Auditor Report of Gupta Synthetics Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Gupta Synthetics Limited ("the company"), which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, 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 Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing 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 mis-statement.

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

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

Opinion

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

1. Loss of Stock in Fire of Rs. 2162.93 Lacs of earlier years yet not provided by the company as mentioned in the Note No. 42 forming part of balance sheet.

2. The ING Vysya Bank Ltd., have written off Rs. 18,14,90,530.05 in Term Loan Account during FY 2013-14. The company have written a letter to the Bank to know the reason for the said writing off. The company has not received any explanations about the same and therefore said amount is not written off by the company in its books of account and therefore the balance outstanding in the name of ING Vysya Bank Ltd is shown higher by that amount Rs. 18,14,90,530.05 and correspondingly the Profit & Loss Account balance in Balance Sheet show the loss figure higher by the amount Rs. 18,14,90,530.05.

3. The Standard Chartered Bank have written off Rs. 20,29,76,713.71 in the Term Loan Account during FY 2013-14. The company have written a letter to the Bank to know the reason for the said writing off. The company has not received any explanations about the same and therefore said amount is not written off by the company in its books of account and therefore the balance outstanding in the name of Standard Chartered Bank is shown higher by that amount Rs. 20,29,76,713.71 and correspondingly the Profit & Loss Account balance in Balance Sheet show the loss figure by the amount Rs. 20,29,76,713.71.

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 loss 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

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 appears from our examination of those books.

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

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

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

f) With respect to the other matters included in Annexure 'A" of the Auditor's Report attached herewith and to our best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note No. 7(b) of the Annexure 'A' to the Audit Report and Note No. 44 to the financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, and the Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.

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

ANNEXURE 'A' TO AUDITORS' REPORT

1. In respect of fixed assets :

a. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets on the basis of available information.

b. As explained to us, the physical verification of the assets has been carried by the management at reasonable intervals and no material discrepancies were noticed on such verification.

2. In respect of its inventories :

a. As explained to us, inventories have been physically verified by the management at reasonable intervals during the year.

b. In our opinion and according to information and explanations given to us, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. In our opinion and according to the information and explanations given to us, the company has maintained proper record of its inventories and no material discrepancies noticed on physical verification.

3. In respect of loans, secured or unsecured, granted by the company to Companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2015.

a. The company has granted unsecured loans to company and other parties covered in the register maintained under Section 189 of the Companies Act.

b. The loan granted by the company is interest free and, the principal amount is repayable on demand and there is no repayment schedule.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure that commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

5. In our opinion and according to the information and explanations given to us, the company has accepted deposits against the terms of provisions of Section 73 and 76 of the Companies Act, 2013.

6. We have broadly reviewed the Cost Audit Report for the year ended as on 31-03-2014 regarding books of accounts pursuant to the rule made by the Central Government for the maintenance of cost records under sub section (1) of Section 148 of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

7. In respect of statutory dues:

a. According to the records of the Company, undisputed statutory dues including Provident Fund, Income tax, Sales tax, Custom Duty, Excise Duty, Cess and other material statutory dues have been generally regularly deposited with the appropriate authorities.

According to the information and explanation given to us, no undisputed amounts payable in respect of Income tax, Sales tax, Custom Duty, Excise Duty, Cess and other material statutory dues as at 31st March, 2015 which are outstanding for a period of more than six months from the date they become payable, except income tax of Rs. 30.09 lacs, fringe benefit tax of Rs. 16.33 lacs, tax on proposed dividend of Rs. 5.03 lacs and provident fund (earlier years) of Rs. 6.52 lacs are outstanding exceeding six month from the end of the financial year.

b. According to the information and explanations given to us and the records produced before us, the particulars of commercial tax and excise duty and service tax as at 31st March, 2015 which have not been deposited as on 31st March, 2015 on account of dispute pending are as under:

Nature of Statute Nature of Dues Rs. in Lacs

Gujarat Commercial Tax Value Added Tax 33.48 / Penalities 80.83

4.12

172.22

87.56

Central Excise Act,1944 Excise Duty 26.45 and Service Tax 63.92

53.41

Total 521.99



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

Gujarat Commercial Tax 2006-07 Gujarat Value Added Tax Appellate Tribunal

2007-08 Deputy Commissioner of Commercial Tax 2008-09

2009-10

2010-11

Central Excise Act,1944 Various years Customs,Excise & Service from 2002-03 Tax Appellate Tribunal to 2007-08

Various years Commissioner of Central from 2005-06 Excise (Appeals) to 2010-11

Various years Additional Commissioner from 2006-07 of Central Excise & to 2010-11 Service Tax

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

8. At the end of the financial year the accumulated losses of the Company have exceeds its net worth. Further the company has incurred cash loss during current and preceding financial years. The Company has an accumulated loss of INR 18245.12 Lacs as on 31st March 2015 and the Company has incurred cash losses of INR 2556.73 Lacs during the financial year and cash losses of INR 2786.04 Lacs in the immediately preceding financial year.

9. Based on our audit procedures and according to the information and explanations given to us, the company has defaulted in repayment of dues towards their Term Loan Accounts with ING Vysya Bank Ltd., Oriental Bank of Commerce, Industrial Development Bank of India and State Bank of India. Details of period and amount of default are as under:

Sr. Name of the Bank Amount of default No. As on 31.03.2015 (Rs. in lacs)

1 ING Vysya Bank Ltd. 2135.83

2 Oriental Bank of Commerce 2600.40

3 Industrial Development Bank of India 1605.74

4 State Bank of India 3023.00

Total 9364.97

The amount of default includes principal and interest. Note that company has not paid any installments and above bank accounts have become Non-Performing Assets, therefore entire term loan accounts are shown as default.

10. The company has pledge certain shares held as investments as guarantees for loans taken by others from banks or financial institutions.

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

12. In our opinion and 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 R. R. PATCHIGAR & CO. Chartered Accountants FRN: 107639W

Rupin Patchigar Place : Surat Proprietor Date : 14.08.2015 Membership No.:31172

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Mar 31, 2014

We have audited the accompanying financial statements of GUPTA SYNTHETICS LIMITED ("the Company"), 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.

Management''s Responsibility for the Financial Statements

The company''s management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the companies Act,1956(The Act) read with the General Circular 15/2003 dated 13th September,2013 of the ministry of corporate affairs in respect of section 133 of the Companies Act,2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing on opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

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

1. Loss of Stock in Fire of '' 2162.93 Lacs not provided by the company as mentioned in the Note No. 43 forming part of balance sheet.

2. The ING Vysya Bank Ltd., have written off ''18,14,90,530.05 in Term Loan Account during FY 2013-14. The company have written a letter to the Bank to know the reason for the said writing off. The company has not received any explanations about the same and therefore said amount is not written off by the company in its books of account and therefore the balance outstanding in the name of ING Vysya Bank Ltd is shown higher by that amount ''18,14,90,530.05 and correspondingly the Profit & Loss Account balance in Balance Sheet show the loss figure higher by the amount ''18,14,90,530.05.

3. The Standard Chartered Bank have written off '' 20,29,76,713.71 in Term Loan Account during FY 2013-14. The company have written a letter to the Bank to know the reason for the said writing off. The company has not received any explanations about the same and therefore said amount is not written off by the company in its books of account and therefore the balance outstanding in the name of Standard Chartered Bank is shown higher by that amount '' 20,29,76,713.71 and correspondingly the Profit & Loss Account balance in Balance Sheet show the loss figure higher by the amount '' 20,29,76,713.71.

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 Profit and Loss Account, of the loss 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, 2003 ("the Order") issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, we give in the Annexure ''A'' statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us.

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from branches not visited by us;

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

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

1. In respect of fixed assets :

a. The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets on the basis of available information.

b. As explained to us, the physical verification of the assets has been carried by the management at reasonable intervals and no material discrepancies were noticed on such verification.

c. Further in our opinion, the company has not disposed off substantial part of fixed assets affecting its going concern status during the financial year.

2. In respect of its inventories :

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to information and explanations given to us, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. In our opinion and according to the information and explanations given to us, the company has maintained proper record of its inventories and no material discrepancies noticed on physical verification .

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

a. The company had granted unsecured loans to company and other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and year - end balance of the loan granted is '' 418.11 Lacs.

b. The loan granted by the company is interest free.

c. The principal amount is repayable on demand and there is no repayment schedule.

d. In respect of the said loan, the same is repayable on demand and therefore the question of overdue amounts does not arise.

e. The company has taken unsecured loans from companies covered in the register maintained under section 301 of the Companies Act, 1956 and year - end balance of the loan taken from such parties is '' 95.48 Lacs.

f. In respect to loans taken by the company from body corporate and related parties are interest free.

g. In respect of the said loan taken, the same is payable on demand and therefore the question of overdue amounts does not arise.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure that commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

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

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

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

6. In our opinion and according to the information and explanations given to us, the company has accepted deposits against the terms of provisions of Section 58A and 58AA of the Companies Act, 1956.

7. In our opinion and according to the information and explanations given to us,the company does not have an internal audit system that commensurate with its size and nature of the business.

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, and Companies (Cost accounting records Rule), 2011, and are of the opinion that prima-facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of records with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

a. According to the records of the Company, undisputed statutory dues including Provident Fund, Income tax, Sales tax, Custom Duty, Excise Duty, Cess and other material statutory dues have been generally regularly deposited with the appropriate authorities.

According to the information and explanation given to us,no undisputed amounts payable in respect of Income tax, Sales tax, Custom Duty, Excise Duty, Cess and other material statutory dues as at 31st March, 2014 which are outstanding for a period of more than six months from the date they become payable, except income tax of '' 30.09 lacs, fringe benefit tax of '' 16.33 lacs, and tax on proposed dividend of '' 5.03 lacs are outstanding exceeding six month from the end of the financial year.

b. According to the information and explanations given to us and the records produced before us, the particulars of commercial tax and excise duty and service tax as at 31st March 2014 which have not been deposited as on 31st March, 2014 on account of dispute pending are as under:

Nature of Statute Nature of Dues Rs in Lacs Period to which Amount relates

Gujarat Commercial Tax Value Added Tax 33.48 2006-07 / Penalities

80.83 2007-08

4.12 2008-09

172.22 2009-10

87.56 2010-11

Central Excise Act, Excise Duty 26.45 Various years 1944 and Service Tax from 2002-03 to 2007-08

63.92 Various years from 2005-06 to 2010-11

53.41 Various years from 2006-07 to 2010-11

Total 521.99

Nature of Statute Forum where dispute is pending

Gujarat Commercial Tax Gujarat Value Added Tax Appellate Tribunal

Deputy Commissioner of Commercial Tax

Central Excise Act,1944 Customs, Excise & Service Tax Appellate Tribunal

Commissioner of Central Excise (Appeals)

Additional Commissioner of Central Excise & Service Tax

10. At the end of the financial year the accumulated losses of the Company have exceeded its net worth. Further the company has incurred cash loss during current and preceding financial years. The Company has an accumulated loss of '' 10570.11 Lacs as on 31st March 2014 and the Company has incurred cash losses of '' 2786.04 Lacs during the financial year and cash losses of '' 2541.11 Lacs in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us, the company has defaulted in repayment of dues towards their Term Loan Accounts with ING Vysya Bank Ltd., Oriental Bank of Commerce, Industrial Development Bank of India and State Bank of India. Details of period and amount of default are as under:

Name of the Bank Amount of default As on 31.03.2014 (Rsin lacs)

ING Vysya Bank Ltd. 2135.83

Oriental Bank of Commerce 2600.40

Industrial Development Bank of India 1605.74

State Bank of India 3023.00

Total 9364.97

The amount of default includes principal and interest. Note that company has not paid any installments and above bank accounts have become Non-Performing Assets, therefore entire term loan accounts are shown as default.

12. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion the company is not a chit fund or a nidhi / mutual benefit fund / society, therefore, clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

14. The company is not dealing or trading in shares, securities, debentures and other investment. However the company has invested in shares and securities as mentioned in Note ''9'' to the accounts. Since the investment are made with a view to earn dividend, interest for capital appreciation and for other benefits, the question of the company maintaining separate records of the transactions and contracts and making timely entries therein does not arise. These shares and securities are held by the Company in its own name.

15. The company has pledged certain shares held as investments as guarantees for loans taken by others from banks or financial institutions.

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

17. According to the information and explanations given to us and on an overall examination of the Balance sheet of the Company, we report that funds raised on short term basis have, prima facie, not been used for long term investment during the year.

18. During the year, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. During the financial year, the company did not issue any debentures. Hence the provision of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 regarding creation of security or charge for debentures are not presently applicable to the company.

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

21. In our opinion and 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 R. R. PATCHIGAR & CO. Chartered Accountants FRN: 107639W

Rupin Patchigar Place : Surat Proprietor Date : 12.08.2014 Membership No.: 31172

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of GUPTA SYNTHETICS LIMITED ("the Company"), 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''s Responsibility for the Financial Statements

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

Auditor''s Responsibility

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements gives the information required by the Act in the manner so required and in conformity with the accounting principles generally accepted in India and gives a true and fair view subject to loss of Stock in Fire of Rs. 2162.93 Lacs not provided by the company as mentioned in the Note No. 43 forming part of balance sheet.

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 Profit and Loss Account, of the loss 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, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure ''A'' statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us.

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from branches not visited by us;

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

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 Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

1. In respect of fixed assets :

a. The Company has maintained proper records to showing full particulars including quantitative details and situation of Fixed Assets.

b. As explained to us, the physical verification of the assets has been carried by the management at reasonable intervals and no material discrepancies were noticed on such verification.

c. Further in our opinion, the company has not disposed off substantial part of fixed assets affecting its going concern status during the financial year.

2. In respect of its inventories :

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to information and explanations given to us, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. In our opinion and according to the information and explanations given to us, the company has maintained proper record of its inventories and no material discrepancies noticed on physical verification in stock.

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

a. The company had granted unsecured loans to company and other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and year - end balance of the loan granted is Rs. 382.57 Lacs.

b. The loan granted by the company is interest free.

c. The principal amount is repayable on demand and there is no repayment schedule.

d. In respect of the said loan, the same is repayable on demand and therefore the question of overdue amounts does not arise.

e. The company has taken unsecured loans from companies covered in the register maintained under section 301 of the Companies Act, 1956 and year - end balance of the loan taken from such parties is Rs. 146.37 Lacs.

f. In respect to loans taken by the company from body corporate and related parties are interest free.

g. In respect of the said loan taken, the same is payable on demand and therefore the question of overdue amounts does not arise.

4. In our opinion, there is an adequate internal control procedure that commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

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

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

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

6. In our opinion and according to the information and explanations given to us, the company has not accepted deposits in terms of provisions of Section 58A and 58AA of the Companies Act, 1956.

7. The company does not have an internal audit system that commensurate with its size and nature of the business.

8. We have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, and Companies (Cost accounting records Rule), 2011, and are of the opinion that prima-facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of records with a view to determine whether they are accurate or complete.

9. a. According to the records of the Company, undisputed statutory dues including Provident Fund, Income tax, Sales tax, Custom Duty, Excise Duty, Cess and other material statutory dues have been generally regularly deposited with the appropriate authorities.

There are no undisputed amounts payable in respect of Income tax, Sales tax, Custom Duty, Excise Duty, Cess and other material statutory dues as at 31st March, 2013 which are outstanding for a period of more than six months from the date they become payable, except income tax of Rs. 30.09 lacs, fringe benefit tax of Rs. 16.33 lacs, and tax on proposed dividend of Rs. 5.03 lacs are outstanding exceeding six month from the end of the financial year.

b. According to the information and explanations given to us and the records produced before us, the particulars of commercial tax and excise duty and service tax as at 31st March 2013 which have not been deposited as on 31st March, 2013 on account of dispute pending are as under:

Nature of Statute Nature of Dues Rs. in Lacs Period to which Forum where dispute Amount relates is pending

Gujarat Commercial Tax Value Added Tax 33.48 2006-07 Gujarat Value Added Tax / Penalities Appellate Tribunal

80.83 2007-08 Deputy Commissioner of Commercial Tax

4.12 2008-09

172.22 2009-10

87.56 2010-11

Central Excise Act, 1944 Excise Duty 26.45 Various years Customs, Excise & Service Tax and Service Tax from 2002-03 Appellate Tribunal to 2007-08

63.92 Various years Commissioner of Central Excise from 2005-06 (Appeals) to 2010-11

53.41 Various years Additional Commissioner of from 2006-07 Central Excise & Service Tax to 2010-11

Total 521.99



10. At the end of the financial year the accumulated losses of the Company have exceeded its net worth. Further the company has incurred cash loss during current and preceding financial year. The Company has an accumulated loss of Rs. 7153.81 Lacs as on 31st March 2013 and the Company has incurred cash losses of Rs. 2541.11 Lacs and Rs. 1059.18 Lacs during such financial year and in the immediately preceding financial year respectively.

11. Based on our audit procedures and according to the information and explanations given to us, the company has defaulted in repayment of dues towards their Term Loan Accounts with ING Vysya Bank Ltd., Oriental Bank of Commerce, Industrial Development Bank of India and State Bank of India. Details of period and amount of default are as under:

Sr. No. Name of the Bank Amount of default(Rs. in lacs)

1 ING Vysya Bank Ltd. 1368.14

2 Oriental Bank of Commerce 606.93

3 Industrial Development Bank of India 1635.06

4 State Bank of India 2253.88

The amount of default includes principal and interest.

12. In our opinion and according to the information and explanations given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion the company is not a chit fund or a nidhi / mutual benefit fund / society, therefore, clause 4(xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the company.

14. The company is not dealing or trading in shares, securities, debentures and other investment. However the company has invested in shares and securities as mentioned in Note Rs.9'' to the accounts. Since the investment are made with a view to earn dividend, interest for capital appreciation and for other benefits, the question of the company maintaining separate records of the transactions and contracts and making timely entries therein does not arise. These shares and securities are held by the Company in its own name.

15. The company has pledged certain shares held as investments as guarantees for loans taken by others from banks or financial institutions.

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

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis have, prima facie, not been used for long term investment during the year.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. During the financial year, the company did not issue any debentures. Hence the provision of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 regarding creation of security or charge for debentures are not presently applicable to the company.

20. The company has not raised money by way of public issue during the year.

21. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.



For R. R. Patchigar & Co.

Chartered Accountants,

FRN: 107639W



Rupin Patchigar

Place :Surat (Proprietor)

Date :07.06.2013 M.No. 31172

---

Mar 31, 2012

We have audited the accompanying financial statements of GUPTA SYNTHETICS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2012, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

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

Opinion

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

Loss of Stock in Fire of Rs. 2162.93 Lacs not provided by the company. As mentioned in the Note No. 43 the claim regarding loss of stock in fire of I 2051.51 Lacs and excise duty credit on such destroyed stock of Rs. 111.42 Lacs in all total loss of Rs. 2162.93 Lacs is not accepted by the Insurer, but the Company has shown the said amounts as claim receivable from the Insurer instead of accounting for loss of stock in fire and writing off excise duty credit for destroyed stocks respectively. Therefore, the losses of the Company are in all reduced to the extent of Rs. 2162.93 Lacs (Rs. 2051.51 Lacs plus Rs. 111.42 Lacs) on account of stock lost in fire.

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 loss 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, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure'A'statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

b. in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us.

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from branches not visited by us;

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

e. on the basis of written representations received from the directors as on March 31, 2012, and taken on record by the Board of Directors, 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.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE 'A' TO AUDITORS' REPORT

1. In respect of fixed assets :

a. The Company has maintained proper records to showing full particulars including quantitative details and situation of Fixed Assets.

b. As explained to us, the physical verification of the assets has been carried by the management at reasonable intervals and no material discrepancies were noticed on such verification.

c. During the year no fixed assets were disposed off, therefore, clause 4(i)(c) of the Companies (Auditor's Report) Order, 2003 is not applicable to the company.

2. In respect of its inventories :

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to information and explanation given to us, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. In our opinion and according to the information and explanations given to us, the company has maintained proper record of its inventories and no material discrepancies noticed on physical verification in stock.

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

a. The company had granted unsecured loans to one company covered in the register maintained under Section 301 of the Companies Act, 1956 and year - end balance of the loan granted is ' 147.00 Lacs.

b. The loan granted by the company is interest free.

c. The principal amount is repayable on demand and there is no repayment schedule.

d. In respect of the said loan, the same is repayable on demand and therefore the question of overdue amounts does not arise.

e. The company has taken unsecured loans from 18 companies covered in the register maintained under section 301 of the Companies Act, 1956 and year - end balance of the loan taken from such parties is ' 558.43 Lacs.

f. In respect to loans taken by the company from shareholders and related parties are interests free. However, in respect of loan taken by the body corporate and other parties, some loans are interest free and others with interest. The interest payment is regular.

g. In respect of the said loan taken, the same is payable on demand and therefore the question of overdue amounts does not arise.

4. In our opinion, there is an adequate internal control procedure that commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

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

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

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

6. In our opinion and according to the information and explanation given to us, the company has not complied with the provisions of Section 58A and 58AA of the Companies Act, 1956 and the Companies (acceptance of deposit) Rules 1975.

7. In our opinion, the company has internal audit system that commensurate with its size and nature of the business.

8. The Central Government has not prescribed maintenance of cost records under Section 209(l)(d) of the Companies Act, 1956 for any of the product of the company, therefore provision of the clause 4(viii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the company.

9. a. According to the records of the Company, undisputed statutory dues including Provident Fund, Income tax, Sales tax, Custom Duty, Excise Duty, Cess and other material statutory dues have been generally regularly deposited with the appropriate authorities.

b. There are no undisputed amounts payable in respect of Income tax, Sales tax, Custom Duty Excise Duty, Cess and other material statutory dues as at 31st March, 2012 which are outstanding for a period of more than six months from the date they become payable, except income tax of Rs. 30.09 lacs, fringe benefit tax of Rs. 16.33 lacs, tax deducted/collected at source of Rs. 3.70 lacs and tax on proposed dividend of Rs. 5.03 lacs are outstanding exceeding six month from the end of the financial year.

c. According to the information and explanations given to us and the records produced before us, the particulars of income tax, commercial tax, excise duty and service tax as at 31st March 2012 which have not been deposited as on 31st March, 2012 on account of dispute pending are as under:

Nature of Nature of Dues Rs.in Lacs Period to Forum where dispute Statute which Amo is pending -unt rela -tes

Income Tax Act, 1961 Income Tax / 293.12 2006-07 Commissioner of Income-Tax Penalties (Appeals)

Gujarat Commercial Tax Value Added Tax 33.48 2006-07 Gujarat Value Added / Penalities Tax Appellate Tribunal

80.83 2007-08 Deputy Commissioner of Commercial Tax

Central Excise Act, 1944 Excise Duty 26.45 Various and Service years Customs, Excise & Tax from Service Tax 2002-03 Appellate Tribunal to 2007-08

63.92 Various Commissioner of years Central Excise from 2005-06 (Appeals) to 2010-11

53.41 Various years Additional from Commissioner of 2006-07 Central Excise & to 2010-11 Service Tax

Total 551.21

10. At the end of the financial year the accumulated losses of the Company have exceeded its net worth by hundred per cent, making the Company a potentially sick company. Further the company has incurred cash loss during current and preceding financial year. The Company has an accumulated loss of Rs. 3954.50 Lacs as on 31st March 2012 and the Company has incurred cash losses of Rs. 1059.18 Lacs and Rs. 53.73 Lacs during such financial year and in the immediately preceding financial year respectively.

11. Based on our audit procedures and according to the information and explanation given to us, the company has defaulted in repayment of dues towards their Term Loan Accounts with ING Vysya Bank Ltd., Oriental Bank of Commerce, Industrial Development Bank of India and State Bank of India aggregating to Rs. 865.28 lacs, Rs. 132.89 lacs, Rs. 1090.05 lacs and Rs. 1598.93 lacs respectively. These overdue amounts are including interest.

12. In our opinioji and according to the information and explanation given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion the company is not a chit fund or a nidhi / mutual benefit fund / society, therefore, clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the company.

14. The company is not dealing or trading in shares, securities, debentures and other investment. However the company has invested in shares & securities as mentioned in Note '9' to the accounts. Since the investment are made with a view to earn dividend, interest for capital appreciation and for other benefits, the question of the company maintaining separate records of the transactions and contracts and making timely entries therein does not arise. These shares and securities are held by the Company in its own name.

15. The company has pledged certain shares held as investments as guarantees for loans taken by others from banks or financial institutions.

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

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis have, prima facie, not been used for long term investment during the year.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. During the financial year, the company did not issue any debentures. Hence the provision of clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 regarding creation of security or charge for debentures are not presently applicable to the company.

20. The company has not raised money by way of public issue during the year.

21. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the course of our audit.

For R. R. Patchigar & Co.

Chartered Accountants,

FRN: 107639W

Rupin Patchigar

Place : Surat (Proprietor)

Date : 16.04.2012 M.No. 31172

---

Mar 31, 2011

We have audited the attached Balance Sheet of M/s. GUPTA SYNTHETICS LIMITED, Mumbai as at 31st March, 2011 and Profit and Loss Account and Cash Flow Statement for the year ended on that date attached 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 purpose of our audit.

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

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

iv. In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statements dealt with by this report comply with the Accounting standard referred to in Section 211 (3C) of the Companies Act, 1956.

v. On the basis of the written representation received from the directors, and taken on record by the Board of Directors.

We report that none of the directors is disqualified as on 31st March, 2011, from being appointed as a director in term 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 explanation given to us, the said accounts read together with the notes thereon as per Schedule "22" give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

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

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

c. In the case of the Cash Flow Statements, of the cash flow of the company for the year ended on that date.

1. In respect of fixed Assets :

a. The Company has maintained proper records to showing full particulars including quantitative details and situation of Fixed Assets.

b. As explained to us, the physical verification of the assets has been carried by the management at reasonable intervals and no material discrepancies were noticed on such verification.

c. In our opinion, the company has not disposed off fixed assets during the year.

2. In respect of its Inventories :

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to information and explanation given to us, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. The company has maintained proper record of inventories. As explained to us there were no material discrepancies noticed on physical verification of inventory as compared to the book record.

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

a. The company has not granted unsecured loans to any company covered in the register maintained under section 301 of the Companies Act, 1956.

b. The company has taken unsecured loans from a companies covered in the register maintained under section 301 of the Companies Act, 1956 and year - end balance of the loan taken from such parties was Rs 1119.18 lacs.

c. In our opinion and according to the information and explanation given to us, the rate of interest, wherever applicable and other terms and condition are not prima-facie prejudicial to the interest of the company.

d. In respect of loans taken by the company from directors is interest free. In respect of loan taken by the company from shareholders, body corporate and other parties, some Loans are interest free and others with interest. The interest payment is regular.

e. There is no overdue amount in respect of loans taken by the company.

4. In our opinion, there is an adequate internal control procedure commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

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

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

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

6. In our opinion and according to the information and explanation given to us, the company has complied with the provisions of Section 58A and 58AA of the companies Act, 1956 and the Companies (acceptance of deposit) Rules 1975.

7. In opinion, the company has internal audit system that commensurate with its size and nature of the business.

8. The central Government has not prescribed maintenance of cost records under Section 209( 1}(d) of the Companies Act, 1956 for any of the product of the company.

9. a. According to the records of the company, the company has been generally regular in depositing with the appropriate authorities, undisputed statutory dues including Provident Fund, E.S.I., Income-tax, Sales-tax, Wealth-tax, Custom-duty, Excise-duty, Cess and other material statutory dues applicable to it.

b. There are no undisputed amounts payable in respect of Income-tax, Wealth-tax, Sales-tax, Custom-duty and Excise-duty as at 31st March, 2011 which are outstanding for a period of more than six months from the date they become payable, except Income tax of Rs 30.09 lacs, Fringe Benefit Tax of Rs 16.33 lacs and Tax on proposed Dividend of t 5.03 lacs are outstanding exceeding six month from the end of the financial year.

10. The Company has an accumulated loss of Rs 2199.64 lacs as on 31st March 2011.

11. Based on our audit procedures and according to the information and explanation given to us, the company has defaulted in repayment of dues towards their Term Loan Accounts with State Bank of India, ING Vysya Bank Ltd., Industrial Development Bank of India and Oriental Bank of Commerce aggregating to Rs 865.10 lacs, X 389.61 lacs, Rs 545.94 lacs and Rs 9.97 lacs respectively. These overdue amounts are including interest.

12. In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion the company is not a chit fund or a nidhi/mutual benefit fund/society, therefore, clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the company.

14. The company is not dealing or trading in shares, securities, debentures and other investment. However the company has invested in shares & securities as mentioned in Schedule '6' to the accounts. Since the investment are made with a view to earn dividend, interest for capital appreciation and for other benefits, the question of the company maintaining separate records of the transactions and contracts and making timely entries therein does not arise. These shares and other securities are held by the company in its own name.

15. The company has not given guarantees for loans taken by others from banks or financial institutions.

16. According to the information and explanation given to us, term loan were applied for the purpose for which the loans were obtained.

17. Based on the information and explanation given to us and on an overall examination of the Balance Sheet of the company, funds raised on a short term basis have not been used for long term investment.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the companies act, 1956.

19. During the financial year, the company did not issue any debentures. Hence the provision of clause 4 (xix) of the companies (Auditor's Report) order, 2003 regarding creation of security or charge for debentures are not presently applicable to the company.

20. The company has not raised money by way of allotment of equity shares on private placement basis during the year.

21. In our opinion and according to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the year that causes the financial statement to be materially misstated.

For R. R. Patchigar & Co. Chartered Accountants, FRN: 107639W

Rupin Patchigar Place : Surat (Proprietor) Date : 02.11.2011 M-No- 31172

---

Mar 31, 2010

We have audited the attached Balance Sheet of M/s. GUPTA SYNTHETICS LIMITED, Mumbai as at 31st March, 2010 and Profit and Loss Account and Cash Flow Statement for the year ended on that date attached thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. :

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and 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 (Auditors 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 purpose of our audit.

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

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

iv. In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statements dealt with by this report comply with the Accounting standard referred to in Section 211 (3C) of the Companies Act, 1956.

v. On the basis of the written representation received from the directors, and taken on record by the Board of Directors. We report that none of the directors is disqualified as on 31st March, 2010, from being appointed as a director in term 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 explanation given to us, the said accounts read together with the notes thereon as per Schedule "22" give the information as required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

a. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010.

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

c. In the case of the Cash Flow Statements, of the cash flow of the company for the year ended on that date.

1. In respect of fixed Assets :

a. The Company has maintained proper records to showing full particulars including quantitative details and situation of Fixed Assets.

b. As explained to us, the physical verification of the assets has been carried by the management at reasonable intervals and no material discrepancies were noticed on such verification.

c. In our opinion, the company has not disposed off fixed assets during the year.

2. In respect of its Inventories :

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to information and explanation given to us, the procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.

c. The company has maintained proper record of inventories. As explained to us there were no material discrepancies noticed on physical verification of inventory as compared to the book record.

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

a. The company has not granted unsecured loans to any company covered in the register maintained under section 301 of the companies Act, 1956.

b. The company has taken an unsecured loans from a companies covered in the register maintained under section 301 of the companies Act, 1956. and year- end balance of the loan taken from such parties was ?.1386.44 lacs.

c. In our opinion and according to the information and explanation given to us, the rate of interest, wherever applicable and other terms and condition are not prima-facie prejudicial to the interest of the company.

d. In respect of loans taken by the company from body corporate and directors is interest free. In respect of loan taken by the company from shareholders and other parties, some loan are interest free and others with interest. The interest payment is regular.

e. There is no overdue amount in respect of loans taken by the company.

4. In our opinion, there is an adequate internal control procedure commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have not observed any major weakness in internal controls.

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

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

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

6. In our opinion and according to the information and explanation given to us, the company has complied with the provisions of Section 58A and 58AA of the companies Act, 1956 and the Companies (acceptance of deposit) Rules 1975.

7. In our opinion, the company has internal audit system that commensurate with its size and nature of the business.

8. The central Government has not prescribed maintenance of cost records under Section 209(l)(d) of the Companies Act, 1956 for any of the product of the company.

9. a. According to the records of the company, the company has been generally regular in depositing with the appropriate authorities, undisputed statutory dues including Provident Fund, E.S.I., Income-tax, Sales-tax, Wealth-tax, Custom-duty, Excise-duty, Cess and other material statutory dues applicable to it.

b. There are no undisputed amounts payable in respect of Income-tax, Wealth-tax, Sales-tax, Custom-duty and Excise-duty as at 31st March, 2010 which are outstanding for a period of more than six months from the date they become payable, except Income tax of ?. 38.56 lacs, Fringe Benefit Tax of ?.16.33 lacs and Tax on proposed Dividend of f. 5.03 lacs are outstanding exceeding six month from the end of the financial year.

10. The Company has an accumulated loss of ?.1394.93 lacs as on 31st March 2010.

11. Based on our audit procedures and according to the information and explanation given to us, the company has defaulted in repayment of dues towards their Term Loan Accounts with State Bank of India aggregating to ?. 1752.36 lacs (including interest) and has defaulted in repayment of dues towards their Term Loan Accounts with IDBI Bank aggregating to ?. 1680 lacs (including interest).

12. In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion the company is not a chit fund or a nidhi/mutual benefit fund/society, therefore, clause 4(xiii) of the Companies (Auditors Report) Order, 2003 is not applicable to the company.

14. The company is not dealing or trading in shares, securities, debentures and other investment. However the company has invested in shares & securities as mentioned in Schedule 6 to the accounts. Since the investment are made with a view to earn dividend, interest for capital appreciation and for other benefits, the question of the company maintaining separate records of the transactions and contracts and making timely entries therein does not arise. These shares and other securities are held by the company in its own name.

15. The company has not given guarantees for loans taken by others from banks or financial institutions.

16. According to the information and explanation given to us, term loan were applied for the purpose for which the loans were obtained.

17. Based on the,information and explanation given to us and on an overall examination of the Balance Sheet of the company, funds raised on a short term basis have not been used for long term investment.

18. During the year, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the companies act, 1956.

19. (19) During the financial year, the company did not issue any debentures. Hence the provision of clause 4 (xix) of the companies (Auditors Report) order, 2003 regarding creation of security or charge for debentures are not presently applicable to the company.

20. The company has not raised money by way of allotment of equity shares on private placement basis during the year.

21. In our opinion and according to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the year that causes the financial statement to be materially misstated.

For R. R. Patchigar & Co.

Chartered Accountants, FRN: 107639W

Rupin Patchigar

Place : Surat (Proprietor)

Date : 14.08.2010 M.No. 31172