Auditor Report of E-Land Apparel Ltd.

Mar 31, 2018

Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements of E-Land Apparel Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.

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 Ind AS 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 Ind AS financial statements based on our audit.

In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder and the Order issued under section 143(11) of the Act.

We conducted our audit of the Ind AS financial statements 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 Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS 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 Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. 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 Ind AS financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS 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 Ind AS and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, and its loss, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date.

Material uncertainty related to Going Concern

We draw attention to Note 36 to the Ind AS financial statements, which indicates that the Company has incurred a net loss of Rs.7,842.49 lakhs during the year ended March 31, 2018 and the accumulated losses amounting to Rs.58,171.19 lakhs as on that date, have eroded the net-worth of the Company. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. However, the Ind AS financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note.

Our opinion is not modified in respect of this matter.

Other Matter

The transition date opening balance sheet as at April 1, 2016 included in these Ind AS financial statements, is based on the statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by the predecessor auditor whose report for the year ended March 31, 2016 dated May 30, 2016 expressed an unmodified opinion on those financial statements, and have been restated to comply with Ind AS. Adjustments made to the previously issued said financial information prepared in accordance with the Companies (Accounting Standards) Rules, 2006 to comply with Ind AS have been audited by us.

Our opinion on the Ind AS financial statements is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit we report, to the extent applicable 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 including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.

e) The matter described in the ‘Material uncertainty related to Going Concern’ paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors of the Company as on March 31, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164(2) of the Act.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”. Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.

h) 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, as amended, 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 Ind AS financial statements;

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

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

2. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.

ANNEXURE “A” TO THE INDEPENDENT AUDITOR’S REPORT

(Referred to in paragraph 1(g) under ‘Report on Other Legal and Regulatory Requirements’ of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of E-Land Apparel Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Basis for Qualified Opinion

According to the information and explanations given to us and based on our audit, material weakness has been identified in the Company’s internal financial controls over financial reporting as at March 31, 2018 in respect of analysing quotations for purchases of raw materials and fixed assets which could potentially result in purchases at higher than market price.

A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Qualified Opinion

In our opinion, to the best of our information and according to the explanations given to us, except for the possible effects of the material weakness described in Basis for Qualified Opinion paragraph above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

We have considered the material weakness identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the Ind AS financial statements of the Company for the year ended March 31, 2018, and the material weakness does not affect our opinion on the said Ind AS financial statements of the Company.

ANNEXURE “B” TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

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

(b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the previous year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed / transfer deed / conveyance deed provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings, are held in the name of the Company as at the balance sheet date.

In respect of immovable properties of land that have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Company, where the Company is the lessee in the agreement.

ii. As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

iii. The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

v According to the information and explanations given to us, the Company has not accepted any deposit during the year and does not have any unclaimed deposits.

vi. The maintenance of cost records has not been specified by the Central Government under Section 148(1) of the Companies Act, 2013.

vii. According to the information and explanations given to us, in respect of statutory dues:

(a) Undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, goods and services tax, duty of customs, duty of excise, value added tax, cess have not been regularly deposited with the appropriate authorities and there have been serious delays in a large number of cases.

(b) The undisputed amounts payable in respect of provident fund, employees’ state insurance, income-tax, sales-tax, service tax, goods and services tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues in arrears as at March 31, 2018 for a period of more than six months from the date they became payable are as follows:

Name of Statute	Nature of Dues	Amount (Rs. Lakhs)	Period to which the Amount Relates	Due Date	Date of subsequent payment
The Karnataka Tax on Professions, Trades, Callings and Employment Act, 1976	Professional Tax	11.34	2016-17 and 2017-18	Various dates from May 31, 2016 to September 30, 2017	Not paid
The Finance Act 2015	Service tax	0.55	2016-17 and 2017-18	Various dates from Nov 06, 2016 to July 06, 2017	Not paid
The Central Excise Act, 1944	Excise Duty	64.84	2016-17 and 2017-18	Various dates from Feb 06, 2017 to July 06, 2017	Not paid
The Karnataka Labour Welfare Fund Act, 1965	Labour Welfare Fund	0.24	2015-16	Jan 15, 2016	Not paid
Sales Tax	Central Sales Tax	1.07	2014-15 and 2015-16	April 21, 2015 & August 21, 2015	Not paid

(c) Details of dues of Income-tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, and Value Added Tax which have not been deposited as on March 31, 2018 on account of disputes are given below:

Name of Statute	Nature of Dues	Forum where Dispute is Pending	Period to which the Amount Relates	Amount (Rs. Lakhs)
Income-tax Act, 1961	Income tax	Commissioner of Income Tax (Appeals)	2008-09 & 2009-10	140.36
Sales Tax	Sales Tax, including interest and penalty	Commissioner of Sales Tax, Maharashtra	2001-02 to 2004-05	250.22

viii. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government. The Company has not issued any debentures.

ix. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause (ix) of the Order is not applicable.

x. To the best of our knowledge and according to the information and explanation given to us, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year.

xi. In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

xii. The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.

xiii. In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.

xiv. During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of the Order is not applicable to the Company.

xv In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with them and hence provisions of Section 192 of the Companies Act, 2013 are not applicable.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm’s Registration No. 117366W/W-100018)

SD/-

Monisha Parikh

Bengaluru, May 30, 2018 Partner

(Membership No.47840)

---

Mar 31, 2016

To the Members of E-land Apparel Limited

Report on the Financial Statements

We have audited the accompanying financial statements of E-land Apparel Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2016, 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 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 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 safe guarding of 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 the design, implementation and maintenance of adequate internal financial control 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, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at March 31, 2016, its loss, and its cash flows for the year ended on that date.

Emphasis of Matters

a. We draw attention to Note 40 of the financial statements. The Company has incurred losses during the current period and the accumulated losses of the Company at the close of the period exceed its paid up capital and reserves and surplus. These conditions as set forth in Note 40, indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

b. We draw attention to Note 30 (ii) of the financial statements, in respect of contingency related to ‘compensation payable in lieu of bank sacrifice pursuant to the right of recompense’, the outcome of which is materially uncertain and cannot be determined currently.

c. We draw attention to Note 10 of the financial statements in respect of company’s land in Bangalore wherein the Company has made an application for extension of time period to comply with the conditions mentioned in the lease cum sale agreement. The extended time period to comply with the conditions expired during the current year. Pending disposal of the Company’s application for further extension of time, no adjustment has been made in the financial statements.

d. We draw attention to Note 41 of the financial statements where pending disposal of the company’s compounding application by the Reserve Bank of India, no adjustment has been made in the financial statements.

e. We draw attention to Note 39 of the financial statements regarding managerial remuneration paid by the Company for the year ended March 31, 2015 in excess of the limits prescribed under the Companies Act, 2013. As informed to us, the Company has received approval from Central Government for excess remuneration paid to two directors and is in the process of filing revised application with the Central Government for one of its directors.

Our audit opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s report) Order, 2016 (“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 1 a statement on the matters specified in 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 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 it appears from our examination of those books;

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

(d) The matter described in para (a) in Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the company;

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

(f) On the basis of written representations received from the directors as on March 31, 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of section 164 (2) of the Act;

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;

(h) 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 30 to the financial statements;

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

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

Annexure 1 referred to in paragraph 1 under the heading ‘Report on Other Legal and Regulatory Requirements’ of our report of even date

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

(b) The Company has performed physical verification of all the assets located at the manufacturing facility at Bangalore in the current year, except for plant & machineries which were verified in the previous year. No material discrepancies were noticed on such verification.

The Company has a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given by the management, the title deeds of immovable properties included in fixed assets are held in the name of the company.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year. Discrepancies noted on physical verification of inventories were not material, and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the Companies Act 2013 in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the company.

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

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under Section 148(1) of the Companies Act, 2013, for the products/services of the Company.

(vii) (a) Undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees’ state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues which were outstanding, at the year end, for a period of more than six months from the date they became payable, are as follows:

Name of the Statute	Nature of the Dues	Amount (Rs. Lakhs)	Date of Payment
Navi Mumbai Municipal Corporation	Municipal Taxes	100.23	Not Paid yet

(c) According to the records of the Company, the dues outstanding of income-tax and sales-tax on account of any dispute, are as follows:

Name of the statute	Nature of dues	Amount Rs. Lakhs)	Period to which the amount relates	Forum where dispute is pending
Sales Tax Income Tax Act, 1961 Income Tax Act, 1961	Works Contract Tax Income Tax Income Tax	250.22 69.46 70.86	2004-05 to 2011-12 Assessment Year 2009-10 Assessment Year 2010-11	Commissioner of Sales Tax, Maharashtra Commissioner of Income Tax (Appeals) Commissioner of Income Tax (Appeals)

(viii)In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders or Government.

(ix) According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer / debt instruments and term loans hence, reporting under clause (ix) is not applicable to the Company and hence not commented upon.

(x) We report that there are certain allegations relating to disposal of assets and statutory non compliances which are currently under investigation by the management of the company and hence we are unable to comment on the same.

(xi) According to the information and explanations given by the management, the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion, the Company is not a Nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the company and, not commented upon.

(xv) According to the information and explanations given by the management, the Company has not entered into any noncash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

Annexure 2 referred to in paragraph 2(f) under the heading ‘Report on Other Legal and Regulatory Requirements’ of our report of even date

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of E-land Apparel Limited (“the Company”) as of March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified as at March 31, 2016:

(a) The Company did not have appropriate internal control system over inviting and analyzing quotations for purchases of raw materials and fixed assets which could potentially result in purchases at higher than market price.

(b) The Company did not have appropriate internal control system over identification and selection of counterparty and inviting and analyzing tenders/bids for sale of company’s assets which could potentially result in company’s assets being sold at a lower than market price and could potentially create opportunities for fraud on the company.

A ‘material weakness’ is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion, except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Explanatory paragraph

We also have audited, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act, the financial statements of E-land Apparel Limited Company, which comprise the Balance Sheet as at March 31, 2016, and the related 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. The material weaknesses identified as above was considered in determining the nature, timing and extent of audit tests applied in our audit of the March 2016 financial statements of the company and this report does not affect our report dated May 30, 2016 on which expressed an unqualified opinion on the financial statements.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Vikram Mehta

Partner

Membership Number: 105938

Place of Signature: Mumbai

Date: May 30, 2016

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Mar 31, 2015

We have audited the accompanying financial statements of E-Land Apparel Limited ('the Company'), which comprise the Balance Sheet as at March 31, 2015, 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 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 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 includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

Basis of qualified opinion

a. We report that, upon disposal of certain revalued fixed assets, Company has transferred Rs.1,430.19 lacs, corresponding to the amount remaining unadjusted in the revaluation reserve as at the date of disposal in relation to these assets, to the statement of profit and loss instead of transferring the same to general reserve as required by Accounting Standard 10 "Accounting for fixed assets".Had the management transferred this amount from the revaluation reserve directly to the general reserve, loss for the year and balance in general reserve would be higher by Rs.1,430.19 lacs.

b. We report that trade receivables and trade payables as at March 31, 2015 are subject to confirmation of balances and reconciliations with the respective parties. The financial statements do not include the impact of adjustments, if any, which may arise out of the confirmation and reconciliation process and accordingly we are unable to comment on the matter including any consequential impact that may arise in this regard in these financial statements.

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 referred to in para (a) and possible effect of matter referred to in para (b) in the Basis of Qualified Opinion paragraph above, 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 March 31, 2015, its loss and its cash flows for the year ended on that date.

Emphasis of Matter

a. We draw attention to Note 30 (ii) of the financial statements, in respect of contingency related to 'compensation payable in lieu of bank sacrifice pursuant to the right of recompense', the outcome of which is materially uncertain and cannot be determined currently.

b. We draw attention to Note 41 of the financial statements, where pending receipt of approval from Reserve Bank of India, no adjustment has been made in the financial statements.

c. We dra w attent ion to Note 39 of the financial statements regarding managerial remuneration paid by the Company for the year ended March 31, 2015 in excess of the limits prescribed under the Companies Act, 2013. As informed to us, the Company has filed an application with the Central government for approval of such excess remuneration paid to two directors and is in the process of filing a revised application with the Central Government for one of its directors.

d. We draw attention to Note 40 of the financial statements. The Company has incurred losses during the current period and the accumulated losses of the Company at the close of the period exceed its paid up capital and reserves and surplus. These conditions, along with other matters as set forth in Note 40, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.

Our opinion is not qualified in respect of these matters.

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 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) Except for the matter described in the Basis of Qualified Opinion paragraph above, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) Except for the matter described in the Basis of Qualified Opinion paragraph above, in our opinion, proper books of account, except for the matter stated in clause (ii) (c) in the Annexure referred to in paragraph 1 under the heading 'Report on Other Legal and Regulatory Requirements', 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) Except for the effect of the matters described in the Basis of Qualified Opinion paragraph above, 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) The matters described in the basis for qualified opinion paragraph and para (a) and (d) in Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;

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

(g) The qualification relating to the maintenance of accounts and other matters connected herewith are as stated in the Basis of Qualified Opinion paragraph above;

(h) 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 30 to the financial statements;

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

iii. There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Company in respect of the unclaimed dividend pertaining to the year 2006-07. In respect of the amounts to be transferred to Investor Education and Protection Fund relating to the refund of money received on Initial Public Offer made, the Company has deposited an amount of Rs 1.71 lacs on January 20, 2015. The due date to deposit the same was March 29, 2014 resulting in a delay of 327 days.

Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date

Re: E-Land Apparel Limited (formerly known as Mudra Lifestyle Limited) ('the Company')

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except for furniture & fixtures, office equipment, vehicles, computers and electrical installations where the fixed asset register is not updated for location and quantitative details. Further, in case of these assets, description of the asset in the fixed asset register is not sufficient in a large number of cases to make asset identification possible.

(b) The Company has performed physical verification of only plant and machinery and vehicles in the current year. No material discrepancies were noticed on such verification. All other fixed assets have not been physically verified by the management and hence we are unable to comment on the discrepancies, if any, that may arise on such verification.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

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

(c) The Company has not maintained proper records of inventory and has shown inventories of raw material, work in progress, finished goods and consumables based on physical verification. In the absence of proper records of inventory, we are unable to comment on discrepancies, if any, that would have arisen on physical verification.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a) and (b) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us and having regard to the explanation that purchases of items of certain inventories are from vendors specifically nominated by the customer and hence no comparable quotations are obtained, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services.

The internal control system for purchases of inventory needs to be significantly strengthened since purchase orders are not timely approved; existence of significant delays in recording of purchase invoices as compared to the date of receipt of material and absence of process to obtain confirmations and perform periodic reconciliations with vendors.

The internal control system for sale of goods needs to be significantly strengthened due to absence of process to obtain confirmations and perform periodic reconciliations with customers; incorrect recording of sales return transactions and significant amount of unadjusted credits accumulated in the books of accounts which have not been adjusted against the respective sale invoices.

In our opinion, this is a continuing failure to correct a major weakness in the internal control system.

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

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under clause 148(1) of the Companies Act, 2013, for the products of the Company.

(vii) (a) Undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in a large number of cases, except for value added tax where the Company is regular in depositing the same. The provisions of excise duty are not applicable to the Company.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, value added tax, cess and oth er mate rial statutory dues which were outstanding, at the year end, for a period of more than six months from the date they became payable, are as follows:-

Nature of statutory dues Amount (Rs in lacs)

Tax deducted on source 22.39

Municipal Taxes 40.23

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax and cess on account of any dispute, are as follows:

Name of Statute Amount Period for which it relates Forum where dispute is pending (Rs in lacs)

Sales Tax Act 250.22 2004-05 to 2011-12 Commission of Sales Tax, Maharashtra

Income Tax Act 69.46 Assessment Year 2009-10 Commissioner of Income Tax (Appeals)

Income Tax Act 70.88 Assessment Year 2010-11 Commissioner of Income Tax (Appeals)

(d) According to the information and explanations given to us, there are significant delay in 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 thereunder.

(viii) The Company's accumulated losses at the end of the financial year are more than fifty percent of its net worth and it has incurred cash losses in current as well as immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

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

(xi) The Company did not have any term loans outstanding during the year.

(xii) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year.

For S R B C & CO LLP

Chartered Accountants ICAI Firm registration number:324982E

per Vikram Mehta

Partner Membership Number: 105938 Place: Mumbai Date : May 28, 2015

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Mar 31, 2014

We have audited the accompanying financial statement of Mudra Lifestyle Limited ("the Company"), which comprises 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 Responsibility for the Financial Statements

Management is responsible for the preparation of these financials statements that give a true and fair view of the financial position, financial performance and cash flows of the company in accordance with accounting standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with General Circular 15/2013 dated 13th September, 2013 of 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 amount and disclosure in the financial statements. The procedures selected depend on auditor''s judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessment, the auditor consider internal control relevant to the company''s preparation and fair presentation of the financials statements in order to design audit procedure that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used as well as evaluating the overall presentation of the financial statement.

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 us the aforesaid financial statements give the information required by the Act in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India:

1. In the case of Balance sheet, of the state of affairs of the Company as at March 31, 2014;

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

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

Emphasis of Matter Without qualifying our opinion, we draw attention to:

a. Note 14 "Deferred Tax Assets" of the Financial Statements, wherein the Company has recognized net deferred tax assets of Rs. 2,623.96 Lacs on account of unabsorbed depreciation.

b. The company has incurred huge losses during the year under audit and preceding audit periods which has resulted in substantial erosion of its net worth. Further, during the year, the Company has disposed off its Fabric Business Unit located at Unit No. D-1, Tarapur, Maharashtra. However, the company has prepared its financial statements on going concern basis being optimistic about company''s production and performance of its garment unit.

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 sub section (4A) of Section 227 of the act, we give in the annexure a statement of the matters Specified in paragraph 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 accounts as required by law have been kept by the Company so far as appears from our examination of those books;

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

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

e. On the basis of written representation received by the directors as on March 31st, 2014 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31st, 2014, from being appointed as a director in terms of clause (g) of sub section (1) of section 274 of the companies Act, 1956.

Annexure to Auditors Report Annexure referred to in paragraph 3 of the Auditors Report of even date

As required by the Companies (Auditors Report) Order, 2003 (as amended) and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:

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

b) As explained to us, fixed assets have been physically verified by the Company at reasonable interval. During the year under audit the Company has verified part of the fixed assets and no material discrepancies have been noticed on such physical verification.

c) We draw attention to Note 37 in the financial statements. The Company has disposed off Unit No. D-1 at Tarapur, Maharashtra, which is substantial part of its fixed assets, during the year under audit. As per the explanation and information provided to us, the Company is having other running units and accordingly, in our opinion there shall be no affect on going concern status of the Company.

(ii) a) As explained to us physical verification of inventories has been conducted during the year by the management at reasonable interval.

b) 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) In our opinion and according to the information and explanation given to us, the company has maintained proper records of its inventories and no material discrepancies were notices on physical verification.

(iii) According to the information and explanation provided to us, the company has neither granted nor taken loans, secured or unsecured, to or from parties covered in the register maintained under section 301 of Companies Act, 1956. Accordingly clause 4(iii) of the order is not applicable to the Company.

(iv) In our opinion and according to information and explanation received from the Company, it is in continuous process of strengthening its internal controls commensurate with the size of the Company and nature of its business for purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

(v) According to the information and explanations given to us, there are no particulars of contracts or arrangements that need to be entered into the register maintained under section 301 of Companies Act, 1956. Accordingly clause 4(v) of the order is not applicable to the Company.

(vi) According to the information and explanation given to us, the Company has not accepted any deposit from the public during the year . Accordingly clause 4(vi) of the order is not applicable to the Company.

(vii) As per the information and explanation made available to us, the Company has an internal audit system commensurate to the size of the Company and the nature of its business.

(viii) Based on the information and explanation provided to us, the Company has maintained the cost records prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956. However, we have not made detailed examination of such cost records with a view to determine whether they are maintained adequately.

(ix) a) As per records, there have been delays in depositing undisputed statutory dues in respect of income tax, wealth tax, service tax, municipal taxes, professional tax, sales tax, provident fund, employees'' state insurance. The details of outstanding statutory dues as on last day of the year under Audit which are outstanding for a period of more than six months from the date they became payable are as under: -

Sr. No. Nature Amount (Rs. In Lacs)

1. Municipal Taxes 40.23

2. Profession Tax 2.38

3. Gram Panchayat Rules* 41.26

* This liability has been transferred to E-Land Fashion India Pvt. Ltd. as liability of Company''s unit at D-1, Tarapur under the Business Transfer Agreement.

b) As per the records of the Company, there are no disputed dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess except as under: -

Name of Statute Amount Period for which Forum (Rs. In lacs) it relates where dispute is pending

Sales Tax Act 250.22 2001-02 to 2004-05 Commissioner of Sales Tax, Maharashtra

Income Tax Act 665.35 Assessment Year Commissioner of Income 2011-12 Tax (Appeals)

(x) The Company has accumulated losses amounting to Rs. 36,848.87 Lacs as at the end of the year under Audit which are more than 50% of its net worth. Further, the Company has incurred cash loss amounting to Rs. 289.26 Lacs during the year under audit and Rs. 4,276.78 Lacs during immediately preceding previous period.

(xi) During the year, the Company had made delayed payment of principal and interest to bank and financial institutions which have been made good as on the balance sheet date except in the following cases which are overdue as on 31st March 2014.

No.Bank Amount Remarks

1 Axis Bank - Term Loan 0.87 Paid as on date

2 Bank of India - WCTL 13.15 Outstanding

3 Industrial Bank of India - Term Loan 12.64 Paid as on date

4 Industrial Bank of India - FITL 1.12 Paid as on date

5 Oriental Bank of Commerce - Term Loan 8.45 Paid as on date

6 Oriental Bank of Commerce - FITL 3.77 Paid as on date

7 Small Industrial Bank of India - Term Loan 13.49 Paid as on date

8 Small Industrial Bank of India - FITL 0.73 Paid as on date

9 State Bank of Patiala - WCTL 5.57 Paid as on date

10 State Bank of Travancore - Term Loan 30.50 Paid as on date

11 State Bank of India - Overdue Interest 1,608.72 Outstanding

The above overdue outstanding loans and interest, as on 31st March 2014, have been transferred to E-Land Fashion India Pvt. Ltd. as loan liability of Company''s unit at D-1, Tarapur under the Business Transfer Agreement.

(xii) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii)The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the Company.

(xiv) As per records of the company and information and explanations given to us by the Company, it is not dealing or trading in shares, securities, and debentures and other investments.

(xv) As per information''s and explanations provided to us, the Company has not given any guarantee in connection with loans taken by others.

(xvi)As per information and explanation given to us, the Company has not obtained any term loan during the period under audit and hence, this clause of the order is not applicable.

(xvii)On an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long term investments.

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

(xix)The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) As per the information and explanation provided to us during the course of audit, no fraud on or by the Company has been noticed or reported during the year under audit.

For K C P L And Associates LLP Chartered Accountants Firm No. 119223W

Mahavir Jain Place: Mumbai Partner Date: 30th May, 2014 M. No. 121275

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statement of Mudra Lifestyle Limited ("the Company"), which comprises the Balance Sheet as at March 31, 2013, the Statement of Profit & Loss and Cash Flow Statement for the period then ended, and a summary of significant accounting policies and other explanatory information.

Management Responsibility for the Financial Statements

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

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We 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 amount and disclosure in the financial statements. The procedures selected depend on auditor''s judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessment, the auditor consider internal control relevant to the company''s preparation and fair presentation of the financials statements in order to design audit procedure that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used as well as evaluating the overall presentation of the financial statement.

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 us the aforesaid financial statements give the information required by the Act in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India:

1. In the case of Balance sheet, of the state of affairs of the Company as at March 31, 2013;

2. In the case of Profit & Loss Account, of the Loss for the period ended on that date; and

3. In the case of Cash Flow statement, of the cash flows for the period ended on that date.

Emphasis of Matter

Without qualifying our opinion, we draw attention to:

i) Note 14 "Deferred Ta x Assets" of the Financial Statements, wherein the Company has recognized deferred tax assets of Rs.1613.16 Lakhs on account of brought forward losses and unabsorbed depreciation keeping in view of binding contract with Promoter Company and existing level of turnover.

ii) The company has incurred huge losses during the period under audit and immediately preceding audit period which has resulted in substantial erosion of its net worth. However, the company has prepared its financial statements on going concern basis being optimistic about company''s production and performance in future years.

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 sub section (4A) of Section 227 of the act, we give in the annexure a statement of the matters Specified in paragraph 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 accounts 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 dealt with by this report are in agreement with the books of accounts;

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

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

Annexure to Auditors Report

Annexure referred to in paragraph 3 of the Auditors Report of even date

As required by the Companies (Auditors Report) Order, 2003 (as amended) and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:

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

b) As explained to us, all the assets have been physical verified by the management. The frequency of verification is reasonable and no material discrepancies have been noticed on such physical verification.

c) The Company has not disposed off any substantial part of its fixed assets during the period.

(ii) a) As explained to us physical verification of inventories has been conducted during the period by the management at reasonable interval.

b) 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) In our opinion and according to the information and explanation given to us, the company has maintained proper records of its inventories and no material discrepancies were notices on physical verification.

(iii) a) During the period the Company has not granted unsecured loans to any parties covered in the register maintained under Section 301 of the Companies Act, 1956. The aggregate maximum amount involved during the period was Rs. Nil and the period-end balance of such loans was Rs. Nil

b) In view of our comments above, clauses (iii) (b) (c) and (d) of the said clause order are not applicable to the Company.

c) As per information and explanation provided to us, the Company has not taken any unsecured loan from parties covered in the register maintained under Section 301 of the Act.

d) In view of our comments above, clauses (iii) (f) and (g) of the said clause are not applicable to the Company.

(iv) In our opinion and according to information and explanation received from the Company, it is in continuous process of strengthening its internal controls commensurate with the size of the Company and nature of its business for purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system.

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

b) According to the information and explanations given to us, the transaction made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in respect of each party during the period have been made at a price which appear reasonable as per information available with the company.

(vi) According to the information and explanation given to us, the Company has not accepted any deposit from the public. Therefore, the provision of clause (vi) of paragraph 4 of the order are not applicable to the company.

(vii) As per the information and explanation made available to us, the Company has an internal audit system commensurate to the size of the Company and the nature of its business.

(viii) Based on the information and explanation provided to us, the Company has maintained the cost records prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956. However, we have not made detailed examination of such cost records with a view to determine whether they are maintained adequately.

(ix) a) Undisputed statutory dues in respect of income tax, wealth tax, service tax, municipal taxes and professional tax have not been regularly deposited by the Company and undisputed statutory dues in respect of sales tax, provident fund, employees'' state insurance, and excise duty have generally been regularly deposited by the Company during the period under Audit. The details of outstanding statutory dues as on last day of the period under Audit which are outstanding for a period of more than six months from the date they became payable are as under:-

Sr. No. Nature Amount (Rs. In Lacs)

1 Karnataka VAT Act 16.67

2 Daman VAT Act 1.30

3 Maharashtra State Professional Tax Act 8.47

4 Employees M.L.W.F. Fund 0.04

5 Wealth Tax Act 0.69

6 Municipal Tax (New Bombay) 37.89

7 Gram Panchayat Rules, Thane 63.26

8 Income Tax Act 575.65

Total 703.97



b) As per the records of the Company, there are no disputed dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess except as under:-

Name of Statute Amount (Rs. In lacs) Period for which it relates Forum where dispute is pending

Sales Tax Act 250.22 2001-02 to 2004-05 Commissioner of Sales Tax, Maharashtra

(x) The Company has accumulated losses amounting to Rs. 35,515 Lakhs as at the end of the period under Audit which are more than 50% of its net worth. Further, the Company has incurred cash loss amounting to Rs. 4,276.78 Lakhs during the period under audit and Rs. 28,510.24 Lakhs during immediately preceding previous period.

(xi) In absence of the requisite information, we are unable to comment whether company has defaulted in making repayment of dues to various banks and financial institutions.

(xii) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii) The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the Company.

(xiv) As per records of the company and information and explanations given to us by the Company, it is not dealing or trading in shares, securities, and debentures and other investments.

(xv) As per information''s and explanations provided to us, the Company has not given any guarantee in connection with loans taken by others.

(xvi) As per information and explanation given to us, the Company has not obtained any term loan during the period under audit and hence, this clause of the order is not applicable.

(xvii) On an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long term investments.

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

(xix) The Company has not issued any debentures during the period.

(xx) The Company has not raised any money by way of public issue during the period.

(xxi) As per the information and explanation provided to us during the course of audit, no fraud on or by the Company has been noticed or reported during the period under audit.



For K C P L & Associates

Chartered Accountants

Firm No. 119223 W



Sd/-

Paras Jain

Partner

Mem. No. 134160

Place: Mumbai

Date: 29th May, 2013

---

Sep 30, 2012

We have audited the attached Balance Sheet of Mudra Lifestyle Limited ("the Company"), as at 30th September 2012, the Statement of Profit and Loss and the Cash Flow Statement for the period ended on that date annexed thereto.

1. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materials misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor''s Report) Order, 2003 (as amended) issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956 (Act), we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said Order.

4. As per information''s and explanations provided to us the company has appointed eight foreign nationals as directors during the period under audit. The company has not filed the requisite applications with Central Government in terms of the provisions of Section 269 read with Schedule XIII of the Companies Act, 1956 (''the Act''), to seek approval for the same. It has been explained to us that, as required, the company is under process to obtain no objection certificates from banks in order to make applications to the Central Government.

5. Attention is invited to Note 4 "Long Term Borrowings" and Note 8 "Short Term Borrowings" of the Financial Statements, wherein the Company''s loan liabilities has been reinstated in the Financial Statements based on the bank statements pursuant to Master Restructuring Agreement (''MRA'') executed with the lenders read along with the Corporate Debt Restructuring Scheme ("CDR"). However, as per the information and explanation provided to us, the Company is yet to reconcile the accuracy of the working of the interest reversed by all the banks as stated in MRA read along with CDR. In absence of the reconciliation, we are unable to ascertain as to whether the amount of Profit/Loss of the period and relevant liabilities have been under or overstated.

6. Attention is invited to Note 16 "Inventories" of Financial Statements wherein the company has shown Inventory of Rs. 6,677.14 Lakhs (P. Y.20,451.23 Lakhs). During the period the Company has carried out physical stock taking by independent auditors appointed by the Company in the month of September 2011 onwards, wherein the Company has discovered that it does not have stock amounting to Rs. 13,225.60 Lakhs and accordingly, the Company has written off such non-existent stock in the books of accounts. As per information and explanation given to us the company is in the process of investigating reasons for non existence of such stock. In absence of final conclusion of such investigation we are unable to ascertain as to whether the amount of Profit/Loss of the period and relevant assets have been under or overstated

7. Attention is invited to Note 16 "Inventories" of Financial Statement. In our view, the company has not valued inventories as per Accounting Standard 2 "Valuation of Inventories" issued by ICAI as under:

i) All direct costs have not been considered in valuation of Raw Material and Work-in-Progress. The effect of the same on the profit/ (loss) is not ascertainable.

ii) Finished goods have been valued at net realisable value without ascertaining the cost thereof.

In absence of proper explanations been provided to us we are unable to ascertain as to whether the amount of Profit/Loss of the period and relevant assets have been under or overstated.

8. Attention is invited to Note 19 "Short -Term Loans & Advances" of Financial Statements wherein Rs. 190.14 Lakhs has been recorded as "Focus Product Receivable" and corresponding income has been credited in the Statement of Profit & Loss. As per the information provided to us, the company is yet to get the license under the scheme and may not be eligible for the benefit and accordingly, the income and assets has been overstated to that extent.

9. As per the information and explanation provided to us during the course of Audit, it has been noticed that there have been certain misappropriation of funds of the Company during the period of financial year2003-04 to financial year 2009-10. Further, it has been explained to us that the company is still investigating further instances in detail and the said investigation is pending finalization and no provision for the misappropriation of funds have been made in the books of accounts. Since the matter is under investigation and the amounts are pending detailed explanation and quantification, we are unable to comment as to whether the books of accounts give a true and fair view.

10. Without qualifying our opinion, we draw attention to:

i) Note 5 "Deferred Tax (Assets)/Liability" of the Financial Statements, wherein the Company has recognised deferred tax assets of Rs.1613.16 Lakhs on account of brought forward losses and unabsorbed depreciation keeping in view of binding contract with promoter company and existing level of turnover.

ii) The company has prepared its Financial Statements on going concern basis despite the fact the company has incurred huge losses during the period under Audit and substantial erosion of its net worth. The appropriateness of the said basis is inter alia dependent on the Company''s ability to fulfil the terms of the Corporate Debt Restructuring ("CDR") Scheme, infusion of the funds, fulfilment of its export obligation and scale up its operations to efficiently utilise the installed capacity of the plants.

11. Further to our comments in the Annexure referred to above and subject to our comment in paragraphs 4 to 9 above, we report that:

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

b) In our opinion, proper books of account as required by law have been kept by the Company as it appears from our examination of such 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 dealt with by this report comply with the requirement of the Accounting Standards referred to in sub section (3C) of Section 211 of the Act.

e) On the basis of written representations received from all the Directors of the Company as on 30th September 2012 and taken on record by the Board of Directors, we report that none of the Directors of the Company are disqualified as on 30th September 2012, from being appointed as a director in terms of Clause (g) of sub section (1) to Section 274 of the Act.

f) In our opinion and to the best of our information and according to the explanations given to us subject to our comment in paragraphs 4 to 9 above, the said financial statements, give the information as required by the Companies Act 1956, in the manner so required and gives 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 30th September, 2012.

ii) In the case of Statement of Profit and Loss, of the Loss of the Company for the period ended on that date.

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

Annexure to Auditors Report

Annexure referred to in paragraph 3 of the Auditors Report of even date

As required by the Companies (Auditors Report) Order, 2003 (as amended) and according to the information and explanations given to us during the course of the audit and on the basis of such checks of the books and records as were considered appropriate we report that:

(i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets for Land, Building and Plant & Machinery. However, the Company is under the process of reconstructing its Fixed Asset Register to include other Assets.

b) As explained to us, all the assets have been physical verified by the management, which in our opinion is reasonable. The frequency of verification is reasonable and no material discrepancies have been noticed on such physical verification.

c) The Company has not disposed off any substantial part of its fixed assets during the year.

(ii) a) As explained to us physical verification of inventories has been conducted during the year by the management at reasonable interval.

b) 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) In our opinion and according to the information and explanation received from the management and from our verification of inventories records, the company is required to maintain inventory records in more detailed manner. During the year the company has written off inventory amounting to Rs. 13,225.60 Lakhs noticed during the stock audit conducted by independent professional. As per information and explanation given to us the company is in the process of investigating reasons for non existence of such stock. In absence final conclusion of such investigation we are unable to comment on its proper treatment in books of account.

(iii) a) During the year the company has not granted unsecured loans to any parties covered in the register maintained under Section 301 of the Companies Act, 1956. The aggregate maximum amount involved during the year was Rs. Nil and the year-end balance of such loans was Rs. Nil

b) In view of our comments above, clauses (iii) (b) (c) and (d) of the said order are not applicable to the company.

c) The Company has taken unsecured loan from three parties covered in the register maintained under Section 301 of the Act. The Maximum amount outstanding during the year was Rs. 1,803.59 Lakhs and the year-end balance was Rs.1,704.19 Lakhs.

d) The above loans are interest free and other terms and conditions on which loans have been taken are prima facie, not prejudicial to the interest of the company.

e) In our opinion and as per the explanation and information made available to us, the Company has not made repayment of outstanding dues of Rs. 1053.59 Lakhs payable to the parties covered under register maintained section 301 of the Act.

(iv) In our opinion and as per the explanation and information given to us, subject to our comments in para 4 to 9 of our report and other observations made in our report, there exist internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and for the sale of goods and services.

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

b) In our opinion and according to the information and explanations given to us, the transaction made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(vi) Subject to Note 8 "Short Term Borrowings" The company has not accepted any deposit.

(vii) In our opinion and as per the explanation and information made available to us, the Company is in continuous process of strengthening its internal audit system commensurate to the size of the Company and the nature of its business.

(viii) Based on the information and explanation provided to us, the Company has maintained the cost records prescribed by the Central Government under Section 209 (1) (d) of the Companies Act, 1956. However, we have not made examination of the cost records with a view to determine whether they are maintained adequately.

(ix) a) The Company is generally regular in depositing undisputed statutory dues including provident fund, investor education protection fund, employees'' state insurance, income tax, Sales tax, wealth tax, Service tax, custom duty, excise duty, cess and other statutory dues applicable to it except as mentioned below which were remained outstanding for a period of more than six months from the date they became payable:-

Sr. No. Nature Amount (Rs. In Lacs)

1 Karnataka VAT Act 0.16

2 Central Sales Tax Act 0.18

3 Maharashtra State Professional Tax Act 4.89

4 ESIC 0.59

5 Wealth Tax Act 0.69

6 Municipal Tax (New Bombay) 35.54

7 Gram Panchayat Rules, Thane 63.26

8 Income Tax Act 17.12

Total 122.43

b) As per the records of the Company, there are no disputed dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess except as under:-

Name of Statute Amount (Rs. In lacs) Period for which it relates Forum where dispute is pending

Sales Tax Act 250.22 2001-02 to 2004-05 Commissioner of Sales Tax, Maharashtra

Income Tax Act, 1961 289.47 2010-11 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 555.96 2004-05 to 2010-11 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 10.96 2008-09 Income Tax Appellate Tribunal

(x) The Company has accumulated losses amounting to Rs. 29,990.99 Lakhs as at the end of the Financial Year which are more than 50% of its net worth. Further, the Company has incurred cash losses during the period under audit however the company has not incurred cash loss during the immediately preceding financial year.

(xi) In our opinion and according to the information and explanation given to us, there have been defaults in repayment of dues to financial institution and banks during the year, which have been subsequently rescheduled by way of Corporate Debt Restructuring (CDR) Scheme, and accordingly, the Company could be said to have not defaulted in repayment of principal and interest to CDR lenders as on the balance sheet date.

(xii) The Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or other securities.

(xiii)The provisions of any Special Statute applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are not applicable to the Company.

(xiv) As per records of the company and information and explanations given to us by the management, company is not dealing or trading in shares, securities, and debentures and other investments.

(xv) As per information''s and explanations provided to us, the company has not given any guarantee in connection with loans taken by others.

(xvi) According to the records of the Company, the Company has applied the term loans for the purposes of which it was taken during the year.

(xvii) On an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long term investments.

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

(xix)The Company has not issued any debentures during the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) As per the information and explanation provided to us during the course of audit, it has been noticed that there have been certain misappropriation of funds of the Company during the period of financial year 2003-04 to financial year 2009-10. Further, it has been explained to us that the company is still investigating further instances in detail hence amounts are yet to be ascertained.

For K C P L & Associates

Chartered Accountants

Firm Reg. No. 119223 W

Paras Jain

Place: Mumbai Partner

Date: 27th November, 2012 Mem. No. 134160

---

Mar 31, 2010

- We have audited the attached Balance Sheet of MUDRA LIFESTYLE LIMITED as at 31st March 2010 and also the Profit and Loss Account & Cash Flow Statement for the year ended on thai date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order. 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of The Companies Act, 1956. We enclose the annexure statement on the matters specified in paragraphs 4 and 5 of the 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 purpose of our audit.

b) In our opinion, proper books of accounts 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 & Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of accounts.

d) In our opinion and to the best of our information and according to the explanations given to us, the Balance Sheet, Profit & Loss & Cash Flow Statement Account are prepared in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1961.

e) On the basis of written representations received from directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March. 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with notes thereon and attached thereto give in the prescribed manner the information required by the Companies Act, 1956, required and give a true and fair view in conformity with the accounting principles generally accepted in India;

I. In so far as it relates to the Balance Sheet of the state of affairs of the Company as at 31st March. 2010.

ii. In so far as it relates to the Profit & Loss Account of the PROFIT of the company for the year ended on that date, and

III. In so far as it related to the Cash Flow Statement, of the Cash Flows for the year ended on that date,

ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE (Referred to in paragraph 1 thereof)

1. In respect of fixed assets:

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

b) The fixed assets have been physically verified by the management at reasonable intervals during the year. We are informed that no material discrepancies were noticed by the management on such verification.

c) Based on our scrutiny of the records of the company and the information & explanation received by us, we report that there were no sate of fixed assets except a vehicle during the year and the same does not constitute a substantial part of the fixed assets of the company.

2. In respect of Inventories:

a) As explained to us physical verification of inventories has been conducted during the year by the management at reasonable intervals.

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

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: During the year the company has not granted any loans to parties covered in the register maintained under section 301 of the Companies Act, 1956. In view of our comments above, clauses (iii) (b) (c) and (d) of the said order are not applicable to the company. The company has taken unsecured loans from three parties (payable on call and no stipulation for due date of repayment) covered in the registered maintained under section 301 of the Companies Act, 1956. The aggregate maximum amount involved during the year was Rs. 328.03 lacs. The year-end balance of such loans is Rs. 222.72 lacs. The said loans are interest free and other terms and conditions on which loans have been taken are prima facie, not prejudicial to the interest of the company. In view of our comments above, clause (iii) (g) of the said order is not applicable to the company.

4. In our opinion and according to the information and explanations given to us. there is adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of services/goods. Further, on the basis of our examination of the books and records of the company, carried out in accordance with the auditing standards generally accepted in India and according to the information and explanations given to us, we have neither come across nor have we been informed of any continuing failure to correct weaknesses in the aforesaid internal control system.

5. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

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

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

6. According to the information and explanations given to us, the Company has not accepted any deposits from public. Therefore, the provision of Clause (vi) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

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

8. We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by the Central Government for the maintenance of Cost records under section 209( 1) (d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed accounts have been made and maintained.

9. In respect of statutory dues:

a) According to the records of the company produced before us. the Company is generally regular in depositing with appropriate authorities undisputed statutory dues, including Provident Fund, Employees State Insurance, Wealth Tax, Income Tax, Custom Duty, Excise Duty, Service Tax, Cess and other statutory dues applicable to it except Municipal Tax of Rs. 27.24 lacs, which were outstanding as at the last day of the financial year for a period of more than six months from the date they became payable.

b) According to the records of the company, there are no undisputed dues of sales tax, customs duty, wealth tax, service tax and excise duty /cess except as under:

Name of the director Amount (Rs.in Lacs) Period for Forum where

which it relates dispute is pending

Income Tax Act. 1961 10.96 2008-09 Income Tax Appellate Tribunal

Income Tax Act, 1961 362.87 2010-11 Assessing Officer

10. The company has no accumulated losses at the end of the financial year. The company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

11. As per the information and explanations given to us the company is generally regular in making the repayments due to the banks & financial institution and as at 31.03.2010 there are no overdue amounts.

12. According to the information and explanations given to us the company has not granted any loans and advances on (he basis of security by way of pledge of shares, debentures or other securities.

13. In our opinion, and to the best of our information and according to the explanations provided by the management, we are of the opinion that the company is neither a Chit Fund nor a nidhi/mutual benefit society. Hence, in our opinion, the requirements of para 4 (xiii) of the Order do not apply to the company.

14. As per records of the company and information and explanations given to us by the management, company is not dealing or trading in shares, securities, and debentures and other investments.

15. The company has not given any guarantee in connection with loans taken by others.

16. According to the records of the Company, the Company has applied the term loans for the purposes of which lt was taken during the year.

17. According to the Information and explanations given to us and, on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term Investment by the company.

18. According to the records of the company and the information and explanations provided by the management, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained u/s.301 of the Act.

19. During the period covered by audit report the company has not issued any debentures.

20. During the year the company has not raised any money by way of public issue.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



For V. K. BESWAL & ASSOCIATES

CHARTERED ACCOUNTANTS

FIRM REGISTRATION NO 101083W

C. A. R. P. LADDHA

Place - Mumbai [PARTNER]

Date: 25th July, 2010 Membership Number - 48195