Auditor Report of Nitin Spinners Ltd.

Mar 31, 2018

REPORT ON THE IND AS FINANCIAL STATEMENTS

We have audited the accompanying Ind AS financial statements of NITIN SPINNERS LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE IND AS 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 Ind AS financial statements that give a true and fair view of the state of affairs(financial position), Profit and loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS 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 Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Ind AS 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 Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Ind AS financial statements.

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

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, including Ind AS of the state of affairs (financial position) of the Company as at 31st March, 2018 and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

OTHER MATTERS

The comparative financial information of the Company for the year ended 31st March, 2017 and the transition date opening balance sheet as at 1st April, 2016 included in these Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 and audited by the predecessor auditor, whose audit report for the year ended 31st March, 2017 and 31st March, 2016 dated 06th May, 2017 and 3rd May, 2016 respectively expressed an unmodified opinion on those financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us. Our opinion is not modified in respect of above matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditor''s Report) Order, 2016 (“the Order”) issued by the Government of India in terms of sub-section (11) of Section 143 of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure 1 a statement on the matters specified in the paragraphs 3 and 4 of the said Order.

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

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

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

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

(d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure 2.

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

a. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements. Refer Note 29 to the financial statements;

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

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

Referred to in our report of even date to the members of NITIN SPINNERS LIMITED on the accounts for the year ended 31st March, 2018

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets (Property, Plant & Equipment);.

(b) The fixed assets (Property, Plant & Equipment) have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties are held in the name of the Company

(ii) Physical verification of inventory has been conducted at reasonable intervals by management. As informed to us no material discrepancies have been noticed on such verification.

(iii) The Company has not granted any loans, secured or unsecured to any companies, firms, limited liability partnership or other parties covered in register maintained under Section 189 of the Companies Act, 2013.

(iv) No loans have been given to parties covered under section 185 of the Companies Act, 2013. The Company has not given any guarantee or provided any security to any party covered under section 185 or 186 of the Companies Act, 2013. In case of investments provisions of section 185 and 186 of the Companies Act, 2013 has been complied.

(v) The Company has not accepted deposits from the public within the meaning of Sections 73 to 76 of the Companies Act, 2013 and the rules made there under, hence this clause is not applicable.

(vi) The maintenance of cost records has been prescribed by the Central Government under section 148(1) of the Companies Act, 2013, and as informed to us such accounts and records have been so made and maintained. However, we have not conducted a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund, employee state insurance, income tax, sales-tax, wealth tax, service tax, custom duty, excise duty, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities and there are no undisputed dues outstanding as on 31st March, 2018 for a period of more than six months from the date they became payable.

(b) According to information and explanations given to us, the gross disputed statutory dues of income tax, sales tax or service tax or duty of customs or duty of excise or value added tax amounts to Rs. 1,194.10 Lacs in aggregate as on 31st March, 2018, out of which Rs. 376.58 Lacs has been deposited under protest/adjusted by tax authorities and the balance of Rs. 817.52 Lacs of dues have not been deposited on account of matters pending before appropriate authorities as detailed below:

Sl. No	Name of Statute	Nature of the disputed statutory dues	Period to which the amount relates (FY)	Forum where the dispute is pending	Gross Amount due ('' Rs. in Lacs.)	Amount deposited under protest/ adjusted by tax authorities (Rs. in Lacs.)	Amount not deposited (Rs. in Lacs.)
1	Central Excise	Interest on Excise Duty	2008	Supreme Court, New Delhi	787.02	Nil	787.02
2.	Central Excise	Excise duty and penalty	2006-07	High Court, Jodhpur	9.25	9.25	Nil
3.	Customs	Redemption Fine	2009-10	CESTAT Ahmadabad	0.50	Nil	0.50
4	Central excise	Excise Duty and Penalty	01.04.2000 to 30.06.2000	Commissioner (A) Jaipur	20.37	Nil	20.37

Sl. No	Name of Statute	Nature of the disputed statutory dues	Period to which the amount relates (FY)	Forum where the dispute is pending	Gross Amount due (Rs. in Lacs.)	Amount deposited under protest/ adjusted by tax authorities (Rs. in Lacs.)	Amount not deposited (Rs. in Lacs.)
5	Central Excise	Refund- Rebate Claim	2017	Commissioner (A) Jaipur	9.63	Nil	9.63
6.	Rajasthan Vat Act	Input Credit	2012-13	Dy. Commissioner (A) Ajmer	5.78	5.78	Nil
7	Rajasthan Vat Act	Input Credit	2013-14	Dy. Commissioner (A) Ajmer	250.25	250.25	Nil
8	Rajasthan Vat Act	Input Credit	2014-15	Dy. Commissioner (A) Ajmer	111.30	111.30	Nil
	Total				1194.10	376.58	817.52

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowing to a financial institution, banks government or dues to debenture holders.

(ix) The Company has not raised any money by way of initial public offer or further public offer. According to the information and explanations given to us, the money raised by the Company by way of term loans have been applied for the purpose for which they were obtained.

(x) According to the information and explanations given to us and as represented by the Management and based on our examination of the books and records of the Company and in accordance with generally accepted auditing practices in India, we have been informed that no case of frauds has been committed on or by the Company or by its officers or employees has been noticed or reported during the year.

(xi) Managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(xii) The provisions of clause 3 (xii) of the Order, for Nidhi Company, are not applicable to the Company

(xiii) The Company has complied with the provisions of Section 177 and 188 of the Companies Act, 2013 w.r.t. transactions with the related parties, wherever applicable. Details of the transactions with the related parties have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) During the year Company has made preferential allotment/ private placement of shares in compliance with the requirement of Section 42 of Companies Act, 2013 and the amount raised has been used for the purpose for which the funds were raised.

(xv) The Company has not entered into any non-cash transactions with the directors or persons connected with him as covered under Section 192 of the Companies Act, 2013.

(xvi) According to information and explanation given to us, the Company is not required to be registered u/s 45-IA of Reserve Bank of India Act, 1934. Accordingly, provision of clause 3(xvi) of the Order is not applicable to the Company

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT, 2013 (“THE ACT”)

Referred to in paragraph 2(f) under ''Report on other Legal and Regulatory Requirements'' section of our report of even date to the members of NITIN SPINNERS LIMITED on the Ind AS financial statements for the year ended 31st March, 2018

We have audited the internal financial controls with reference to Ind AS financial statements of NITIN SPINNERS LIMITED (“the Company”) as of 31st March, 2018 in conjunction with our audit of the Ind AS Financial Statements of the Company for the year ended on that date.

MANAGEMENT''S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Company''s management is responsible for establishing and maintaining internal financial controls w.r.t. Ind AS financial statements based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

AUDITORS'' RESPONSIBILITY

Our responsibility is to express an opinion on the Company''s internal financial controls w.r.t. Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013 to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by ICAI.

Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls w.r.t. Ind AS financial statements was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system w.r.t. Ind AS financial statements and their operating effectiveness. Our audit of internal financial controls w.r.t. Ind AS financial statements included obtaining an understanding of internal financial controls w.r.t. Ind AS financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system w.r.t. Ind AS financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS W.R.T. IND AS FINANCIAL STATEMENTS

A Company''s internal financial control w.r.t. Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company''s internal financial control w.r.t. Ind AS financial statements includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company''s assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS W.R.T. IND AS FINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls w.r.t. Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls w.r.t. Ind AS financial statements to future periods are subject to the risk that the internal financial controls w.r.t. Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls w.r.t. Ind AS financial statements were operating effectively as at 31st March, 2018, based on the internal controls w.r.t. Ind AS financial statements criteria established by the Company considering the components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the ICAI.

For Kalani & Company

Chartered Accountants

FRN-000722C

[Bhupender Mantri]

Partner

M. No. 108170

Place of Signature : Bhilwara

Dated : 10th May, 2018

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Mar 31, 2017

To,

The Members,

Nitin Spinners Limited REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Nitin Spinners Limited(“The Company’), which comprise the Balance Sheet as at 31stMarch, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT’S RESPONSIBILITY FOR THE 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 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 provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of 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 specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the 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, 2017;

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

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

(i) As required by the Companies (Auditor’s Report) Order, 2016 issued by the Central government of India in the terms of Section 143 of the Companies Act 2013, we give in the “Annexure A” statement on the matters specified in Paragraph 3 a 4 of the order.

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

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

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

c) The Balance Sheet, 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 referred to in 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 31st March, 2017, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2017 from being appointed as a Director in terms of Section 164 (2) of the Act.

f) With respect to adequacy of internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B” and

g) 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:

(a) The Company does not have any pending litigations which would materially impact its financial position.

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

(c) During the year the Company was not required to transfer any amount to Investor Education a Protection Fund .

(d) The Company has provided requisite disclosures (Refer note 24(B)(8)) in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and these disclosures are in accordance with the books of account maintained by the Company.

The annexure referred to in our paragraph ‘‘Report on Other Legal and

Regulatory Requirements” report to the members of Nitin Spinners Limited. for the year ended 31st March, 2017 as per information and explanations given to us, we report that-

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

(b) these fixed assets have been physically verified by the management at reasonable intervals, no material discrepancies were noticed on such verification.

(c) the title deeds of immovable properties are held in the name of the Company,

(ii) Physical verification of inventory has been conducted at reasonable intervals by the management and no material discrepancies were noticed on such verification.

(iii) The Company has not granted any loans secured or unsecured to the companies, firms, Limited Liability Partnerships, or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

(iv) In respect of loans, investments, guarantees, and security the provisions of Section 185 and 186 of the Companies Act, 2013 have been complied with.

(v) The Company has not accepted any deposits.

(vi) The maintenance of cost records has been specified by the Central Government under sub-Section (1) of Section 148 of the Companies Act, 2013 and such accounts and records have been so made and maintained.

(vii) (a) The Company is generally regular in depositing undisputed statutory dues including provident fund, employees’ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues to the appropriate authorities. There are no arrears of outstanding statutory dues as on the last day of the financial year concerned for a period of more than six months from the date they became payable.

(b) There are no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax which have not been deposited on account of any dispute except as follows:

S. No.	Name of Statute	Nature of Dues	Unpaid Amt (Rs, in Lacs)	Year	Forum which at pending/ Remarks
1.	Central Excise	Excise Duty and Penalty	12.02	2007-08	CESTAT, New Delhi
2.	Central Excise	Excise duty and Penalty	20.37	2000-01	Commissioner (A), Jaipur
3.	Central Excise	Custom Duty and Penalty	37.72	2008-09	CESTAT, New Delhi

S. No.	Name of Statute	Nature of Dues	Unpaid Amt (Rs, in Lacs)	Year	Forum which at pending/ Remarks
4.	Central Excise	Penalty	15.97	2008-09	CESTAT, New Delhi
5.	Central Excise	Excise Duty	463.54	2008-09	CESTAT, New Delhi
6.	Central Excise	Excise Duty	20.67	2008-09	CESTAT, New Delhi
7.	Service Tax	Demand of Service Tax and Penalty	93.65	2009-11	Commissioner (A), Jaipur

(viii) The Company has not defaulted in repayment of loans or borrowing to a financial institution, bank, Government or dues to debenture holders.

(ix) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) however it has raised term loans which were applied for the purposes for which those are raised.

(x) There were no incident of fraud by he Company or any fraud on the Company by its officers or employees has been noticed or reported during the year.

(xi) The managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act.

(xii) The Company is not a Nidhi Company.

(xiii) All transactions with the related parties are in compliance with Sections 177 and 188 of the Companies Act, 2013 where ever applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) The Company has not entered into any non-cash transactions with directors or persons connected with him.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

Report on the Internal Financial Controls under Clause (i) of SubSection 3 of Section 143 of the Companies Act, 2013 (“the Act”).

We have audited the internal financial controls over financial reporting of Nitin Spinners Limited (“The Company”) as of 31st March, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

The Company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal financial control over financial reporting includes those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error of fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2017 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For R.S. DANI & CO.

Chartered Accountants

(Firm Reg. No. 000243C)

ASHOK MANGAL

Partner

M.No. 071714

Place : Bhilwara

Date : 6th May, 2017

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Mar 31, 2015

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

Management's Responsibility for the 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 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 provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of 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 specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the 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 March 31, 2015;

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

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

Report on Other Legal and Regulatory Requirements

(i) As required by the Companies (Auditor's Report) Order, 2015 issued by the Central government of India in the terms of section 143 of the Companies Act 2013,we give in the Annexure a statement on the matters specified in Paragraph 3 & 4 of the order.

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

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

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

c) The Balance Sheet, 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 referred to in 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 does not have any pending litigations which would materially impact its financial position.

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

(iii) During the year the Company was not required to transfer any amount to Investor Education & Protection Fund .

The annexure referred to in our paragraph "Report on Other Legal and Regulatory Requirements" report to the members of Nitin Spinners Ltd. for the period ended 31 March 2015, we report that-

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

(b) The Company has a phased programme of physical verification of its fixed assets which in our opinion, is reasonable having regard to the size of the Company and the nature of its fixed assets. In accordance with this program, certain fixed assets has been physically verified by the management during the year and no material discrepancies were noticed on such verification as compared to the books of accounts.

(ii) (a) The inventory has been physically verified by the management during the year. 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 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 far as we could ascertain and according to the information and explanations given to us, no material discrepancies were noticed between the physical stock and the book records.

(iii) The Company has not granted any unsecured loans to entities covered in the register maintained under section 189 of the Companies Act, 2013. Thus provisions of Clause 3(iii) (a) & (b) of the Companies (Auditor's Report) Order, 2015 are not applicable to the company.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and the sale of goods & services. During the course of our audit, we have not observed any major weakness in such 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 the public and consequently, the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other provision of the Companies Act and the rules framed there under are not applicable to the company.

(vi) We have broadly reviewed the cost records maintained by the company as prescribed by the Central Government of India under section 148(1) of the Companies Act, 2013, 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 records with a view to determine whether they are accurate or complete.

(vii) (a) According to the records of the Company examined by us and the information and explanations given to us, in our opinion, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Service tax, Wealth tax, Customs duty, Excise duty, value added tax, Cess and any other material statutory dues to the extent applicable to it and there are no such undisputed statutory dues payable for a period of more than six months from the date they become payable as at 31st March,2015.

(b) According to the information and explanations given to us, there are no dues of sales tax, income tax, customs duty, service tax, wealth tax, excise duty and cess which have not been deposited on account of any dispute except as under

Name of the Nature of Unpaid Statute dues Amount (Rs. in lacs)

Central Excise Excise Duty 4.88 & Penalty

Central Excise Excise Duty 12.02 & Penalty

Service Refund of Tax Service Tax under notifi- 3.42 cation no. 41/2007

Central Excise Excise Duty 20.37 & Penalty

Central Excise Refund of 10.48 Cenvat

Central Excise Cenvat Credit 1.86 of Input services and penalty

Central Excise Custom Duty 37.72 and Penalty

Central Excise Penalty 15.97

Central Excise Excise Duty 463.54

Central Excise Excise Duty 20.67



Name of the Period Forum at Statute which pending /Remarks

Central Excise 2001-02 CESTAT, New Delhi

Central Excise 2007-08 CESTAT, New Delhi

Service CESTAT, Tax 2008-09 New Delhi to 2009-10

Central Excise 2000-01 Commissioner (A), Jaipur

Central Excise 2007-08 CESTAT, New Delhi

Central Excise 2008-09 CESTAT, New Delhi

Central Excise 2008-09 CESTAT, New Delhi

Central Excise 2008-09 CESTAT, New Delhi

Central Excise 2008-09 CESTAT, New Delhi

Central Excise 2008-09 CESTAT, New Delhi

(c) No amounts were required to be transferred to investor education and protection fund during the year by the Company.

(viii) The Company does not have accumulated losses as at the end of the financial year. There are no cash losses during the financial year under report and in the immediately preceding financial year.

(ix) In our opinion and according to the information & explanations given to us, the company has not defaulted in repayment of dues to financial institution, banks and debenture holders.

(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. Accordingly, the provisions of clause 3(x) of the order are not applicable to the Company.

(xi) On the basis of records made available and according to information and explanations given to us, the company has applied its term loans for the purposes for which the loans were obtained.

(xii) Based upon the audit procedure performed for the purpose of reporting the true and fair view and on the basis of the information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For R. S. DANI & CO.

Chartered Accountants

(Firm Reg. No. 000243C)

Place : Bhilwara Ashok Mangal Date : 4th May, 2015 Partner M.No. 071714

---

Mar 31, 2014

1. We have audited the accompanying financial statements of NITIN SPINNERS LIMITED ("the company"), which comprise the Balance Sheet as at March 31, 2014, the Profit and Loss Statement and Cash Flow Statement for the year ended on that date and a summary of significant accounting policies and other explanatory information.

2. 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 principles generally accepted in India including Accounting Standards referred to in Section 211(3C) 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.

3. 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 misstatements.

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 judgement, 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 the internal controls relevant to 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.

4. 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:

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2014, and

(ii) In the case of the Profit & Loss Statement, of the Profit for the year ended on that date.

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

Report on Other Legal and Regulatory Requirement

5. As required by the Companies (Auditor''s Report) Order, 2003 as amended by Companies (Auditor''s Report)(Amendment) Order,2004, issued by the Government of India in terms of Section 227 (4A) of the Act and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

6. As required by Sec. 227(3) of the Act., we report that

a) We have obtained all the information & 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, Profit & Loss Statement 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 Profit & Loss Statement and Cash Flow Statement comply with the accounting standards referred to in Section 211 (3C) of the Act.

e) On the basis of the written representations received from the Directors as on 31st March 2014 and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2014 from being appointed as a Director in terms of Section 274(1)(g) of the Companies Act, 1956;

ANNEXURE TO AUDITOR''S REPORT Annexure referred to in paragraph (5) of our report of even date to the shareholders of Nitin Spinners Limited on the financial statements for the year ended 31st March 2014.

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

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

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off any major part of the Fixed Assets during the year.

(2) (a) The inventory (excluding stock lying with third parties for which confirmation has been obtained) has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedure 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(3) (a) The company has not given any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently the requirement of Clauses (iii) (b) to (iii) (e) of paragraph 4 of the order are not applicable.

(b) The company has not taken any loans from the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act. 1956. Consequently the requirement of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the order are not applicable.

4. In our opinion and according to the information and 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 inventory and fixed assets and for the sale of goods and services. On the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the Register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public with in the meaning of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

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 cost records maintained by the company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209 (1) (d) of the companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) In our opinion and according to the information and explanations given to us, and according to the records of the Company examined by us, the Company is generally regular in depositing the undisputed statutory dues with appropriate authorities including provident fund, investor education protection fund, employee''s state insurance, income-tax, sales-tax, custom duty, excise-duty, cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Sales tax, Custom Duty and Excise Duty were outstanding, as at 31.3.2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of Wealth Tax, Income Tax, Service Tax, Excise Duty, Customs, VAT, Entry Tax and Education Cess as at March 31st, 2014 which have not been deposited on account of any dispute, except as under :-

Name of the Nature of Unpaid Period Forum at Statute dues Amount which (Rs. in pending lacs) /Remarks

Central Excise Excise Duty 4.88 2001-02 CESTAT, & Penalty New Delhi

Central Excise Excise Duty 12.02 2007-08 CESTAT, & Penalty New Delhi

Service Refund of 2.02 01.01.09 to CESTAT, Tax Service Tax 30.06.09 New Delhi under notifi- 0.81 01.04.08 to cation no. 30.06.08

41/2007 0.59 01.10.08 to 31.12.08

Central Excise Excise Duty 20.37 01.04.2000 to Commissioner & Penalty 30.06.2000 (A), Jaipur

Central Excise Refund of 10.48 01.03.2008 to CESTAT, Cenvat 31.03.2008 New Delhi

Central Excise Cenvat Credit 1.86 16.05.2008 CESTAT, of Input New Delhi services and penalty

Central Excise Custom Duty 37.72 16.05.2008 CESTAT, and Penalty New Delhi

Central Excise Penalty 15.97 16.05.2008 CESTAT, New Delhi

Central Excise Excise Duty 463.54 16.05.2008 CESTAT, New Delhi

Central Excise Excise Duty 20.67 16.05.2008 CESTAT, New Delhi

Entry Tax Tax 61.92 2006-07 to Rajasthan High 31.03.2014 Court, Jodhpur

10. The company does not have any accumulated losses. The company has not incurred any cash losses during immediately preceding Financial Year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to the financial institution, banks or debenture holders.

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 statutes applicable to a Chit Fund/Nidhi/Mutual Benefit Fund/ Societies are not applicable to the Company.

14. In our opinion and as per information and explanations given to us, the Company is not dealing in shares, securities, debentures and other investments.

15. In our opinion and 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 during the year.

16. In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purpose for which they were raised.

17. On the basis of an overall examination of the Balance Sheet of the Company as at 31.3.2014 and in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investment.

18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money by public issue during the year.

21. During the course of our examination of the books and records of the Company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have we been informed of such case by the management.

For R. S. DANI & CO.

Chartered Accountants

(Firm Reg. No. 000243C) Place : Bhilwara Ashok Mangal Date : 6th May, 2014 Partner

M.No. 071714

---

Mar 31, 2013

1. We have audited the attached Balance Sheet of NITIN SPINNERS LIMITED as at 31st March, 2013 and the related Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto which we have signed under reference to this report. 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 mis-statement. 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 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 Companies (Auditor''s Report)(Amendment) Order,2004, issued by the Government of India in terms of Section 227 (4A) of The Companies Act, 1956 (the ''Act'') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in Paragraph (3) above, we report that

a) We have obtained all the information & 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, Profit & Loss Account 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 Profit & Loss Account dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act,1956;

e) On the basis of the written representations received from the Directors as on 31st March 2013 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 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) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon and attached thereto, give in the prescribed manner the information required by the Companies Act, 1956 and 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, 2013, and

(ii) In the case of the Profit & Loss Account, of the Profit of the Company for the year ended on that date.

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

Annexure referred to in paragraph (3) of our report of even date to the shareholders of Nitin Spinners Limited on the financial statements for the year ended 31st March 2013.

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

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

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off any major part of the Fixed Assets during the year.

(2) (a) The inventory (excluding stock lying with third parties for which confirmation has been obtained) has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedure 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(3) (a) The company has not given any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently the requirement of Clauses (iii) (b) to (iii) (e) of paragraph 4 of the order are not applicable.

(b) The company has not taken any loans from the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act. 1956. Consequently the requirement of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the order are not applicable.

4. In our opinion and according to the information and 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 inventory and fixed assets and for the sale of goods and services. On the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the Register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public with in the meaning of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

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 cost records maintained by the company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209 (1) (d) of the companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) In our opinion and according to the information and explanations given to us, and according to the records of the Company examined by us, the Company is generally regular in depositing the undisputed statutory dues with appropriate authorities including provident fund, investor education protection fund, employee''s state insurance, income-tax, sales-tax, custom duty, excise- duty, cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Sales tax, Custom Duty and Excise Duty were outstanding, as at 31.3.2013 for a period of more than six months from the date they became payable.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to the financial institution, banks or debenture holders.

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 statutes applicable to a chit fund / nidhi /mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion and as per information and explanations given to us, the Company is not dealing in shares, securities, debentures and other investments.

15. In our opinion and 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 during the year.

16. In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purpose for which they were raised.

17. On the basis of an overall examination of the Balance Sheet of the Company as at 31.3.2013 and in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investment.

18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money by public issue during the year.

21. During the course of our examination of the books and records of the Company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have we been informed of such case by the management.

For R. S. DANI & CO.

Chartered Accountants (Firm Reg. No. 000243C)

Place : Bhilwara Ashok Mangal

Date : 2nd May, 2013 Partner

M.No. 71714

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of NITIN SPINNERS LIMITED as at 31st March, 2012 and the related Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto which we have signed under reference to this report. 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 mis-statement. 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 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 Companies (Auditor's Report)(Amendment) 0rder,2004, issued by the Government of India in terms of Section 227 (4A) of The Companies Act, 1956 (the 'Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in Paragraph (3) above, we report that

a) We have obtained all the information & 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, Profit & Loss Account 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 Profit & Loss Account dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act,1956;

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

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon and attached thereto, give in the prescribed manner the information required by the Companies Act, 1956 and 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, and

(ii) In the case of the Profit & Loss Account, of the Profit of the Company for the year ended on that date.

(iii) In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date. Annexure referred to in paragraph (3) of our report of even date to the shareholders of Nitin Spinners Limited on the financial statements for the year ended 31st March 2012.

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

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

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off any major part of the Fixed Assets during the year.

(2) (a) The inventory (excluding stock lying with third parties for which confirmation has been obtained) has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedure 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(3) (a) The company has not given any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently the requirement of Clauses (iii) (e) of paragraph 4 of the order are not applicable.

(b) The company has not taken any loans from the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act. 1956. Consequently the requirement of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the order are not applicable.

4. In our opinion and according to the information and 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 inventory and fixed assets and for the sale of goods and services. On the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the Register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public with in the meaning of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

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 cost records maintained by the company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209 (1) (d) of the companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) In our opinion and according to the information and explanations given to us, and according to the records of the Company examined by us, the Company is generally regular in depositing the undisputed statutory dues with appropriate authorities including provident fund, investor education protection fund, employee's state insurance, income-tax, sales-tax, custom duty, excise- duty, cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Service Tax, Sales tax, Custom Duty and Excise Duty were outstanding, as at 31.3.2012 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of Wealth Tax, Income Tax, Service Tax, Excise Duty, Customs, VAT, Entry Tax and Education Cess as at March 31st, 2012 which have not been deposited on account of any dispute, except as under :-

Name of the Nature of Unpaid Period Forum Statute dues Amount which (Rs. in at lacs) pending

Central Excise Excise Duty 4.88 2001-02 CESTAT, & Penalty New Delhi

Central Excise Excise Duty 12.02 2007-08 CESTAT, & Penalty New Delhi

Service Refund of 2.02 01.01.09 to CESTAT, Tax Service Tax 30.06.09 New Delhi under notifi- 0.81 01.04.08 to cation no. 30.06.08 41/2007 0.59 01.10.08 to

31.12.08

Central Excise Excise Duty 30.45 01.04.2000 to Commissioner & Penalty 30.06.2000 (A), Jaipur

Central Excise Refund of 10.48 01.03.2008 to CESTAT, Cenvat 31.03.2008 New Delhi

Central Excise Cenvat Credit 1.86 16.05.2008 CESTAT, of Input New Delhi services and penalty

Central Excise Custom Duty 37.72 16.05.2008 CESTAT, and Penalty New Delhi

Central Excise Penalty 15.97 16.05.2008 CESTAT, New Delhi

Central Excise Excise Duty 663.54 16.05.2008 CESTAT, New Delhi

Central Excise Excise Duty 20.67 16.05.2008 CESTAT, New Delhi

Entry Tax Tax 70.46 2006-07 to RajasthanHigh 31.03.2012 Court, Jodhpur

10. The company does not have any accumulated losses. The company has not incurred any cash losses during immediately preceding Financial Year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to the financial institution, banks or debenture holders.

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 statutes applicable to a chit fund / nidhi /mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion and as per information and explanations given to us, the Company is not dealing in shares, securities, debentures and other investments.

15. In our opinion and 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 during the year.

16. In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purpose for which they were raised.

17. On the basis of an overall examination of the Balance Sheet of the Company as at 31.3.2012 and in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investment.

18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money by public issue during the year.

21. During the course of our examination of the books and records of the Company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have we been informed of such case by the management.

For R. S. DANI & CO.

Chartered Accountants

(Firm Reg. No. 000243C)

Place : Bhilwara Ashok Mangal

Date : 8th May, 2012 Partner

M.No. 71714

---

Mar 31, 2011

1. We have audited the attached Balance Sheet of NITIN SPINNERS LIMITED as at 31st March, 2011 and the related Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto which we have signed under reference to this report. 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 mis-statement. 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 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 Companies (Auditor's Report)(Amendment) Order,2004, issued by the Government of India in terms of Section 227 (4A) of The Companies Act, 1956 (the ‘Act') and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in Paragraph (3) above, we report that

a) We have obtained all the information & 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, Profit & Loss Account 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 Profit & Loss account dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act,1956;

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

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon and attached thereto, give in the prescribed manner the information required by the Companies Act, 1956 and 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, 2011, and

(ii) In the case of the Profit & Loss Account, of the Profit of the Company for the year ended on that date.

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

ANNEXURE TO AUDITOR'S REPORT

Annexure referred to in paragraph (3) of our report of even date to the shareholders of Nitin Spinners Limited on the financial statements for the year ended 31st March, 2011.

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

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

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off any major part of the Fixed Assets during the year.

(2) (a) The inventory (excluding stock lying with third parties for which confirmation has been obtained) has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedure 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(3) (a) The company has not given any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently the requirement of Clauses (iii) (b) to (iii) (e) of paragraph 4 of the order are not applicable. (b) The company has not taken any loans from the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act. 1956.

Consequently the requirement of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the order are not applicable.

4. In our opinion and according to the information and 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 inventory and fixed assets and for the sale of goods and services. On the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the Register required to be maintained under that section.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public with in the meaning of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

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

9. (a) In our opinion and according to the information and explanations given to us, and according to the records of the Company examined by us, the Company is generally regular in depositing the undisputed statutory dues with appropriate authorities including provident fund, investor education protection fund, employee's state insurance, income-tax, sales-tax, custom duty, excise- duty, cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, Service Tax, Sales tax, Custom duty and Excise duty were outstanding, as at 31.3.2011 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of Wealth Tax, Income Tax, Service Tax, Excise Duty, Customs, VAT, Entry Tax and Education Cess as at March 31st, 2011 which have not been deposited on account of any dispute, except as under :-

Name of the Nature of Unpaid Period Forum Statute dues Amount which (Rs. in at lacs) pending Central Excise Excise Duty 6.38 2001-02 CESTAT, & Penalty New Delhi

Central Excise Excise Duty 24.50 2007-08 CESTAT, & Penalty New Delhi

Service Refund of 2.02 01.01.09 to CESTAT, Tax Service Tax 30.06.09 New Delhi under notifi- 0.81 01.04.08 to cation no. 30.06.08 41/2007 0.59 01.10.08 to 31.12.08

Central Excise Excise Duty 30.45 01.04.2000 to CESTAT, & Penalty 30.06.2000 New Delhi

Central Excise Refund of 10.48 01.03.2008 to CESTAT, Cenvat 31.03.2008 New Delhi

Central Excise Cenvat Credit 1.86 16.05.2008 CESTAT, of Input New Delhi services and penalty

Central Excise Custom Duty 37.72 16.05.2008 Appeal is and Penalty being filed with CESTAT, New Delhi

Central Excise Penalty 16.28 16.05.2008 Commissioner (A) Jaipur

Central Excise Excise Duty 663.54 16.05.2008 Appeal is being filed with CESTAT, New Delhi

Entry Tax Tax 89.64 2006-07 to Rajasthan 31.03.2011 High Court, Jodhpur

10. The company does not have any accumulated losses. The company has not incurred any cash losses during immediately preceding Financial Year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to the financial institution, banks or debenture holders.

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 statutes applicable to a chit fund / nidhi /mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion and as per information and explanations given to us, the Company is not dealing in shares, securities, debentures and other investments.

15. In our opinion and 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 during the year.

16. In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purpose for which they were raised.

17. On the basis of an overall examination of the Balance Sheet of the Company as at 31.3.2011 and in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investment.

18. The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures.

20. The Company has not raised any money by public issue during the year.

21. During the course of our examination of the books and records of the Company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have we been informed of such case by the management.

For R. S. DANI & CO. Chartered Accountants (Firm Reg. No. 000243C)

Ashok Mangal Partner M.No. 71714

Place : Bhilwara Date : 3rd May, 2011

---

Mar 31, 2010

We have audited the attached Balance Sheet of NITIN SPINNERS LIMITED as at 31st March, 2010 and the related Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto which we have signed under reference to this report. 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 mis- statement. 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 the management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 as amended by Companies (Auditors Report)(Amendment) Order,2004, issued by the Government of India in terms of Section 227 (4A) of The Companies Act, 1956 (the Act) and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order.

Further to our comments in the annexure referred to in Paragraph (3) above, we report that

a) We have obtained all the information & 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, Profit & Loss Account 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 profit & Loss account dealt with by this report comply with the accounting standards referred to in Section 211 (3C) of the Companies Act, 1956;

e) On the basis of the written representations received from the Directors as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements read together with the notes thereon and attached thereto, give in the prescribed manner the information required by the Companies Act, 1956 and 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, and

(ii) In the case of the Profit & Loss Account, of the Profit of the Company for the year ended on that date.

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

ANNEXURE TO AUDITORS REPORT

Annexure referred to in paragraph (3} of our report of even date to the shareholders of Nitin Spinners Limited on the financial statements for the year ended 31st March 2010.

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

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

(c) In our opinion and according to the information and explanations given to us, the Company has not disposed off any major part of the Fixed Assets during the year.

(2) (a) The inventory (excluding stock lying with third parties for which confirmation has been obtained) has been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedure 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) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

(3) (a) The company has not given any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Consequently the requirement of Clauses (iii) (b) to (ill) (e) of paragraph 4 of the order are not applicable. (b) The company has not taken any loans from the from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act. 1956. Consequently the requirement of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the order are not applicable.

(4) In our opinion and according to the information and 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 inventory and fixed assets and for the sale of goods and services. On the basis of our examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

(5) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the Register required to be maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(6) In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from public with in the meaning of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

(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 cost records maintained by the company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209 (1) (d) of the companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not however made a detailed examination of the records with a view to determine whether they are accurate or complete.

(9) (a) In our opinion and according to the

information and explanations given to us, and according to the records of the Company examined by us, the Company is generally regular in depositing the undisputed statutory dues with appropriate authorities including provident fund, investor education protection fund, employees state insurance, income-tax, sales-tax, custom duty, excise-duty, cess and other statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of Income tax, wealth tax, Service Tax, Sales tax, Custom duty and Excise duty were outstanding, as at 31.3.2010 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of Wealth Tax, Income Tax, Service Tax, Excise Duty, Customs, VAT, Entry Tax and Education Cess as at March 31st, 2010 which have not been deposited on account of any dispute are as under :- Name of the Nature of Amount Period Forum Statute dues Rs. in lacs which at pending

Central Excise Excise Duty 6.38 2001-02 Tribunal

& Penalty New Delhi

Central Excise Excise Duty 24.50 2007-08 Tribunal

& Penalty New Delhi

Value Added Penalty 0.44 2006-07 D.C. (Appeal)

Tax Bhilwara

Entry Tax Tax 90.22 2006-07 to High Court

31.03.2010 Jodhpur

Central Excise Excise duty 30.45 01.04.2000 to Commissioner

and Penalty 30.06.2000 (A) Jaipur

Central Excise Refund under 10.48 01.03.2008to CESTAT

Rule 5 31.03.2008



(10) The company does not have any accumulated losses. The company has incurred cash losses amounting to Rs. 2614.07 during immediately preceding Financial Year.

(11) Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company has not defaulted in repayment of dues to the financial institution, banks or debenture holders.

(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 statutes applicable to a chit fund / nidhi /mutual benefit fund/ societies are not applicable to the Company.

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

(15) In our opinion and 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 during the year.

(16) In our opinion and according to the information and explanations given to us, on an overall basis, the term loans have been applied for the purpose for which they were raised.

(17) On the basis of an overall examination of the Balance Sheet of the Company as at 31.3.2010 and in our opinion and according to the information and explanations given to us, there are no funds raised on a short-term basis, which have been used for long-term investment.

(18) In terms of approval of CDR Scheme by the lenders, the Company has made preferential allotment of 50,00,000 Equity Shares of Rs. 10/ - each, at par, to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 .

(19) The Company has not issued any debentures.

(20) The Company has not raised any money by public issue during the year.

(21) During the course of our examination of the books and records of the Company carried out in accordance with generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have we been informed of such case by the management.

For R. S. DANI & CO.

Chartered Accountants

Place : Bhilwara Ashok Mangal

Date : 8th May, 2010 Partner M.No. 71714