Auditor Report of Flexituff Ventures International Ltd.

Mar 31, 2025

1. We have audited the accompanying standalone
financial statements of Flexituff Ventures
International Limited (''the Company''), which
comprise the Balance Sheet as at 31 March 2025, the
Statement of Profit and Loss (including Other
Comprehensive Income), the Statement of Cash
Flows and the Statement of Changes in Equity for the
year then ended and notes to the financial
statements including a summary of the material
accounting policies and other explanatory
information (hereinafter referred to as "standalone
financial statements").

2. In our opinion and to the best of our information and
according to the explanations given to us, except for
the effects of the matter described in the Basis of
Qualified Opinion section of our report, the aforesaid
standalone financial statements give the information
required by the Companies Act, 2013 (''the Act'') in the
manner so required and give a true and fair view in
conformity with the Indian Accounting Standards
(''Ind AS'') specified under section 133 of the Act and
other accounting principles generally accepted in
India, of the state of affairs of the Company as at 31
March 2025, and its profit (including other
comprehensive income), its cash flows and the
changes in equity for the year ended on that date.

Basis of Qualified Opinion

3. We draw attention to the following matters:

(a) . The Company has recognized deferred tax asset (net)

of ? 528.82 million on its carried forward accumulated
losses (including unabsorbed depreciation) and
other temporary differences. In accordance with Ind
AS 12 on Income Taxes, a deferred tax asset shall be
recognised only to the extent that it is probable that
taxable profit will be available against which the
deductible temporary differences and unused tax
losses can be utilised. Due to the material
uncertainty on account of financial and operational
difficulties as stated in Note 41 to the standalone
financial statements, we are unable to comment on
the recoverability of deferred tax asset and
consequential impact, if any, on the Statement.

(b) . The Company''s Cash Generating Unit ("CGU") viz.

Kashipur cluster, has a carrying value of ?2,360.65

million as at 31 March 2025 comprising of tangible
and intangible assets. The Company has performed
an impairment assessment of the CGU as required
under Ind AS 36 - Impairment of Assets. The
Company is undergoing financial difficulties as
stated in Note 56 to the standalone financial
statements. We are unable to comment on the
appropriateness of the assumptions for the
projections used in the impairment assessment and
consequential impairment provision, if any, to be
made in the standalone financial statements with
regard to the CGU.

4. We conducted our audit in accordance with the
Standards on Auditing (SA''s) and other
pronouncements issued by the Institute of Chartered
Accountants of India (''ICAI'') specified under section
143(10) of the Act. Our responsibilities under those
standards are further described in the Auditor''s
Responsibilities for the Audit of the Standalone
Financial Statements section of our report. We are
independent of the Company in accordance with the
Code of Ethics issued by the Institute of Chartered
Accountants of India (''ICAI'') together with the ethical
requirements that are relevant to our audit of the
standalone financial statements under the provisions
of the Act and the rules thereunder, and we have
fulfilled our other ethical responsibilities in
accordance with these requirements and the Code of
Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a
basis for our opinion on the standalone financial
statements.

Material Uncertainty Related to Going Concern

5. We draw attention to Note 56 to the Statement, which
states that the Company is facing operational and
financial difficulties as at 31 March 2025 indicating
several factors that a material uncertainty exists
which casts doubt on the Company''s ability to
continue as a going concern. The Statement has been
prepared on a going concern basis based on
management''s assessment of the Company''s future
prospects

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

Emphasis of Matters

6. We draw attention to

(a). The Company has entered into one time settlement
arrangement with IFCI LTD and FCCBs with TPG
Growth II SF Pte. Ltd. and International Finance
Corporation (IFC) and booked gain on one time

settlement of ? 1,658.51 million during the year ended
31 March 2025 on the payment of principle of FCCBs.
(Refer note 55 to the Statement)

(b) . The Company had executed Business Transfer

Agreement (BTA) with Flexituff Technology
International Limited (FTIL) on 28 August 2023 for
sale of Flexible Intermediate Bulk Container (FIBC)
business of Pithampur units of the Company. The
sale is completed on 30 April 2024 via slump sale for a
lump sum consideration.

As per BTA sale consideration was ? 3,190.60 million
considering transfer of bank limits of ? 839.50 million
to (FTIL). However, consortium banks have
sanctioned fresh limits to FTIL to the extent amount
restructured and appropriated that amount
disbursed for reduction of banks limits of the
Company. By virtue of modus operandi adopted by
banks, sale consideration as well as net assets
transferred increased by ? 839.50 million.

The cost of acquisition of FIBC business comprises of
net book value of assets and liabilities of FIBC
business of Pithampur units as at 30 April 2024
amounting to ? 254.07 million.

The total profit on sale of business to the Company is
? 3,776.02 million (Refer note 57 to the Statement).

finance cost of ? 113.65 million which is being shown
in prior period expense on account of change in
interest rate during year ended 31 March, 2025 (Refer
note 60 to the Statement).

Our opinion on the standalone financial statements is
not modified in respect of these matters.

Key Audit Matters

7. Except for the matter described in the Basis for
Qualified Opinion section, Material Uncertainty
Related to Going Concern section and Emphasis of
Matters section, we have determined that there are
no other key audit matters to communicate in our
report.

Information other than the Standalone Financial
Statements and Auditor''s Report thereon

8. The Company''s Management and Board of Directors
are responsible for the other information. The other
information comprises the information included in
the Annual Report, but does not include the
standalone financial statements and our auditor''s
report thereon. The Annual Report is expected to be
made available to us after the date of this auditor''s
report.

Our opinion on the standalone financial statements
does not cover the other information and we do not
express any form of assurance conclusion thereon.

In connection with our audit of the standalone
financial statements, our responsibility is to read the

other information and, in doing so, consider whether
the other information is materially inconsistent with
the standalone financial statements or our
knowledge obtained in the audit or otherwise
appears to be materially misstated.

When we read the annual report, if we conclude that
there is a material misstatement therein, we are
required to communicate the matter to those
charged with governance of this other information,
we are required to report that fact. We have nothing to
report in this regard.

Responsibilities of Management and Those
Charged with Governance for the Standalone
Financial Statements

9. The Company''s Board of Directors are responsible
for the matters stated in section 134(5) of the Act with
respect to the preparation and presentation of these
standalone financial statements that give a true and
fair view of the financial position, financial
performance, including other comprehensive
income, changes in equity and cash flows of the
Company in accordance with the Ind AS specified
under section 133 of the Act 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 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
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 standalone
financial statements that give a true and fair view and
are free from material misstatement, whether due to
fraud or error.

10. In preparing the standalone financial statements, the
Board of Directors are responsible for assessing the
Company''s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of
accounting unless the Board of Directors either
intend to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.

11. Those Board of Directors are also responsible for
overseeing the Company''s financial reporting
process.

Auditor''s Responsibilities for the Audit of the
Standalone Financial Statements

12. Our objectives are to obtain reasonable assurance
about whether the standalone financial statements

as a whole are free from material misstatement,
whether due to fraud or error, and to issue an
auditor''s report that includes our opinion.
Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in
accordance with SA''s will always detect a material
misstatement when it exists.

Misstatements can arise from fraud or error and are
considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these standalone financial statements.

13. As part of an audit in accordance with SA''s issued by
ICAI, specified under section 143(10) of the Act, we
exercise professional judgment and maintain
professional skepticism throughout the audit. We
also:

â¢ Identify and assess the risks of material
misstatement of the standalone financial
statements, whether due to fraud or error, design
and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control;

â¢ Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances. Under section
143(3)(I) of the Act, we are also responsible for
expressing our opinion on whether the Company has
adequate internal financial controls with reference to
standalone financial statements in place and the
operating effectiveness of such controls.

â¢ Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting
estimates and related disclosures made by
management;

â¢ Conclude on the appropriateness of Board of
Directors'' use of the going concern basis of
accounting and, based on the audit evidence
obtained, whether a material uncertainty exists
related to events or conditions that may cast
significant doubt on the Company''s ability to continue
as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention
in our auditor''s report to the related disclosures in
the standalone financial statements or, if such
disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our auditor''s report.
However, future events or conditions may cause the
Company to cease to continue as a going concern;

â¢ Evaluate the overall presentation, structure and
content of the standalone financial statements,
including the disclosures, and whether the
standalone financial statements represent the
underlying transactions and events in a manner that
achieves fair presentation;

14. We communicate with those charged with
governance regarding, among other matters, the
planned scope and timing of the audit and significant
audit findings, including any significant deficiencies
in internal control that we identify during our audit.

15. We also provide those charged with governance with
a statement that we have complied with relevant
ethical requirements regarding independence, and to
communicate with them all relationships and other
matters that may reasonably be thought to bear on
our independence, and where applicable, related
safeguards.

Report on Other Legal and Regulatory
Requirements

16. As required by the Companies (Auditor''s Report)
Order, 2020 (''the Order'') issued by the Central
Government of India in terms of section 143(11) of the
Act we give in the Annexure I a statement on the
matters specified in paragraphs 3 and 4 of the Order,
to the extent applicable.

17. As required by section 143(3) of the Act, based on our
audit 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 of
the accompanying standalone financial statements
except as mentioned in the para ii(b) of Annexure I of
this report;

b) . Except for the effects of the matters described in the

Basis of Qualified Opinion section above, 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 and the Statement of Profit and

Loss including Other Comprehensive Income,
Statement of Changes in Equity and the Statement of
Cash Flows dealt with by this Report are in
agreement with the books of account of the
Company;

d) . Except for the effects of the matters described in the

Basis of Qualified Opinion section above, in our
opinion, the aforesaid standalone financial
statements comply with Ind AS specified under
section 133 of the Act;

e) . The matter described in Material Uncertainty

Related to Going Concern section of our report, 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 and taken on record by the Board
of Directors, none of the directors is disqualified as
on 31 March 2025 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 therewith are
as stated in the Basis for Qualified Opinion above; and

h) . With respect to the adequacy of the internal financial

controls with reference to standalone financial
statements of the Company and the operating
effectiveness of such controls, refer to our separate
Report in "Annexure II".

i) . 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 as at 31 March
2025 in its standalone financial statements - Refer
Note 43 to the standalone financial statements;

ii The Company did not have any long-term contracts
including derivative contracts for which there were
any material foreseeable losses as at 31 March
2025;

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

iv a. The management has represented that, to the

best of its knowledge and belief , no funds
have been advanced or loaned or invested
(either from borrowed funds or securities
premium or any other sources or kind of
funds) by the Company to or in any person or
entity, including foreign entities (''the
intermediaries''), with the understanding,
whether recorded in writing or otherwise, that
the intermediary shall, whether, directly or
indirectly lend or invest in other persons or
entities identified in any manner whatsoever
by or on behalf of the Company (''the Ultimate
Beneficiaries'') or provide any guarantee,
security or the like on behalf the Ultimate
Beneficiaries;

persons or entities identified in any manner
whatsoever by or on behalf of the Funding
Party (''Ultimate Beneficiaries'') or provide any
guarantee, security or the like on behalf of the
Ultimate Beneficiaries; and

c. Based on such audit procedures performed as
considered reasonable and appropriate in the
circumstances, nothing has come to our
notice that has caused us to believe that the
management representations under subÂ¬
clause (i) and (ii) of Rule 11(e), as provided
under (a) and (b) above, contain any material
misstatement.

v The Company has neither declared nor paid any
dividends during the year ended 31 March 2025.

vi Based on our examination, which included test
checks, the Company has used accounting
software for maintaining its books of account
which has a feature of recording audit trail (edit
log) facility and the same has been operated
throughout the year for all relevant transactions
recorded in the respective software.

Further, where audit trail (edit log) facility was
enabled, we did not come across any instance of
the audit trail feature being tampered with during
the course of our audit and the audit trail has been
preserved by the Company as per the statutory
requirements for record retention.

18. With respect to the matter to be included in the
Auditor''s Report under Section 197(16) of the Act:

a). According to information and explanations given to
us, the Company has not paid or provided for any
managerial remuneration during the year. Hence,
reporting under section 197(16) of the Act is not
applicable.

For Mahesh C. Solanki & Co.

Chartered Accountants
Firm''s Registration No.: 006228C

Mahesh Solanki

Partner

Membership No.: 074991
UDIN: 25074991BMJAJN9926

Place: Indore
Date: May 30, 2025

Mar 31, 2024

1. We have audited the accompanying standalone financial statements of Flexituff Ventures International Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and notes to the financial statements including a summary of the material accounting policies and other explanatory information (hereinafter referred to as "standalone financial statements").

2. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis of Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (''the Act'') in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (''Ind AS'') specified under section 133 of the Act and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2024, and its loss (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis of Qualified Opinion

3. We draw attention to the following matters:

(a). The Company has recognized deferred tax asset (net) of ? 1,851.09 million on its carried forward accumulated losses (including unabsorbed depreciation) and other temporary differences. In accordance with Ind AS 12 on Income Taxes, a deferred tax asset shall be recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilised. Due to the financial difficulties experienced by the Company as stated in Note 22(d) and Note 25(c) to the standalone financial statements and significant uncertainty stated in Note 53 to the standalone financial statements, we are unable to comment on the recoverability of deferred tax asset and consequential impact, if any, on the standalone financial statements. Had the Deferred tax asset not

been created, the net loss and total comprehensive loss for the year ended 31 March 2024 would have been higher by ? 1,851.09 million and other equity as on that date would have been lower by the same amount.

(b) . The Company''s Cash Generating Unit ("CGU") viz.

Kashipur cluster, has a carrying value of ?2,626.42 million as at 31 March 2024 comprising of tangible and intangible assets. The Company has performed an impairment assessment of the CGU as required under Ind AS 36 - Impairment of Assets. The Company is undergoing financial difficulties as stated in Note 22(d) and Note 25(c) to the standalone financial statements and there is significant uncertainty as cited in Note 53 to the standalone financial statements in respect of the Company''s plan to monetize its assets, secure funding from the bankers / investors, restructure its liabilities and normalize its operations. We are unable to comment on the appropriateness of the assumptions for the projections used in the impairment assessment and consequential impairment provision, if any, to be made in the standalone financial statements with regard to the CGU.

Subsidy receivable amounting to ? 69.03 million which pertains to the period prior to financial year 2016-17. We are unable to comment on the recoverability of the same. (Refer Note 56 to the standalone financial statements).

(d) . The Company has claims amounting to ? 103.52

million of export incentive receivable. We are unable to comment on the recoverability of the same. (Refer Note 57 to the standalone financial statements).

4. We conducted our audit in accordance with the Standards on Auditing (SA''s) and other pronouncements issued by the Institute of Chartered Accountants of India (''ICAI'') specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (''ICAI'') together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.

Material Uncertainty Related to Going Concern

5. We draw attention to Note 53 to the standalone financial statements which states that the Company has incurred net losses of ?1,850.88 million during the year ended 31 March 2024 and has a net current liability position of ?7,416.39 million as on that date and describes certain loans in default for which the Company has entered into a one - time settlement with FCCB''s holders. Further, the Company''s ability to meet its future obligations is dependent on successful implementation of the restructuring agreement. These conditions indicate significant doubt on the Company''s ability to continue as going concern. The Company is in the process of implementing restructuring agreement. In view of the above, the standalone financial statements of the Company have been prepared on a going concern basis. (Refer Note 60 to the standalone financial statements).

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

Emphasis of Matters

6. We draw attention to

The Company has entered into a settlement with TPG Growth II SF Pte. Ltd. and International Finance Corporation ("lenders") for one time settlement of its FCCB and waiver of interest. Settlement amount has been paid to TPG and IFC on 30^th April, 2024 and 29^thApril, 2024 respectively (Refer Note 54 to the standalone financial statements).

The Company has not accrued interest amounting to ? 238.75 million, ? 272.62 million, ? 203.07 million,

? 171.44 million and ? 183.29 million for the year ended March 31, 2024, for the year ended March 31, 2023, for the year ended March 31,2022, for the year ended March 31, 2021 and for the year ended March 31, 2020 respectively. The aggregate interest not accrued for the period April 1,2019 to March 31,2024 amounts to ? 1,069.17million. This amount of ? 1,069.17 million has been waived by FCCB''s holders. (Refer Note 54 to the standalone financial statements).

Our opinion on the standalone financial statements is not modified in respect of these matters.

Key Audit Matters

7. Except for the matter described in the Basis for Qualified Opinion section, Material Uncertainty Related to Going Concern section and Emphasis of Matters section, we have determined that there are no other key audit matters to communicate in our report.

Information other than the Standalone Financial Statements and Auditor''s Report thereon

8. The Company''s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditor''s report thereon. The Annual Report is expected to be made available to us after the date of this auditor''s report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

9. The Company''s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance, including other comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS specified under section 133 of the Act 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 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 design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

10. In preparing the standalone financial statements, the Board of Directors are responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

11. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Standalone Financial Statements

12. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SA''s will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

13. As part of an audit in accordance with SA''s issued by ICAI, specified under section 143(10) of the Act, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(I) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by

management;

â¢ Conclude on the appropriateness of Board of Directors'' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern;

â¢ Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation;

14. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

15. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Report on Other Legal and Regulatory Requirements

16. As required by the Companies (Auditor''s Report) Order, 2020 (''the Order'') issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

17. As required by section 143(3) of the Act, based on our audit 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 of the accompanying standalone financial statements except as mentioned in the para ii(b) of Annexure I of this report;

b) . Except for the effects of the matters described in the

Basis of Qualified Opinion section above, in our opinion, proper books of account as required by law have been kept by the Company sofar as it appears

from our examination of those books.

c) . The Balance sheet and the Statement of Profit and

Loss (including Other Comprehensive Income) are in agreement with the books of account of the Company;

d) . Except for the effects of the matters described in the

Basis of Qualified Opinion section above, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;

e) . The matter described in Material Uncertainty

Related to Going Concern section of our report, 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 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2024 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 therewith are as stated in the Basis for Qualified Opinion above; and

h) . With respect to the adequacy of the internal financial

controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure II".

i) . 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 as at 31 March 2024 in its standalone financial statements - Refer Note 40 to the standalone financial statements;

ii The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2024;

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

iv a. The management has represented that, to the

indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

b. The management has represented that, to the best of its knowledge and belief , no funds have been received by the Company from any person or entity, including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v The Company has neither declared nor paid any dividends during the year ended 31 March 2024.

vi Based on our examination, which included test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March 31,2024 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of the audit trail feature being tampered with.

As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2021 is applicable from April 1, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2021 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended March 31,2024.

vii As per the Companies (Amendment) Act, 2017, in our opinion, according to information, explanations given to us, provisions of Section 197 are not applicable to the Company.

For Mahesh C. Solanki & Co.

Chartered Accountants Firm''s Registration No.: 006228C

Mahesh Solanki

Partner

Membership No.: 074991 UDIN: 24074991BKEFJO4472

Place: Indore Date: May 30, 2024

Mar 31, 2023

1. We have audited the accompanying standalone financial statements of Flexituff Ventures International Limited (''the Company''), which comprise the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and notes to the financial statements including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "standalone financial statements").

2. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis of Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (''the Act'') in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards (''Ind AS'') specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and/or any addendum thereto as defined in the Rule 2(1 )(a) of the companies (Indian Accounting Standards) Rules and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2023, and its loss (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis of Qualified Opinion

3. We draw attention to the following matters:

(a). The Company has recognized deferred tax asset (net) of Rs. 1,129.67 million on its carried forward accumulated losses (including unabsorbed depreciation) and other temporary differences. In accordance with Ind AS 12 on Income Taxes, a deferred tax asset shall be recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilised. Due to the financial difficulties experienced by the Company as stated in Note 22(d) and Note 24(c) to the standalone financial statements and significant uncertainty stated in Note 52 to the standalone

financial statements, we are unable to comment on the recoverability of deferred tax asset and consequential impact, if any, on the standalone financial statements. Had the Deferred tax asset not been created, the net loss and total comprehensive loss for the year ended 31 March 2023 would have been higher by Rs. 1,129.67 million and other equity as on that date would have been lower by the same amount.

(b) . The Company''s Cash Generating Unit ("CGU") viz.

Kashipur cluster, has a carrying value of Rs. 3,023.93 million as at 31 March 2023 comprising of tangible and intangible assets. The Company has performed an impairment assessment of the CGU as required under Ind AS 36 - Impairment of Assets. The Company is undergoing financial difficulties as stated in Note 22(d) and Note 24(c) to the standalone financial statements and there is significant uncertainty as cited in Note 52 to the standalone financial statements in respect of the Company''s plan to monetize its assets, secure funding from the bankers / investors, restructure its liabilities and normalize its operations. We are unable to comment on the appropriateness of the assumptions for the projections used in the impairment assessment and consequential impairment provision, if any, to be made in the standalone financial statements with regard to the CGU.

(including penal interest) amounting to Rs. 183.29 million for the year ended 31 March 31 2020; Rs 171.44 million for the year ended 31 March 2021; Rs 203.07 million for the year ended 31 March 2022 and Rs 272.62 million for the year ended 31 March 2023 respectively on loans outstanding to certain lenders; this constitutes departure from the accrual basis of accounting stipulated under Ind AS 1 - Presentation of Financial Statements. Accordingly, interest due to lenders (gross of TDS deduction), the interest cost and loss for the years ended 31 March 2023, 31 March 2022, 31 March 2021 and 31 March 2020 is understated by Rs 272.62 million, Rs 203.07 million, Rs. 171.44 million and 183.29 million respectively. In the absence of sufficient appropriate audit evidence, we are unable to comment upon the consequential impact, if any that may arise from this matter. (Refer Note 51 to the standalone financial statement).

standards are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (''ICAI'') together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.

Material Uncertainty Related to Going Concern

5. We draw attention to Note 52 to the standalone financial statements which states that the Company has incurred net losses of Rs. 1,045.02 million during the year ended 31 March 2023 and has a net current liability position of Rs. 5,457.64 million as on that date and describes certain loans for which the Company is in default. Further, the Company''s ability to meet its future obligations is dependent on restructuring of its loans. These conditions indicate significant doubt on the Company''s ability to continue as going concern. The Company is in the process of executing an Inter Creditor Arrangement and proposing a resolution plan to the lenders. In view of the above, the standalone financial statements of the Company have been prepared on a going concern basis.

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

Emphasis of Matters

6. We draw attention to

(a) . Note 53 to the standalone financial statements which

describes Tuff Subsidy and Government Subsidy receivable by the Company of Rs 124.32 million which pertains to the period prior to financial year 2016-17. The Company is pursuing with respective banks and Ministry of Textiles through a Consultant. The Company is confident that the said government subsidy will be released, once the joint inspection (JIT) and other procedure laid down by the Ministry of Textile are completed.

(b) . Note 54 to the standalone financial statements which

describes claims amounting to Rs 149.92 million of export incentive receivable. The Company was getting export incentive under Merchandise Export from India Scheme and recognized export incentive receivable till 30 June 2020. Government of India has withdrawn this scheme with retrospective that is from 7 March 2019. FIBC manufacturer association (IFIBCA) has challenged retrospective withdrawal of

incentive scheme by the Government before Hon''ble High Court, New Delhi. The Hon''ble High Court has issued interim order and final order is awaited in this regard. The Company is confident that final order of High Court will be issued in favour of manufacturers.

Our opinion on the standalone financial statements is not modified in respect of these matters.

Key Audit Matters

7. Except for the matter described in the Basis for Qualified Opinion section, Material Uncertainty Related to Going Concern section and Emphasis of Matters section, we have determined that there are no other key audit matters to communicate in our report.

Information other than the Standalone Financial Statements and Auditor''s Report thereon

8. The Company''s Management and Board of Directors are responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the standalone financial statements and our auditor''s report thereon. The Annual Report is expected to be made available to us after the date of this auditor''s report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

responsibility also 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 design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

10. In preparing the standalone financial statements, the Board of Directors are responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

11. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Standalone Financial Statements

13. As part of an audit in accordance with SA''s issued by ICAI, specified under section 143(10) of the Act, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting

from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;

â¢ Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(I) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;

â¢ Conclude on the appropriateness of Board of Directors'' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern;

â¢ Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation;

14. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

15. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

16. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the

matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

17. As required by the Companies (Auditor''s Report) Order, 2020 (''the Order'') issued by the Central Government of India in terms of section 143(11) of the Act we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

18. As required by section 143(3) of the Act, based on our audit 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 of the accompanying standalone financial statements except as mentioned in the para ii(b) of Annexure I of this report;

b) . Except for the effects of the matters described in the

Basis of Qualified Opinion section above, 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 and the statement of Profit and

Loss (including Other Comprehensive Income) are in agreement with the books of account of the Company; and

d) . Except for the effects of the matters described in the

Basis of Qualified Opinion section above, in our opinion, the aforesaid standalone financial statements comply with Ind AS and/or any addendum thereto as defined in Rule 2(1a) of the Companies (Indian Accounting Standards) Rules, 2015, as amended specified under section 133 of the Act;

e) . The matter described in Material Uncertainty

Related to Going Concern section of our report, 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 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2023 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 therewith are as stated in the Basis for Qualified Opinion above;

h) . With respect to the adequacy of the internal financial

controls with reference to standalone financial statements of the Company and the operating

effectiveness of such controls, refer to our separate Report in "Annexure II".

i). 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 as at 31 March 2023 in its standalone financial statements - Refer Note 39 to the standalone financial statements;

ii The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2023;

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

a. The management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person or entity, including foreign entities (''the intermediaries''), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (''the Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;

b. The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person or entity, including foreign entities (''the Funding Parties''), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

c. Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under subclause (i) and (ii) of Rule 11(e), as provided

under (a) and (b) above, contain any material misstatement.

v The Company has neither declared nor paid any dividends during the year ended 31 March 2023.

vi Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

vii As per the Companies (Amendment) Act, 2017, in our opinion, according to information, explanations given to us, provisions of Section 197 are not applicable to the Company.

For Mahesh C. Solanki & Co.

Chartered Accountants Firm''s Registration No.: 006228C

Mahesh Solanki

Partner

Membership No.: 074991 UDIN: 23074991BGUWKJ1108

Place: Indore Date: May 30, 2023

Mar 31, 2018

Report on the Standalone Ind AS Financial Statements

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

Managementâs Responsibility for the Standalone Ind AS Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (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 Rule

7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended, and the 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditorâs Responsibility

Our responsibility is to express an opinion on these standalone Ind AS 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 of the standalone 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 standalone 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 standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone 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 Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone 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 standalone 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 accounting principles generally accepted in India including the Ind AS, of the state of affairs (financial position) of the Company as at March 31, 2018, and its loss (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Other Matter

The comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as at April 1, 2016 included in these standalone Ind AS financial statements are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 for the year ended March 31, 2016 and March 31, 2017 on which we issued an unmodified audit opinion vide our reports dated May 20, 2016 and May 30, 2017 respectively on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have also been audited by us.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

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

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

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

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

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the Companies (Indian Accounting Standards) Rules, 2015, as amended.

(e) On the basis of the written representations received from the directors 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.

(f) 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 âAnnexure Aâ

(g) With respect to the other matters to be included in the Auditorâs 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:

1. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements - Refer Note 40 to the standalone 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of sub-section 11 of section 143 of the Act, we give in the âAnnexure Bâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.

[Referred to in paragraph 1(f) under âReport on Other Legal and Regulatory Requirementsâ in the Independent Auditorsâ Report]

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)

We have audited the internal financial controls over financial reporting of Flexituff International Limited (âthe Companyâ) as of March 31, 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Managementâs Responsibility for Internal Financial Controls

The Companyâs 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 (ICAI) (the âGuidance Noteâ. 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 Companyâs 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 Act.

Auditorsâ Responsibility

Our responsibility is to express an opinion on the Companyâs internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, 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 auditorâs judgement, 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 Companyâs internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Companyâs 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 Companyâs 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 companyâs 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.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 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.

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

(b) All the fixed assets have not been physically verified by the management during the year but there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

ii. The inventory (excluding stocks with third parties), has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on verification between the physical stocks and the book records.

iii. The Company has granted loans, secured or unsecured to a company and Limited Liability Partnerships covered in the register maintained under section 189 of the Act.

(a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the rate of interest and other terms and conditions on which the loans have been granted to a company and Limited Liability Partnerships covered in the register maintained under section 189 of the Companies Act, 2013 are not, prima facie, prejudicial to the interest of the Company.

(b) In the case of the loans granted to a company and Limited Liability Partnerships covered in the register maintained under section 189 of the Companies Act, 2013, schedule of repayment of principal and payment of interest have been stipulated and the borrowers have been regular in the payment of the principal and interest.

(c) There are no amounts overdue for more than ninety days in respect of the loans granted to a company and Limited Liability Partnerships covered in the register maintained under section 189 of the Companies Act.

iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, in respect of loans, investments, guarantees and security made.

v. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the rules framed there under.

vi. The provisions of sub-section (1) of section 148 of the Act are not applicable to the Company as the Central Government of India has not specified the maintenance of cost records for any of the products of the Company. Accordingly, the provisions stated in paragraph 3 (vi) of the Order are not applicable to the Company.

vii. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, goods and service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues applicable to it.

According to the information and explanation given to us, no undisputed amounts are payable in respect of provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, goods and service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues which were applicable to it were in arrears, as at March 31, 2018 for a period of more than six months from the date they became payable.

(b) According to the information and explanation given to us, there are no dues of service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute. However, according information and explanation given to us and the records of the Company examined by us, the dues outstanding of income-tax, sales-tax, value added tax, cess and any other statutory dues on account of any dispute, are as follows:

Name of the statute	Nature of dues	Amount in INR million	Period to which the amount relates	Forum where dispute is pending
	Income tax, penalty and interest thereon¹	4.25	AY 2005-06 to 07-08, AY 201011, AY 2012-13, AY 14-15	CIT (A)
Income tax Act	Income tax, penalty and interest thereon¹	8.03	AY 2003-04	Madhya Pradesh High Court
	Income tax, penalty and interest thereon¹	39.29	AY 2004-05, AY 2005-06	ITAT & CIT(A)

Central Sales Tax Act, 1956	Sales tax²	22.97	FY 2009-10 to 2014-15	Joint Commissioner ^(Appeal⁾ Haldwani
Central Sales Tax Act, 1956	Sales tax²	0.01	FY 2006-07	The Appellate Board M.P. Tax Tribunal, Bhopal
M.P. commercial Tax Act, 1994	Sales tax³	5.39	FY 200607 and FY 2009-10	The Appellate Board M.P. Tax Tribunal, Bhopal
M.P. commercial Tax Act, 1994	Sales tax³	1.06	FY 2015-16	The Appellate Authority and Additional commissioner of commercial tax, Indore division
Uttarakhand VAT Act, 2005	Sales tax⁴	2.92	FY 2010-11 to FY 201415	Deputy (Joint) Commissioner (Appeal) Haldwani
M.P. Entry Tax Act, 1976	Entry tax⁵	0.28	FY 2010-11	The Appellate Authority and Additional commissioner of commercial tax, Indore division
M.P. Entry Tax Act, 1976	Entry tax⁵	9.04	FY 2006-07 to FY 200910	The Appellate Board M.P. Tax Tribunal, Bhopal

Amount disclosed is net of amount paid under protest of Rs. 39.45 million

² Amount disclosed is net of amount paid under protest of Rs. 9.32 million

³Amount disclosed is net of amount paid under protest of Rs. 3.09 million

⁴Amount disclosed is net of amount paid under protest of Rs. 11.24 million

⁵Amount disclosed is net of amount paid under protest of Rs. 4.57 million

viii. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to the financial institution and bank. The Company does not have any outstanding debentures during the year.

ix. In our opinion, money raised by way of term loans during the year have been applied for the purpose for which they were raised. The Company has not raised any money by way initial public offer or further public offer (including debt instruments) during the year.

x. During the course of our audit, examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees.

xi. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, the provisions stated in paragraph 3(xii) of the Order are not applicable to the company.

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, provisions stated in paragraph 3(xv) of the Order are not applicable to the Company.

xvi. In our opinion, the Company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions stated in paragraph clause 3 (xvi) of the Order are not applicable to the Company.

For MSKA& Associates For Kailash ChandJain & Co.

(Formerly known as MSKA & Chartered Accountants

Associates) Firm Registration No. 112318W

Chartered Accountants

Firm Registration No.105047W

Amrish Anup Vaidya Rajeev Kumar Dubey

Partner Partner

Membership No.: 101739 Membership No.: 407139

Place: Pithampur Place: Pithampur

Date: May 30, 2018 Date: May 30, 2018

Mar 31, 2016

To the Members of Flexituff International Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Flexituff International Limited_(âthe Companyâ), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone 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 Companyâs Directors, as well as evaluating the overall presentation of the standalone financial statements.

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

Opinion

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

(e) In our opinion, there are no matters that may have an adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on March 31, 2016 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 âAnnexure Aâ

(h) With respect to the other matters to be included in the Auditorâs 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 standalone financial statements - Refer Note 29 to the standalone financial statements.

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

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

2. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government interms of sub-section 11 of section 143 of the Act, we give in the âAnnexure Bâ, a statement on the matters specified in paragraphs 3 and 4 of the Order.

ANNEXURE A TO THE INDEPENDENT AUDITOR''S REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF (âthe Companyâ)

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)

To the Members of Flexituff International Limited (âthe Companyâ)

We have audited the internal financial controls over financial reporting of (âthe Companyâ) as of March 31, 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Companyâs 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 Companyâs 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 Act.

Auditors'' Responsibility

Our responsibility is to express an opinion on the Companyâs 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 âGuidance Noteâ) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, 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 auditorâs judgment, 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 Companyâs 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 Companyâs 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 Companyâs assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Qualified Opinion on adequacy and therefore operating effectiveness of Internal Financial Controls Over Financial Reporting

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

a) The Company needs to strengthen the process with respect to vendor selection and analysis of quotation in relation to purchase of stores and spares, consumables and fixed assets. These could potentially result in material misstatements in trade payable, consumption and fixed assets.

b) The internal control system for work-in-progress and finished goods inventories with regard to stages of completion, movement of inventories, and identification and allocation of overheads to inventories will have to be further strengthened. These could potentially result in material misstatements in the consumption and valuation of work-in-progress and finished goods inventories. However, the Company has identified the gaps in the process with respect to allocation of overheads to inventory.

In our opinion, except for the effects of the 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 standalone financial statements of the 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, and our report dated May 20, 2016 expressed true and fair opinion on the financial statements.

ANNEXURE B TO INDEPENDENT AUDITORS'' REPORT

[Referred to in paragraph 2 under âReport on Other Legal and Regulatory Requirementsâ in the Independent Auditorsâ Report of even date to the members of Flexituff International Limited on the financial statements for the year ended March 31, 2016]

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

ii. The inventory, excluding stocks with third parties, has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on verification between the physical stocks and the book records.

iii. The Company has granted loans to a company covered in the register maintained under section 189 of the Companies Act, 2013.

(a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the rate of interest and other terms and conditions on which the loans have been granted to a company covered in the register maintained under section 189 of the Companies Act, 2013 are not, prima facie, prejudicial to the interest of the Company.

(b) In the case of the loans granted to a company covered in the register maintained under section 189 of the Companies Act, 2013, schedule of repayment of principal and payment of interest have been stipulated and the borrowers have been regular in the payment of the principal and interest.

(c) There are no amounts overdue for more than ninety days in respect of the loans granted to a company covered in the register maintained under section 189 of the Companies Act.

v. In our opinion and according to the information and explanations given to us, there are no amounts outstanding which are in the nature of deposits as on March 31, 2016 and the Company has not accepted any deposits during the year.

vi. The provisions of sub-section (1) of section 148 of the Act are not applicable to the Company. Accordingly, the provisions stated in paragraph 3 (vi) of the order are not applicable to the Company.

vii. (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues applicable to it.

According to the information and explanation given to us, no undisputed amounts are payable in respect of provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues which were applicable to it were in arrears, as at March 31, 2016 for a period of more than six months from the date they became payable.

Name of statute	Nature of dues	Rupees in Millions	Period to which the amount relates	Forum where dispute is pending
Income Tax Act	Assessment made by A.O. is further enhanced by CIT (A) U/s 68 in respect of Share Application money received	20.62	AY 2004-05 & 2005-06	ITAT
Income Tax Act	Disallowances in respect of SEZ Loss U/s 10A	1.07	AY 2006-07	CIT (A)
Income Tax Act	Non deduction of TDS on payment of Lease Rent to MPAKVN and Interest thereon	0.35	AY 2005-06 to AY 2007-08	CIT (A)
Income Tax Act	Disallowances made by A.O.U/s 69A of Income Tax Act, in respect of Investment and certain expenses	35.89	AY 2009-10 & 2010-11	CIT (A)
Income Tax Act	Disallowances made by A.O.U/s 14A of Income Tax Act, in respect of Investment and certain expenses	3.19	AY 2013-14	CIT (A)
M.P. Entry Tax Act, 1976	Entry tax levied on job work done for SEZ unit	5.82	F.Y. 2006-07 to 2009-10	The Appellate Board, M.P. Tax Tribunal Bhopal / Indore
M.P. Commercial Tax Act, 1994	Assessing Office has levied the tax on sale by SEZ unit in Domestic Area	2.30	F.Y. 2006-07	The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

Central Sales Tax Act, 1956	Assessing Office has levied the tax on sale by SEZ unit in Domestic Area	0.01	F.Y. 2006-07	The Appellate Board, M.P. Tax Tribunal Bhopal / Indore
M.P. Entry Tax Act, 1976	Entry tax levied on job work done for SEZ unit	1.07	F.Y. 2007-08 & 2010-11	The Appellate Authority and Additional Commissioner of Commercial Tax, Indore Division
M.P. Entry Tax Act, 1976	Assessing Office has levied the tax on sale by SEZ unit in Domestic Area	1.30	F.Y. 2008-09	The Appellate Authority and Additional Commissioner of Commercial Tax, Indore Division
M.P. Commercial Tax Act, 1994	Tax Imposed on (a) sale by SEZ unit in Domestic Area (b) benefit not given of VAT output (c) ITR Amt. Disallowed and (d) Tax Imposed on non receipts of form "H"	3.09	F.Y. 2009-10	The Appellate Board, M.P. Tax Tribunal Bhopal / Indore
Uttarakhand VAT Act, 2005	Tax imposed on tax free item	2.87	2010-11 to 2012-13	Deputy Commissioner- Appeal Haldwani
Central Sales Tax Act, 1956	Tax imposed on non receipt of form C & tax free item	26.80	2010-11 to 2012-13	Deputy Commissioner- Appeal Haldwani
Uttarakhand VAT Act, 2005	Appeal for chargeability of tax on Sale of Narrow Woven Fabric	5.59	2011-12	Deputy Commissioner- Appeal Haldwani
Central Sales Tax Act, 1956	Appeal for tax charged on Purchase of Capital Civil Item, purchase under C form by FIL	1.75	2009-10 & 2010-11	Deputy Commissioner- Appeal Haldwani

x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees during the course of our audit.

xi. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/ payable the following amounts for managerial remuneration to one of its whole time director, which is not in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act. The Company is in the process of obtaining necessary approval from shareholders for remuneration payable to its whole time director.

Payment made to	Remuneration paid/ payable in excess of the limits prescribed (Rupees in Millions)	Remuneration due for recovery as at 31s March, 2016 (Rupees in Millions)	Steps taken to secure the recovery of the amount
Whole Time Director	3.28	3.28	The Company is in the process of obtaining necessary approval from shareholders for remuneration payable to its whole time director

xiii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiv. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company.

xvi. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvii. In our opinion, the Company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company.

For MZSK & Associates For L.K. Maheshwari & Co.

Chartered Accountants Chartered Accountants

Firm Registration No.105047W Firm Registration No. 000780C

Amrish Vaidya Abhay Singi

Partner Partner

Membership No.: 101739 Membership No.: 079873

Place: Pithampur Place: Pithampur

Date: May 20, 2016 Date: May 20, 2016

Mar 31, 2015

We have audited the accompanying financial statements of M/s Flexituff International Limited ('the Company'), which comprise the Balance Sheet as at March 31, 2015, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Principle Generally Accepted in India including Accounting Standards referred to in Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 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 control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

OPINION

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

a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2015;

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Company (Accounts) Rules, 2014;

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

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

i) the Company has no pending litigations on its financial position in its financial statements.

ii) the Company has made provision, as required under the applicable accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts (refer note 27 (A) (i)).

iii) there has been no delay in transferring amounts, required to be transferred, to the Investor 8j Protections by the Company.

ANNEXURE

TO THE INDEPENDENT AUDITOR'S REPORT

Referred to in Paragraph 1 under the heading of "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 fixed assets have been physically verified by the management during the year and there is 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. As informed, no material discrepancies were noticed on such verification.

ii. (a) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year other than those lying with Job Workers.

(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 is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii. According to the information and explanation given to us, Company has, during the year, not granted any loans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 189 of the Companies Act, 2013 ('the Act). Accordingly, paragraph 3(iii)(a)(b) of the Order is not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods..

v. The Company has not accepted any deposits from public. Thus, paragraph 3(ii) of the Order is not applicable.

vi. According to information and explanation given to us, the Companies is not required to maintain cost records under (Cost Records 8j Audit) Rules, 2014, prescribed by the Central Government under Section 148 (1) of the Act,

vii. (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income- tax, sales-tax, wealth-tax, custom duty, excise duty, VAT, cess and other material statutory dues applicable to it.

(b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

S. Name of Nature of dues Demand Amount Paid No. the statute (Rs. in Millions) (Rs. in Millions)

1 Income Tax Assessment made 16.05 3.98 Act by A.O. is further enhanced by CIT (A) in respect of Share application money received SEZ Loss u/s 10A&80HHC deduction_

2 Income Tax Disallowances 10.13 10.13 Act in respect of Share Capital Subscribed during the year, SEZ Loss u/s 10A&80HHC deduction.

3 Income Tax Disallowances 9.88 1.33 Act in respect of Share Capital Subscribed during the year.

4 Income Tax Disallowances 12.73 12.73 Act in respect of Share Capital Subscribed during the year.

5 Income Tax Disallowances in 6.03 Nil Act respect of SEZ Loss u/s 10 A.

6 Income Tax Departmental 6.57 -NA- Act Appeal against appeal allowed by IT AT in case of Investment made by certain companies in Equity Capital of Company and also against deduction allowed under Section 80 IB in Company's favor by ITAT

7 Income Tax Non Deduction 0.71 0.35 TDS of TDS on payment of Lease Rent to MPAKVN and Interest thereon.

8 M.P. Entry tax levied 2.41 1.35 Entry Tax on job work done Act, 1976 for SEZ unit (U/s 21 Re- open)

9 M.P. Assessing Office 3.83 1.53 commercial has levied the tax Tax Act, on sale by SEZ 1994 unit in Domestic (U/s 21 Re- Area open)

10 Central Sales Assessing Office 0.02 0.008 Tax Act, has levied the tax (U/s 21 Re- on sale by SEZ open) unit inDomestic Area

11 M.P. Entry Entry tax levied 1.68 1.61 Tax Act, on job work done 1976 for SEZ unit

12 M.P. Entry tax levied 1.09 0.31 Entry Tax on job work done Act, 1976 for SEZ unit (U/s 21 Re- open)

13 M.P. Assessing Office 1.96 1.96 commercial has levied the tax Tax Act, on sale by SEZ unit 1994 in Domestic Area

14 M.P. Entry Entry tax levied 2.89 0.88 Tax Act, on job work done 1976 for SEZ unit

15 M.P. Assessing Office 1.73 0.43 Entry Tax has levied the tax Act, 1976 on sale by SEZ (U/s 21 Re- unit in Domestic open) Area

16 M.P. Assessing Office 1.05 1.05 commercial has levied the tax Tax Act, on sale by SEZ 1994 unit in Domestic Area

17 M.P. Entry Entry tax levied 3.72 1.04 Tax Act, on job work done 1976 for SEZ unit

18 Central Sales Tax imposed on 0.08 0.08 Tax Act, non receipts of Form -H

19 M.P. VAT ITR Reversal 0.61 0.61 commercial on Job Work & Tax Act, Stock Transfer 1994

20 M.P. Entry Entry tax levied 0.37 0.09 Tax Act, on job work done 1976 for SEZ unit

21 Central Sales Tax imposed on 0.31 0.31 Tax Act, non receipts of Form -H

22 Central Sales Tax imposed on 0.20 0.20 Tax Act, non receipts of Form -H

23 M.P. Tax imposed on 0.45 0.45 commercial non receipts of Tax Act, Form -H 1994

24 Central Sales Tax imposed on 0.97 0.97 Tax Act, non receipts of Form -H

25 M.P. Tax imposed on 0.02 0.02 commercial non receipts of Tax Act, Form -H 1994

26 Uttarakhand Tax imposed on 1.71 Nil VAT Tax Free Item Act,2005

27 Central Sales Tax imposed on 26.75 Nil Tax Act on non receipts of Form C and Tax Free Item

28 Central Sales Appeal for 7.81 2.23 Tax Act Chargeability of tax on sale of narrow woven fabric

29 Uttarakhand Assessment under 6.00 2.00 VAT Act,2005 Section 25(7) of the Uttarakhand Vat ACt for claim of Vat Input not paid by selling party

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

Income Tax ACt A.Y. 2004-05 ITAT

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax acT A.Y.2005-06 ITAT

Income Tax Act A.Y.2005-06 CIT (A)

Income Tax Act A.Y.2006-07 CIT (A)

iNCOME tAX A.Y.2003-04 M.P.HIGH COURT

Income Tax Act A.Y.2005-06 to A.Y. CIT(A) TDS 2007-08

M.P. F.Y. 2006-07 The Appellate Board, Entry Tax M.P. Tax Tribunal Act 1976 Bhopal / Indore (u/s) 21 Re- open)

M.P.Commercial F.Y. 2006-07 The Appellate tax Act 1994 (U/s 21 Reopen) Authority and Additional Commissioner of Commercial Tax, Indore Division

Central Sales F.Y. 2006-07 The Appellate Tax Act Authority and Additional (U/s 21 Reopen Commissioner of Commercial Tax, Indore Division

M.P.Entry F.Y. 2007-08 The Appellate Board, TAX Act 1976 M.P. Tax Tribunal Bhopal / Indore

M.P Entry Tax F.Y. 2007-08 The Appellate aCT,1976 Authority and (u/S 21Reopen) Additional Commissioner of Commercial Tax, Indore Division

M.P.Commercial F.Y. 2007-08 The Appellate Board, Tax Act 1994 M.P. Tax Tribunal Bhopal / Indore

M.P Entry F.Y. 2008-09 The Appellate Board, Tax Act,1976 M.P. Tax Tribunal Bhopal / Indore

M.P Entry Tax F.Y. 2008-09 The Appellate Act, 1976 Authority and (U/s 21 Reopen) Additional Commissioner of Commercial Tax, Indore Division

M.P Commercial F.Y. 2008-09 The Appellate Board, TAX Act,1999 M.P. Tax Tribunal Bhopal / Indore

M.P.Entry F.Y. 2009-10 The Appellate Board, Tax Act,1994 M.P Commercial M.P. Tax Tribunal Bhopal / Indore

Central Sales F.Y. 2009-10 The Appellate Board, Tax Act, M.P. Tax Tribunal Bhopal Indore

M.P Commercial F.Y. 2010-11 The Appellate Tax Act,1994 Authority and Additional Commissioner of Commercial Tax, Indore Division

M.P Entry F.Y. 2010-11 The Appellate TAx Act,1976 Authority and Additional Commissioner of Commercial Tax, Indore Division

Central Sales F.Y. 2010-11 The Appellate Tax Act Authority and Additional Commissioner of Commercial Tax, Indore Division

Central sales F.Y. 2012-13 The Appellate Tax Act, Authority and Additional Commissioner of Commercial Tax, Indore Division

M.P. Commer- cial Tax F.Y. 2012-13 The Appellate Act 1994 Authority and Additional Commissioner of Commercial Tax, Indore Division

Central Sales F.Y. 2012-13 The Appellate Tax ACT Authority and Additional Commissioner of Commercial Tax, Indore Division

M.P. Commer F.Y. 2012-13 The Appellate cial Tax Act Authority and Additional 1994 Commissioner of Commercial Tax, Indore Division

Uttarakhand F.Y. 2010-11, VAT Act,2005 2011-12 The Deputy Commissioner Appeal Uttarakhand

Central Sales F.Y. 2010-11 $ The Deputy Tax Act 2012-13 Commissioner Appeal Uttarakhand

Central Sales F.Y.2011-12 The Deputy Tax Act Commissioner Appeal Uttarakhand

Uttarakhand F.Y.2013-14 The Deputy VAT 2014-15 Commissioner Range aCT,2005 -1 Uttarakhand

(c) According to the information and explanation given to us the amounts which were required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act,1956 (1 of 1956) and rules there

under has been transferred to such fund within time.

viii. The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding 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 or bank or debenture holders.

x. According to the information and explanations given to us, the Company has given corporate guarantee on behalf

of Nanofil Technologies Private Limited for Rs.0.2 million to Governor of Uttarakhand, which is not prima facie prejudicial to the interest of the company.

xi. Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

xii. According to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit.

For L.K MAHESHWARI & CO.

Chartered Accountants

FRN No. 000780C

(Abhay Singi)

Indore, Partner

Dated: 28th May 2015 Membership No 079873

Mar 31, 2014

1. We have audited the accompanying financial statements of M/s Flexituff International Limited, which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Principle Generally Accepted in India including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of interna 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.

3. Our responsibility is to express an opinion on these financia

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

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

4. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion In our opinion and to the best of our information and according to the explanations given to us, the financia statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India

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

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

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

As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order. As required by section 227(3) of the Act, we report that:

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

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

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

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

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

ANNEXURE TO THE AUDITORS REPORT

Annexure to the Auditors report of even date to the Members of Flexituff International Ltd.

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details except the location of fixed assets, item-wise depreciation and accumulated depreciation. The management is in the process to comply the requirement as prescribed.

(b) The fixed assets have been physically verified by the management during the year and there is 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. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion, there was no disposal of substantial part of fixed assets during the year, therefore, does not affect the going concern assumption.

(ii) (a) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year other than those kept with third parties.

(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 is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The company has not taken Inter Corporate Deposit from companies covered in the register maintained under section 301 of the Act.

(b) According to the information and explanation given to us, Company has, during the year, not granted any bans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. However as observed during the course of audit, the internal control and procedures in relation to trading of goods, purchase of fixed assets and receivables needs to be strengthen

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Act have been so entered

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

(vi) The Company has not accepted any deposits from public. Therefore, the provision of Clause of (vi) of paragraph 4 of the Order are not applicable to the company.

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

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained We have however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employee''s state insurance, income- tax, sales-tax, wealth-tax, custom duty, excise duty, VAT, cess and other material statutory dues applicable to it. (b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

Name of the statute Nature of dues Demand Amount (Rs. in million) Paid (Rs. in million)

IncomeTax Act Disallowances in respect of Share 7.00 3.00 Capital Subscribed during the year.

IncomeTax Act Disallowances in respect of Share 10.13 3.90 Capital Subscribed during the year, SEZ Loss u/s 10A & 80HHC deduction.

IncomeTax Act Disallowances in respect of Share 2.66 1.33 Capital Subscribed during the year.

IncomeTax Act Disallowances in respect of Share 12.73 Nil Capital Subscribed during the year.

IncomeTax Act Disallowances in respect of SEZ Loss 6.03 Nil u/s 10 A.

IncomeTax Act Departmental Appeal against penalty 1.45 -NA- order decided in Company''s favor by ITAT

IncomeTax Act Departmental Appeal against appeal 6.58 -NA- allowed by ITAT in case of Investment made by certain companies in Equity Capital of Company and also against deduction allowed under Section 80 IB in Company''s favor by ITAT

IncomeTax TDS Non Deduction of TDS on payment of 0.71 NIL Lease Rent to MPAKVN and Interest thereon.

M.P. Entry Tax Act, Entry tax levied on job work done for 2.41 1.35 1976 SEZ unit (U/s 21 Re-open)

M.P. commercial Tax Assessing Office has levied the tax on 3.83 0.98 Act, 1994 sale by SEZ unit in Domestic Area (U/s 21 Re-open)

Central Sales Tax Act, Assessing Office has levied the tax on 0.0002 0.00 (U/s 21 Re-open) sale by SEZ unit in Domestic Area

M.P. Entry Tax Act, Entry tax levied on job work done for 1.68 1.61 1976 SEZ unit

M.P. Entry Tax Act, Entry tax levied on job work done for 1.09 0.11 1976 (U/s 21 Re- SEZ unit open)

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

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax Act A.Y. 2005-06 CIT (A)

Income Tax Act A.Y. 2005-06 CIT (A)

Income Tax Act A.Y. 2006-07 CIT (A)

Income Tax Act A.Y. 2003-04 M.P.HIGH COURT

Income Tax Act A.Y. 2003-04 M.P.HIGH COURT

Income Tax TDS A.Y. 2005-06 to CIT(A) A.Y. 2007-08

M.P. Entry Tax Act, 1976 F.Y. 2006-07 The Appellate Board, M.P. Tax Tribunal Bhopal / (U/s 21 Re-open) Indore

M.P. commercial Tax Act, 1994 F.Y. 2006-07 The Appellate Authority and Additiona Commissioner (U/s 21 Re-open) of Commercial Tax, Indore Division

Central Sales Tax Act, F.Y. 2006-07 The Appellate Authority and Additiona Commissioner of (U/s 21 Re-open) Commercial Tax, Indore Division

M.P. Entry Tax Act, 1976 F.Y. 2007-08 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. Entry Tax Act, 1976 F.Y. 2007-08 The Appellate Authority and Additiona Commissioner (U/s 21 Re- open) of Commercial Tax, Indore Division

Name of the statute Nature of dues Demand Amount (Rs. in million) Paid (Rs. in million)

M.P. commercial Tax Assessing Office has levied the tax on 1.96 1.96 Act, 1994 sale by SEZ unit in Domestic Area

M.P. Entry Tax Act, Entry tax levied on job work done for 2.89 0.88 1976 SEZ unit

M.P. Entry Tax Act, Assessing Office has levied the tax on 1.73 0.43 1976 (U/s 21 Re- sale by SEZ unit in open) Domestic Area

M.P. commercial Tax Assessing Office has levied the tax on 1.06 1.06 Act, 1994 sale by SEZ unit in Domestic Area

M.P. Entry Tax Act, Entry tax levied on job work done for 3.72 1.04 1976 SEZ unit

M.P. commercial Tax Tax Imposed on (a) sale by SEZ unit 4.30 1.20 Act, 1994 in Domestic Area Rs.18.17 mln (b) Assessing Officer has not given the benefit of VAT out put Rs.1.58 million (c) ITR Amt. Disallowed Rs.0.07 mln (d) Tax Imposed on non receipts of form "H"Rs.1.60mln

Central Sales Tax Act, Tax imposed on non receipts of Form 0.08 0.08 -H

M.P. commercial Tax VAT ITR Reversal on Job Work & Stock 0.61 0.61 Act, 1994 Transfer

M.P. Entry Tax Act, Entry tax levied on job work done for 0.37 0.09 1976 SEZ unit

Central Sales Tax Act, Tax imposed on non receipts of Form 0.31 0.31 -H

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

M.P. commercial Tax Act, 1994 F.Y. 2007-08 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. Entry Tax Act, 1976 F.Y. 2008-09 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. Entry Tax Act, 1976 F.Y. 2008-09 The Appellate Authority and Additiona Commissioner (U/s 21 Re- open) of Commercial Tax, Indore Division

M.P. commercial Tax Act, 1994 F.Y. 2008-09 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. Entry Tax Act, 1976 F.Y. 2009-10 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

M.P. commercial Tax Act, 1994 F.Y. 2009-10 The Appellate Board, M.P. Tax Tribunal Bhopal / Indore

Central Sales Tax Act, F.Y. 2009-10 The Appellate Board, M.P. Tax Tribunal Bhopal

M.P. commercial Tax Act, 1994 F.Y. 2010-11 The Appellate Authority and Additiona Commissioner of Commercial Tax, Indore Division

M.P. Entry Tax Act, 1976 F.Y. 2010-11 The Appellate Authority and Additiona Commissioner of Commercial Tax, Indore Division

Central Sales Tax Act, F.Y. 2010-11 The Appellate Authority and Additiona Commissioner of Commercial Tax, Indore Division

Name of the statute Nature of dues Demand Amount (Rs. in million) Paid (Rs. in million)

Uttarakhand VAT Tax imposed on non receipts of C form 22.19 NIL Act, 2005

Uttarakhand VAT Demand u/s 10(A)/ 10(B)/10(D)/ & 10.66 3.33 Act, 2005 24(3)

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

Uttarakhand VAT Act, 2005 F.Y. 2009-10, The Joint Commissioner 2010-11 Appeal-1 Uttarakhand

Uttarakhand VAT Act, 2005 F.Y. 2009-10, The Joint Commissioner 2010-11& 2011- Appeal-1 Uttarakhand 12

(x) The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

(xi) 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 or bank.

(xii) Based on our examination and according to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments

(xv) According to the information and explanations given to us, the Company has given corporate guarantee on behalf of M/s Satguru Polyfab Private Limited for Rs.60.00 million to State Bank of Patiala, Indore, and on behalf of Nanofil Technologies Private Limited for Rs.0.02 million to Governor of Uttarakhand, which are not prima facie prejudicial to the interest of the company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained

(xvii) On the examination of books of accounts and the information and explanations given to us, in our opinion the funds raised on short term basis have not been used for long term investment and vice versa,

(xviii) During the year, the Company has not made any allotment of preferential shares to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956

(xix) The Company has not issued any Debenture therefore the provision of clause 4(xix) of the companies (Auditor''s Report) Order, 2003 are not applicable

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

(xxi) We have been informed that the one of the staff of the company had misappropriated funds amounting to Rs.4.67 million during the year under audit. Investigations are in progress and the staff has been dismissed, arrested and matter is under prejudice. The company has provided for the amount involved in books of account. Apart from above, as per the information and explanation given to us and examination of books of accounts carried by us in accordance in the generally accepted audit practices in India, no other fraud on or by the company has been noticed or reported during the course of our audit.

For L.K.Maheshwari & Co. Chartered Accountants FRN No. 000780C

(Abhay Singi) Place: Indore Partner Dated : 27th May 2014 Membership No 079873

Mar 31, 2013

We have audited the accompanying financial statements of M/s Flexituff International Limited , which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

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

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

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

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

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:

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

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

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

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

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

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

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

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

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

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

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

(b) The fixed assets have been physically verified by the management during the year and there is 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. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion, there was no disposal of substantial part of fixed assets during the year, therefore, does not affect the going concern assumption.

(ii) (a) As explained to us, the management has conducted physical verification of inventory at reasonable intervals during the year other than those kept with third parties.

(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 is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The company has not taken Inter Corporate Deposit from companies covered in the register maintained under section 301 of the Act.

(b) According to the information and explanation given to us, Company has, during the year, not granted any loans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 301 of the Act.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods.

During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

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

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

(vi) The Company has not accepted any deposits from public. Therefore, the provision of Clause of (vi) of paragraph 4 of the Order are not applicable to the company.

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

(viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act , 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have however not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income- tax, sales-tax, wealth-tax, custom duty, excise duty, VAT, cess and other material statutory dues applicable to it.

(b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

Name of the Nature of dues Demand statute (Rs. in Million)

Income Tax Act Disallowances in respect of Share 7.00 Capital Subscribed during the year.

Income Tax Act Disallowances in respect of Share 10.13 Capital Subscribed during the year, SEZ Loss u/s 10A & 80HHC deduction.

Income Tax Act Disallowances in respect of Share 2.66 Capital Subscribed during the year.

Income Tax Act Disallowances in respect of Share 12.73 Capital Subscribed during the year.

Income Tax Act Disallowances in respect of SEZ 6.03 Loss u/s 10 A.

Income Tax Act Departmental Appeal against 1.45 penalty order decided in Company''s favor by ITAT

Income Tax Act Departmental Appeal against 6.58 appeal allowed by ITAT in case of Investment made by certain companies in Equity Capital of Company and also against deduction allowed under Section 80 IB in Company''s favor by ITAT

Income Tax Non Deduction of TDS on 0.71 TDS payment of Lease Rent to MPAKVN and Interest thereon.

M.P. Entry Tax Entry Tax levied on Job Work for 1.68 Act, 1976 SEZ unit

M.P. Entry Tax Entry Tax levied on Job Work for 2.89 Act, 1976 SEZ unit

Name Amount Period to which Forum where Paid the Amount dispute is (Rs. in Million) relates pending

Income Tax Act 3.00 A.Y. 2004-05 CIT (A)

Income Tax Act 3.90 A.Y. 2004-05 CIT (A)

Income Tax Act 1.33 A.Y.2005-06 CIT (A)

Income Tax Act NIL A.Y.2005-06 CIT (A)

Income Tax Act NIL A.Y.2006-07 CIT (A)

Income Tax Act -NA- A.Y.2003-04 M.P.HIGH COURT

Income Tax Act -NA- A.Y.2003-04 M.P.HIGH COURT

Income Tax Act NIL A.Y.2005-06 to CIT(A) A.Y. 2007-08

Income Tax Act 1.61 F.Y. 2007-08 M.P.Commercial Tax Tribunal, Bhopal

Income Tax Act 0.88 F.Y. 2008-09 M.P.Commercial Tax Tribunal, Bhopal

Name of the Nature of dues Demand statute (Rs. in Million) M.P.VAT Act, Assessing Officer has levied 1.96 2002 the tax on sale by SEZ unit in Domestic Area

M.P.VAT Act, Assessing Officer has levied 1.06 2002 the tax on sale by SEZ unit in Domestic Area

M.P.VAT Act, Tax Imposed on 4.30 2002 (a) sale by SEZ unit in Domestic Area Rs.181.70 Lacs

(b) Assessing Officer has not given the benefit of VAT out put Rs.15.82 Lacs

(c) ITR Amt.Disallowed Rs.0.75 Lacs

(d) Tax Imposed on non receipts of form "H" Rs.16.06 Lacs

M.P. Entry Tax Entry tax levied on job work 3.51 Act, 1976 done for SEZ unit

M.P. Entry Tax Entry tax levied on Job work 10.86 Act, 1976 done for SEZ unit

Uttarakhand Demand u/s 10(A)/ 10(B)/10(D)/ 10.66 VAT Act,2005 & 24(3)

Name Amount Period to which Forum where Paid the Amount dispute is (Rs. in Million) relates pending

M.P.VAT Act, 1.96 F.Y. 2007-08 M.P.Commercial Tax Tribunal, Bhopal

M.P.VAT Act, 1.06 F.Y. 2008-09 M.P.Commercial Tax Tribunal, Bhopal

M.P.VAT Act, 0.43 F.Y. 2009-10 Additional Commissioner (Appeals) of Commercial Taxes, Zone Indore

M.P.VAT Act, 0.37 F.Y. 2009-10 Additional Commissioner (Appeals) of Commercial Taxes, Zone Indore

M.P.VAT Act, 1.09 F.Y. 2006-07 Additional Commissioner (Appeals) of Commercial Taxes, Zone Indore

M.P.VAT Act, 3.33 F.Y. 2009- The Joint 10,2010-11& Commissioner 2011-12 Appeal -1 Uttarakhand

(x) The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

(xi) 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 or bank.

(xii) Based on our examination and according to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has given corporate guarantee on behalf of Entertainment World Developers Limited, Mumbai for Rs.4.55 million to State Bank of India, Commercial Branch, Indore., and on behalf of M/s Satguru Polyfab Private Limited, Gandhidham for Rs.60.00 million to State Bank of Patiala, Indore, and on behalf of Nanofil Technologies Pvt.Ltd., Kashipur for Rs.0.20 million to Governor of Uttarakhand, which are not prima facie prejudicial to the interest of the company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) On the examination of books of accounts and the information and explanations given to us, in our opinion the funds raised on short term basis have not been used for long term investment and vice versa;

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

(xix) The Company has not issued any Debenture therefore the provision of clause 4(xix) of the companies (Auditor''s Report) Order, 2003 are not applicable.

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

(xxi) 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 course of our audit.

For L.K.Maheshwari & Co.

Chartered Accountants

FRN No. 000780C

(Abhay Singi)

Place : Indore Partner

Dated : 27th May 2013 Membership No 079873

Mar 31, 2012

We have audited the attached Balance Sheet of M/s Flexituff International Limited as at March 31, 2012 and also the Profit and Loss account for the year ended on March 31, 2012 annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub- section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

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

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

iii. The Balance Sheet and Profit and Loss account statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the Balance Sheet, and Profit and Loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2012.

b) in the case of the profit and loss account, of the profit for the year ended March 31, 2012.

ANNEXURE TO THE AUDITORS' REPORT of even date to the Members of Flexituff International Ltd.

i) 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 during the year and there is 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. As informed, no material discrepancies were noticed on such verification.

c) There was no disposal of fixed assets during the year and therefore does not affect the going concern assumption.

ii) a) The management has conducted physical verification of inventory at reasonable intervals during the year other than those kept with third parties.

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 is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

iii) a) The company has not taken Inter Corporate Deposit from companies covered in the register maintained under section 301 of the Companies Act, 1956

b) According to the information and explanation given to us, Company has, during the year, not granted any loans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 301 of the Companies Act 1956.

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

v) a) According to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 have been so entered.

b) In our opinion and according to information and explanations given to us, the register is maintained the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, an exceeding the value of Rupees Five Lacs in respect of any one party during the year have been made at prices which are reasonable having regard to the prevailing market at relevant time.

vi) The Company has not accepted any deposits from public. Therefore, the provision of Clause of (vi) of paragraph 4 of the Order are not applicable to the company.

vii) In our opinion, the Company has an Internal Audit System commensurate with the size and nature of its business.

viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act , 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

ix) a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, ESI, Income-Tax, Sales-Tax, Wealth-Tax, Custom Duty, Service Tax, Excise Duty, VAT, Cess and other statutory dues applicable to it.

b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

Name of the statute Nature of dues Demand Amount paid (Rs. In million) (Rs. In million)

Income Tax Act Disallowances in respect of 7.00 3.00 Share Capital Subscribed during the year.

Income Tax Act Disallowances in respect of 10.13 3.00 Share Capital Subscribed during the year, SEZ Loss u/s 10A & 80HHC deduction.

Income Tax Act Disallowances in respect of 2.66 1.33 Share Capital Subscribed during the year.

Income Tax Act Disallowances in respect of 12.73 NIL Share Capital Subscribed during the year.

Income Tax Act Disallowances in respect of SEZ Loss u/s 10 A. 6.03 NIL

Income Tax Act Departmental Appeal against penalty order 1.45 -NA- decided in Company's favor by ITAT

Name of the Statue Period to which Forum where the Amount dispute is relates pending.

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax Act A.Y. 2004-05 CIT (A)

Income Tax Act A.Y.2005-06 CIT (A)

Income Tax Act A.Y.2005-06 CIT (A)

Income Tax Act A.Y.2006-07 CIT (A)

Income Tax Act A.Y.2003-04 M.P. HIGH COURT

Name of the statute Nature of dues Demand Amount paid (Rs. In million) (Rs. In million)

Income Tax Act Departmental Appeal against appeal allowed 6.58 -NA- by ITAT in case of Investment made by certain companies in Equity Capital of Company and also against deduction allowed under Section 80 IB in Company's favor by ITAT

Income Tax TDS Non Deduction of TDS on payment of 0.71 NIL Lease Rent to MPAKVN and Interest thereon.

M.P. Commercial Difference in Sales tax exemption .02 .004

Tax Act, 1994 Caping calculation

Central Sales Difference in Sales tax exemption 1.96 1.54

Tax Act, 1956 Caping calculation

M.P. Entry Tax Act, 1976 Entry Tax levied on Job Work for SEZ unit 1.68 1.61

M.P. Entry Tax Act, 1976 Entry Tax levied on Job Work for SEZ unit 2.89 0.88

Utarakhand Assessment FY 2010-11 u/s 10(A)/ 10(B) and 10(D) 1.56 NIL Commercial Tax

Name of the Statue Period to which Forum where the Amount dispute is relates pending.

Income Tax Act A.Y.2003-04 M.P. HIGH COURT

Income Tax TDS A.Y.2005-06 to CIT(A) A.Y. 2007-08

M.P. Commercial Tax Act, 1994 F.Y. 2005-06 The Appellate Board, M.P.Tax Tribunal Bhopal Central Sales Tax Act, 1956 F.Y. 2005-06 The Appellate Board, M.P. Tax Tribunal Bhopal M.P. Entry Tax Act, 1976 F.Y. 2007-08 The Appellat Board, M.P. Tax Tribunal Bhopal M.P. Entry Tax Act, 1976 F.Y. 2008-09 The Appellate Board, M.P. Tax Tribunal Bhopal Utarakhand Commercial Tax F.Y. 2010-11 The Joint Commissioner (Appeal)-I

x) The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

xi) 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 or bank.

xii) Based on our examination and according to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

xv) According to the information and explanations given to us, the Company has given corporate guarantee on behalf of EWDPL for Rs.4.55 million to State Bank of India, and on behalf of M/s Satguru Polyfab Private Limited, for Rs.60.00 million to State Bank of Patiala, and on behalf of Nanofil Technologies Pvt.Ltd. for Rs. 0.2 million to Governor of Uttarakhand, which are not prima facie prejudicial to the interest of the company.

xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

xvii) On the examination of books of accounts and the

information and explanations given to us, in our opinion the funds raised on short term basis have not been used for long term investment and vice versa;

xviii)During the year, the Company has not made any allotment of preferential shares to parties or Companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix) The Company has not issued any Debenture therefore the provision of clause 4(xix) of the companies (Auditor's Report) Order, 2003 are not applicable.

xx) During the year the Company has issued 4500000 Equity share of Rs. 10/- each at a premium of Rs. 145/- each through IPO and an Offer for sale of 2250000 equity share by Clearwater Capital Partners (Cyprus) Ltd. & 19700 Equity Shares of Rs. 10/- each at a premium of Rs. 85/- per Share under ESOP Scheme. The end use of money raised by IPO has been disclosed in Financial Statements and the same has been verified.

xxi) 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 course of our audit.

For L.K. Maheshwari & Co.

Chartered Accountants

FRN No. 000780C

Abhay Singi Place : Indore Partner

Dated : 30th May 2012 Membership No 079873

Mar 31, 2011

We have audited the attached Balance Sheet of M/s Flexituff International Limited as at March 31,2011 and also the Profit and Loss account for the year ended on March 31,2011 annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub- . section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

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

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

iii. The Balance Sheet and Profit and Loss account statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the Balance Sheet, and Profit and Loss account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in case of the balance sheet, of the state of affairs of the Company as at March 31,2011.

b) in case of the profit and loss account, of the profit for the year ended March 31,2011.

Annexure to the Auditors report of even date to the Members of Flexituff International Ltd.

(i) (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 during the year and there is 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. As informed, no material discrepancies were noticed on such verification.

(c) There was no disposal of fixed assets during the year and therefore does not affect the going concern assumption.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year other than those kept with third parties.

(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 is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The company has not taken Inter Corporate Deposit from companies covered in the register maintained under section 301 of the Companies Act, 1956

(b) According to the information and explanation given to us, Company has, during the year, not granted any loans, security or unsecured, to companies, firm and other parties covered in the register maintained under Section 301 of the Companies Act 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to information and explanations given to us, the register is maintained the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, an exceeding the value of Rupees Five Lacs in respect of any one party during the year have been made at prices which are reasonable having regard to the prevailing market at relevant time.

(vi) The Company has not accepted any deposits from public

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

(viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the products of the Company.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth-tax, custom duty, excise duty, VAT, cess and other material statutory dues applicable to it.

(b) According to the records of the Company, the dues outstanding of taxes on account of any dispute are as follows:

Name of the statute Nature of dues Demand (Rs. in million)

Income Tax Act Disallowances in respect of 7.00 Share Capital Subscribed during the year.

Income Tax Act Disallowances in respect of 2.66 Share Capital Subscribed during the year.

Income Tax Act Departmental Appeal against -NA- penalty order decided in Company's favor by 1TAT

Income Tax Act Departmental Appeal against -NA- deduction allowed under Section 80 IB in Company's favor by ITAT

Income Tax Act Departmental Appeal against -NA- appeal allowed by ITAT in case of Investment made by certain companies in Equity Capital of Company

Income Tax TDS Non Deduction of TDS on 0.71 payment of Lease Rent to MPAKVN and Interest thereon

Income Tax TDS Short Deduction of TDS and 1.58 Interest thereon

M.P Commercial Tax Difference in sales tax 0.02 Act 1994 exemption caping calculation

Central Sales Tax Difference in sales tax 1.96 Act 1956 exemption caping calculation

M.P. Entry Tax Act, 1976 Tax imposed on Job Work for 1.68 SEZ unit

Name of the statute Amount Paid Period to Forum where (Rs. in which the dispute is million) Amount pending. relates

Income Tax Act 3.00 A.Y. 2004-05 CIT (A)

Income Tax Act 1.33 A.Y.2005-06 CIT (A)

Income Tax Act -NA- A.Y.2003-04 M.P. HIGH COURT

Income Tax Act -NA- A.Y.2003-04 M.P.HIGH COURT

Income Tax Act -NA- A.Y.2003-04 M.P.HIGH COURT

Income Tax TDS Nil A.Y.2005-06 to CIT (A) A.Y.2007-08

Income Tax TDS Nil A.Y.2009-10 CIT (A)

M.P.Commercial Tax 0.00 F.Y. 2005-06 The Appellate Act,1956 Board, M.P. Tax Tribunal Bhopal

Central Sales Tax 0.55 F.Y. 2005-06 The Appellate Act,1956 Board, M.P Tax Tribunal Bhopal

M.P. Entry Tax Act,1976 0.47 F.Y. 2007-08 The Appellate Board, M.P. Tax Tribunal Bhopal

(x) The Company neither has accumulated losses at the end of the financial year nor has incurred cash losses during the year and in the immediately preceding year.

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

(xii) Based on our examination and according to the information and explanations given to us, the company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities.

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

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has given corporate guarantee on behalf of Entertainment World Developers Limited, Mumbai for Rs.4.55 million to State bank of India, Commercial Branch, , Indore., and on behalf of M/s Satguru Polyfab Private Limited, Gandhidham for Rs.60.00 million to State Bank of Patiala,' Orbit Mall Branch, A.B.Road, Indore, and on behaif of Nanofil Technologies Pvt.Ltd., Kashipur for Rs.0.20 million to Governor of Uttarakhand, which are not prima facie prejudicial to the interest of the company.

(xvi) Based on information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) On the examination of books of accounts and the information and explanations given to us, in our opinion the funds raised on short term basis have not been used for long term investment and vice versa;

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

(xix) 92 Nos. of Zero Percent Fully Convertible Debentures of Rs. 5.00 million each issued to M/s Clearwater Capital Partners (Cyprus) Limited, Cyprus are converted into 44,86,492 equity shares during the year;

(xx) The company has not raised any money by public issues during the year;

(xxi) 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 course of our audit.

For L.K.Maheshwari & Co.

Chartered Accountants

FRN No. 000780C

Place : Indore

Partner

Dated : 18.6.2011 Membership No 079873

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