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Auditor Report of Vishal Fabrics Ltd.

Mar 31, 2015

Report on the Standalone Financial Statements

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

Management's Responsibility for the 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.

Auditor's 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 misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal 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 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 standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, 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,

i. In the case of the Balance sheet, of the state of affairs of the Company as at March 31, 2015;

ii. In the case of the 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.

Report on 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 Act, we give in the Annexure a statement on the matters specified in the paragraph 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;

(c) 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;

(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;

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

(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 – Refer Note 29 to the financial statements;

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

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

The Annexure referred to in our Independent Auditors' Report to the members of Vishal Fabrics Limited ("the Company") on the standalone financial statements for the year ended on 31st March 2015, 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 on the basis of available information.

b. As per the information and explanation given to us, all the fixed assets have been physically verified by the management at reasonable intervals during the year. No material discrepancies were noticed on such physical verification.

2. In respect of Inventories:

a. As per the information and explanation given to us, the inventories have been physical verified by the management at reasonable intervals during the year.

b. In our opinion and as per the information and explanation given to us, procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

c. The Company has maintained proper records of inventories. The discrepancies noticed on verification between the physical stocks and books records were not material.

3. In respect of Loans and Advances granted during the year:

As per information and explanation given to us, the Company has not granted loans to parties covered in the register maintained under section 189 of the Companies Act, 2013 ('the Act') and therefore, the clauses (iii) (a) and (b) of the Companies (Auditor's Report) Order, 2015 are not applicable.

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 the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods. During the course of audit, no major weakness has been noticed in the internal controls.

5. During the year, the company has not accepted any deposits and hence the directives issued by the Reserve Bank of India and the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under are not applicable to the company.

6. As per the information and explanation provided to us the company is not required to maintain the cost records as per the provisions of Companies (Cost Records and Audit) Rules 2014, hence Clause (vi) of the Companies (Auditor's Report) order,2015 are not applicable.

7. In respect of Statutory Dues:

a. According to the records of the Company, the Company is by and large regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities applicable to it.

b. According to the information and explanations given to us, the following dues of income tax, custom duty and excise duty have not been deposited by the Company on account of disputes:

Name of the statute Nature of dues Amount (in Rs)

The Central Excise Act 1944 Excise 1141668

633617

Labour Laws Labour Law Matters 250000

Labour Laws Civil Suit 457378

The Custom Act, 1962 Custom 90000

Name of the Statute Period to which Forum where dispute is pending the amount relates

The Central Excise Act 1944 2001-02 to 2004-05 Textile Cess Appelate Tribunal 2004-05 to 2006-07

Labour Laws 2013 Labour Commisisoner Ahmedabad

Labour Laws 2005 to 2013 City Civil Court Ahmedabad

The Custom Act, 1962 2013-14 Commisisoner of Custom, Jamnagar

c. During the year no amount is required to be transferred to the Investor Education and Protection Fund and hence clause (c) of clause (vii) of the Companies (Auditor's Report) Order, 2015 is not applicable.

8. The company has no accumulated losses and has not incurred any cash losses during the financial year under review or in the immediately preceding financial year.

9. Based on our audit procedures and according to the information and explanation given to us, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks and debenture holders.

10. As per the information and the explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

11. To the best of our knowledge and belief and according to the information and explanation given to us, no fresh term loans availed by the company during the year under audit.

12. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the year. For M/s. Anil S. Shah & Co.

Chartered Accountants

(FRN : 100474W)

Sd/-

Krunal A. Shah

Date : 28/05/2015 Partner

Place : Ahmedabad Membership No.: 115801


Mar 31, 2014

We have audited the accompanying financial statements of Vishal Fabrics Limited (formerly known as Vishal Fabrics Pvt. Ltd.) (the Company), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the Act) read with the General Circular 15/2013 dated 13th September, 2013, of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. 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.

AUDITORS'' RESPONSIBILITY

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

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

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 Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

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

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

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

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

e. On the basis of the written representations received from the directors as on March 31, 2014, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of Section 274(1)(g) of the Act.

The Annexure referred to in our report to the members of Vishal Fabrics Ltd. (formerly known as Vishal Fabrics Pvt. Ltd.) (the company) for the year ended 31st 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 on the basis of available information.

b. As per the information and explanations given to us, the management at reasonable intervals during the year in accordance with a programme of physical verification physically verified the fixed assets and no material discrepancies were noticed on such verification as compared to the available records.

c. In our opinion, the Company has not disposed off any major/substantial part of the fixed assets during the year and the going concern status of the company is not affected.

2. In respect of its Inventories:

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

b. The procedures of physical verification of inventories followed by the management at the end of the year are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. On the basis of our examination of the records of inventory, we are of opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and books records were not material.

3. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

a. During the year under audit, the company has granted unsecured loans to two parties covered under section 301 of the Companies Act, 1956. The Maximum amount involved during the year was Rs. 335.00 Lacs and year end balance of loans granted to such party amounting to Rs. 275.50 Lacs. During the year the company has not taken unsecured loans.

b. According to the information and explanations given to us, the company has granted unsecured loans to the parties covered under section 301 of The Companies Act, 1956 are interest free and as explained to us the other terms & conditions are not prima facie prejudicial to the interest of the company.

c. According to the information and explanations given to us, the loans granted by the company are interest free loans hence the question of recovery of interest does not arise and in case of interest, as explained to us recovery of loan granted have been made on demand.

d. In respect of loans granted by the company during the year, as the terms of recovery have been on demand as explained to us, overdue installments in respect of the same has not arise.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.

5. In respect of transactions covered under Section 301 of the Companies Act, 1956:

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 and exceeding the value of the five lakh rupees in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The company has not accepted any deposits from public.

7. As per information and explanation given to us, the Company has its own internal audit system commensurate with the size and nature of its business.

8. 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. We have not, however made a detailed examination of the said records with a view to determine whether they are accurate or complete.

9. In respect of Statutory Dues:

a. According to the records of the Company, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including income tax, tax deducted at source, service tax, sales tax, custom duty, excise duty, cess and other statutory dues with the appropriate authorities.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Customs Duty, Sales Tax and Excise Duty were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, particulars of outstanding dues of custom duty, excise duty not deposited on account of any dispute given below :-

Name of the Statute Nature of the Dues Amount Rs.In Lacs

The Central Excise Act,1944 Excise Rs. 1775285/-

The Customs Act, 1962. Custom Rs. 90000/-

Labour Laws Labour Law Matters Rs. 287145/-

Income Tax Act, 1961 Income Tax Rs. 730110/-

Labour Laws Civil Suit Rs. 457378/-

Name of the Statute Forum where dispute Is pending

The Central Excise Act,1944 Textile Cess Appellate Tribunal

The Customs Act, 1962. Commissioner of Custom, Jamnagar

Labour Laws Labour Deputy of Labour Commissioner, Ahmedabad

Income Tax Act, 1961 CIT(A)

Labour Laws City Civil Court, Ahmedabad

10. The company has no accumulated losses and has not incurred any cash losses during the financial year under review or in the immediately preceding financial year.

11. Based on our audit procedure and according to the information and explanation given to us, we are of the opinion that the Company has not defaulted in repayment of dues to Banks.

12. Based on our examination of documents and records and 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.

13. The provisions of any special statute applicable to Chit Fund, Nidhi or Mutual benefit Fund/Societies are not applicable to the Company. Therefore, clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

14. The Company is not dealing or trading in shares, securities, debentures or other investments and hence, the requirements of para 4 (xiv) are not applicable to the Company. The shares, securities and other investments have been held by the company, in its own name.

15. As per the information and explanation given to us and in our opinion, the company has not given any guarantee for loan taken by others from banks and financial institution.

16. To the best of our knowledge and belief and according to the information and explanation given to us, no fresh term loans availed by the company during the year under Audit.

17. According to the information and explanations given to us and on overall examination of Balance Sheet of the company, the funds raised on short term basis have prima facie not been used during the year for long term investment (fixed assets etc.) and vice versa, other than temporary deployment pending application.

18. During the year, the Company has made fresh allotment of shares to parties not covered in the register maintained under Section 301 of the Companies Act, 1956 at Net Asset Value basis and terms there of are not prejudicial to the interest of the company.

19. During the year, the company has not issued any debentures.

20. During the year, the Company has not raised any money by way of Public issues.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud had occurred in the company during the year under audit.

For M/s. Anil S. Shah & Co. Chartered Accountants (FRN : 100474W)

Sd/- Krunal A. Shah Date : 02/06/2014 Partner Place : Ahmedabad Membership No.: 115801