualified as on March 31st, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) As indicated in Note No. 17, the Company has not provided for doubtful debts in respect of debtors outstanding for over 2 years and we have relied on the representations received from the management with respect to the recoverability of these debtors.

Subject to above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes 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 balance sheet, of the state of affairs of the Company as at 31st March, 2013; ii) in the case of the statement of profit and loss, of the profit for the year ended on that date; and

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

1. In respect of fixed assets:

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

b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year. No discrepancies were noticed on such physical verification. In our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its business.

c) According to the information and explanations given to us, the Company has not disposed off substantial part of its fixed assets during the year.

2.1n respect of its inventories:

a) According to the information and explanations given to us, the inventories have been physically verified by the management at the close of year. In our opinion the frequency of verification is reasonable.

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

c) The Company is maintaining proper records of inventory. As explained to us, no material discrepancies were noticed on physical verification between physical stocks and book records

3. a) According to the information and explanations given to us, the Company has not granted loans secured or unsecured to companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956. b) In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the register maintained under section 301 of the companies Act, 1956, according to information and explanations given to us:

The Company has taken unsecured loans amounting to ''12.98 crore from two parties covered in the register maintained under section 301 of the Companies Act,1956. The maximum amount involved during the year was Rs.12.98 crore.

In our opinion the rate of interest and other terms and conditions of the said loan are not, prima facie, prejudicial to the interest of the Company. The loan is repayable on demand.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. a)ln our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register maintained under that section. b)ln our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rupees five Lacs or more in respect of each party during the year, have been made at prices which are reasonable having regard to the prevalent market prices at the relevant time.

6. According to the information and explanations given to us the Company has not accepted deposits covered under the provisions of section 58Aand 58AAor any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

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

8. We have broadly reviewed the books of accounts relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

9. a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to the Company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2013, for a period of more than six months from the date they become payable. b) According to the information and explanations given to us, there are no disputed statutory dues that have not been deposited on account of matters pending before the appellate authorities.

10. The Company does not have accumulated losses. The latter part of the question relating to net worth is thus not applicable to the Company. Further, the Company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions.

12. According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of share, debentures and other securities. Therefore, the provisions ofclause4(xii)ofthe Companies (Auditor''s Report) Order 2003 are not applicable to the Company.

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

14. According to the information and explanations given to us, the Company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks. Accordingly the provisions of 4(xv) of the Companies (Auditor''s Reports) Order 2003 are not applicable to the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they 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 investment.

18. According to the information and explanations given to us, the Company has not made preferential allotment to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. According to the information and explanations given to us, the Company has not issued debentures during the year. Accordingly the provisions of clause 4(xix) of the Companies (Auditor''s Report) Order 2003 are not applicable to the Company.

20. According to the information and explanations given to us, the Company has not raised money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the above said order are not applicable to the Company.

21. Based upon the audit procedures performed and the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year ended 31s1 March 2013.

For Ashish Agarwal & Co.

Chartered Accountants

Firm Reg. No.010788N

ASHISH AGARWAL

Partner Ludhiana

M. No. 089579

May 30,2013


Mar 31, 2012

1. We have audited the attached balance sheet of M/s Supreme Tex Mart Limited as at 31st March, 2012, the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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. These 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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government 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 paragraph 4 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 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 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, 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) The Company has received written representations from the directors as on 31st March, 2012, except from the nominees directors under section 274(1 )(g) of the Companies Act, 1956, which have been taken on record by the Board of Directors. We have been informed that the nominee directors are not required to comply with the requirements of the aforesaid section 274(1 )(g) of the Companies Act, 1956 pursuant to the relevant notification issued by the Central Government;

We report that none of the director is disqualified as on March 31st, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

f) As indicated in Note No. 37 there is significant uncertainty associated with the derivative options referred to in the said note, resolution of which is dependent upon future events which are not under the direct control of the company, on account of which the company could not determine the possible loss, if any, on valuation of open derivative options. The ultimate outcome of these future events and their affect on the financial statements cannot be ascertained at this stage.

Subject to above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes 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 Balance Sheet, of the state of affairs of the company as at 31 st March, 2012;

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

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

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

b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year. No discrepancies were noticed on such physical verification. In our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the company and nature of its business.

c) According to the information and explanations given to us, the company has not disposed off substantial part of its fixed assets during the year.

(ii) a) According to the information and explanations given to us, the inventories have been physically verified by the management at the close of year. In our opinion the frequency of verification is reasonable.

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

c) The Company is maintaining proper records of inventory. As explained to us, no material discrepancies were noticed on physical verification between physical stocks and book records.

(iii) a) According to the information and explanation given to us, the company has not granted loans secured or unsecured to companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (b) (c) and (d) of the above said order are not applicable to the company.

b) According to the information and explanation given to us, the company has not taken loans secured or unsecured from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (f) and (g) of the above said order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

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

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rupees five lacs or more in respect of each party during the year, have been made at prices which are reasonable having regard to the prevalent market prices at the relevant time.

(vi) According to the information and explanations given to us the company has not accepted deposits covered under the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) In our opinion the company has an internal audit system commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of accounts relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) a) According to the records of the company, undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to the company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2012, for a period of more than six months from the date they become payable.

b) According to the information and explanations given to us, there are no disputed statutory dues that have not been deposited on account of matters pending before the appellate authorities.

(x) The company does not have accumulated losses. The latter part of the question relating to net worth is thus not applicable to the company. Further, the company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to banks and financial institutions.

(xii) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of share, debentures and other securities. Therefore, the provisions of clause 4(xii) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xiii) The company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xiv) According to the information and explanations given to us, the company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xv) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks. Accordingly the provisions of 4(xv) of the Companies (Auditor's Reports) Order 2003 are not applicable to the company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose 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 investment.

(xviii) According to the information and explanations given to us, the company has made preferential allotment to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956. The preferential allotments of shares were in accordance with SEBI (Disclosures and Investor Protection) Guidelines, 2000. The price at which preferential allotment of shares has been made by company is not prejudicial to the interest of the company.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year. Accordingly the provisions of clause 4(xix) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised money by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the above said order are not applicable to the company. However the money raised by way of allotment of preferential equity shares has been utilized for the purpose it was raised.

(xxi) Based upon the audit procedures performed and the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year ended 31st March 2012.

For Ashish Agarwal & Co.

Chartered Accountants

Firm Reg. No.010788N

Ludhiana (ASHISH AGARWAL)

May 30, 2012 Partner

M. No. 089579


Mar 31, 2011

1. We have audited the attached balance sheet of M/s Supreme Tex Mart Limited as at 31st March, 2011, the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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. These 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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit

also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government 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 paragraph 4 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 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 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, 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) The Company has received written representations from the directors as on 31" March, 2011, except from the nominees directors under section 274(1 )(g) of the Companies Act, 1956, which have been taken on record by the Board of Directors. We have been informed that the nominee directors are hot required to comply with the requirements of the aforesaid section 274(1 )(g) of the CompaniesAct, 1956 pursuant to the relevant notification issued by the Central Government;

We report that none of the director is disqualified as on March 31st, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the CompaniesAct, 1956.

f) As indicated in Note No. 23 of schedule-17 there is significant uncertainty associated with the derivative options referred to in the said note, resolution of which is dependent upon future events which are not under the direct control of the company, on account of which the company could not determine the possible loss, if any, on valuation of open derivative options. The ultimate outcome of these future events and their affect on the financial statements cannot be ascertained at this stage.

Subject to above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes thereon give the information required by the CompaniesAct, 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 balance sheet, of the state of affairs of the company as at 31 * March, 2011;

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

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

Annexure to the Auditor's Report

(Referred to in paragraph 3)

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

b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year. No discrepancies were noticed on such physical verification. In our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the company and nature of its business.

c) According to the information and explanations given to us, the company has not disposed off substantial part of its fixed assets during the year.

(ii) a) According to the information and explanations given to us, the inventories have been physically verified by the management at the close of the year. In our opinion the frequency of verification is reasonable.

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

c) The Company is maintaining proper records of inventory. As explained to us, no material discrepancies were noticed on physical verification between physical stocks and book records.

(iii) a) According to the information and explanations given to us, the company has not granted loans secured or unsecured to companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (b) (c) and (d) of the above said order are not applicable to the company. b) According to the information and explanations given to us, the company has not taken loans secured or unsecured from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (f) and (g) of the above said order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

(v) a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rupees five lacs or more in respect of each party during the year, have been made at prices which are reasonable having regard to the prevalent market prices at the relevant time.

(vi) According to the information and explanations given to us the company has not accepted

deposits covered under the provisions of section 58Aand 58AAor any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) In our opinion the company has an internal audit system commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items.of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) a) According to the records of the company, undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to the company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2011, for a period of more than six months from the date they became payable. b) According to the information and explanations given to us, there are no disputed statutory dues that have not been deposited on account of matters pending before the appellate authorities.

(x) The company does not have accumulated losses. The latter part of the question relating to net worth is thus not applicable to the company Further, the company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has

not defaulted in repayment of dues to banks and financial institutions.

(xii) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xiii) The company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4

(xiii) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xiv) According to the information and explanations given to us, the company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4

(xiv) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xv) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks. Accordingly the provisions of clause 4

(xv) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xvi) In our opinion and according to the information and explanations given to us, the term loanshave been applied for the purpose for which they were obtained.

(xvii) According to 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 investment.

(xviii) According to the information and explanations given to us, the company has made preferential allotment to the parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.The preferential allotments of shares were in accordance with SEBI (Disclosures and Investor Protection) Guidelines, 2000. The price at which preferential allotments of shares has been made by company is not prejudicial to the interest of the company.

(xix) According to the information and explanations given to us the company has not issued debentures during the year. Accordingly the provisions of clause 4

(xix) of the Companies (Auditor's Report) Order 2003 are not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised money

by way of public issue during the year. Accordingly, the provisions of clause 4(xx) of the above said order are not applicable to the company. However the money raised by way of allotment of preferential equity shares has been utilized for the purpose it was raised.

(xxi) Based upon the audit procedures performed and the information and explanations given to us,

no fraud on or by the company has been noticed or reported during the year ended 31" March 2011

FOR S.C. VASUDEVA & CO.

CHARTERED ACCOUNTANTS FIRMREGN.NO.000235N

PLACE :LUDHIANA (SANJAY MOHAN) DATED: 27.05.2011 Partner M. No. 86066






Mar 31, 2010

1. We have audited the attached balance sheet of M/s Supreme Tex Mart Limited as at 31st March, 2010, the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted ouraudit in accordance with auditing standards generally accepted in India. These stand- ards 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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government 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 paragraph 4 of the said order.

4. Further to our comments in the Annexure referred to in paragraph 3 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 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, 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) The Company has received written representations from the directors on 31st March, 2010, except from the nominees directors under section 274(1)(g) of the Companies Act, 1956, which have been taken on record by the Board of Directors. We have been informed that the nominee directors are not required to comply with the requirements of the aforesaid section 274(1 )(g}of the Companies Act, 1956 pursuant to the relevant notification issued by the Central Government;

We report that none of the director is disqualified as on March 31st, 2010 from being appointed as a director in terms of clause (g) of sub-section (I) of Section 274 of the. Companies Act, 1956.

f) As indicated in note-20 in schedule-17 there is significant uncertainty associated with the derivative options referred to in the said note, resolution of which is dependent upon future events which are not under the direct control of the Company, on account of which the Company could not determine the possible loss, if any, on valuation of open derivative options. The ultimate outcome of these future events and their affect on the Financial Statements cannot be ascertained at this stage.

Subject to above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes 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 balance sheet, of the state of affairs of the company as at 31 st March, 2010; ii) in the case of profit and loss account, of the loss for the year ended on that date; and iii) in the case of cash flow statement, of the cash flows for the year ended on that date.

Annexure to the Auditors Report (Referred to in paragraph 3)

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

b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year. No discrepancies were noticed on such physical verification. In our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the company and nature of its business.

c) According to the information and explanations given to us, the company has not disposed off substantial part of its fixed assets during the year.

(ii) a) According to the information and explanations given to us, the inventories have been physically verified by the management at the close of the year. In our opinion the frequency of verification is reasonable.

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

c) The Company is maintaining proper records of inventory. As explained to us, no material discrepancies were noticed on physical verification between physical stocks and book records.

(iii) a) According to the information and explanations given to us, a company has not granted loans secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (iii) (b) (c) and (d) of the Companies (Auditors Report) Order 2003 are not applicable to the company.

b) The company has taken unsecured loans from three parties covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved in the transactions is Rs. 1533.31 lacs. The amount payable is RS.3022.51 lacs to these parties as at the close of the year.

c) According to the information and explanations given to us, these are interest free loans and the other terms and conditions in respect of unsecured loans taken by the Company, are not prima-facie prejudicial to the interest of the company;

d) In our opinion and according to the information and explanations given to us, the payment of principal amount and interest in respect of the aforesaid loans is regular.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and nature of its business, for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

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

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rupees five lacs or more in respect of each party during the year, have been made at prices which are reasonable having regard to the prevalent market prices at the relevant time.

(vi) According to the information and explanations given to us the company has not accepted deposits covered % under the provisions of section 58Aand 58AAorany other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) In our opinion the company has an internal audit system commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.

(ix) a) According to the records of the company, undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to the company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2010, for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no disputed statutory dues that have not been deposited on account of matters pending before the appellate authorities.

(x) The company does not have accumulated losses. The latter part of the question relating to net worth is thus not applicable to the company. Further, the company has not incurred cash losses during the financial year covered under audit and in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to banks and financial institutions.

(xii) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of clause 4(xii) of the Companies (Auditors Report) Order 2003 are not applicable to the company.

(xiii) The company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order2003 are not applicable to the company.

(xiv) According to the information and explanations given to us, the company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order 2003 are not applicable to the company.

(xv) According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from banks. Accordingly the provisions of clause 4 (xv) of the Companies (Auditors Report) Order 2003 are not applicable to the company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were obtained.

(xvii) According to information and explanations given to us and on an overall examination of the balancesheet of the company, we report that no funds raised on short-term basis have been used for long term investment.

(xviii) According to the information and explanations given to us, the company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us the company has not issued debentures during the year. Accordingly the provisions of clause 4 (xix) of the Companies (Auditors Report) Order 2003 are not applicable to the company.

(xx) According to the information and explanations given to us, the company has not raised any money by way of public issue during the year. Accordingly the provisions of clause 4 (xx) of the Companies (Auditors Report) Order 2003 are not applicable to the company.

(xi) Based upon the audit procedures performed and the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year ended 31 st March 2010.

FOR S.C. VASUDEVA & CO. Chartered Accountants

(SANJIV MOHAN) PLACE : LUDHIANA Partner

DATED: 21.05.2010 M. No. 86066



 
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