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Auditor Report of Winsome Textile Industries Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of WINSOME TEXTILE INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31stMarch, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

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 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 financial statements.

Basis for Qualified Opinion:-

Attention is drawn to :

(i) Note No.26.3 regarding non-provisioning against receivables amounting to Rs. 1089.44 lacs which in the opinion of management is good and recoverable as stated in the said notes and our inability to comment thereon.

(ii) Note no. 26.7 regarding non provision for shortfall in recovery (amount unascertainable) against overdue debt of Rs. 66.27 lacs (Previous Year Rs. 85.15 lacs) as stated in the said note for which legal and other persuasive action for recovery has been initiated, in the opinion of the management these debts are good and recoverable as stated in the said note and our inability to comment thereon.

We further report that the profit for the year, the balance in reserve & surplus, receivable, loans & advances and profit for the year are without considering items mentioned in (i) & (ii) above, the effect of which could not be determined.

Our opinion was also qualified on the financial statements for the year ended 31st March 2014 in respect of overdue debts reported in (ii) above.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described under the head "Basis for Qualified Opinion" paragraph, 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, 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.

Emphasis of Matter

(i) Note no. 26.8 regarding balances of certain receivables, loans and advances (including capital advances), trade payables and other liabilities are subject to confirmation/reconciliation.

Our opinion is not qualified in respect of above matter.

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, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us during the course of audit, we give in the Annexure a statement on the matters specified in the paragraphs 3 and 4 of the Order.

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 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 31stMarch, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on31stMarch, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note no. 26.1((A)(ii)), (B) and 26.4 to the financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses; if any, on long term contracts including derivative contracts. (Refer note 26.27 (B)).

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 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date for the year ended 31st March 2015.

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

(b) The fixed assets have been physically verified by the management according to the programme of periodical physical verification in phased manner which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

2. (a) The inventories of the Company (except stock in transit) have been physically verified by the management at reasonable intervals.

(b) The procedures of physical verification of inventory followed by the management are reasonable (read with note no. 26.19(a)(ii)) and adequate in relation to the size of the Company and nature of its business.

(c) The Company is maintaining proper records of inventories (in case of process stock, records are updated on monthly basis physical verification of stock). As per records and information made available the discrepancies noticed on such physical verification of inventory as compared to book records were not material.

3. (a) As per the information and explanation provided to us, the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, provision of clause 3 of the Order is not applicable.

4. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternatives sources do not exist for obtaining comparable quotations or where user department has shown specific preference, where as explained , rates were determined considering the quality , volume , nature of the items and market conditions prevailing at that time , there are adequate internal control systems 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 which needs to be further strengthen (read with note no. 26.13 regarding MSME and 26.19(a) regarding accounting of consumption based on the balancing figure as stated in the said note) . Based on the audit procedure performed and on the basis of information and explanations provided by the management, during the course of audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

5. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Section 73 to76 of the Act or any other relevant provisions of the Act and the rules framed there under. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other tribunal in this regard.

6. We have broadly reviewed the books of account 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 Act in respect of the company's products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

7. (a) According to the records of the Company, the Company is generally regular in depositing 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 and cess and other material statutory dues with the appropriate authorities to the extent applicable and there were no undisputed statutory dues payable for a period of more than six months from the date they became payable as at 31stMarch, 2015 TDS of Rs.0.93 lacs (since paid).

(b) According to the records and information & explanations given to us, there are no dues in respect of Income tax , Wealth Tax or Cess that have not been deposited with the appropriate authorities to the extent applicable on account of any dispute and the dues in respect of Sales tax , Excise duty , Custom duty , Service tax and Entry tax that have not been deposited with the appropriate authorities on account of dispute and the forum where the dispute is pending are given below:-

NAME OF STATUTE NATURE OF DUES PERIOD AMOUNT UNPAID FORUM (IN LACS RS.)

Central Excise Act Excise Duty 1995-96 1.44 Assistant Commissioner

Central Excise Act Excise Duty 1998-2001 1.83 CESTAT

Central Excise Act Excise Duty 2000-2001 1.74 CESTAT

Central Excise Act Excise Duty 2003-04 41.59 CESTAT

Central Excise Act Excise Duty 2004-05 0.35 Commissioner (Appeal)

Central Excise Act Excise Duty 2005-06 21.33 CESTAT

Central Excise Act Excise Duty 2008-09 1.32 Commissioner (Appeal)

HP Sales Tax Act Entry Tax 2010-11 to 2014-15 333.27 The High Court of Shimla

Refer Note no. 26.1(A) (ii).

(c) According to the records of the Company and information and explanations given to us, 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 has been transferred to such fund within time.

8. The Company does not have accumulated losses at the end of the financial year and has not incurred cash losses in the current financial year & in the immediately preceding financial year.

9. In our opinion, on the basis of audit procedure and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions or banks. The company did not have any outstanding debentures during the year.

10. According to the information and explanations given to us the company has not given any guarantee for loan taken by others from banks.

11. On the basis of information and explanations given to us, term loans were applied for the purpose for which the loans were obtained.

12. Based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For Lodha & Co. Chartered Accountants Firm's Registration No. 301051E

Place : New Delhi (N.K. LODHA)

Date : 26.05.2015 Partner

Membership No.: 85155


Mar 31, 2014

We have audited the Accompanying financial statements of Winsome Textile Industries Limited, which comprise the balance sheet as at 31st March 2014, and the statement of the profit and loss and the cash flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s responsibility for the financial statements

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

Auditor''s responsibility

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 un 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 audit opinion.

Basis for Qualified Opinion:-

Attention is drawn to :

Note no. 27.7(i) regarding non provision for shortfall in recovery (amount unascertainable) against overdue debt of Rs. 85.15 lacs as stated in the said note for which legal and other persuasive action for recovery has been initiated, in the opinion of the management these debts are good and recoverable as stated in the said note and our inability to comment thereon.

We further report that the profit for the year, the balance in reserve & surplus, receivable and profit for the year are without considering items mentioned in (i) above, the effect of which could not be determined.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described under the head "Basis for Qualified Opinion" paragraph, 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 the affairs of the Company as at 31st March 2014,

b. In case of the statement of the profit and loss, of the profit for the year ended on that date, and

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

Emphasis of Matter

Note no. 27.7(ii) regarding balances of certain receivables, loans and advances (including capital advances), trade and other payables are subject to confirmation/reconciliation.

Report on other legal and the 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 the Annexure a statement on the, matters specified in the 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 purposes of our audit;

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

c. The Balance Sleet, Statement of Profit & Loss and Cash Flow Statement referred to in this report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

e. On the basis of the written representations received from the Directors and taken on records by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31st March 2014 from being appointed as a Director of the Company in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in paragraph 1 of our Report of even date on Winsome Textile Industries Limited for the year ended 31st March, 2014)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect of certain fixed assets (and also at new project location), where the same are in process of compilation /updation.

(b) As per information & explanations given to us, physical verification of the certain fixed assets are in process, according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets.

(c) As per the records and information and explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) As explained to us, the inventories of the Company (except stock lying with the third parties; and in transit) have been physically verified by the management during the year.

(b) In our Opinion and according to information & explanation given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) According to the information and explanation given to us, we are of the opinion that the Company is maintaining proper records of inventories (In case of process stock, records are updated on monthly physical verification of stock). As per records and information made available the discrepancies noticed on verification between the physical stock and the book records were not material in relation to the operation of the Company.

iii. As per the information and explanations given to us the Company has neither granted nor taken during the year any loans, secured or unsecured to and from companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as

explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time, there are internal control system commensurate with size of the Company and nature of its business with regard to the purchase of inventory, fixed assets, services and for the sale of goods and services which needs to be further strengthen (read with note no. 27.2, 27.7 and 27.11). Based on the audit procedure performed and information & explanation provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system nor been identified by the management.

v. a) According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section; and b) In our opinion and according to the information and explanation given to us, having regard to para iv above, the transactions made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time. vi. According to the information and explanations given to us, the Company has not accepted any deposits from

the public within the meaning of Section 58A and 58AA Act and the rules framed there under and directives issued by the Reserve bank of India and other relevant provisions of the Act. We have been informed 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 in this regard. vii. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. viii. We have broadly reviewed the books of account maintained by the Company as prescribed 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 records have been made and maintained. We have, however, not made a detailed examination of the said records with view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the Company in generally regular in depositing with appropriate authorities undisputed statutory dues {(excepts Sales Tax read with note no. 27.7(ii)} including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no undisputed statutory dues payable for a period more than six months from the date they became payable as at 31.03.2014. (b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax, Custom Duty, Wealth Tax, Service Tax, Sales Tax and Cess that have not been deposited on account of any dispute. In our opinion and according to the information and explanations given to us, the dues in respect of Excise duty that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are given below:

Name of Statute Nature of Dues Amount Period to which (Rs. in Lacs) amount relates

Central Excise Act Excise Duty 1.44 1995-96 Excise Duty 62.92 2003-04, 2005-06

Excise Duty 3.57 2003-04, 2004-05 Excise Duty 1.67 2004-05, 2008-09



Name of the Statute Forum where dispute is pending

Central Excise Act Asst. Commissioner CESTAT

CESTAT Commissioner Appeal

x. The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses during the current and immediately preceding previous year.

xi. In our opinion, based on the audit procedures and according to information & explanation given to us, the Company has generally not defaulted in repayment of dues to financial institution and banks.

xii. Based on our examination of the records and the information and explanation given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures andother securities.

xiii. Clause (xiii) of the order is not applicable to the Company as the Company is not a Chit Fund Company or nidhi/mutual benefit fund/society.

xiv. In our opinion and according to the information and explanations provided to us, the Company is not dealing in or trading in shares, securities, debentures and other investment.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institution. xvi. According to the information and explanations given to us, the term loans were applied for the purpose for which the loans were obtained.

xvii. According to the information and explanations given to us and on an overall examination of the financial statements, we are of the opinion that no funds raised on short term basis have been used for long term investment.

xviii. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act in the current year.

xix. No debenture has been issued /outstanding during the year hence the provision of clause 4 (xix) of the said order are not applicable.

xx. According to the information and explanations given to us, during the year the Company has not raised fund through public issue.

xxi. To the best of our knowledge and belief,based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co. Chartered Accountants Firm Registration No. 301051E

Place : New Delhi N.K. Lodha Date : 28.05.2014 (Partner) Membership No.: 85155


Mar 31, 2013

Report on the financial statements

We have audited the accompanying financial statements of Winsome Textile Industries Limited, which comprise the balance sheet as at 31st March 2013, and the statement of the profit and loss and the cash flow statement for the year then ended, and a summary of the 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 the 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 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 free from material misstatement, whether due to fraud or error.

Auditor''s responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 audit opinion.

Emphasis of Matter

1) During the year 2010-11, the Company had issued and allotted 12,90,000 nos. GDR''s entitling 6,45,00,000 (now 64,50,000 equity shares of Rs.10/- each) nos. equity shares of Re.1/- each at price of Rs.6.94 per share (including premium of Rs.5.94, now premium is Rs.59.40 on Rs.10/- per share).

As on 31.03.2012, Rs.4,586.69 lacs (including exchange gain) was pending to be received in India against above issue made, during the year Rs.777.14 lacs, as explained, have been received/credited to account of the company in India. As stated in the note no. 2.3 balance amount of Rs. 4147.07 lacs as on 31st March 2013 (excluding amount lying in bank outside India of Rs. 13.35 lacs) is invested outside India with a money market fund.

2) Balances of receivable, loans and advances, trade payable and other liabilities (read with note no. 2.4) are subject to confirmation and reconciliation (note no 2.5(ii))

Our report is not qualified in respect of above matters.

Basis for Qualified Opinion:-

i. Attention is drawn to Note no. 2.5 (i) regarding non provision for shortfall in recovery (amount unascertainable) against overdue debt of Rs. 232.70 lacs as stated in the said note for which legal and other persuasive action for recovery has been initiated, in the opinion of the management these debts are good and recoverable as stated in the said note and our inability to comment thereon.

We further report that the profit for the year, the balance in reserve & surplus, receivable and profit for the year are without considering items mentioned in (i) above, the effect of which could not be determined.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described under the head "Basis for Qualified Opinion” paragraph, 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 the affairs of the company as at 31st March 2013,

b. In case of the statement of the profit and loss, of the profit for the year ended on that date, and

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

Report on other legal and the 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 the Annexure a statement on the, manners specified in the 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 purposes of our audit;

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

c. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement referred to in this report are in agreement with the books of account;

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

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

ANNEXURE TO THE AUDITORS'' REPORT

(Referred to in paragraph 1 of our Report of even date on Winsome Textile Industries Limited for the year ended 31st March, 2013)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect of certain fixed assets (and also at new project location), where the same are in process of compilation /updation.

(b) As per information & explanations given to us, physical verification of the certain fixed assets are in process, according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets.

(c) As per the records and information and explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) As explained to us, the inventories of the Company (except stock lying with the third parties; and in transit) have been physically verified by the management during the year.

(b) In our Opinion and according to information & explanation given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) According to the information and explanation given to us, we are of the opinion that the company is maintaining proper records of inventories (In case of process stock, records are updated on monthly physical verification of stock). As per records and information made available the discrepancies noticed on verification between the physical stock and the book records were not material in relation to the operation of the company.

iii. As per the information and explanations given to us the Company has neither granted nor taken during the year any loans, secured or unsecured to and from companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time, there are internal control system commensurate with size of the company and nature of its business with regard to the purchase of inventory, fixed assets, services and for the sale of goods and services (read with note no. 2.2, 2.5, 2.9 & 2.18). Based on the audit procedure performed and information & explanation provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system nor been identified by the management.

v. a) According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section; and b) In our opinion and according to the information and explanation given to us, having regard to para iv above, the transactions made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time. vi. According to the information and explanations given to us, the Company has not accepted any deposits from

the public within the meaning of Section 58A and 58AA Act and the rules framed there under and directives issued by the Reserve bank of India and other relevant provisions of the Act. We have been informed 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 in this regard. vii. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business. viii. We have broadly reviewed the books of account maintained by the company as prescribed 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 records have been made and maintained. We have, however, not made a detailed examination of the said records with view to determine whether they are accurate and complete. ix. (a) According to the records of the Company, the company in generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no undisputed statutory dues payable for a period more than six months from the date they became payable as at 31.03.2013. (b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax, Custom Duty, Wealth Tax, Service Tax, Sales Tax and Cess that have not been deposited on account of any dispute.

x. The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses during the current and immediately preceding previous year.

xi. In our opinion, based on the audit procedures and according to information & explanation given to us, the Company has generally not defaulted in repayment of dues to financial institution and banks.

xii. Based on our examination of the records and the information and explanation given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. Clause (xiii) of the order is not applicable to the company as the company is not a Chit Fund Company or nidhi/mutual benefit fund/society.

xiv. In our opinion and according to the informations and explanations provided to us, the company is not dealing in or trading in shares, securities, debentures and other investment.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institution.

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

xvii. According to the information and explanations given to us and on an overall examination of the financial statements, we are of the opinion that no funds raised on short term basis have been used for long term investment.

xviii. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act in the current year.

xix. No debenture has been issued /outstanding during the year hence the provision of clause 4 (xix) of the said order are not applicable.

xx. According to the information and explanations given to us, during the year the Company has not raised fund through public issue.

xxi. To the best of our knowledge and belief, based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co.

Firm Regn. No. 301051E

Chartered Accountants

Place : New Delhi N.K. LODHA

Date : 29.05.2013 (Partner)

Membership No.: 85155


Mar 31, 2012

We have audited the attached Balance Sheet of Winsome Textile Industries Limited as at 31st March 2012, the statement of Profit and loss and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditor's Report) Order, 2003 ('The Order') as amended by the Companies Auditor's Report) Order, 2004 issued by the Central Government of ndia in terms of Section 227 (4A) of the ompanies Act, 1956 ('The Act'), we enclose in the Annexure a statement in the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

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

e) On the basis of written representation received from the Directors of the Company and taken on the Record by the Board of Directors, we report that none of the Directors of the Company is disqualified as on 31.03.2012 from being appointed as Director in terms of clause (g) sub-section (1) of section 274 of the Companies Act, 1956.

f) Attention is invited to note no. 2.5(i) regarding non provision for shortfall in recovery (amount unascertainable) against overdue debt of Rs. 185.74 lacs as stated in the said note for which legal and other persuasive action for recovery has been initiated, as in the opinion of the management these debts are good and recoverable as stated in the said note and our inability to comment thereon.

We further report that the profit for the year, the balance in reserve and surplus and debtors are without considering items mentioned above, the effect of which could not be determined.

Subject to para (f) above, in our opinion and to the best of our information and according to the explanations given to us, the said account subject to and read with note no. 2.3 and 2.5 (ii) and read together with other notes on accounts give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012;

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

and

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

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 1 of our Report of even date on Winsome Textile Industries Limited for the year ended 31st March, 2012)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including

quantitative details and situation of fixed assets except in respect of certain fixed assets (and also at new project location), where the same are in process of compilation / updating.

(b) As per information & explanations given to us, physical verification of the certain fixed assets are in process, according to the regular programmed of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets.

(c) As per the records and information and explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) As explained to us, the inventories of the Company (except stock lying with the third parties; and in transit)

have been physically verified by the management during the year.

(b) In our Opinion and according to information & explanation given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) According to the information and explanation given to us, we are of the opinion that the company is maintaining proper records of inventories (In case of process stock, records are updated on monthly physical verification of stock). As per records and information made available the discrepancies noticed on verification between the physical stock and the book records were not material in relation to the operation of the company.

iii. As per the information and explanations given to us the Company has neither granted nor taken during the year any loans, secured or unsecured to and from Companies, firms or other parties listed in the register maintained under section 301 of the Act Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time, there are internal control system commensurate with size of the company and nature of its business with regard to the purchase of inventory, fixed assets, services and for the sale of goods and services (read with note no. 2.5, 2.09 & 2.14). Based on the audit procedure performed and information. & explanation provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system nor been identified by the management

v. a) According to the information and explanations provided by the management and based on the audit

procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section; and

b) In our opinion and according to the information and explanation given to us, having regard to para iv above, the transactions made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.(Read with Para iv above)

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA Act and the rules framed there under and directives issued by the Reserve bank of India and other relevant provisions of the Act We have been informed 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 in this regard.

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

viii. We have broadly reviewed the books of account maintained by the company as prescribed 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 records have been made and maintained. We have, however, not made a detailed examination of the said records with view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the company in generally regular in depositing with appropriate

authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund,

Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no undisputed statutory dues payable for a period more than six months from the date they became payable as at 31.03.2012.

(b) According to the records and information and explanations given to us, there are no dues in respect of Income Tax, Custom Duty, Wealth Tax, Service Tax and Cess that have not been deposited on account of any dispute. In our opinion and according to the information and explanation given to us, the dues in respect of Sales Tax and Excise duty that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are given below:

Name of Statute# Nature of Dues Amount Period to which Forum where dispute (Rs. in Lacs) amount relates is pending

Central Excise Act Cenvat Credit 1.44 1995-96 Asst Commissioner

Cenvat Credit Cenvat Credit 62.92 2003-04 and CESTAT 2005-06 Excise Duty 3.57 2002-03,2003-04 CESTAT

2006-07

# (Excluding excise show cause notices)

This para is to be read with note no. 2.1 (a) in respect of Income Tax matters for the . Assessment Year 2006- 07 to 2009-10 where appeal is pending before Appellate authorities.

x. The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses during the current and immediately preceding previous year.

xi. In our opinion, based on the audit procedures and according to information & explanation given to us, the Company has generally not defaulted in repayment of dues to financial institution.

xii. Based on our examination of the records and the information and explanation given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. Clause (xiii) of the order is not applicable to the company as the company is not a Chit Fund Company or niche/ mutual benefit fund society.

xiv. In our opinion and according to the information's and explanations provided to us, the company is not dealing in or trading in shares, securities, debentures and other investment.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the balance sheet of the Company, we are of the opinion that prima facie at balance sheet date fund temporary has not been deployed for long term purpose, as explained by the management of the company.

xviii. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties or Companies covered in the register maintained under Section 301 of the Act in the current year.

xix. No debenture has been issued / outstanding during the year hence the provision of clause 4 (xix) of the said order are not applicable.

xx. According to the information and explanations given to us, during the year the Company has not raised fund through public issue. ( read with note no. 2.3)

xxi. To the best of our knowledge and belief, based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co.

Chartered Accountants Firm Regn. No. 301051E

Place : New Delhi N.K. LODHA

Date : 30.05.2012 Partner Membership No.: 85155


Mar 31, 2011

We have (audited the attached Balance Sheet of Winsome Textile Industries Limited as at 31st March 2011, the Profit and loss Account and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003 (The Order) as amended by the Companies (Auditors Report) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (The Act), we enclose in the Annexure a statement on the matters specified in the para- graphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

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

e) On the basis of written representation received from the directors of the Company and taken on the Record by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31.03.2011 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Attention is invited to note no. 7 of schedule 14B regarding non provision for shortfall in recovery (amount unascertainable) against overdue debt of Rs. 203.40 lacs as stated in the said note for which legal and other persuasive action for recovery has been initiated, as in the opinion of the management these debts are good and recoverable as stated in the said note and our inability to comment thereon.

We further report that the profit for the year, the balance in reserve and surplus and debtors are without considering items mentioned above, the effect of which could not be determined.

Subject to para (f) above, In our opinion and to the best of our information and according to the explanations given to us, the said account subject to and read with note no. 17 of & 5 schedule 14B, and read together with other notes on accounts give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31st March, 2011;

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

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

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 1 of our Report of even date on Winsome Textile Industries Limited for the year ended 31st March, 2011)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect ot certain fixed assets, where the same are in process of compilation/updation.

(b) As per information & explanations given to us, physical verification of the certain fixed assets have been taken up which is in process, according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets.

(c) As per the records and information and explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) As explained to us, the inventories of the Company (except stock lying with the third partiesj and in transit) have been physically verified by the management during the year.

(b) In our opinion and according to information & explanation given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) According to the information and explanation given to us, we are of the opinion that the company is maintaining proper records of inventories (In case of process stock, records are updated on monthly physical verification of stock). As per records and information made available the discrepancies noticed on verification between the physical stock and the book records were not material in relation to the operation of the company.

iii. As per the information and explanations given to us the Company has neither granted nor taken during the year any loans, secured or unsecured to and from companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature ana suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time, there are internal control system commensurate with size of the company and nature of its business with regard to the purchase of inventory, fixed assets, services and for the sale of goods and services which needs to be further strengthened (read with note no. 12 & 17 of schedule 14B). Based on the audit procedure performed and information & explanation provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system nor been identified by the management.

v (a) According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section; and

(b) In our opinion and according to the information and explanation given to us, having regard to para iv above, the transactions made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA Act and the rules framed there under and directives issued by the Reserve bank of India and other relevant provisions of the Act. We have been informed 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 in this regard.

vii. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business which needs to be further strengthened.

viii. We have broadly reviewed the books of account maintained by the company as prescribed 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 records have been made and maintained. We have, however, not made a detailed examination of the said records with view to determine whether they are accurate and complete.

ix. (a) According to the records of the Company, the company in generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no undisputed statutory dues payable for a period more than six months from the date they became payable as at 31.03.2011.

(b) According to the records and information and explanations given to us, there are no dues in respect of Custom Duty, Wealth Tax and Cess that have not been deposited on account of any dispute. In our opinion and according to the information and explanations given to us, the dues in respect of Sales Tax, Excise duty, Entry Tax, Service Tax and Income Tax that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are given below:

Name of the Statute# Nature of Dues Amount (Rs. in lacs)

Central Excise Act Cenvat Credit 0.95

Cenvat Credit 1.44

Cenvat Credit 68.04

Excise Duty 20.37

Excise Duty 0.63

Excise Duty 33.87

Excise Duty 91.26

Finance Act 1994 Service Tax 4.62

The Himachal Entry Tax 52.08 Pradesh Tax on Entry of Goods into Local Area Act, 2010

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

Central Excise Act 1995-96 Commissioner (A)

1995-96 Asst. Commissioner

2003-04, 2004-05 CESTAT 2005-06

2002-03, 2003-04 CESTAT 2006-07

2006-07 Commissioner (A)

2008-2009 High Court

2008-09 Additional Commissioner

Finance Act 1994 2005-06 CESTAT

The Himachal 2010-2011 High Court Pradesh Tax on Entry of Goods into Local Area Act, 2010

# (excluding excise show cause notices)

This para is to be read with note no.1 (B) of schedule 14B in respect of Income Tax matters for the Assessment Year 2006-07 to 2009-10 where appeal is pending before Appellate authorities.

x The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses during the current and immediately preceding previous year.

xi. In our opinion, based on the audit procedures and according to information & explanation given to us, the Company has generally not defaulted in repayment of dues to banks and financial institution.

xii. Based on our examination of the records and the information and explanation given to us, the Company has not granted any loans and / or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. Clause (xiii) of the order is not applicable to the company as the company is not a Chit Fund Company or nidhi/ mutual benefit fund / society.

xiv. In our opinion and according to the informations and explanations provided to us, the company is not dealing in or trading in shares, securities, debentures and other investment.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the balance sheet of the Company, we are of the opinion that prima facie no fund raised on short-term basis, which have been used for long term investment.

xviii. According to the information and explanations given to us, the Company has not made preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act. (read with note no, 4 (ii) of Schedule 14B).

xix. No debenture has been issued / outstanding during the year hence the provision of clause 4 (xix) of the said order are not applicable.

xx. According to the information and explanations given to us, during the year the Company has raised money through a GDR issue, pending compliance the money is parked in a separate bank Escrow account, (refer note no. 5 of schedule 14 B).

xxi. To the best of our knowledge and belief, based on the audit procedure performed and on the basis of .information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.

For Lodha & Co. Chartered Accountants Firm Regn. No. 301051E

N.K. Lodha Partner M. No. 85155

Place: New Delhi Date : 16.05.2011


Mar 31, 2010

We have audited the attached Balance Sheet of Winsome Textile Industries Limited as at 31st March 2010, the Profit and loss Account and also the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003 (The Order) as amended by the Companies (Auditors Report) Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (The Act), we enclose in the Annexure a statement on the matters specified in the paragraphs 4 & 5 of the said Order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we report that:

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

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

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

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

e) On the basis of written representation received from the directors of the Company and taken on the Record by the Board of Directors, we report that none of the directors of the Company is disqualified as on 31.03.2010 from being appointed as director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Attention is drawn on nofe no.3 of schedule 15B regarding depreciation on certain Plant & Machinery is provided as per the rates applicable to the continuous process plant for the reasons as stated in the said note.

g) Further Attention is invited to:

(i) Note no. 7 of schedule 758 regarding non provision for shortfall in recovery (amount unascertained) against overdue debt for which legal and other persuasive action for recovery has been initiated, as in the opinion of the management these debts are good and recoverable as stated in the said note and our inability to comment thereon.

(ii) Note no. 19 (B) of schedule 15B regarding remuneration paid to a director as stated in the said note is subject to the approval of the Central Government.

We further report that the profit for the year, the balance in reserve and surplus and debtors are without considering items mentioned above, the effect of which could not be determined.

Subject to para (g) above, In our opinion and to the best of our information and according to the explanations given to us, the said account subject to and read with note no. 17 of schedule 15B, Significant Accounting Policies and read together with other notes on accounts give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of Balance Sheet, of the State of Affairs of the Company as at 31 st March, 2010;

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

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



ANNEXURE TO THE AUDITORS REPORT



(Referred to in paragraph 1 of our Report of even date on Winsome Textile Industries Limited for the year ended 31st March, 2010)

i. (a) The Company has maintained records in respect of fixed assets showing full particulars including quantitative details and situation of fixed assets except in respect of certain fixed assets, where the same are in process of compilation updation.

(b) As per information & explanations given to us, physical verification of the certain fixed assets are in process, according to the regular programme of physical verification once in every three years, in phased manner, which in our opinion is reasonable having regard to the size of the company and the nature of its fixed assets.

(c) As per the records and information and explanation given to us, fixed assets disposed off during the year were not substantial.

ii. (a) As explained to us, the inventories of the Company (except stock lying with the third parties, job workers and in transit) have been physically verified by the management during the year.

(b) In our opinion and according to information & explanation given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) According to the information and explanation given to us, we are of the opinion that the company is maintaining proper records of inventories (In case of process stock, records are updated on monthly physical verification of stock). As per records and information made available the discrepancies noticed on verification between the physical stock and the book records were not material in relation to the operation of the company.

iii. As per the information and explanations given to us the Company has neither granted nor taken during the year any loans, secured or unsecured to and from companies, firms or other parties listed in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (b) to (d) and (f) & (g) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotation or where user department has shown specific preference, where, as explained, rates were determined considering the quality, volume, nature of the items and market conditions prevailing at that time, there are internal control system commensurate with size of the company and nature of its business with regard to the purchase of inventory, fixed assets, services and for the sale of goods and services which needs to be further strengthened (read with note no. 12 & 17 of schedule 15B). Based on the audit procedure performed and information & explanation provided by the management, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system nor been identified by the management.

v. (a) According to the information and explanations provided by the management and based on the audit procedure performed, we are of the opinion that the particulars of the contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that section; and

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of such contracts or arrangements (exceeding the value of Rs. 5 Lacs in respect of each party during the financial year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Section 58A and 58AA Act and the rules framed there under and directives issued by the Reserve bank of India and other relevant provisions of the Act. We have been informed 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 in this regard.

vii. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business which needs to be further strengthened.

viii. We have broadly reviewed the books of account maintained by the company as prescribed 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 records have been made and maintained. We have, however, not made a detailed examination of the said records with view to determine whether they are accurate and complete.

ix. (a) According to the records of the company, the company in generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, there are no undisputed statutory dues payable for a period more than six months from the date they became payable as at 31.03.2010.

(b) According to the records and information and explanations given to us. there are no dues in respect of Income Tax, Custom Duty. Wealth Tax, Service Tax and Cess that have not been deposited on account of any dispute. In our opinion and according to the information and explanations given to us, the dues in respect of Sales Tax and Excise duty that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are given below:

Name of Statute# Nature of Dues Amount Period to which Forum where

dispute is

pending (Rs. in Lacs) amount relates

Central Excise Act Cenvat Credit 0.95 1995-96 Commissioner

(A)

Cenvat Credit 1.44 1995-96 Asstt.

Commissioner

Cenvat Credit 68.04 2003-04,2004-05, CESTAT

2005-06

Excise Duty 96.23 2002-03,2003-04 CESTAT

2004-06,2006-07

Excise Duty 0.63 2006-07 Commissioner

(A)

Excise Duty 33.87 2008-09 High Court

Excise Duty 91.26 2008-09 Additional

Commissioner

Finance Act 1994 Service Tax 4.62 2005-06 CESTAT

#(excluding excise show cause notices)

This para is to be read with note no. 1 of Schedule 15B.

x. The Company does not have accumulated losses at the end of financial year and in the current financial

year Company has not incurred cash losses, however Company had incurred cash loss in the immediate preceding financial year.

xi. In our opinion, based on the audit procedures and according to information & explanation given to us, the Company has generally not defaulted in repayment of dues to financial institution, except in the first quarter where debt restructuring was under consideration and read with note no 6 (i) of schedule 15B.

xii. Based on our examination of the records and the information and explanation given to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities.

xiii. Clause (xiii) of the order is not applicable to the company as the company is not a Chit Fund Company or nidhi/mutual benefit fund/society.

xiv. In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investment.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks and financial institution.

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

xvii. On the basis of information and explanations given to us and on overall examination of the balance sheet of the Company, we are of the opinion that prima facie no fund raised on short-term basis, which have been used for long term investment.

xviii. According to the information and explanations given to us, during the year Company has made preferential allotment of 94,00.000 equity shares to 2 (two) Companies namely M/s Roselab Commodities Private Limited and M/s Kailashpati Vinimay Private Limited covered in the register maintained under Section 301 of the Act (read with note no. 5 (A) (i) of Schedule 15B).

xix. No debenture has been issued outstanding during the year hence the provision of clause 4 (xix) of the said order are not applicable.

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

xxi. To the best of our knowledge and belief, based on the audit procedure performed and on the basis of information and explanations provided by the management, no material fraud on or by the Company has been noticed or reported during the course of the audit.



For Lodha & Co.

Chartered Accountants

Firm Regn. No. 301051E

Place : New Delhi N.K. LODHA

Date : 27.05.2010 Partner

Membership No.: 85155

 
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