Auditor Report of Rishab Special Yarns Ltd.

Mar 31, 2014

We have audited the accompanying financial statements of Rishab Special Yarns Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, 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

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit We conducted our audit in accordance with the Standards on Auditing Issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Opinion

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

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

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

Report on Other Legal and Regulatory Requirements:

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

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

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

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

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

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

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

ANNEXURE TO THE AUDITORS'' REPORT

Statement on the Matters Specified in paragraph 4 & 5 of Companies (Auditors Report) order 2003 as referred to in our Report of even date under the heading "Report on Other Legal & Regulatory" requirements:

1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of the Tangible Assets.

(b) As explained to us, the Tangible Assets have been physically verified by the management during the year at regular Intervals, which in our opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

(c) The company has decided to discontinue the manufacturing operations due to non viability and has disposed off its entire Tangible Assets except major part of Land & Building and some Furniture. Accordingly, the going concern status of the company has affected.

2. The Company did not have any inventory during whole of the year under audit.

3. (a) The company has not granted unsecured loans during the year to the persons specified under section 301 of The Companies Act 1956.

(b) The company has taken interest-free unsecured loans, repayable on demand, from three parties covered in the register maintained under section 301 of the Companies Art, 2013. The maximum amount involved during the year was Rs. 1,96,00,000/- and the year-end balance of loans taken from such parties was Rs. 1,76,27,951/-. As the loans are interest free and repayable on demand, sub clause (f) and (g) are not applicable.

4. In our opinion and according to the information and explanations give to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchase and also for the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal controls.

5. As explained to us, there has not been any transaction required to be entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to Rs. 5,00,000/- or more in respect of each such party.

6. In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public. Hence the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 2013 and the Rules framed there under are not applicable.

7. As explained to us, in view of no business activities being carried on by the company, no interna) audit was carried out.

8. As explained to us, there was no manufacturing activity during the year, as such the clause regarding maintenance of cost records U/s 209 (1) (d) of the Companies Act, 1956 is not applicable.

9. a. The company is generally regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other statutory dues with appropriate authorities, wherever applicable to it.

b. According to the information and explanations given to us, as at 31st March, 2014, except a sum of Rs. 14623/- in respect of Sales Tax, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears for a period exceeding six months from the date they become payable.

c. As per records of the company and in accordance with the information and explanations given to us, there are no dues of income tax, custom duty, wealth tax, which have not been deposited on account of any dispute. However, in the case of excise duty and cess the particulars on account of dispute are reported herein below:

Name of Statute Nature of Period to Amount Forum Dues which the (Rupees amount in Lakh) relates

Excise & Customs Excise Duty 2002-2003 83.36 The Commissioner - (NCCD) (Appeals), Customs, Excise & Service Tax

Textile Textile 1989-1997 8.27 Rajasthan High Committee Committee Court Cess

10. The accumulated losses of the company at the end of the financial year are more than 50% of its net worth and though the company has not incurred cash losses during the year immediately preceding financial year, it has incurred cash losses during the year under report.

11. During the year the company has not availed any loan from financial institutions. There are no dues of Financial Institutions, Banks & Debenture Holders.

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

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

14. During the year, the company has not done any dealing/trading in shares, debentures and other securities.

15. According to the information and explanations given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.

16. During the year the company has not taken any term loan.

17. According to the information and explanations given to us and an on overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investments.

18. During the year, the company has not made any preferential allotment of shares to the 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. During the year, the company has not raised any money by public issue.

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

For Jain Shrimal & CO. Chartered Accountants (FRN. 001704C)

[S.K. Jain] Place : Jaipur Partner Dated : 30.05.2014 (M. No. 010145)

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Rishab Special Yarns Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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

Auditor''* 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 issuod by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit nvolves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

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

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2013

(b) in the case of the 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

As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act. we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. As required by section 227(3) of the Act, we report that:

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

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

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

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

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

RE : RISHAB SPECIAL YARNS LIMITED, JAIPUR ANNEXURE TO THE AUDITOR''S REPORT

(Referred to in Paragraph 3 of our report of even date)

1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of the angible Assets.

(b) As explained to us, the Tangible Assets have been physically verified by the management during the year at regular intervals, which in our opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

(c) The company has decided to discontinue the manufacturing operations due to non viability and has disposed off its entire Tangible Assets except major part of Land & Building and some Furniture. Accordingly, the going concern status of the company has affected.

2. The Company did not have any inventory during whole of the year under audit. i

3. (a) The company has not granted unsecured loans during the year to the persons specified under section 301 of The Companies Act 1956.

(b) The company has taken interest-free unsecured loans, repayable on demand, from four parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 2,25,78,117/- and the year end balance of loans taken from such parties was Rs. 2,00,85,360/-. As the loans are interest free and repayable on demand, sub clause (f) and (g) are not applicable.

4. In our opinion and according to the information and explanation give to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchase and also for the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal controls.

5. As explained to us, there has not been any transaction required to be entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to Rs. 5,00,000/- or more in respect of each such party.

6. In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public. Hence the provisions of Section 58A, 58Aa or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under are not applicable.

7. As explained to us, in view of no business activities being carried on by the company, no internal audit was carried out.

8. As explained to us, there was no manufacturing activity during the year, as such the clause regarding maintenance of cost records U/s 209(1)(d) of the Companies Act, 1956 is not applicable.

9. a. The company is generally regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues with appropriate authorities, wherever applicable to it.

b. According to the information and explanations given to us, as at 31** March, 2013, except a sum of Rs. 14623/- in respect of Sales Tax, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears for a period exceeding six months from the date they become payable.

10. The accumulated losses of the company at the end of the financial year are more than 50% of its net worth and though the company has not incurred cash losses during the year under report, it has incurred cash losses during the immediately preceding financial year.

11. During the year the company has not availed any loan from financial institutions. There are no dues of Financial Institution, Banks & Debenture Holders.

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

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

14. During the year, the company has not done any dealing/trading in shares, securities, debentures and other investments.

15. According to the information and explanation given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.

16. During the year the company has not taken any term loan.

17. According to the information and explanations given to us and an on overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investments.

18. During the year, the company has not made any preferential allotment of Shares to the 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. During the year, the company has not raised any money by public issue.

21. In accordance with the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

FOR Jain Shrimal & CO.

CHARTERED ACCOUNTANTS

(FRN.001704C)

[S.K.JAIN]

Place: Jaipur PARTNER

Dated: 30/05/2013 (M. No. 010145)

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Mar 31, 2011

We have audited the attached Balance Sheet of RISHAB SPECIAL YARNS LIMITED, JAIPUR as at 31st March 2011. and also the Profit & Loss Account for the year ended on that date annexed thereto and cash flow statement for the year ended on that date. 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order 2003, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

Further to our comments in the annexure referred to in the paragraph (1) above:

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

(ii) In our opinion proper books of account as required by law have been maintained by the company so far as appears from our examination of such books.

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

(iv) In our opinion, the Balance Sheet, the Profit 8. Loss Account and Cash Flow Statement dealt by this report have been prepared in compliance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956..

(v) Based on representations made by all the directors of the company and the information and explanation as made available, directors of the company do not prima facie have any disqualification as referred to in clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of Balance Sheet, of the state of affairs as at 31st March, 2011 and

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

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

ANNEXURE TO THE AUDITORS REPORT (Referred to in Paragraph 3 of our report of even date)

1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of the Fixed Assets.

(b) As explained to us, the fixed assets have been physically verified by the management during the year at regular intervals, which in our opinion is reasonable having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification.

(c) The company has decided to discontinue the manufacturing operations due to non viability and has disposed off its entire fixed assets except major part of Land & Building and some Furniture. Accordingly, the going concern status of the company has been affected.

2. The Company did not have any inventory during whole of the year under audit.

3. (a) The company has not granted unsecured loans during the year.

(b) The company has taken interest-free unsecured loans, repayable on demand, from four parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 26158787/- and the year end balance of loans taken from such parlies was Rs. 22126526/-. As the loans are interest free and repayable on demand, sub clause (f) and (g) are not applicable.

4. In our opinion and according to the information and explanation give to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchase and also for the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal controls.

5. As explained to us, there has not been any transaction required to be entered in the register maintained under section 301 of the Companies Act, 1956 aggregating during the year to Rs. 5,00,000/- or more in respect of each such party.

6. In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public. Hence the provisions of Section 58A, 58Aa or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under are not applicable.

7. As explained to us, in view of no business activities being carried on by the company, no internal audit was carried out.

8. As explained to us, there was no manufacturing activity during the year, as such the clause regarding maintenance of cost records U/s 209( 1) (d) of the Companies Act, 1956 is not applicable.

9. a. The company is generally regular in depositing undisputed statutory dues including provident fund,

employees state insurance, income tax, sales tax, wealth tax, service fax, custom duty, excise duty, cess and other material statutory dues with appropriate authorities, wherever applicable to it.

b. According to the information and explanations given to us, as at 31st March, 2011, except a sum of Rs. 14623/- in respect of Sales Tax, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears for a period exceeding six months from the date they become payable.

c. As per records of the company and in accordance with the information and explanation given to us, there are no dues of income tax, custom duty, wealth tax, which have not been deposited on account of any dispute. However, in the case of excise duty and cess the particulars on account of dispute are reported herein below:

Name of Statute Nature of Period to which the Amount Forum Dues amount relates

Excise & Customs Excise Duty 2002-2003 83.36 Customs, Excise & (NCCD) Service Tax Appellate Tribunal

Textile Committee Textile 1989-1997 8.27 Rajasthan High Court Committee Cess

10. The accumulated losses of the company at the end of the financial year are more than 50% of the net worth of the company and the company has incurred cash losses during the year and also in the immediately preceding financial year.

11. During the year the company has not availed any loan from financial institutions. There are no dues of Financial Institution, Banks & Debenture Holders. The company has not issued any debentures.

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

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

14. During the year, the company has not done any dealing/trading in shares, securities, debentures and other investments.

15. According to the information and explanation given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.

16. During the year the company has not taken any term loan.

17. According to the information and explanations given to us and an on overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investments.

18. During the year, the company has not made any preferential allotment of shares to the 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. During the year, the company has not raised any money by public issue.

21. In accordance with the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

FOR N. C. DHADDA & CO. CHARTERED ACCOUNTANTS (Regn. No. 000986C)

[S.K.JAIN] PARTNER (M. No. 010145)

Place: Jaipur Dated: 27.05.2011

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Mar 31, 2010

We have audited the attached Balance Sheet of RISHAB SPECIAL YARNS LIMITED, JAIPUR as at 31st March 2010, and also the Profit & Loss Account for the year ended on that date annexed thereto and cash flow statement for the year ended on that date. 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 the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order 2003, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

Further to our comments in the annexure referred to in the paragraph (1) above:

{I) We have obtained all the information and explanations which to the best of our knowledge and belief, were necessary for the purpose of our audit.

(ii) In our opinion proper books of account as required by law have been maintained by the company so far as appears from our examination of such books.

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

(iv) In our opinion, the Balance Sheet, the Profit 8. Loss Account and Cash Flow Statement dealt by this report have been prepared in compliance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956..

(v) Based on representations made by all the directors of the company and the information and explanation as made available, directors of the company do not prima facie have any disqualification as referred to in clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

(vi) We refer to Note No. 2 in the financial statements. In view of continued losses and unavibility of the business, the management discontinued the business operations of the company and sold entire remaining plant & machinery & misc. fixed assets except for land and building & some furniture & fixtures. These factors, along with other matters as set forth in the Note No. 2 may unable the company to continue as a going concern.

(vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act 1956 in the manner so required and subject to para (vi) above, give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) In the case of Balance Sheet, of the state of affairs as at 31st March, 2010; and

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

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

ANNEXURE TO THE AUDITORS REPORT

(Referred to In Paragraph 3 of our report of even date)

1. (a) The company has maintained proper records showing full particulars including quantitative details and situation of the Fixed Assets.

(b) As explained to us, the fixed assets have been physically verified by the management during the year of regular intervals, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. No material discrepancies were notice on such physical verification.

(c) The company has decided to discontinue the manufacturing operations of the company due to non viability and has disposed off the entire plant & machinery of the company. Accordingly, the going concern status of the company has been affected.

2. The Company did not have any inventory during whole of the year under audit.

3. (a) The company has granted interest free unsecured loans, repayable on demand, to one party listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 4,79,000/- and the year end balance of such loans was Rs. NIL. As the loans are interest free and repayable on demand, sub clause (b), (c) and (d) are not applicable.

(b) The company has taken interest-free unsecured loans, repayable on demand, from four parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 27267737/- and the year end balance of loans taken from such parties was Rs. 26165237/-. As the loans are interest free and repayable on demand, sub clause (f) and (g) are not applicable.

4. In our opinion and according to the information and explanation give to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchase and also for the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal controls.

5. As explained to us, there has not been any transaction required to be entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 5,00,000/- or more in respect of each such party.

6. In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public. Hence the provisions of Section 58A, 58Aa or any other relevant provisions of the Companies Act, 1956 and the Rules framed there under are not applicable. As informed to us in companys case, no order has been passed by the Company Law Board or National Company Law Tribunal or any court or any other tribunal.

7. As explained to us, in view of no business activities, no internal audit was carried out.

8. As explained to us, there was no manufacturing activity during the year, as such the clause regarding maintenance of cost records U/s 209(1) (d) of the Companies Act, 1956 is not applicable.

9. a. The company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues with appropriate authorities, wherever applicable to it.

b. According to the information and explanations given to us, as at 31st March, 2010, except a sum of Rs. 14623/- in respect of Sales Tax, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears for a period exceeding six months from the date they become payable.

c. As per records of the company and in accordance with the information and explanation given to us, there are no dues of income tax, custom duty, wealth tax, which have not been deposited on account of any dispute. However, in the case of excise duty and cess the particulars on account of dispute are reported herein below:

Name of Statute Nature of Period to which the Amount Forum Dues amount relates

Excise & Customs Excise Duty 2002-2003 83.36 Customs, Excise & (NCCD) Service Tax Appellate Tribunal

Textile Committee Textile 1989-1997 8.27 Rajasthan High Court Committee Cess

10. The accumulated losses of the company at the end of the financial year are more than 50% of the net worth of the company and the company has incurred cash losses during the year and also in the immediately preceding financial year.

11. During the year the company has not availed any loan from financial institutions. There are no dues of Financial Institution, Banks & Debenture Holders. The company has not issued any debentures.

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

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

14. During the year, the company has not done any dealing/trading in shares, securities, debentures and ther investments.

15. According to the information and explanation given to us, the company has not given guarantees for loans taken by others from banks or financial institutions.

16. During the year the company has not taken any term loan.

17. According to the information and explanations given to us and an on overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investments.

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

19. During the year, the company has not issued any debentures.

20. During the year, the company has not raised any money by way of public issue.

21. In our opinion, on the basis of audit conducted by us and in accordance with the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

FOR N. C. DHADDA & CO.

CHARTERED ACCOUNTANTS

(Regn. No. 000986C)

[ S.K.JAIN ]

PARTNER

(M. No. 010145)

Place: Jaipur

Dated :20th August, 2010

---

Mar 31, 2009

We have audited the attached balance sheet of Rishab Special Yarns Limited as at 31st March, 2009 the Profit & Loss Account for the year ended on that date annexed thereto and the cash flow statement for the year ended on that date. 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 the auditing standards generally accepted in India. Those Standards require that we plan & perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

1. Further to our comments in the annexure referred to in the paragraph (1) above:

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

(b) In our opinion, proper books of account as required by the law have been maintained by the company so far as appears from our examination of such books.

(c) The balance sheet, the 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, the profit & loss Account and cash flow statement dealt with by this report have been prepared in compliance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(e) based on representations made by all the directors of the company and the information and explanation as made available, directors of the company do not prima facie have any disqualification as referred to in clause (g) of sub- section (1) of section 274 of the Companies Act, 1956;

(f) We refer to Note No.2 in the financial statements. In view of continued losses and unvaibilHy of the business, the management discontinued the business operations of the company and sold entire remaining plant & machinery & misc. fixed assets except for land & building . These factors, alongwith other matters as set forth in the Note No.2 may unable the company to continue as a going concern.

(g) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and subject to para (f) above, give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of balance sheet, of the state of affairs as at 31 st March, 2009; and

ii. in the case of profit and loss account, of the loss for the year ended on that date.

iii. in the case of the cash flow statement, of the cash flows for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (Referred to in Paragraph 3 of our report of even dqte) To The Members of Rishab Special Yarns Limited Jaipur

i. a) As informed by the management, the proper records of fixed assets showing full particulars including quantitative details and location of fixed assets are under updation and compilation.

b) As explained to us, the fixed assets have been physically verified by the management during the year at regular intervals, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. No material discrepancies were notice on such physical verification.

c) The company has decided to discontinue the manufacturing operations of the company due to non viability and has disposed off the entire plant & machinery of the company. Accordingly, the going concern status of the company has been affected.

ii. a) The inventories have 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 information and explanation given to us, the procedures of physical verification of the company are reasonable and adequate having regard to the size of the company and nature of its business.

c) in our opinion and according to the information and explanation given to us, the company is maintaining proper records of inventory. The discrepancies noticed on such verification between physical stocks and book records were not material and have been properly dealt with in the books of accounts.

iii. a. The company has granted interest free unsecured loans, repayable on demand, to one party listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 700000/- and the year end balance of such loans was Rs. 479000/-. As the loans are interest free and repayable on demand, sub clause (b),(c) and (d) are not applicable. b. The company has taken interest-free unsecured loans, repayable on demand, from two parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 2,43,90,727/- and the year end balance of loans taken from such parties was Rs. 2,16,92,727/-. As the loans are interest free and repayable on demand, sub clause (f) and (g) are not applicable.

iv. In our opinion and according to the information and explanation give to us, there are adequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchase and also for the sale of goods and services. During the course of our audit we have not observed any continuing failure to correct major weaknesses in internal controls.

v. As explained to us, there has not been any transaction required to be entered in the register maintained under section 301 of the Companies Act, 1956 and aggregating during the year to Rs. 5,00,000/- or more in respect of each such party.

vi. in our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public. Hence the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956, and the Rules framed there under are not applicable. In companys case, no order has been passed by the Company Law Board or National Company Law Tribunal or any court or any other tribunal. As informed to us , no order has been passed by the Company Law Board.

vii. As explained to us, in view of no business activities, no internal audit was carried out.

viii. As explained to us, there was no manufacturing activity during the year, as such the clause regarding maintenance of cost records u/s 209(1 )(d) of the companies Act, 1956 is not applicable.

ix. a. The company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty cess and other material statutory dues with appropriate authorities, wherever applicable to it.

b. According to the information and explanations given to us, as at 31st March, 2009, except a sum of Rs. 14623/- in respect of Sales Tax, no undisputed amounts payable in respect of income tax, wealth tax, service tax, sales tax, custom duty, excise duty and cess were in arrears for a period exceeding six months from the date they became payable.

c. As per records of the company and in accordance with the information and explanation given to us, there are no dues of income tax, custom duty, wealth tax, which have not been deposited on account of any dispute. However, in the case of excise duty and Cess the particulars on account of dispute are reported herein below:-

Name of Nature of dues Period to which the Statute amount relates

Excise & Excise Duty(NCCD) 2002-2003 Customs

Textile Textile Committee 1989-1997 Committee Cess (Cess), Rules



Name of Statue Amount Forum

Excise & Customs 83.36 Customs, Excise & Service Tax Appellate Tribunal

Textile Committee (Cess), Rules 8.27 Rajasthan High Court

x. The accumulated losses of the company at the end of the financial year are more than 50% of the net worth of the company and the company has incurred cash losses during the year and also in the immediately preceding financial year.

xi. During the year the company has not availed any loan from financial institutions. There are no dues of Financial Institution, Banks & debenture holders.The company has not issued any debentures.

xii. The company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities. xiii. In our opinion, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

xiv. During the year, the company has not done any dealing/trading in shares, securities, debentures and other investments.

xv. According to the information and explanation given to us, the company has not given guarantees for loans taken by others from banks or financial institutions. xvi. During the year the company has not taken any term loan .

xvii. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investments.

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

xix. During the year, the company has not issued any debentures.

xx. During the year, the company has not raised any money by way of public issue.

xxi. In our opinion, on the basis of audit conducted by us and in accordance with the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit. For R.MohnoU Co.

Chartered Accountants Place: Jaipur (Narender Mital)

Dated: 11/11/2009 Partner

M.No.72715