Auditor Report of Indus Fila Ltd.

Mar 31, 2015

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

Management's Responsibility for the Standalone Financial Statements

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

Auditor's Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2015 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

a) Without qualifying our opinion, we draw attention to Note (1) of the Notes to financial statements. The Company's operating results has been materially affected due to various factors as at 31st March 2015, the Company's accumulated losses has fully eroded the net worth of the company. The appropriateness of the going concern assumption is dependent on the company's ability to establish consistent profitable operations as well as raising adequate finance to meet its short term and long term obligations. As discussed in the said note, the management believes that the going concern assumption is appropriate and no adjustments have been made in the financial statements for the year ended 31st March 2015.

b) Without qualifying our opinion, we draw attention to Note 25(k) of the financial statements towards highlighting the negative income in the statement of profit and loss for the year ended 31st March 2015.

c) Without qualifying our opinion, we draw attention to Note 25(o) of the financial statement regarding that the management has not carried out the impairment analysis in accordance with the requirement of Accounting Standard-28-lmpairment of Assets" in respect of all its units that are not in operation for last two years. In the absence of such analysis, we are unable to comment on the carrying value of the fixed assets and the consequential impact, if any, on the Profit/loss for the year 2014-15.

d) Without qualifying our opinion, we draw attention to Note 25(p) of the financial statements regarding that the management has not prepared the Bank Reconciliation Statements for the banks due to non-availability of bank statement or bank confirmation. In the absence of such statement, we are unable to comment on the correctness of bank balances and the consequential impact, if any, in the financial statements for the year 2014-15.

e) Without qualifying our opinion, we draw attention to Note 25(q) of the financial statements that the management has computed interest on the term loans and cash credit accounts based on the rates of terms of sanction due to non-availability of loan statement or confirmation. The management believes that difference, if any, between the computed interest and actual interest charged will not be material. In the absence of such above information, we are unable to comment on the interest charged and consequential impact, if any, on the profit and loss account for the year 2014-15.

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

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

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

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

i. The Company has disclosed the impact of pending litigation on its financial position in its financial statements - Refer Note: 25 to the financial statements.

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

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

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF INDUSFILA LIMITED

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

b) These fixed assets have been physically verified by the management at reasonable intervals and as explained to us, no material discrepancies were noticed on such verification during the year.

ii) a) Physical verification of inventory has been conducted at reasonable intervals by the management.

b) In our opinion and according to the information and explanation given to us, 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. As explained to us, the discrepancies noticed on physical verification were not material and the same have been properly dealt with in the books of account.

iii) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions stated in paragraph 3(iii)(a) and 3(iii)(b) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, the Company has an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

v) The Company has not accepted any deposits from the public within the meaning of Sections 73 to 76 or any other relevant provisions of the Companies Act and the rules framed thereunder.

vi) We have broadly reviewed the cost records maintained by the Company in respect of products where the Central Government has prescribed 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, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii) a) The Company is not regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities . There are no undisputed statutory dues payable in respect of above which were outstanding as at 31st March 2015 for a period of more than six months from the date they became payable except for the following.

Nature of Dues Amount outstanding Period of Outstanding

Dividend Distribution Tax Rs 16,46,404/- A.Y 2008-09

Provident Fund Contribution Rs. 7,19,169/- F.Y 2011-12

Provident Fund Contribution Rs. 24,98,449/- F.Y 2012-13

Provident Fund Contribution Rs. 14,26,911/- F.Y 2013-14

Employees State Insurance Corporation Rs. 47,01,239/- F.Y 2012-13

Employees State Insurance Corporation Rs. 1,03,47,317/- F.Y 2013-14

Tax Deducted at Source Rs. 52,11,725/- A.Y 2011-12

Tax Deducted at Source Rs. 13,70,438/- A.Y 2012-13

Tax Deducted at Source Rs. 33,31,127/- A.Y 2013-14

Tax Deducted at Source Rs. 10,85,097/- A.Y 2014-15

Tax Deducted at Source Rs. 2,02,495/- A.Y 2015-16

Service Tax on reverse Charge Rs. 32,15,768/- Before FY 2013-14

Tax collected at source Rs. 11,290/- Before FY 2013-14

Profession Tax Rs. 8,74,200/- Before FY 2013-14

b) According to the information and explanations furnished to us, the details of disputed statutory dues are as under:

Name of the Nature of Amount Statute dues disputed (Rs.)

Income Tax Act, 1961 Income Tax Rs.1670 Lakhs

Income Tax Act, 1961 Income Tax Rs.503.5 Lakhs

Income Tax Act, 1961 Income Tax Rs.705.3 Lakhs

Income Tax Income Tax Rs. 1769.47 Act 1961 Lakhs

Karnataka Tax Entry Tax, Rs.0.47 Lakhs on Entry of interest and Goods Act penalty

Karnataka KVAT, Rs.45.21 Lakhs Value Added interest and Tax Act 2003 penalty

CST Act 1956 CST, interest Rs.1.02 Lakhs and penalty

CST Act 1956 CST, interest Rs. 1.01 Lakhs and penalty

Name of the Amount Forum where Statute Paid dispute is (Rs.) pending

Income Tax Commissioner of Act, 1961 Nil Income Tax (Appeals)

Income Tax Commissioner of Act, 1961 Nil Income Tax (Appeals)

Income Tax Commissioner of Act, 1961 Nil Income Tax (Appeals)

Income Tax Commissioner of Act 1961 Nil Income Tax (Appeals)

Karnataka Tax Joint Commissioner on Entry of Nil of Commercial Tax Goods Act

Karnataka Joint Commissioner Value Added Nil of Commercial Tax Tax Act 2003

CST Act 1956 Joint Commissioner Nil of Commercial Tax

CST Act 1956 Joint Commissioner Nil of Commercial Tax

c) There were no amounts which were required to be transferred to investor education and protection fund by the Company

viii) The accumulated losses of the Company as on 31st March 2015 exceeds more than 50% of the net worth of the Company. The Company has incurred cash losses during the financial year and also in the immediately preceding financial year.

ix) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks. The default in respect of principal and interest is Rs. 364.99 crores.

x) According to the information and explanations given to us, the company has given guarantee for loans taken by subsidiary company/firms from a bank, the terms and conditions of which are not prima facie prejudicial to the interest of the Company.

xi) According to the information and explanations given to us the Company has applied the term loans for the purpose for which they were obtained. No term loan has been availed during the year.

xii) During the course of examination of the books and records and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

FOR SURI & CO CHARTERED ACCOUNTANTS Firm Regn No: 004283S

(G Rangarajan) PLACE : Bangalore Partner DATE : 30/05/2015 M.No: 024107

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Mar 31, 2014

We have audited the accompanying financial statements of M/S INDUS FILA LIMITED, which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the period 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 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 31st March, 2014;

(b) in the case of the Statement of Profit & Loss, of the LOSS for the period ended on that date; and

(c) in the case of the Cash Flows Statement, of the cash flows for the period ended on that date.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note (2) of the financial statements. The Company's operating results has been materially affected due to various factors and as at 31st March 2014, the Company's accumulated losses has fully eroded the net worth of the company. The appropriateness of the going concern assumption is dependent on the company's ability to establish consistent profitable operations as well as raising adequate finance to meet its short term and long term obligations. As discussed in the said note, the management believes that the going concern assumption is appropriate and no adjustments have been made in the financial statements for the period ended 31st March 2014.

Without qualifying our opinion, we draw attention to Note 27(j) of the financial statements towards highlighting the negative income in the statement of profit and loss for the period ended 31st March 2014.

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;

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

d. 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 Act;

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

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 Act 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 TO AUDITORS' REPORT

(Referred to in our report of even date on the Accounts of INDUS FILA LIMITED for the period ended 31st March 2014)

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

b) The company's programme of physical verification of fixed assets, in our opinion, is reasonable considering the size and nature of assets and business. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

c) The fixed assets disposed off during the period, in our opinion, do not constitute a substantial part of fixed assets of the company.

2) a) The inventories has been physically verified by the management under supervision by independent chartered accountants at the end of the period.

b) According to the information and explanation given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the company and nature of its business.

c) In our opinion and according to the information and explanation given to us, the company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to the book records were not material and are being adjusted in the books of account.

3) a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. As the Company has not granted any loans, clause (iii)(b), (iii)(c), and (iii)(d) of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

b) The company has taken interest-free unsecured loans from eight parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the period was Rs.568.54 lakhs and the period end balance of the loans taken from such parties was Rs.568.54 lakhs.

c) Being Interest free, the loans are not prima-facie prejudicial to the interest of the company.

d) The terms of the arrangement do not stipulate any repayment schedule. Accordingly, paragraph 4(iii)(g) of the Order is not applicable.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with size of the company and nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services, subject to continuing weakness relating to internal audit system as stated in Para 7 below.

5) a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) According to the information and explanations given to us and having regard to the explanations that some the items purchased, sold are services availed are of a special nature for which comparable alternative price are not available, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 of the Companies Act, 1956 during the period have been made at prices which are considered reasonable.

6) The Company had not taken any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and the rules framed there under.

7) The system of internal audit of the company needs to be strengthened to commensurate with the size and nature of its business.

8) On the basis of the prima facie examination of the records of the company, we are of the opinion that the company has made and maintained cost records as required under section 209(1)(d) of the Companies Act, 1956. However we have not made a detailed examination of the records in this regard.

9) a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues wherever applicable, though there are delays in depositing provident fund and ESI. In respect of Income tax there were delays in depositing the undisputed dues with appropriate authorities.

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

Nature of Dues Amount outstanding Period of Outstanding

Dividend Distribution Rs 16,46,404/- A.Y 2008-09 Tax

Tax Deducted at source Rs.52,11,725/- A Y 2011-12

Tax Deducted at source Rs.1,20,16,425/- AY 2012-13

Tax Deducted at source Rs.85,74,915/- AY 2013-14

Tax Deducted at source Rs.12,55,596/- AY 2013-14

Provident Fund Rs.3,21,936/- FY 2011-12

Provident Fund Rs.1,90,79,881/- FY 2012-13

Provident Fund Rs.46,04,463/- FY 2013-14

Employee State Rs.78,35,475/- FY 2011-12 Insurance

Employee State Rs.1,47,99,110/- FY 2012-13 Insurance

Employee State Rs.27,26,414/- FY 2013-14 Insurance

c) According to the information and explanations given to us, there are no disputed dues in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise Duty and Cess of the company that have not been deposited except the following

Period to Name of the Nature of Amount of which the statute Dues disputed tax amount due related

Income Tax Income Tax Rs.1.95 Lakhs A.Y 2006-07 Act, 1961

Name of the Forum where dispute is statute pending

Income Tax Commissioner of Income Act, 1961 Tax (Appeals)

10) The accumulated losses of the company as on 31st March 2014 exceeds more than 50% of the networth of the company. The Company has incurred cash losses during the financial period covered by our audit and also in the immediately preceding financial year.

11) In our opinion, the company has defaulted in the repayment of dues to financial institutions or banks amounting to Rs.82.15 crores from the year 2010-11

12) According to the information and explanation given to us, the Company has not granted loans or advances on the basis of security by way of pledge of shares, debentures and investments.

13) In our opinion and according to the information and explanations given to us, the Company is not a chit fund / nidhi / mutual fund / society. Therefore, provisions of clause (xiii) of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

14) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, provisions of clause (xiv) of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

15) The Company has given guarantees for loans from banks taken by subsidiary company/firms, who are engaged for job works and the terms and conditions of such guarantees in our opinion are not prejudicial to the interest of the company.

16) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were raised.

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 the company has not applied short term funds for long term purposes.

18) In our opinion and according to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the period.

19) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

20) During the period covered under audit, the company has not raised any monies by public issues.

21) 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.

Date: 30.05.2014 Place: Bangalore

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Jun 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of M/S INDUS FILA LIMITED, which comprise the Balance Sheet as at 30th June, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the period 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 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 30th June, 2013;

(b) in the case of the Statement of Profit & Loss, of the LOSS for the period ended on that date; and

(c) in the case of the Cash Flows Statement, of the cash flows for the period 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;

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

d. 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 Act;

e. on the basis of written representations received from the Directors, as on 30th June, 2013, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th June, 2013 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Act.

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 Act 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.

(Referred to in our report of even date on the Accounts of INDUS FILA LIMITED for the period ended 30th June 2013)

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

b) The company''s programme of physical verification of fixed assets, in our opinion, is reasonable considering the size and nature of assets and business. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

c) The fixed assets disposed off during the period, in our opinion, do not constitute a substantial part of fixed assets of the company.

2) a) The inventories has been physically verified by the management under supervision by independent chartered accountants at the end of the period.

b) According to the information and explanation given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the company and nature of its business.

c) In our opinion and according to the information and explanation given to us, the company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to the book records were not material and are being adjusted in the books of account.

3) a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. As the Company has not granted any loans, clause (iii)(b), (iii)(c), and (iii)(d) of Paragraph 4 of the Companies (Auditor''s Report) Order. 2003 are not applicable to the company.

b) The company has taken interest-free unsecured loans from eight parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the period was Rs.568.54 lakhs and the period end balance of the loans taken from such parties was Rs.568.54 lakhs.

c) Being Interest free, the loans are not prima-facie prejudicial to the interest of the company.

d) The terms of the arrangement do not stipulate any repayment schedule. Accordingly, paragraph 4(iii)(g) of the Order is not applicable.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with size of the company and nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services, subject to continuing weakness relating to internal audit system as stated in Para 7 below.

5) a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) According to the information and explanations given to us and having regard to the explanations that some the items purchased, sold are services availed are of a special nature for which comparable alternative price are not available, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 of the Companies Act, 1956 during the period have been made at prices which are considered reasonable.

6) The Company had not taken any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and the rules framed there undei:

7) The system of internal audit of the company needs to be strengthened and commensurate to the size and nature of its business.

8) On the basis of the prima facie examination of the records of the company, we are of the opinion that the company has made and maintained cost records as required under section 209(l)(d) of the Companies Act, 1956. However we have not made a detailed examination of the records in this regard.

9) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues where ever applicable, though there are delays in depositing provident fund and ESI. In respect of Income tax there were delays in depositing the undisputed dues with appropriate authorities.

10) The accumulated losses of the company as on 30th June 2013 exceeds more than 50% of the networth of the company. The Company has incurred cash losses during the financial period covered by our audit and not in the immediately preceding financial year

11) In our opinion, the company has defaulted in the repayment of dues to financial institutions or banks amounting to Rs.52.50 crores from the year 2010-11

12) According to the information and explanation given to us, the Company has not granted loans or advances on the basis of security by way of pledge of shares, debentures and investments.

13) In our opinion and according to the information and explanations given to us, the Company is not a chit fund / nidhi / mutual fund / society. Therefore, provisions of clause (xiii) of Paragraph 4 of the Companies (Auditor''s Report) Order. 2003 are not applicable to the company.

14) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, provisions of clause (xiv) of Paragraph 4 of the Companies (Auditor''s Report) Ordei; 2003 are not applicable to the company.

15) The Company has given guarantees for loans from banks taken by subsidiary company/firms, who are engaged for job works and the terms and conditions of such guarantees in our opinion are not prejudicial to the interest of the company.

16) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were raised.

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 the company has not applied short term funds for long term purposes.

18) In our opinion and according to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the period.

19) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

20) During the period covered under audit, the company has not raised any monies by public issues.

21) 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.

Date: 26th July 2013

Place: Bangalore

---

Mar 31, 2012

We have audited the attached Balance Sheet of M/S INDUS FILA LIMITED as at 31st March 2012 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the management. Our responsibility is to express an opinion on the financial statements based on our audit.

We conducted the audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 as amended by Companies (Auditors' Report) (Amendment) Order, 2004 issued by the Central Government 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 order to the extent applicable to this company.

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 the 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account maintained by the Company.

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

(v) Based on the declarations furnished by the Directors, taken on record, none of the directors is disqualified to be appointed as director under section 274 (1 )(g) 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 subject to note No.8 regarding the non classification of creditors into micro, small and medium enterprises and the consequent non disclosure under schedule VI of the companies Act,1956 and MSMED Act 2006, 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 2012

b) In the case of the Profit and Loss Account, 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.

ANNEXURE TO AUDITORS' REPORT

(Referred to in our report of even date on the Accounts of INDUS FILA LIMITED for the year ended 31st March 2012)

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

b) The company's programme of physical verification of fixed assets, in our opinion, is reasonable considering the size and nature of assets and business. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of fixed assets of the company.

2) a) The inventories has been physically verified by the management under supervision by independent chartered accountants at the end of the year.

b) According to the information and explanation given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the company and nature of its business.

c) In our opinion and according to the information and explanation given to us, the company has maintained proper records of its inventories. The discrepancies noticed on physical verification of inventories as compared to the book records were not material and are being adjusted in the books of account.

3) a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. As the Company has not granted any loans, clause (iii)(b), (iii)(c), and (iii)(d) of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

b) The company has taken interest-free unsecured loans from eight parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.959.40 lakhs and the year end balance of the loans taken from such parties was Rs.553..72 lakhs.

c) Being Interest free, the loans are not prima-facie prejudicial to the interest of the company.

d) The terms of the arrangement do not stipulate any repayment schedule. Accordingly, paragraph 4(iii)(g) of the Order is not applicable.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with size of the company and nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services, subject to continuing weakness relating to internal audit system as stated in Para 7 below.

5) a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) According to the information and explanations given to us and having regard to the explanations that some the items purchased, sold are services availed are of a special nature for which comparable alternative price are not available, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 of the Companies Act, 1956 during the year have been made at prices which are considered reasonable.

6) The Company had not taken any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and the rules framed there under.

7) The system of internal audit of the company needs to be strengthened and commensurate to the size and nature of its business.

8) On the basis of the prima facie examination of the records of the company, we are of the opinion that the company has made and maintained cost records as required under section 209(1 )(d) of the Companies Act, 1956. However we have not made a detailed examination of the records in this regard.

9) a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues where ever applicable,though there are delays in depositing provident fund and ESI. In respect of Income tax there were delays in depositing the undisputed dues with appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise Duty and Cess were in arrears, as at 31st March 2012 for a period of more than six months from the dates they became payable except for the following.

Nature of Dues Amount outstanding Period of Outstanding

Fringe Benefit Tax Rs.23,90,590/- A.Y 2009-10

Dividend Distribution Tax Rs 16,46,404/- A.Y 2008-09

Tax Deducted at source Rs 33,10,538/- A.Y 2011-12

Tax Deducted at source Rs 37,68,724/- A.Y 2012-13

Provident Fund Rs. 2,40,919/- A.Y-2011-12

Provident Fund Rs.19,01,190/- A.Y 2012-13

Employee State Insurance Rs. 2,33,306/- A.Y 2012-13

c) According to the information and explanations given to us, there are no disputed dues in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise Duty and Cess of the company that have not been deposited except the following

Period to Name of the Nature of Amount of which the Forum where dispute is statute Dues dispute tax due amount pending related

Income Tax Rs. 1177.61 Commissioner of Income Tax Act, 1961 Income Tax Lakhs A.Y 2008-09 (Appeals)

Income Tax Income Tax Rs.1.95 Lakhs A.Y 2006-07 Commissioner of Income Tax Act, 1961 (Appeals)

10) The accumulated losses of the company as on 31st March 2012 does not exceed 50 percent of its net worth. The Company has not incurred Cash Losses during the financial year covered by our audit and has incurred cash losses in the immediately preceding financial year.

11) In our opinion, the company has defaulted in the repayment of dues to financial institutions or banks amounting to Rs.21.93 crores during the financial year under review.

12) According to the information and explanation given to us, the Company has not granted loans or advances on the basis of security by way of pledge of shares, debentures and investments.

13) In our opinion and according to the information and explanations given to us, the Company is not a chit fund / nidhi / mutual fund / society. Therefore, provisions of clause (xiii) of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

14) According to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, provisions of clause (xiv) of Paragraph 4 of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

15) The Company has given guarantees for loans from banks taken by subsidiary company/firms, who are engaged for job works and the terms and conditions of such guarantees in our opinion are not prejudicial to the interest of the company.

16) In our opinion and According to the information and explanations given to us, the term loans have been applied for the purposes for which they were raised.

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 the company has not applied short term funds for long term purposes.

18) The Company has during the year, made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act. In our opinion and according to the information and explanation given to us, the price at which the shares have been issued are not prejudicial to the interest of the company.

19) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

20) During the year covered under audit, the company has not raised any monies by public issues..

21) 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.

Place : Bangalore For SURI & CO.,

Date : May 30, 2012

Chartered Accountants

G. Rangarajan

Partner

Firm Regn No.0042838

---

Mar 31, 2010

We have audited the attached Balance Sheet of M/S INDUS FILA LIMITED as at 31st March 2010 and also the Profit and Loss Account and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the management. Our responsibility is to express an opinion on the financial statements based on our audit.

We conducted the audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 as amended by Companies (Auditors Report) (Amendment) Order, 2004 issued by the Central Government 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 order to the extent applicable to this company. 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 the 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account maintained by the Company.

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

v) Based on the declarations furnished by the Directors, taken on record, none of the directors is disqualified to be appointed as director under section 274 (1)(g) 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 subject to Note No 8 regarding the non classification of creditors into micro, small and medium enterprises and the consequent non disclosure under schedule VI of the companies Act,1956 and MSMED Act 2006, 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 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.



ANNEXURE TO AUDITORS REPORT

(Referred to in our report of even date on the Accounts of INDUS FILA LIMITED for the year ended 31st March 2010) 1)

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

b) The companys programme of physical verification of fixed assets, in our opinion, is reasonable considering the size and nature of assets and business. No material discrepancies were noticed on such verification.

c) The Company has not disposed off any major part of the assets during the year

2)

a) The inventory has been physically verified by the management under supervision by independent chartered accountants at the end of the year, except in respect of value of inventories, taken over from Tulip Apparels Private Limited consequent to the merger of the Company, which has been verified by the Company.

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

c) The company is maintaining proper records of inventory. The discrepancies noticed on physical verification of stocks as compared to the book records were not material and are being adjusted in the books of account

d) The valuation of stocks is fair and proper and is in accordance with the generally accepted accounting principles.

3)

a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Act.

b) The company has taken interest-free unsecured loans, from companies, firms or other parties aggregating to Rs 959.59 Lakhs (6 Parties) covered in the register maintained under Section 301 of the Act.

c) Being Interest free, the loans are prima-facie not prejudicial to the interest of the company.

d) The company is regular in the repayment of the principal amount and interest as per terms, wherever applicable.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with size of the company and nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services, subject to continuing weakness relating to internal audit system as stated in Para 7 below.

5)

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

b) According to the information and explanations given to us and having regard to the explanations that some of the items purchased, sold or services availed are of special nature for which comparable alternative prices are not available, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 of the Companies Act, 1956 during the year have been made at prices which are considered reasonable.

6) The Company had not taken any deposits within the meaning of Section 58A and 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and the rules framed there under.

7) The system of internal audit of the company needs to be strengthened and commensurate to the size and nature of its business.

8) On the basis of the prima facie examination of the records of the company, we are of the opinion that the company has made and maintained cost records as required under section 209(1)(d) of the Companies Act, 1956. However we have not made a detailed examination of the records in this regard.

9)

a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues where ever applicable, though there are slight delays in depositing provident fund and ESI. In respect of Income tax there were delays in depositing the undisputed dues with appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise Duty and Cess were in arrears, as at 31st March 2010 for a period of more than six months from the dates they became payable except for the following:

Nature of Dues Amount Outstanding Period of Outstanding

Income Tax Rs. 3,77,87,852 A. Y 2008-09

Fringe Benefit Tax Rs. 72,854 A. Y 2008-09

Dividend Distribution Tax Rs. 16,46,404 A. Y 2008-09

Tax Deducted at Source Rs. 50,71,827 A. Y 2008-09

c) According to the information and explanations given to us, there are no disputed dues in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise Duty and Cess of the company that have not been deposited except Income Tax payable Rs.12,76,668/- pertaining to Assessment Year 2006-07, for which appeal is pending before the Commissioner of Income Tax (Appeals).

10) The accumulated losses of the company as on 31st March 2010 does not exceed 50 percent of its net worth. The Company has incurred Cash Losses during the financial year covered by our audit and the immediately preceding financial year.

11) During the year, the Companys Loans from Banks were subject to Corporate Debt Restructuring, as a part of which, the bank allowed "Holding on Operations". The dues of interest and principal during the period have also been restructured.

12) The Company has not granted loans or advances on the basis of security by way of pledge of shares, debentures and investments.

13) The Company has given guarantees for loans from banks taken by subsidiary company/firms,who are engaged f or job works and the terms and conditions of such guarantees in our opinion are not prejudicial to the interest of the company.

14) In our opinion, the term loans have been applied for the purposes for which they were raised.

15) According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the company has not applied short term funds for long term purposes.

16) According to the information and explanations given to us, the company has not during the year, made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

17) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

18) The end use of funds raised by public issues have been discussed as Note No. C4 in the financial statements which have been verified by us.

19) 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 SURI & CO.,

(S. SUNDARARAMAN)

Membership no.28423

PARTNER

BANGALORE CHARTERED ACCOUNTANTS

25-06-2010 Firm Reg. No.004283s

---

Mar 31, 2009

We have audited the attached Balance Sheet of M/S INDUS FILA LIMITED as at 31st March 2009 and also the Profit and Loss Account and Cash flow statement for the period ended on that date annexed thereto. These financial statements are the responsibility of the Management. Our responsibility is to express an opinion on the financial statements based on our audit.

We conducted the audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 as amended by Companies (Auditors report) (Amendment) order, 2004 issued by the Central Government 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 order to the extent applicable to this company.

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 the 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, Profit and Loss Account and Cash flow statement dealt with by this report are in agreement with the books of account maintained by the Company.

iv) In our opinion the Balance Sheet, Profit and Loss Account and Cash flow statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

v) Based on the declarations furnished by the directors taken on record, none of the directors is disqualified to be appointed as director under 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 subject to note no 8 regarding the non classification of creditors into micro, small and medium enterprises and the consequent non disclosure under Schedule VI of the Companies Act, 1956 and MSMED Act 2006, 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 2009; and

b. in the case of the Profit and Loss Account, of the LOSS for the period ended on that date.

c. in the case of the Cash flow statement, of the cash flows for the period ended on that date.

ANNEXURE TO AUDITORS REPORT

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

b) The assets have been physically verified by the management during the year, which in our opinion is reasonable having regard to the size and nature of its assets. No material discrepancies were noticed on such verification.

c) The Company has not disposed off any major part of the assets during the year. 2.

a) The inventory has been physically verified by the management under supervision by independent chartered accountants at the end of the year.

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

c) The company is maintaining proper records of inventory. The discrepancies noticed on physical verification of stocks as compared to the book records were not material and are being adjusted in the books of account.

d) The valuation of stocks is fair and proper and is in accordance with the generally accepted accounting principles.

3. a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act.

b) The company has taken interest-free unsecured loans, from companies, firms or other parties aggregating to Rs.916.35 lakhs (5 parties) covered in the register maintained under section 301 of the Act.

c) Being interest free, the loans are prima facie not prejudicial to the interest of the company.

d) The company is regular in the repayment of the principal amount as per terms, wherever applicable.

4. In our opinion and according to the information and explanations given to us, the internal control procedures are commensurate with size of the company and nature of its business with regard to purchase of inventory, fixed assets and sale of goods and services subject to the continuing weakness relating to the internal audit system as stated in Para 7 below.

5. a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) According to the information and explanations given to us, and having regard to the explanations that some of the items purchased, sold or services availed are of a special nature for which comparable alternative price are not available, the transactions made in pursuance of contracts or arrangements entered in the registers maintained under section 301 of the Companies Act, 1956 during the year have been made at prices which are considered reasonable.

6. The Company has not accepted any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956 or any other relevant provisions of the Act and the rules framed there under.

7. The system of internal audit of the company needs to be strengthened commensurate to the size of the company.

8. On the basis of the prima facie examination of the records of the company we are of the opinion that the company has made and maintained cost records as required under section 209 (1)(d)of the Companies Act, 1956. However we have not made a detailed examination of the records in this regard.

9. a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable. In respect of Income Tax there were delays in depositing the undisputed dues with appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise Duty and Cess were in arrears, as at 31st March 2009 for a period of more than six months from the dates they became payable except a sum of Rs.3,77,87,852 in respect of Income Tax payable and Rs. 72,854 in respect of fringe benefit tax for the assessment year 2008-09.

c) According to the information and explanations given to us, there are no disputed dues in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise Duty and Cess of the company that have not been deposited.

10. The company does not have accumulated losses as on 31st March 2009. The Company has incurred Cash Losses during the financial year covered by our audit. The company has not incurred cash loss in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution or banks.

12. The Company has not granted loans or advances in the nature of loans on the basis of security by way of pledge of shares, debentures and investments.

13. The Company has given guarantees for loans from banks taken by subsidiary company /firms who are engaged for job works and the terms and conditions of such guarantees in our opinion are not prejudicial to the interest of the Company.

14. In our opinion, the term loans have been applied for the purposes for which they were raised.

15. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that the company has not applied short term sources for long term purposes.

16. According to the information and explanations given to us, the company has not during the year, made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

17. According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

18. The end use of funds raised by public issue have been disclosed as Note No.C5 in the financial statements which have been verified by us.

19. According to the information and explanations given to us, no fraud by or on the company has been noticed or reported during the year.

For SURI & CO.,

(S.Sundararaman) Place: Bangalore Partner

Date: 30.06.2009 Chartered Accountants

Membership No. 28423