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Auditor Report of Sutlej Textiles & Industries Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of SUTLEJ TEXTILES AND INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement, and a summary of the significant accounting policies and other explanatory information for the year then ended, in which are incorporated the financial statements for the year ended on that date audited by the branch auditor of the Company's unit at Kathua in the State of Jammu and Kashmir.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and 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 control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Companies Act, 2013 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its profit and its cash flows for the year ended on that date.

Other Matter

We did not audit the financial statement of Kathua unit included in the financial statements of the Company whose financial statements reflect total assets of Rs. 78884.55 lakhs as at 31st March, 2015 and total revenues of Rs. 120727.91 lakhs for the year ended on that date, as considered in the financial statements. The financial statement of the branch has been audited by the branch auditor whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of the branch, is based solely on the report of such branch auditor.

Our opinion is not modified in respect of this matter.

Report on the other legal and regulatory requirements

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

2. 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 and as per report submitted by the branch auditor.

c. The report on the accounts of the Kathua unit of the Company audited under Section 143 (8) of the Act by branch auditor has been sent to us and have been properly dealt with by us in preparing this report.

d. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the financial statements received from the Kathua unit not visited by us.

e. In our opinion. the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014

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

g. 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 — Refer Note 7 and 19A (1) and (2) to the financial statements

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company

Annexure referred to in paragraph I of our report of even date on the other legal and regulatory requirements (Re: Sutlej Textiles and Industries Limited)

(i) a. The Company has maintained proper records showing full

particulars, including quantitative details and situation of fixed assets.

b. Fixed Assets of the Company's units at Bhawanimandi has been physically verified by the management during the year and in respect of Kathua and Bhilad units, all fixed assets have not been physically verified by the management during the year but there is a regular programme of verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

(ii) a. As explained to us inventories (except stock lying with third parties and in-transit) were physically verified during the year by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, 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. In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) The Company has granted loans to companies covered in the register maintained under Section 189 of the Companies Act, 2013 and receipt of the principal amount and interest are 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 the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) The company has not received any deposit during the year. In case of deposit received in earlier years and were outstanding as on 31st March, 2014, the company has complied with the directives issued by the Reserve Bank of India and provisions of Section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and rules framed there under to the extent applicable, with regard to the deposits accepted from the public. We are informed by the management that 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.

(vi) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148 (1) of the Companies Act, 2013 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 same.

(vii) a. According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, service tax, wealth tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues applicable to it with the appropriate authorities. There was no undisputed outstanding statutory dues as at the year end for a period of more than six months from the date they became payable. b. According to the records of the Company, there are no dues outstanding of income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess on account of any dispute, other than the followings:

Name of the statute Nature of dues

The Central Excise Act, 1944 Disallowances & Penalty on Cenvat on Service Tax

The Central Excise Act, 1944 Demand & Penalty for Service Tax

The Central Excise Act, 1944 Penalty against non-reversal of Cenvat credit on exempted goods

The Central Excise Act, 1944 Demand of rebate erroneously granted and paid by Department

The Central Excise Act, 1944 Demand towards excise duty on Textile Committee cess

The Central Excise Act, 1944 Excise duty on Clearance of Yarn at Single Stage

The Central Excise Act, 1944 Excise Duty on Clearance of Capital goods and Scrap Sales, interest and penalty thereon

Gujarat Tax on Entry of Specified Entry Tax, Penalty and Interest Goods into Local Areas Act, 2001 thereon

Rajasthan Tax on Entry of Goods Entry Tax and Interest into Local Areas Act, 1999

Name of the statute Amount Forum where dispute (Rs. in is pending lakhs)

The Central Excise Act, 1944 36.05 Commissioner (Appeals), Jaipur

The Central Excise Act, 1944 23.91 CESTAT, New Delhi

The Central Excise Act, 1944 8.50 Rajasthan High Court, Jaipur

The Central Excise Act, 1944 138.35 Additional Commissioner of Central Excise, Jammu

The Central Excise Act, 1944 17.64 CESTAT, New Delhi

The Central Excise Act, 1944 23.66 High Court of Jammu and Kashmir, Jammu

The Central Excise Act, 1944 22.40 CESTAT, New Delhi



Gujarat Tax on Entry of Specified 1129.79 Commercial Tax Goods into Local Areas Act, 2001 Officer, Vapi

Rajasthan Tax on Entry of Goods 40.53 Supreme Court, into Local Areas Act, 1999 Delhi

Name of the statute Related period

The Central Excise Act, 1944 Oct., 05 to Mar., 06

The Central Excise Act, 1944 Dec., 05 to Oct.,06

The Central Excise Act, 1944 May, 99 to Feb.,02

The Central Excise Act, 1944 2008-2012

The Central Excise Act, 1944 2000- 2005

The Central Excise Act, 1944 1995 - 1996

The Central Excise Act, 1944 2009-2012

Gujarat Tax on Entry of Specified Apr, 06 to Mar, 15 Goods into Local Areas Act, 2001

Rajasthan Tax on Entry of Goods Apr, 06 to Mar, 15 into Local Areas Act, 1999

c. The amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act ,1956 (1 of 1956) and rules made there under have been transferred to such funds within time.

(viii) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash loss in the current and immediately preceding financial year.

(ix) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions and banks. The company has no outstanding debentures.

(x) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) According to the information and explanations given to us, term loans obtained were applied for the purpose for which loans were obtained.

(xii) Based on our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practice in India and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For SINGHI & Co. Chartered Accountants Firm Reg. No.302049E



B.K. Sipani Place: Mumbai Partner Date: 7th May, 2015 Membership No. 88926


Mar 31, 2014

We have audited the accompanying financial statements of Sutlej Textiles and Industries Limited, ("the company") which comprise the Balance Sheet as at 31st March, 2014 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conduct 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 risk 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 and based on the consideration of the report of the other auditor on the financial statements of Chenab Textiles Mills as noted below, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014;

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

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

Other Matter

We did not audit the financial statements of Chenab Textile Mills, whose financial statements reflect total assets (net) of Rs.70026.05 lakhs as at 31st March,2014, total revenues(net) of Rs.115544.33 lakhs and net cash outflow amounting to Rs.115.51 lakhs for the year then ended. These financial statements have been audited by other auditor whose reports have been furnished to us, and our opinion is based solely on the report of the other auditor. Our opinion is not qualified in respect of this matter.

Report on the other legal and regulatory requirements

1. The report on the accounts of Chenab Textile Mills audited under section 228 of the Act by other auditor has been forwarded to us as required by clause(c) of sub-section 228 of the Act and have been dealt with in preparing our report in the manner considered necessary by us.

2. As required by the Companies (Auditor''s Report) order, 2003 ("the Order") issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, we give in the Annexure a statements on the matters specified in the paragraphs 4 and 5 of the Order.

3. 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 and proper returns adequate for the purposes of our audit have been received from depots not visited by us;

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 and with the returns received from depots not visited by us;

d. 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;

e. On the basis of written representations received from the directors as on 31st March, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st 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 referred to in paragraph 1 of our report of even date on the other legal and regulatory requirements (Re: Sutlej Textiles and Industries Limited)

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

b. Fixed Assets of the Company''s units at Bhawanimandi has been physically verified by the management during the year and in respect of Kathua and Bhilad units, all fixed assets have not been physically verified by the management during the year but there is a regular programme of verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

c. There was no substantial disposal of fixed assets during the year.

(ii) a. As explained to us inventories (except stock lying with third parties and in-transit) were physically verified during the year by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, 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. In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) a. The Company has granted loan to two bodies corporate covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.10950 lakhs and the year-end balance was nil.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

c. Repayment of the principal amount is as stipulated and payment of interest has been regular.

d. As informed, the Company has not taken any loans, secured or unsecured from 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) (f) and (g) of the Order are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us and having regard to the explanation that purchases of certain items of inventories and fixed assets are of proprietary nature for which alternative sources are not available to obtain comparative quotations, there is an adequate internal control system commensurate with the size of the Company and the

nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) a. According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and rules framed there under to the extent applicable, with regard to the deposits accepted from the public. We are informed by the management that 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 the size and nature of its business.

(viii) We have broadly reviewed the books of accounts 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 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 same.

(ix) a. According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-Tax, Sales-Tax, Service Tax, Wealth Tax, Custom duty, Excise duty, Cess and other statutory dues applicable to it with the appropriate authorities. There was no undisputed outstanding statutory dues as at the year end for a period of more than six months from the date they became payable.

b. According to the records of the Company, there are no dues outstanding of Sales Tax, Income Tax, Service Tax, Custom Duty, Wealth Tax, Excise Duty and Cess on account of any dispute, other than the followings:

Name of the statute Nature of dues Amount (Rsin lakhs)

The Central Excise Act, 1944 Disallowances S Penalty on 36.05 Cenvat on Service Tax

The Central Excise Act, 1944 Demand S Penalty for Service Tax 23.91

The Central Excise Act, 1944 Penalty against non-reversal of 8.50 Cenvat credit on exempted goods

The Central Excise Act, 1944 Demand of rebate erroneously 138.35 granted and paid by Department

The Central Excise Act, 1944 Demand towards excise duty on 17.64 Textile Committee cess

The Central Excise Act, 1944 Excise duty on Clearance of Yarn 23.66 at Single Stage

The Central Excise Act, 1944 Excise Duty on Clearance of 22.40 Capital goods and Scrap Sales, interest and penalty thereon

Gujarat Tax on Entry of Entry Tax, Penalty and Interest 1051.95 Specified Goods into thereon Local Areas Act, 2001

Rajasthan Tax on Entry of Entry Tax and Interest 116.61 Goods into Local Areas Act, 1999

Name of the Statute Forum where dispute is Related period pending The Central Excise Act 1944 The Central Excise Act 1944 Commissioner (Appeals), Oct 05 to Jaipur Mar 06

The Central Excise Act 1944 Central Excise S Service Tax Dec 05 to Appellate Tribunal, New Delhi Oct 06

The Central Excise Act 1944 Rajasthan High Court, Jaipur May,99 to Feb 02 The Central Excise Act 1944 Additional Commissioner of 2008-2012 Central Excise, Jammu

The Central Excise Act 1944 Central Excise S Service Tax 2000- 2005 Appellate Tribunal, New Delhi

The Central Excise Act 1944 High Court of Jammu and 1995-1996 Kashmir, Jammu

The Central Excise Act 1944 Additional Commissioner 2009-2012 of Central Excise, Jammu S Kashmir

Gujarat Tax on entry of Commercial Tax Officer, Vapi Apr, 06 to Goodss into Local Areas Mar 14 Act - 2001 Rajasthan Tax on Entry of Rajasthan High Court,Jodhpur Apr, 06 to Goods Into Local Areas Mar 14 Act - 1999

x) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash loss in the current and immediately preceding financial year.

(xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks. We have been informed that the Company did not have any debenture outstanding during the year.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, 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. Accordingly, the clause 4 (xiii) of the Order is not applicable.

(xiv) The Company does not deal or trade in shares, securities, debentures and other securities except that it has investments in shares and units in mutual funds and these are held in the name of the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantees in favour of financial institution or bank for loans taken by others.

(xvi) According to the information and explanations given to us, term loans obtained during the year were applied for the purpose for which loans were obtained.

(xvii) According to the information and explanation given to us, 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) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year. Accordingly, clause 4 (xix) of the Order is not applicable.

(xx) The Company has not raised any money through a public issue during the year. Accordingly, clause 4 (xx) of the Order is not applicable.

(xxi) Based on our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practice in India and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

ForSINGHI SCO. Chartered Accountants Firm Reg. No.302049E B.K. Sipani Camp: Mumbai Partner Date: 13th May, 2014 Membership No. 88926


Mar 31, 2013

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Sutlej Textiles and Industries Limited ("the company"), which comprise the Balance Sheet as at 31st March, 2013 and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows ofthe Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 ofthe Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITOR''S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conduct 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 risk 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 to overall presentation ofthe 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 and based on the consideration of the report of the other auditor on the financial statements of Chenab Textile Mills as noted below, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

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

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

OTHER MATTER

We did not audit the financial statements of Chenab Textile Mills, whose financial statements reflect total assets (net) of Rs. 57812.06 lakhs as at 31st March,2013, total revenues(net) of Rs. 104986.54 lakhs and net cash inflow amounting to Rs. 94.28 lakhs for the year then ended. These financial statements have been audited by other auditor whose reports have been furnished to us and our opinion is based solely on the report of the other auditor. Our opinion is not qualified in respect of this matter.

REPORT ON THE OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the companies ( Auditor''s Report) order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statements on the matters specified in the paragraphs 4 and 5 of the Order.

2. As required by section 227(3) ofthe 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 and proper returns adequate for the purposes of our audit have been received from depots not visited by us;

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 and with the returns received from depots not visited by us;

d. 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; and

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

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

b. Fixed Assets of the Company''s units at Bhawanimandi and Daheli (Near Bhilad) have been physically verified by the management during the year and in respect of Chenab Textiles Mills , all fixed assets have not been physically verified by the management during the year but there is a regular programme of verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

c. There was no substantial disposal of fixed assets during the year.

(ii) a. As explained to us inventories (except stock lying with third parties and in-transit) were physically verified during the year by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, 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. In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) a. The Company has granted loan to three bodies corporate covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 8500 lakhs and the year-end balance was nil.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

c. In respect of loans granted, repayment of the principal amount is as stipulated and payment of interest have been regular.

d. As informed, the Company has not taken any loans, secured or unsecured from 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) (f) and (g) of the 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 the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) a. According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the company has complied with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and rules framed there under to the extent applicable, with regard to the deposits accepted from the public. We are informed by the management that 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 the size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(l)(d) of the Companies Act, 1956 and 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, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-Tax, Sales-Tax, Service Tax, Wealth Tax, Custom duty, Excise duty, Cess and other statutory dues applicable to it with the appropriate authorities. There was no undisputed outstanding statutory dues as at the year end for a period of more than six months from the date they became payable.

b. Accordingto the records of the Company, there are no dues outstanding of Sales Tax, Income Tax, Service Tax, Custom Duty, Wealth Tax, Excise Duty and Cess on account of any dispute, other than the followings:

Amount Forum where dispute is Name of the atatute Nature of dues Related period (Rs. in lakhs) pending

Central Excise Act, 1944 Disallowances & Penalty on 36.05 Commissioner (Appeals) Jaipur Oct., 05 to Mar., 06 Cenvat on Service Tax

Central Excise Act, 1944 Demand & Penalty for Service 23.91 CESTAT, New Delhi Dec.,05 to Oct.,06 Tax

Central Excise Act, 1944 Penalty against non-reversal 8.50 Rajasthan High Court Jaipur May,99 to Feb.,2002 of cenvat credit on exempted goods

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash loss in the current and immediately preceding financial year.

(xi) Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks. We have been informed that the Company did not have any debenture outstanding during the year.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, 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. Accordingly, clause 4 (xiii) of the Order is not applicable.

(xiv) The Company does not deal or trade in shares, securities, debentures and other securities except that it has investments in shares and units in mutual funds and these are held in the name of the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantees in favour of financial institution or bank for loans taken by others.

(xvi) According to the information and explanations given to us, term loans obtained during the year were applied for the purpose for which loans were obtained.

(xvii) According to the information and explanation given to us, 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) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year. Accordingly, clause 4 (xix) of the Order is not applicable.

(xx) The Company has not raised any money through a public issue during the year. Accordingly, clause 4 (xx) of the Order is not applicable

(xxi) Based on our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practice in India and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For Singhi & Co.

Chartered Accountants

Firm Reg. No.302049E

B.K. Sipani

Camp: Mumbai Partner

Date: 8th May, 2013 Membership No. 88926


Mar 31, 2012

1. We have audited the attached Balance Sheet of SUTLEJ TEXTILES AND INDUSTRIES LIMITED (the Company) as at March 31, 2012 and also the Profit and Loss Statement and the Cash Flow Statement for the year ended on that date annexed thereto in which financial statements of Chenab Textile Mills, Kathua Unit of the Company audited by Branch auditors are incorporated. 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 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 (as amended) issued by the Central Government 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:

i. 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;

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 and proper returns adequate for the purpose of our audit, have been received from the branches/depots not visited by us. The report on the account of Chenab Textile Mills, Kathua Unit audited by Branch auditors has been forwarded to us and has been appropriately dealt by us in preparing our report;

iii. The Balance Sheet, Profit and Loss Statement and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the returns from the depots and the returns from the Chenab Textile Mills, Kathua Unit audited by Branch Auditors.

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

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

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with 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;

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012.

b) In the case of the Profit and Loss Statement, of the profit of the Company for the year ended on that date and

c) In the case of Cash Flow Statement, of the cash flows of the Company 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. Fixed Assets of the Company's units at Bhawanimandi and Daheli (Near Bhilad) have been physically verified by the Management during the year and in respect of Kathua unit, all fixed assets have not been physically verified by the management during the year but there is a regular programme of verification. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

c. There was no substantial disposal of fixed assets during the year.

(ii) a. As explained to us inventories (except stock lying with third parties and in-transit) were physically verified during the year by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, 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. In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification, wherever done.

(iii) a. The Company has granted loan to two Bodies Corporates covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 7000 lakhs and the year-end balance of loans granted to such parties was nil.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

c. In respect of loans granted, repayment of the principal amount is as stipulated and payment of interest have been regular.

d. As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4 (iii) (f) and (g) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is 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. During the course of our audit, no major weakness has been noticed in internal control system.

(v) a. According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and rules framed there under to the extent applicable, with regard to the deposits accepted from the public. We are informed by the management that 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 the size and nature of its business.

(viii) We have broadly reviewed the books of accounts 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 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, the Company is generally regular in depositing material undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, service tax, wealth tax, custom duty, excise duty, cess and other statutory dues applicable to it with the appropriate authorities. There was no material undisputed outstanding statutory dues as at the year end for a period of more than six months from the date they became payable.

b. According to the records of the Company, there are no dues outstanding of sales tax, income tax, service tax, custom duty, wealth tax, excise duty and cess on account of any dispute, other than the following:

Name of Statute Nature of Dues Amount Forum where Dispute Related Period (Rs. in lakhs) is Pending

Central Excise Act, 1944 Disallowances & Penalty on Cenvat on 33.80 Commissioner Oct., 05 to Mar., Service Tax (Appeals), Jaipur 06

Central Excise Act, 1944 Demand & Penalty for Service Tax 23.91 CESTAT, New Delhi Dec.,05 to Oct.,06

Central Excise Act, 1944 Reversal of Cenvat Credit, Interest & 20.64 Rajasthan High Court, May,99 to Penalty on Excise Duty Jaipur Feb.,2002

Rajasthan Tax on Entry Entry Tax and Interest 99.31 Rajasthan High Court, April, 06 to March, of Goods into Local Jodhpur 12 Areas Act, 1999

Central Excise Act, 1944 Excise duty on Textile Committee Cess 17.64 Central Excise & Service 2000- 2005 and penalty thereon Tax Appellate Tribunal, New Delhi

Central Excise Act, 1944 Excise duty on Clearance of Yarn at 23.66 Central Excise & Service 1995 - 1996 Single Stage Tax Appellate Tribunal, New Delhi

Gujarat Tax on Entry Entry Tax, Penalty and Interest thereon 761.05 Commercial Tax Officer, Apr' 06 to Mar'12 of Specified Goods into Vapi Local Areas Act, 2001

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash loss in the current and immediately preceding financial year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks. We have been informed that the Company has not issued any debenture during the year.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, 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, the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order,2003 (as amended), are not applicable to the Company.

(xiv) The Company does not deal or trade in shares, securities, debentures and other securities except that it has investments in shares / units of mutual funds and these are held in the name of the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantees in favour of financial institution or bank for loans taken by others.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed during the year by the Company were, prima facie, applied by the Company for the purpose for which loans were obtained.

(xvii) According to the information and explanation given to us, 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 by the Company.

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

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based on our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practice in India and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For Singhi & Co.

Chartered Accountants

Firm Reg. No. 302049E

B.K.Sipani

Place: New Delhi Partner

Dated: May 16, 2012 Membership No. 88926


Mar 31, 2011

1. We have audited the attached Balance Sheet of SUTLEJ TEXTILES AND INDUSTRIES LIMITED, as at 31st March, 2011 and also the Profit and Loss account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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 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 (as amended) 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:

i. 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;

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 and proper returns adequate for the purpose of our audit, have been received from the branches/depots not visited by us. The report on the account of branch audited by other auditor has been forwarded to us and has been appropriately dealt by us in preparing our report;

iii. The Balance Sheet, Profit and Loss account and Cash Flow statement dealt with by this report are in agreement with the books of account and with the returns from the branches/depots;

iv. 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;

v. On the basis of written representations received from the directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2011, from being appointed as directors in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with 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;

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011.

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

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

Annexure referred to in paragraph 3 of our report of even date to the shareholders

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

b. Fixed Assets of the Companys units at Bhawanimandi and Daheli (Near Bhilad) have been physically verified by the Management during the year and in respect of Kathua unit, the Unit is carrying out physical verification of fixed assets by covering physical verification of all fixed assets over a period of three years, accordingly part of fixed assets have been physically verified by the management during the year. In our opinion, the frequency of physical verification is reasonable having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

c. There was no substantial disposal of fixed assets during the year.

(ii) a. As explained to us inventories (except stock lying with third parties, confirmation for which has been obtained and in-transit) were physically verified during the year by the management at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, 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. In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification, wherever done.

(iii) a. The Company has granted loan to two Bodies Corporates covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 4500 lakhs and the year- end balance of loans granted to such parties was nil.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

c. In respect of loans granted, repayment of the principal amount is as stipulated and payment of interest have been regular.

d. As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4 (iii) (f) and (g) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is 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. During the course of our audit, no major weakness has been noticed in internal control system.

(v) a. According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and provisions of Section 58A and 58AA of the Companies Act, 1956 and rules framed there under with regard to the deposits accepted from the public.

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

(viii) We have broadly reviewed the books of accounts 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 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, the Company is generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, sales-tax, services tax, wealth tax, custom duty, excise duty, cess and other statutory dues applicable to it with the appropriate authorities. There was no undisputed outstanding statutory dues as at the year end for a period of more than six months from the date they became payable.

b. According to the records of the Company, there are no dues outstanding of sales tax, income tax, service tax, custom duty, wealth tax, excise duty and cess on account of any dispute, other than the following:

Name of Statute Nature of Dues Amount Forum where Related Period (Rs. in lakhs) Dispute is Pending

(A) Bhawanimandi unit

Central Excise Act, 1944 Penalty on Serv ice Tax on GTA 13.17 CESTAT, New Delhi Jan.,05 to Sept., 05

Central Excise Act, 1944 Disallowance & Penalty for 33.80 Commissioner (Appeals) Oct., 05 to Mar., 06 Cenvat on Service Tax

Central Excise Act, 1944 Demand & Penalty for Service Tax 23.91 CESTAT, New Delhi Dec.,05 to Oct.,06

Central Excise Act, 1944 Reversal of Cen vat Credit, Interest & 25.50 Rajasthan High Court, Jaipur May,99 to Feb.,2002 Penalty on Excise Duty

Rajasthan Tax on Entry of Goods Entry Tax and Interest 91.37 Rajasthan High Court, Apr 06 to Mar 11 into Local Areas Act, 1999 Jodhpur

(B) Kathua Unit

Central Excise Act, 1944 Excise duty on Textile Committee 17.64 Central Excise & Service Tax 2000-2005 Cess and penalty thereon Appellate Tribunal, New Delhi

Central Excise Act, 1944 Excise duty on Clearance of 23.66 Central Excise & Service Tax 1995-1996 Yarn at Single Stage Appellate Trib unal, New Delhi

(C) Daheli unit

Gujarat Tax on Entry of Specified Entry Tax, Penalty and 626.04 Commercial Tax Officer Apr 06 to Mar11 Goods into Local Areas Act, 2001 Interest thereon

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash loss in the current year.

(xi) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions and banks. We have been informed that the Company has not issued any debenture during the year.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, 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, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order,2003 (as amended), are not applicable to the Company.

(xiv) The Company does not deal or trade in shares, securities, debentures and other securities except that it has investments in shares / units and these are held in the name of the Company.

(xv) According to the information and explanations given to us, the Company has not given any corporate guarantees in favour of financial institution/bank for loans taken by others.

(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, term loans availed by the Company were, prima facie, applied by the Company during the year for the purpose for which loans were obtained.

(xvii) According to the information and explanation given to us, 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 by the Company.

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

(xix) The Company did not have any outstanding debentures during the year.

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

(xxi) Based on our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practice in India and according to the information and explanations given to us, no fraud on or by the Company, noticed or reported during the year.



For Singhi & Co. Chartered Accountants Firm Reg. No. 302049E

B. K. Sipani Place: New Delhi Partner

Dated: May 13, 2011 Membership No. 88926

 
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