Auditor Report of Mewar Polytex Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of MEWAR POLYTEX LIMITED ( the Company), comprising of the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the preparation of these financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as "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. The Board of Directors of the company are responsible for 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; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial 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, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Company, as aforesaid.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. While conducting the 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 an adequate internal financial control system over financial reporting in place 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 Board of Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, 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, to the extent applicable, that:

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

(b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid financial statements have been kept 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 relevant books of account maintained for the purpose of preparation of the financial statements.

(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 the written representations received from the directors of the Company as on 31st March, 2015 taken on record by the Board of Directors of the Company, none of the directors of the company is disqualified as on 31st March, 2015,

(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 Auditor's) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The financial statements disclose the impact of pending litigations on the financial position of the Company.

ii. Provision has been made in the financial statements, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

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

ANNEXURE TO THE AUDITOR'S REPORT

[Referred to in Paragraph (1) of the Auditors' Report of even date to the members of Mewar Polytex Limited for the period ended 31.03.2015]

i) a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. b) Physical verification of fixed assets has been carried out by the management according to the program of physical verification in phased manner and no material discrepancies were noticed from such verification. ii) Physical verification of inventories has been conducted by the management once during the period under audit. In respect of inventories lying with third parties, if any, these have substantially been confirmed by them. In our opinion frequency of verification is reasonable.

a) The procedure of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

b) The Company is maintaining proper records of inventory and material discrepancies noticed on physical verification have been properly dealt with in the books of accounts.

(iii) The Company has not granted any loans secured or unsecured to Companies, firms or other parties covered in the registered maintained u/s 189 of the Act and accordingly the provisions of paragraph 4(iii)(a) and (b) are not applicable.

iv) The Company has an adequate internal control system commensurate to the size of the Company and nature of its business for the purchase of inventory and fixed assets and for sale of goods & services and no major weaknesses in internal control system has been noticed.

v) The Company has not accepted any deposits from public within the meaning of the directives issued by the Reserve Bank of India and under the provisions of section 73 to 76 or any other relevant provisions of the Act and the Rules framed there under. As informed to us no order has been passed by the Company Law Board or National Law Tribunal or Reserve Bank of India or any court or any other tribunal in this regard.

vi) We have broadly reviewed the books of account maintained by the Company pursuant to the order made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013 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 records have been made and maintained.. We have not, however, made a detailed examination of the said records with a view to determine whether they are accurate.

vii) a) According to the records of the Company and information and explanations given to us, the Company is regular in depositing undisputed statutory dues, including Provident Fund, Employees Estate Insurance, Entry Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise, VAT, Cess and other material Statutory dues with the appropriate authorities to the extent applicable. There are no material statutory dues payable for a period of more than six months from the date they became payable as at 31st March, 2015.

b) According to the records and information and explanations given to us there are following dues under various taxes which has not been deposited on account of any dispute and the amounts involved and the forum where dispute is pending are given below: -

Name of Period to which Name of the Statute the Dues Amount Relates

The Rajasthan Value Sales Tax 15th Jan. 1999 to Added Tax Act, 2003 14th Jan. 2006

Income Tax Act, 1961 Trading Assessment Disallowance Year 2012-13

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

The Rajasthan Value Honourable High Court 12,65,151 Added Tax Act,2003 of Rajasthan

Income Tax Act,1961 Commissioner of Income 32,140 Tax (Appeals), Udaipur

c) The Company does not have any amount which are required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956).

viii) The Company' has no accumulated losses and has not incurred any cash losses during the financial year covered by our audit or in the immediately preceding year.

ix) On the basis of records made available and information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions, banks etc.

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

xi) On the basis of information and explanations given to us, the term loan has been applied for the purpose for which they were obtained.

xii) Based on the audit procedures performed and on the basis of information and explanations provided by the management which have been relied upon by us, no fraud on or by the Company has been noticed or reported during the course of our audit or have been informed by the management.

For Om Prakash S Chaplot & Co.

Chartered Accountants

(Firm Reg. No. 000127C)

Place : Udaipur

Date : 26.05.2015 sd/- (O P Chaplot)

Partner

M. No. 010184

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Mar 31, 2014

We have audited the accompanying financial statements of MEWAR POLYTEX LIMITED, which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss for the year ended, Cash Flow Statement 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.

Auditors'' 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 and

(b) in the case of the Profit and Loss Account, of the Profit for the year ended on that date;

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

Report on Other Legal and Regulatory Requirements

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

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

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

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

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 and Statement of Profit and Loss 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.

The Annexure referred to in paragraph 1 of the Our Report of even date to the members of MEWAR POLYTEX LIMITED on the accounts of the company for the year ended 31st March, 2014.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

(b) Some of the Fixed Assets been physically verified by the management during the year, according to the information and explanations given to us, there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed in respect of the assets physically verified.

(c) During the year, in our opinion, the company has not disposed a substantial part of the fixed assets and the going concern status of the company is not affected.

2. (a) The inventory of the company has been physically verified by the management at reasonable

interval during the year. In respect of inventories lying with third parties, if any, these have been substantially been confirmed by them. In our opinion the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the Management were found reasonable and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of the examination of the records of inventory, in our opinion, the company has maintained proper records of inventory and the discrepancies noticed on physical verification between the physical stocks and the book records were not material in relation to the operations of the company.

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 given loan to one party during the year amounting to Rs. 486.20 lacs.

(b) The Company has taken short-term loan from one party during the year amounting to Rs. 52 lacs.

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

5. In respect ofthe contract or arrangement referred to in section 301 ofthe Companies Act, 1956:

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

(b) In our opinion and according to the information and explanations given to us these contract or arrangements have been made at prices which appear reasonable having regard to the prevailing market prices for such goods, materials or services at the relevant time.

6. The company has not accepted any deposits from the public.

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

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

9. (a) According to the information and explanations given to us and according to the books and

records as produced and examined by us, in our opinion, the undisputed statutory dues in respect of Provident fund, investor education and protection fund, employee''s state insurance, income tax, sales tax, custom duty, excise duty, cess, service tax and other applicable taxes have been regularly deposited by the company during the year with the appropriate authorities.

(b) Disputed Sales tax, Stamp duty and Labour Compensation dues aggregating Rs.1,765,869/- have not been deposited since the matter are pending with relevant forum as detailed below:

Forum where dispute is Name of the statute Nature of dues pending

The Rajasthan Value Sales Tax Honerable High Court of Added Tax Act, 2003 Rajasthan

Indian Stamp Stamp Duty and Collector Stamp, Act,1899 registration fee Udaipur

Payment of wages Labour Payment and wages Act, 1936 compensation authority, Udaipur

Commissioner, Workmen Labour Workmen compensation,

compensation act2009 compensation Chittorgarh

Name of the Statues Amount

The Rajasthan Value 1,265,151/- Added Tax Act, 2003

Indian Stamp 135,000/- Act,1899

Payment of wages 44,923/- Act, 1936

Workmen 320,795/- compensation act2009

Total 1,765,869

10. The Company has no accumulated losses and has not incurred any cash losses during the financial year covered by our audit or in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us we are of the opinion that the Company has not defaulted in the repayment of dues to Financial Institutions, banks etc.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute as specified under clause (xiii) of Paragraph 4 of the order are not applicable to the Company.

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. The Company has not given any guarantee for loans taken by others from banks or financial Institutions, the terms and conditions whereof, in our opinion, are prima facie, prejudicial to the interests of the Company.

16. The Company has not obtained any term loans that were not applied for the purpose for which these were raised.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, in our opinion there are no funds raised on a short term basis which have been used for long term investment and vice versa.

18. 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 during the year.

19. The Company does not have debentures in its capital structure.

20. The Company has not raised any money by 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 OM PRAKASH S CHAPLOT & CO. Chartered Accountants

sd/- (O. P. Chaplot) Partner M. No. 010184 Firm Regn.No. 000127C Udaipur the 29th May 2014

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Mar 31, 2012

We have audited the attached Balance Sheet of MEWAR POLYTEX LIMITED, UDAIPUR as at 31st March 2012, the Profit and Loss Account and the Cash Flow Statement of the company for the year ended on that date annexed thereto.

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

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

2. As required by the Companies (Auditor's report) Order, 2003 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 the paragraphs 4 and 5 of the said order.

3. Further to our comments in the Annexure referred to in paragraph 2 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 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 the books

c. The Balance Sheet, Profit & Loss Account and Cash flow Statement dealt with by this report are in agreement with the books of account of the company.

d. In our opinion the profit & loss account and the balance sheet comply with the Accounting Standard referred to in subsection (3C) of section 211 of the Companies Act, 1956.

e. In our Opinion and best of the information and according to explanation given to us none of the Directors is disqualified as on 31st March 2012 from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956;

f. In our opinion and to the best of our information and according to explanation given to us the said account subject to:

Notes : No.28 to schedule annexed to and forming part of the Balance Sheet regarding certain balances of debtors, creditors, loans and advances are subject to confirmation and read together with other notes to schedule annexed, give a true and fair view in conformity with the accounting principles generally accepted in India:

I. In the case of the balance sheet of the State of Affairs of the Company as at 31st March 2012;

II. In the case of the Profit & Loss account of the Profit for the year ended on that date; and

III. In so far as it relates to the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure to Audit Report

(Referred to in paragraph (2) of our report of even date)

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

(b) Some of the Fixed Assets been physically verified by the management during the year, according to the information and explanations given to us, there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed in respect of the assets physically verified.

(c) During the year, in our opinion, the company has not disposed a substantial part of the fixed assets and the going concern status of the company is not affected.

2. (a) The inventory of the company has been physically verified by the management at reasonable interval during the year. In respect of inventories lying with third parties, these have been substantially been confirmed by them. In our opinion the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the Management were found reasonable and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of the examination of the records of inventory, in our opinion, the company has maintained proper records of inventory and the discrepancies noticed on physical verification between the physical stocks and the book records were not material in relation to the operations of the company.

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 3 01 of the Companies Act, 1956:

a. The Company has not given any loan during the year.

b. The Company has taken short-term loan from two parties aggregating of Rs. 206.15 lacs and long term loan from one party of Rs. 250 lacs during the year.

c. In our opinion and according to the information and explanations given to us, the rate of interest, and other terms and conditions are not prima facie prejudicial to the interest of the Company.

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

5. In respect of the contract or arrangement referred to in section 301 of the Companies Act, 1956:

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

(b) In our opinion and according to the information and explanations given to us these contract or arrangements have been made at prices which appear reasonable having regard to the prevailing market prices for such goods, materials or services at the relevant time.

6. The company has not accepted any deposits from the public.

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

8. According to the information and explanation given to us, the provision of Section 209 (1) (d) of the Companies act 1956 relating to maintenance of cost records are not applicable to the Company.

9. (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, the undisputed statutory dues in respect of Provident fund, investor education and protection fund, employee's state insurance, income tax, sales tax, custom duty, excise duty, cess, Service Tax and other applicable taxes have been regularly deposited by the company during the year with the appropriate authorities.

(b) Disputed sales tax, Stamp duty, Labour Compensation and Income tax dues aggregating Rs.6941898.00 have not been deposited since the matter are pending with relevant forum as detailed below:

S. No. Name of the Statute Nature of dues Forum where dispute is pending Amount

1. Rajasthan Sales Tax Honerable High Court of Acr 1994 Sales Tax Rajasthan 1,265,151/-

Indian Stamp Act, Stamp Duty and 2. 1899 Collector Stamp, Udaipur 135,000/- registration fee

Payment of wages Labour Payment and wages authority 3. Act,1936 compensation Udaipur 44,923/-

Workmen Labour Commissioner, Workmen 4. compensation 320,795/- Act 2009 compensation compensation, Chittorgarh

5. Income Tax Act, 1961 MAT Credit Honerable High Court of 269,800/- Rajasthan

Bad Advance Honerable High Court of 6. Income Tax Act, 1961 962,702/- Written off Rajasthan

7. Income Tax Act, 1961 Deemed Dividend Hocrableigh Court of 2,734,063/- Rajasthan

8. Income Tax Act, 1961 Deemed Dividend honcereble High Court of 519 344/- Rajasthan

9. Income Tax Act, 1961 Disallowance of CIT(A),Udaipur 590,120/- Interest expenses TOTAL 6,941,898/-

10. The Company has no accumulated losses and has not incurred any cash losses during the financial year covered by our audit or in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us we are of the opinion that the Company has not defaulted in the repayment of dues to Financial Institutions, banks etc.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities,

13. The provisions of any special statute as specified under clause (xiii) of Paragraph 4 of the order are not applicable to the Company.

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. The Company has not given any guarantee for loans taken by others from banks or financial Institutions, the terms and conditions whereof, in our opinion, are prima facie, prejudicial to the interests of the Company.

16. The Company has not obtained any term loans that were not applied for the purpose for which these were raised.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, in our opinion there are no funds raised on a short term basis which have been used for long term investment and vice versa.

18. 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 during the year.

19. The Company does not have debentures in its capital structure.

20. The Company has not raised any money by 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 RAJESH SUTHAR & ASSOCIATES Chartered Accountants (Firm Regn.No. 010856C)

(Rajesh Suthar) Partner M. No. 077812 Udaipur, the 29th May 2012

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Mar 31, 2010

We have audited the attached Balance Sheet of MEWAR POLYTEX LIMITED, UDAIPUR 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 annexed thereto.

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

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

2. As required by the Companies (Auditors report) Order, 2003 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 the paragraphs 4 and 5 of the said order.

3. Further to our comments in the Annexure referred to in paragraph 2 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 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 the books

c. The Balance Sheet, Profit & Loss Account and Cash flow Statement dealt with by this report are in agreement with the books of account of the company.

d. In our opinion the profit & loss account and the balance sheet comply with the Accounting Standard referred to in subsection (3C) of section 211 of the Companies Act, 1956.

e. In our opinion and best of the information and according to explanation given to us none of the Directors are disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of subsection (1) of section 274 of the Companies Act, 1956;

f. In our opinion and to the best of our information and according to explanation given to us the said account subject to:

Notes No.4 to schedule annexed to and forming part of the Balance Sheet regarding certain balances of debtors, creditors, loans and advances are subject to confirmation and read together with other notes to schedule annexed, give a true and fair view in conformity with the accounting principles generally accepted in India:

I. In the case of the balance sheet of the State of Affairs of the Company as at 31st March 2010;

II. In the case of the Profit & Loss account of the Profit for the year ended on that date; and

III. In so far as it relates to the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Annexure to Audit Report (Referred to in paragraph (2) of our report of even date)

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

(b) Some of the Fixed Assets been physically verified by the management during the year, according to the information and explanations given to us, there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies between the book records and the physical inventory have been noticed in respect of the assets physically verified.

(c) During the year, in our opinion, the company has not disposed a substantial part of the fixed assets and the going concern status of the company is not affected.

2. (a) The inventory of the company has been physically verified by the management at reasonable interval

during the year. In respect of inventories lying with third parties, these have been substantially been confirmed by them. In our opinion the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the Management were found reasonable and adequate in relation to the size of the company and the nature of its business.

(c) On the basis of the examination of the records of inventory, in our opinion, the company has maintained proper records of inventory and the discrepancies noticed on physical verification between the physical stocks and the book records were not material in relation to the operations of the company.

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 given short-term loan to one party aggregating to 41.05 lacs during the year.

b. The Company has taken short-term loan from three parties aggregating to 583.05 lacs during the year.

c. In our opinion and according to the information and explanations given to us, the rate of interest, and other terms and conditions are not prima facie prejudicial to the interest of the Company.

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

5. In respect of the contract or arrangement referred to in section 301 of the Companies Act, 1956:

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

(b) In our opinion and according to the information and explanations given to us these contract or arrangements have been made at prices which appear reasonable having regard to the prevailing mar- ket prices for such goods, materials or services at the relevant time.

6. The company has not accepted any deposits from the public.

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

8. According to the information and explanation given to us, the provision of Section 209 (1) (d) of the Companies act 1956 relating to maintenance of cost records are not applicable to the Company.

9. (a) According to the information and explanations given to us and according to the books and records as

produced and examined by us, in our opinion, the undisputed statutory dues in respect of Provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, custom duty, excise duty, cess, Service Tax and other applicable taxes have been regularly deposited by the company during the year with the appropriate authorities. (b) During the year 2008-09 the Company lost the Excise Case in the Honourable High Court and the Company had to pay Rs. 1286542/- (including Rs. 5.38 lacs as Excise duty and 6.99 lacs as Interest and penalty of Rs. 50000/-). The Company has preferred further appeal to the Hoble Supreme Court, hence the amount is shown as "Excise Duty under protest" under the head Loans and Advances assets, in the Balance Sheet.

S.No. Name of the Nature of Forum where dispute is Amount statute dues pending

1. Rajasthan Sales Sales Tax Honourable High Court of 1,265,151/- Tax,Act 1994 Rajasthan

2. Indian Stamp Stamp Duty Rajasthan Tax Board Ajmer 135,000/- Act,1899 and registration fee

3. Payment of wages Labour Payment and wages 44,923/-

Act, 1936 compensation authority, Udaipur

4. Income Tax MAT Credit Honourable High Court 269,800/- Act,1961 of Rajasthan

5. Income Tax Bad Advance Honourable High Court of 962,702/- Act,1961 Written off Rajasthan

6. Income Tax Deemed Dividend ITAT,Jodhpur 2,508,810/- Act, 1961

TOTAL 5,186,386/-

10. The Company has no accumulated losses and has not incurred any cash losses during the financial year covered by our audit or in the immediately preceding financial year.

11. Based on our audit procedures and according to the information and explanations given to us we are of the opinion that the Company has not defaulted in the repayment of dues to Financial Institutions, banks etc.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statute as specified under clause (xiii) of Paragraph 4 of the order are not applicable to the Company.

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. The Company has not given any guarantee for loans taken by others from banks or financial Institutions, the terms and conditions whereof, in our opinion, are prima facie, prejudicial to the interests of the Company.

16. The Company has not obtained any term loans that were not applied for the purpose for which these were raised.

17. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, in our opinion there are no funds raised on a short term basis which have been used for long term investment and vice versa.

18. 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 during the year.

19. The Company does not have debentures in its capital structure.

20. The Company has not raised any money by 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 RAJESH SUTHAR & ASSOCIATES

Chartered Accountants

Rajesh Suthar (Proprietor)

Membership No. 77812

Firm Reg. No. 010856 C

Udaipur the 29th May 2010