Auditor Report of Kush Industries Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of SNS Textiles Ltd., which comprise the Balance Sheet as at March 31,2015, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information for the year then ended.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

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

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

We conducted our audit in accordance with the Standards on Auditing 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 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 control 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 qualified audit opinion on the financial statements.

Opinion

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

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 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, 2015 ("the order") issued by the Central Government of India in terms of subsection (11) of section 143 of the Companies Act, 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

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

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

c. The Balance Sheet, Statement of Profit 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 March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015, from being appointed as a director in terms of Section 164 (2) of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 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 'A' TO AUDIT REPORT (As referred to in our Report of even date)

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

(b) We are informed that all the fixed assets have been physically verified by the management in accordance with a phased programme of verification. The frequency is reasonable, considering the size and nature of its business and no material discrepancies have been noticed on such physical verification.

(ii) (a) As informed to us, the physical verification of inventories is conducted by the management. In our opinion, the frequency of verification is reasonable.

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

(c) In our opinion, the company is maintaining proper records of inventory. As per information and explanations provided, no discrepancies were noticed on physical verification.

(iii) The Company has not granted any loan, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 189 of the Companies Act, 2013 and therefore paragraph 3 (iii) (a) & (b) of the order is not applicable.

(iv) In our opinion and according to information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control system.

(v) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public within the meaning of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Consequently, the clause 3(v) is not applicable to the Company.

(vi) The maintenance of cost records under section 148(1) of the Companies Act, 2013, is not applicable to the Company.

(vii) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, the Company is regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues wherever applicable to it. Based on our audit procedures and according to the information and explanations given to us, there are no arrears of undisputed statutory dues which remained outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable.

(b) According to the records made available to us and the information and explanations given by the management, the disputed statutory dues on account of Income tax/Sales-tax/Wealth-tax/Service tax/Custom duty/excise duty/value added tax and cess that have not been deposited on account of matters pending before appropriate authorities are as follows:

(c) According to the records made available to us and the information and explanations given by the management, there is no amount outstanding to be transferred to the investor education and protection fund in accordance with the relevant provisions of the act, 1956.

(viii) The accumulated losses of the company have exceeded 50% of the Net worth. The company has incurred cash loss during the financial year covered by our audit however, in the immediately preceding financial year the company had not incurred cash loss.

(ix) According to the records made available to us and the information and explanations given by the management, the Company has not borrowed funds from any financial institutions or banks or issued debentures till 31st March, 2015. Consequently, in our opinion, the question of reporting on defaults in repayment of dues to financial institutions or banks or debentures does not arise.

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

(xi) In our opinion and according to the information and explanations given to us, the company neither has any unutilized amount as on the 1st day of the financial year out of any term loan obtained during the earlier years on this account, nor has raised any term loans during the year. Accordingly, the provisions of Clause 3 (xi) of the Companies (Auditors' Report) Order, 2015, are not applicable to the Company.

(xii) According to the records and information and explanations provided by the management, we report that no fraud on or by the company has been noticed or reported during the course of audit.

For Natvarlal Vepari & Co. Chartered Accountants FRN : 123626W

Ravindra N. Vepari Place : Surat Partner Date : 30th May, 2015 Membership No. : 006728

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Mar 31, 2014

We have audited the accompanying financial statements of SNS Textiles Ltd., 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

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. 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 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 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 Companies Act, 1956;

e. On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the 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 AUDIT REPORT (As referred to in our Report of even date) (i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) We are informed that all the fixed assets have been physically verified by the management in accordance with a phased programme of verification. The frequency is reasonable, considering the size and nature of its business and no material discrepancies have been noticed on such physical verification.

(c) The Company has not disposed off any substantial/major part of its fixed assets so as to affect its going concern status.

(ii) (a) As informed to us, the physical verification of inventories is conducted by the management.

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

(c) In our opinion, the Company is maintaining proper records of inventory. As per information and explanations provided, no discrepancies were noticed on physical verification.

(iii) (a) The Company has not granted any loan, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 and therefore paragraph 4 (iii) (b), (c) & (d) of the order is not applicable.

(b) According to explanations and information provided and subsequent to the verification of records produced, previously the Company had taken loan from 7 parties covered in the Register, maintained u/s 301 of the Companies Act, 1956. The year end balance of this loan aggregate to Rs. 9500000 /-. The maximum amount involved during the year was Rs. 9500000 /-.

(c) According to the information and explanations given to us, loan is interest free hence; we are unable to make any comment on the same.

(d) According to the information and explanations given to us, loan is payable on demand and therefore, we are unable to make any comment regarding the regularity of payment of principal and interest.

(iv) In our opinion and according to information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that the Company has entered all the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 into the register required to be maintained under that section. (b) According to the information and explanations given to us, the company has entered into contracts or arrangements referred in section 301 of the companies Act, 1956. However, none of such transactions entered during the financial year with parties referred under section 301 exceeded Rs. 5 lacs.

(vi) As explained to us the Company has not accepted deposits from the public within the meaning of Section 58A, 58AA or any other relevant Provision of the Companies Act, 1956 and the rules framed there under. Therefore, the provisions of Clause 4(vi) of the Order are not applicable.During the previous years, the company has transferred share application money pending allotment into Non Current liability.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of the Company''s products to which the said rules are made applicable, and are of the opinion that, prima facie the prescribed accounts and records are being maintained.

(ix) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, the Company is regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues wherever applicable to it. Based on our audit procedures and according to the information and explanations given to us, there are no arrears of undisputed statutory dues which remained outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable.

(b) According to the records made available to us and the information and explanations given by the management, the disputed statutory dues on account of Income tax/Sales- tax/Wealth-tax/Service tax/Custom duty/excise duty and cess that have not been deposited on account of matters pending before appropriate authorities are as follows:

Name of Nature of Amount Period to Forum where Amount the Statute dues under dispute which the dispute deposited (Rs.) amount relates is pending against (Rs.)

Foreign Trade Custom Duty Yet 1997-98 Deputy General 21,00,000 1992 / Export not of Foreign Obligation determined Trade. Surat

Central Excise Excise Duty 30,42,620 Jul''95 CEGAT, 6,80,000 Act,1944 to Feb''97.Mumbai

Income Tax Income Tax 18,64,220 A.Y. 1996 -97 ITAT - Act,1961 Ahmedabad

Sales Tax Sales Tax 32,99,845 2001-02 Gujarat Value - Act,1969 Added Tax Tribunal

(x) The accumulated losses of the company have exceeded 50% of the Net worth. However, the company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

(xi) According to the records made available to us and the information and explanations given by the management, the Company has not borrowed funds from any financial institutions or banks or issued debentures till 31st March, 2014. Consequently, in our opinion, the question of reporting on defaults in repayment of dues to financial institutions or banks or debentures does not arise.

(xii) According to the records made available to us and the information and explanations given by the management, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Consequently, clause 4(xii) of the Order is not applicable to the company.

(xiii) In our opinion and to the best of our information and according to the explanations provided by the management , the company is neither a Chit Fund nor a nidhi/mutual benefit society. Consequently, the requirement of para 4(xiii) of the Order is not applicable to the company.

(xiv) In our opinion and to the best of our information and according to the explanations provided by the management, the Company does not deal or trade in shares, securities, debentures and other investments. Accordingly, the requirement of para 4(xiv) of the Order is not applicable to the company.

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

(xvi) In our opinion and according to the information and explanations given to us, the company neither has any unutilized amount as on the 1st day of the financial year out of any term loan obtained during the earlier years on this account, nor has raised any term loans during the year. Accordingly, the provisions of Clause 4 (xvi) of the Companies (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xvii) According to the information and explanations provided by the management and based on the overview of cash flow statement and other records examined by us, funds raised on short term basis have prima facie, not been used during the year for long term investment.

(xviii) According to the records of the company and information and explanations provided by the management, the company has not made any preferential allotment of shares during the year.

(xix) According to the records of the company and information and explanations provided by the management, the company has not issued any debentures during the year. Accordingly, the requirement of para 4(xix) is not applicable to the Company.

(xx) According to the records of the company and information and explanations provided by the management, the company has not raised any money by public issue during the year. Accordingly, the requirement of para 4(xx) is not applicable to the Company.

(xxi) According to the records and information and explanations provided by the management, we report that no fraud on or by the company has been noticed or reported during the course of audit.

Forming an Opinion and Reporting on Financial Statements

For Natvarlal Vepari & Co.

Chartered Accountants

Firm Registration No. : 123626W

Ravindra N. Vepari

Place:Surat Partner

Date :28th May, 2014 Membership No. : 006728

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of SNS Textiles Ltd., 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. 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 March 31, 2013;

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 ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we 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 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.

ANNEXURE ''A'' TO AUDIT REPORT (As referred to in our Report of even date)

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

(b) We are informed that all the fixed assets have been physically verified by the management in accordance with a phased programme of verification. The frequency is reasonable, considering the size and nature of its business and no material discrepancies have been noticed on such physical verification.

(c) The Company has not disposed off any substantial/major part of its fixed assets so as to affect its going concern status.

(ii) (a) As informed to us, the physical verification of inventories conducted by the management. In our opinion, the frequency of verification is reasonable.

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

(c) In our opinion, the Company is maintaining proper records of inventory. As per information and explanations provided, no discrepancies were noticed on physical verification.

(iii) (a) The Company has not granted any loan, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 and therefore paragraph 4 (iii) (b), (c) & (d) of the order is not applicable.

(b) The Company has not taken any loan, secured or unsecured, from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956 and therefore paragraph 4 (iii) (f) & (g) of the order is not applicable.

(iv) In our opinion and according to information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control system.

(v) (a) According to the information and explanations given to us, we are of the opinion that the Company has entered all the particulars of contracts and arrangements referred to in section 301 of the Companies Act, 1956 into the register required to be maintained under that section.

(b) According to the information and explanations given to us, the company has entered into contracts or arrangements referred in section 301 of the companies Act, 1956. However, none of such transactions entered during the financial year with parties referred under section 301 exceeded Rs. 5 lacs.

(vi) In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public within the meaning of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. Consequently, the clause 4(vi) is not applicable to the Company.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. However the same needs to be improved.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of the Company''s products to which they said rules are made applicable, and are of the opinion that, prima facie the prescribed accounts and records are being maintained.

(ix) (a) Is the Company regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, cess and any other statutory dues with the appropriate authorities and if not, the extent of the arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable, shall be indicated by the auditor.

(b) According to the records made available to us and the information and explanations given by the management, the disputed statutory dues on account of Income tax/Sales- tax/Wealth-tax/Service tax/Custom duty/excise duty and cess that have not been deposited on account of matters pending before appropriate authorities are as follows:

Name of Nature of Amount Period to the Statute dues under dispute which the (Rs.) amount relates

Foreign Trade Custom Duty Yet 1997-98 1992 / Export not Obligation Available

Central Excise Excise Duty 30,42,620 July-1995 Act,1944 to Feb.-1997.

Income Tax Income Tax 18,64,220 A.Y. 1996-97 Act,1961

Sales Tax Sales Tax 32,99,845 2001-02 Act,1969



Name of Statute Forum where Amount dispute deposited is pending against (Rs.)

Foreign Trade Deputy General 21,00,000 1992 of Foreign Trade. SURAT

Central Excise CEGAT, 6,80,000 Act,1944 Mumbai.

Income Tax ITAT Act,1961 Ahmedabad

Sales Tax Gujarat Value Act,1969 Added Tax Tribunal

(x) The accumulated losses of the company have exceeded 50% of the Net worth. However, the company has not incurred any cash loss during the financial year covered by our audit and in the immediately preceding financial year.

(xi) According to the records made available to us and the information and explanations given by the management, the Company has not borrowed funds from any financial institutions or banks or issued debentures till 31st March, 2013. Consequently, in our opinion, the question of reporting on defaults in repayment of dues to financial institutions or banks or debentures does not arise.

(xii) According to the records made available to us and the information and explanations given by the management, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Consequently, clause 4(xii) of the Order is not applicable to the company.

(xiii) In our opinion and to the best of our information and according to the explanations provided by the management, the company is neither a Chit Fund nor a Nidhi/mutual benefit society. Consequently, the requirement of Para 4(xiii) of the Order is not applicable to the company.

(xiv) In our opinion and to the best of our information and according to the explanations provided by the management, the Company does not deal or trade in shares, securities, debentures and other investments. Accordingly, the requirement of Para 4(xiii) of the Order is not applicable to the company.

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

(xvi) In our opinion and according to the information and explanations given to us, the company neither has any unutilized amount as on the 1st day of the financial year out of any term loan obtained during the earlier years on this account, nor has raised any term loans during the year. Accordingly, the provisions of Clause 4 (xvi) of the Companies (Auditors'' Report) Order, 2003, are not applicable to the Company.

(xvii) According to the information and explanations provided by the management and based on the overview of cash flow statement and other records examined by us, funds raised on short term basis have prima facie, not been used during the year for long term investment.

(xviii) According to the records of the company and information and explanations provided by the management, the company has not made any preferential allotment of shares during the year.

(xix) According to the records of the company and information and explanations provided by the management, the company has not issued any debentures during the year. Accordingly, the requirement of Para 4(xix) is not applicable to the Company.

(xx) According to the records of the company and information and explanations provided by the management, the company has not raised any money by public issue during the year. Accordingly, the requirement of Para 4(xx) is not applicable to the Company.

(xxi) According to the records and information and explanations provided by the management, we report that no fraud on or by the company has been noticed or reported during the course of audit.

For Natvarlal Vepari & Co.

Chartered Accountants

Firm Registration No. : 123626W

Ravindra N. Vepari

Place: Surat Partner

Date : 30th May, 2013 Membership No. : 006728

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Mar 31, 2011

1. We have audited the attached Balance Sheet of SNS TEXTILES LIMITED as at 31st March, 2011 the Profit and Loss account and the Cash Flow statement of the Company for the year ended on that date attached hereto. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004 (together the “Order”), issued by the Central Government of India in terms of sub-section (4A) of Section 227of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in Annexure referred to in Para 3 above, we report that:

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

c. The Balance Sheet and Profit and Loss Account dealt with by the report are in agreement with the books of accounts;

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

e. On the basis of written representations received from the Directors of the Company as at March 31,2011 and taken on record by the Board of Directors, we report that no Director is disqualified from being appointed as Director of the Company under clause (g) of sub- section (1) of Section 274 of the Companies Act, 1956;

f. Subject to matters referred to above, 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, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in accordance with the Generally Accepted Accounting Principles in India:

1) in the case of the Balance Sheet of the Company of the state of affairs of the Company as at 31st March, 2011,

2) In the case of the Profit and Loss account of the Loss of the company for the year ended on that date and

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

ANNEXURE TO THE AUDITORS' REPORT

(Statement referred to in Paragraph 3 of the Auditors' Report of even date to the Members of SNS Textiles Limited on the Accounts for the year ended 31st March, 2011)

(1) In respect of its fixed assets:

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

b) As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any fixed assets that would affect the going concern.

(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 the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company has maintained proper records of inventories. As explained to us, there were no material discrepancies noticed on physical verification of inventories as compared to the book records.

(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 loans, secured or unsecured to companies, firms, or other parties covered in the register maintained under section 301 of the Companies Act. Hence sub clause (a),(b), (c), and (d) of clause (iii) of the order are not applicable to the company.

b) The Company has not taken loans during the financial year from the parties listed in the register maintained under section 301 of the Companies Act, 1956. One loan exists from the party listed in the register maintained under section 301 of the Companies Act, 1956. The year end balance of this loan aggregate to Rs. 1332.50 lacs.

c) As per information and explanations given to us, these are interest free loans and other terms and conditions are not prima facie prejudicial to the interest of the Company.

d) In respect of loans taken, the principal amount is repayable on demand.

e) Since the loans are repayable on demand, the question of overdue amount, if any, does not arise.

(4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regards to the purchase of inventory and fixed assets and also for the sale of goods and services. During the course of our audit, we have not come across any major weaknesses in internal control system of the company.

(5) In respect of transactions covered under Section 301 of the Companies Act, 1956:

a) According to 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 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 such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at price which are reasonable having regard to the prevailing market prices at the relevant time except where because of the unique and specialized nature of the items and services involved and in absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

(6) As explained to us the Company has not accepted deposits from the public within the meaning of Section 58A, 58AA or any other relevant Provision of the Companies Act, 1956 and the rules framed there under. Therefore, the provisions of Clause 4(vi) of the Order are not applicable.

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

(8) We have been informed by the management that maintenance of cost records under section 209(1) (d) of the Companies Act, 1956, in respect of the company has applied for withdrawal.

(9) In respect of statutory dues:

a) Undisputed statutory dues including provident fund, investor education and protection fund, or employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess have been regularly deposited by the Company with appropriate authorities in all cases during the year. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, wealth tax, custom duty and excise duty were outstanding, at the year end for a period more than six months from the date they became payable.

b) According to the records of the Company and the information and explanations given to us, the disputed statutory dues (provided/considered as contingent liability, as appropriate) on account of sales tax, custom duty, Income tax, excise duty, and cess that have not been deposited on account of matters pending before appropriate authorities are as follows:

Name of Nature of Amount to Period to the Statute dues extent not which the deposited amount relates

Foreign Trade Custom Duty Yet 1997-98 1992 /Export not Obligation Available

Central Excise Excise Duty 30,42,620 July-1995 Act,1944 to Feb.-1997.

Income Tax Income Tax 18,64,220 A.Y. 1996-97 Act,1961

Sales Tax Sales Tax 32,99,845 1st April, 2001 Act,1969 to 31st March 2002.

Name of Forum where Remarks the Statute dispute is pending

Foreign Trade Deputy General Out of total 1992 of Foreign three cases Trade.SURAT order for two have been received and amount payable has been paid

Central Excise CEGAT, To the extent Act,1944 Mumbai. not deposited

Income Tax ITAT Amount Act,1961 Ahmedabad Disallowed

Sales Tax Gujarat Value To the extent Act,1969 Added Tax not deposited Tribunal

(10) According to the Financial Statement, the Company shows a position where accumulated losses exceeded 50% of its net worth at the end of the Current Year as well as Preceding Year.

(11) The Company has not taken loans from bank or financial institutions or issued any debentures.

(12) According to the information and explanations given to us, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, accordingly paragraph 4(xii) of the Order is not applicable.

(13) In our opinion the Company is not a chit fund/nidhi/mutual benefit fund/society to which provisions of special statute relating to chit fund are applicable; accordingly paragraph 4(xiii) of the Order is not applicable.

(14) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities.

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

(16) The Company has not raised any new term loan during the year.

(17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, we are of the opinion that no funds raised on short term basis have been used for long term investment by the Company.

(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) The Company did not have outstanding debentures during the year. Accordingly no securities have been created.

(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 fraud on or by the Company has been noticed or reported during the year, that causes the financial statements to be materially misstated.

For and on behalf of Natvarlal Vepari & Co. Chartered Accountants Firm Registration No. : 123626W

R. N. Vepari Partner Membership No. : 006728

Place Surat Date 30th May, 2011

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Mar 31, 2010

We have audited (he attached Balance Sheet of SNS TEXTILES LIMITED as at 31st MARCH, 2010 the Profit and Loss account and the Cash Flow statement of the Company for the year ended on that date attached hereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

(1) As required by the Companies (Auditors Report] Order, 2003 issued by the Company Law Board in terms of Section 2£7(4-A) of the Companies Act, 1956, we annex hereto Annexure A on the matters specified in paragraph 4 and 5 of the said order.

(2) Further to our comments in Annexure referred to in Para (1 ] above, we report that

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

c. The Balance Sheet and Profit and Loss Account dealt with by the report are in agreement with the books of accounts;

d In our opinion, the Profit and Loss Account and Balance Sheet comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, Subject to note no. 5 of Schedule 16 of the Financial Statement.

e. On the basis of written representations received from the Directors of the Company as at March 31,2010 and taken on record by the Board of Directors, we report that no Director is disqualified from being appointed as Director of the Company under clause (gj of sub section (1) of Section 274 of the Companies Act, 1956; and

(3) Subject to matters referred to above, 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, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in accordance with the Generally Accepted Accounting Principles in India-

a. in the case of the Balance Sheet of the Company 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 of the Company for the year ended on that date and

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

ANNEXURE A TO AUDITORS REPORT FOR THE YEAR ENDED: 31-03-2010.

(1) In respect of its fixed assets:

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

b) As explained to us, the fixed assets have been physically verified by the management during the /ear in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any fixed assets that would affect the going concern.

(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 the information and explanations given to us. the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

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

(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 loans, secured or unsecured to companies, firms, or other parties covered in the register maintained under section 301 of the Companies Act. Hence subclause (a).(b), (c), and (d) of clause (iii)of the order are not applicable to the Company.

b) The Company has not taken loans during the financial year from the parties listed in the register maintained under section 301 of the Companies Act, 1956. One loan exists from the party listed in the register maintained under section 30! of the Companies Act, 1956. The year end balance of this loan aggregate to Rs. 1332,50 Lacs

c) As per information and explanations given to us, these are interest free loans and other terms and conditions are not prima facie prejudicial to the interest of the Company.

d) In respect of loans taken, the principal amount is repayable on demand,

e) Since the loans are repayable on demand, the question of overdue amount, if any, does not arise.

(4) In our opinion and according to the information and explanations given to us. there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal controls.

(5) In respect of transactions covered under Section 301 of the Companies Act. 1956:

a) According to 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 that need to be entered into the register maintained under section 301 have been so entered.

b] In ouropinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at price which are reasonable having regard to the prevailing market prices at the relevant time except where because of the unique and specialized nature of the items and services involved and in absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

(6) The Company has not accepted any deposits from the public to which the directions issued by the Reserve Bank of India & the provisions of section 58A, 58AA or any other relevant Provision of the Companies Act, 1956 and the rules framed there under apply.

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

(8) We have been informed by the management that maintenance of cost records under section 209(1.| (d) of the Companies Act. 1956, in respect of the Company has applied for withdrawal.

(9) In respect of statutory dues:

a) Undisputed statutory dues including provident fund, investor education and protection fund, or employees state insurance, income tax. sales tax, weallh tax, service tax, custom duty, excise duty, cess have been regularly deposited by the Company with appropriate authorities in alt cases during the year. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, wealth tax, custom duly and excise duty were outstanding, at the year end for a period more than six months from the date they became payable.

b) According to the records of the Company, the disputed statutory dues (provided/considered as contingent liability, as appropriate) on account of sales tax, custom duty. Income tax, excise duty, and cess that have not been deposited on account of matters pending before appropriate authorities are as follows:



Name of Nature of Amount to Period to Forum where Remarks

the Statute dues extent not which the dispute

deposited amount relates is pending

Foreign Trade Custom Duty Yet 1997-98 Deputy General Out of total

1992 / Export not of Foreign three cases

Obligation Available Trade. SURAT order for two

have been received and amount payable has been paid Central Excise Excise Duty 30.42,620 July-1995 CEGAT, To the extent

Act.1944 to Feb. -1997. Mumbai. not deposited

Income Tex Income Tax 18,64.220 A.Y. 1996 -97 ITAT Amount

Act,1961 Ahmedabad Disallowed

Sales Tax Sales Tax 32,99,845 1st April. 2001 Gujarat Value To the extent

Act,1969 to 31st March Added Tax not deposited

2002. Tribunal



(10) According to the Financial Statement, the Company shows a position where accumulated losses exceeded 50% of its net worth at the end of the Current Year as well as Preceding Year.

(11) The Company has not taken loans from bank or financial institutions or issued any debentures.

(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) The Company is not a chit fund or a nidhi/mulual benefit fund/society. Therefore, clause 4(xiii) of the Companies (Auditors Report) Order 2003 is not applicable to the Company.

(14) In our opinion and according to the information and explanations given to us, the Company is not dealing or trading in shares, securities, debentures and other investments.

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

(16) The Company has not raised any new term loan during the year.

(17) According to the information and explanations given to us and on an overall examination of the Balance Sheet and Cash Flow Statement of the Company, we are of the opinion that no funds raised on short term basis have been used for long term investment by the Company.

(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) The Company did not have outstanding debentures during the year. Accordingly no securities have been created.

(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 fraud on or by the Company has been noticed or reported during the year, that causes the financial statements to be materially misstated.



For Natvarlal Vapari & Co.

Chartered Accountants

Firm Membership No. : 123626W

R. N. Vepari

Place : Sural Partner

Date : 29th May, 2010 Membership No. : 006728