Auditor Report of Source Industries (India) Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of SOURCE INDUSTRIES (INDIA) LIMITED ("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

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 specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also 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 under Section 143(10) 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 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 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 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 Loss for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) order, 2015 ("the order") issued by the Central Government of India in terms of Sub-Section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the order.

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

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

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

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement comply with the accounting standards specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

f) With respect to the other matters to be included in Auditors Report in accordance with Rule 11 of Companies (Audit and Auditors),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 impact its financial position

(ii) In our opinion and as per information and explanations provides to us, the company has not entered into any long term contracts including derivatives contracts requiring provisions under applicable laws or accounting standards, for material foreseeable losses and

(iii) There has been no delay in transferring the amounts, required to be transferred, to the Investor Education and Protection Fund by the Company

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT SOURCE INDUSTRIES (INDIA) LIMITED

[Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date]

1. According to the information and explanations furnished to us, the company does not have any Fixed Assets. Hence the provision of clauses (i) (a )and (b ) are not applicable.

2. According to the information and explanations furnished to us, the company does not have any Inventory. Hence the provision of clauses (ii) (a ) (b) and (c ) are not applicable.

3. According to the information and explanations given to us, the company has not granted any loans secured or Unsecured to Companies, firms or other Parties covered in the register maintained under section 189 of the Companies Act, 2013.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory and fixed assets and 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. According to the information and explanations given to us, The Company has not accepted any deposits in terms of Directives issued by the Reserve Bank of India and provision of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under.

6. During the year Company has not carried any manufacturing operations, hence as informed to us The maintenance of cost records under section 148(1) of the Companies Act, 2013 is not applicable

7. a.) According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund,, employees' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, Value Added tax , cess and any other material statutory dues applicable to it and we have been informed that there are no arrears of outstanding statutory dues as at the last day of the financial year under audit for a period of more than six months from the date they became payable.

b. ) According to the information and explanations given to us, there are no dues of Income Tax, Sales tax, Wealth tax, Service tax, Custom Duty , Excise duty, Value Added tax and cess which are not deposited on account of dispute.

c. ) According to the information and explanations given to us , there are no amounts required to be transferred to the investor education and protection fund by the Company.

8. In our opinion, the company has accumulated losses as at 31.03.2015 which is more than 50% of its net worth. It has incurred cash losses in the financial year ended on that date and also in the immediately preceding financial year. .

9. According to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions, bank and debenture holders as at balance sheet date.

10. 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.

11. According to information and explanations given to us, no term loan were obtained during the year under audit.

12. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For RAKESH S JAIN & ASSOCIATES CHARTERED ACCOUNTANTS Firm Registration Number: 010129S

Sd/- (B. RAMESH KUMAR) PARTNER MEMBERSHIP NO. 200304

Place : Hyderabad Date : 28-05-2015

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Mar 31, 2014

We have audited the accompanying financial statements of SOURCE INDUSTRIES (INDIA) LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, and 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 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 notified under the Companies Act, 1956 ("the Act") read with General Circular 15/2013 dated 13th September,2013 of the Ministry Of Corporate Affairs in respect of Section 133 of Companies Act,2013 and in accordance with accounting principle generally accepted in India. 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 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 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 effectiveness of 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 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 information and according to the explanations given to us, the aforesaid financial statements gives 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 of the company for the year ended on that date; and

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

Emphasis of Matter

We draw attention to Note No. 13.6 to the financial statements regarding non confirmation / reconciliation of balances of

Trade payables, other current liabilities, trade receivable and Loans and Advances, the impact of which is unascertained.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

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

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

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

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards notified under the Act read with General Circular 15/2013 dated 13th September, 2013 of Ministry of Corporate Affairs in respect of Section 133 of Companies Act, 2013.

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 the terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE TO THE INDEPENDENT AUDITOR''S REPORT SOURCE INDUSTRIES (INDIA) LIMITED [Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date]

(i) . a. The company does not have any Fixed Assets. Hence provisions of clause 4(i) of the order are not applicable to the company.

(ii) . a. The company does not have any Inventories Hence provisions of clause 4(ii) of the order are not applicable to the company.

(iii) . (a) According to the information and explanations given to us during the year the company has not granted/ accepted , any loans secured or Unsecured to/from the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence clause 4(iii) of the order is not applicable.

(iv) . In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to 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) . a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, there are no transactions made during the year in pursuance of contracts or arrangements entered in the register maintained under sec.301 of the Companies act 1956 and exceeding the value of rupees Five Lakhs in respect of any party during the year.

(vi) . In our opinion and according to the information and explanations given to us and the records of the company examined by us, During the year the Company has not accepted deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

(vii) . In our opinion, the company does not have internal audit system commensurate with the size and nature of its business.

(viii) . During the Year Company has not carried any manufacturing operations. Hence as informed to us the maintenance of cost records is not applicable for this year.

(ix) . a. According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, wealth tax, custom duty, excise duty and cess were in arrears, as at 31.03.2014 for a period of more than six months from the date they became payable.

c. According to the information and explanations given to us, there are no dues of sales tax, income tax, wealth tax, custom duty, excise duty and cess which are not deposited on account of dispute.

(x) . In our opinion, the company''s accumulated losses are more than fifty percent of its Net worth as on 31.03.2014. It has incurred cash losses in the financial year ended on that date. However, it has not incurred cash losses in the immediately preceding financial year.

(xi) . According to the information and explanations given to us, the company has not defaulted in repayment of dues to financial institutions and bank as at balance sheet date.

(xii) . In our opinion and according to the information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly the provisions of clause 4(xii) of the Order are not applicable to the Company.

(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 Order are not applicable to the company.

(xiv) . In our opinion, the company is not dealing in or trading in Shares, Securities debentures and other investments. Accordingly, the provision of Clause 4(xiv) of the Order is not applicable to the company.

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

(xvi) . During the year the company has not taken any term loan and hence the provisions of clause 4 (xvi) of the Order are not applicable to the company.

(xvii) . According to the information and explanations given to us and on the 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) . According to the information and explanations given to us, the company has not made preferential allotment of shares during the year to the parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (xviii) of the order are not applicable to the company.

(xix) . According to the information and explanations given to us, the Company has not issued any secured debentures. Therefore, the provisions of clause 4(xix) of the Order are not applicable to the Company.

(xx) . According to the information and explanations given to us, the company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable to the Company.

(xxi) . According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For RAKESH S JAIN & ASSOCIATES CHARTERED ACCOUNTANTS Firm Registration Number: 010129S

Sd/- (SURESH KUMAR JAIN) PARTNER MEMBERSHIP NO. 018465

Place : Hyderabad Date : 30-05-2014

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fnancial statements of SOURCE INDUSTRIES (INDIA) LIMITED ("the Company"), which comprise the Balance Sheet as at March 31st, 2013, and the Statement of Proft and Loss and the Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the Accounting Principles generally accepted in India including 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 fnancial 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 fnancial 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 fnancial 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 judgment, including the assessment of the risks of material misstatement of the fnancial 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 fnancial 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 fnancial statements.

We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our qualifed audit opinion.

Opinion

In our opinion, and to the best of information and according to the explanations given to us, the aforesaid financial statements gives 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 Proft and Loss, of the Proft for the year ended on that date; and

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

Emphasis of Matter

We draw attention to Note No. 13.6 to the fnancial statements regarding non confrmation / reconciliation of balances of Loan and Advances, the impact of which is unascertained. Our opinion is not qualifed in respect of this matter.

We draw attention to Note No. 13.7 to the financial statements regarding regrouping / reclassifying/ rearranging/ modifying wherever necessary according to the scheme of demerger.Our opinion is not qualifed in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

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

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

c) The Balance Sheet, the Statement of Proft & Loss, and the 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 the Cash Flow Statement complying with the accounting standards referred to in Sub-Section (3C) of Section 211 of the Act.

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 disqualifed as on March 31, 2013, from being appointed as a Director in the terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE TO THE

INDEPENDENT AUDITOR''S REPORT

SOURCE INDUSTRIES (INDIA) LIMITED

[Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date]

(i). a. The company does not have any Fixed Assets. Hence provisions of clause (i) of the CARO 2003 are not applicable to the company.

(ii). a. The company does not have any Inventories Hence provisions of clause (ii) of the CARO 2003 are not applicable to the company.

(iii). (a) According to the information and explanations given to us during the year the company has not granted/ accepted , any loans secured or Unsecured to/from the companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Hence clause 4(iii) of the order is not applicable.

(iv). In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to 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). a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

b. In our opinion and according to the information and explanations given to us, there are no transactions made during the year in pursuance of contracts or arrangements entered in the register maintained under sec.301 of the Companies act 1956 and exceeding the value of rupees fve lakhs in respect of any party during the year.

(vi). In our opinion and according to the information and explanations given to us and the records of the company examined by us, During the year the Company has not accepted deposits from the public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

(vii). In our opinion, the company does not have internal audit system commensurate with the size and nature of its business.

(viii). During the year Company has not carrying any manufacturing operations. Hence as informed to us the maintenance of cost records is not applicable for this year.

(ix). a. According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty and other material statutory dues applicable to it except TDS..

b. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, sales tax, and excise duty were in arrears, as at 31.03.2013 for a period of more than six months from the date they became payable except TDS amounting to Rs. 4,05,000/-.

c. According to the information and explanations given to us, there are no dues of sales tax, income tax and excise duty which are not deposited on account of dispute.

(x). In our opinion, the company accumulated losses are more than ffty percent of its Net worth as on 31.03.2013. It has not incurred any cash losses in the fnancial year ended on that date. However, it has incurred cash losses in the immediately preceding fnancial year.

(xi). According to the information and explanation given to us, the company has not defaulted in repayment of dues to fnancial institutions and bank as at balance sheet date.

(xii). In our opinion and according to the information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly the provisions of clause 4(xii) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

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

(xiv). In our opinion, the company is not dealing in or trading in Shares, Securities debentures and other investments. Accordingly, the provision of Clause 4(xiv) of the Companies (Auditor''s Report) Order is not applicable to the company.

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

(xvi). During the year the company has not taken any term loan and hence the provisions of clause 4 (xvi) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the company.

(xvii). According to the information and explanations given to us and on the 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). According to the information and explanation given to us, the company has not made preferential allotment of shares during the year to the parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (xviii) of the Companies (Auditors report) order 2003 are not applicable to the company.

(xix). According to the information and explanation given to us, the Company has not issued any secured debentures. Therefore, the provisions of clause 4(xix) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

(xx). According to the information and explanation given to us, the company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

(xxi). According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For RAKESH S JAIN & ASSOCIATES

CHARTERED ACCOUNTANTS

Firm Registration Number: 010129S

Sd/-

(SURESH KUMAR JAIN)

PARTNER

MEMBERSHIP NO. 018465

Place : Hyderabad

Date : 30-05-2013

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Mar 31, 2012

1. We have audited the attached Balance Sheet of M/s. SOURCE INDUSTRIES (INDIA) LIMITED (FORMERLY TIRUMALA SEUNG HAN TEXTILES LIMITED), Hyderabad, as at 31st March 2012 and the Statement of Profit and Loss and also the Cash Flow Statement for the year ended on that date annexed there to. 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 misstatements. An audit included examining on test basis evidence supporting the amounts and disclosures in the financial statement. 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.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) 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.

4. Further to our comments in the Annexure referred to above, we state 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 accounts as required by law have been kept by the company so far as appears from our examination of such books.

c) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statements 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 Statements dealt with by this report comply with the accounting standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of written representations received from the Directors as on 31.03.2012 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31.03.2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on the said date.

() Our comments on financial statements:

i) Non confirmation/reconciliation of Balances of Loan and advances and Bank Balances refer Note No 14.8, the impact of which is unascertained.

ii) The provisions for interest on unsecured loans is not made, as the request for waiver of interest/ reduction in the rate of interest is made - RefNote No 14.9, the impact of which could not be ascertained.

Hi) Impairment loss, if any on assets of the company which could not be ascertained in absence of technical evaluation from experts, refers Note no. 14.11

g. In our opinion and to the best of our information and according to the explanations given to us, the said account read with the Accounting Policies and notes forming part of accounts appearing in notes and subject to matters referred in Para (f) above, gives the information required by the Companies Act 1956 in the manner so required and give the true and fair view, in conformity with the accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March 2012.

ii) In the case of the Statement of Profit and Loss of the loss of the company for the year ended on that date; and

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

ANNEXURE TO THE AUDITOR'S REPORT SOURCE INDUSTRIES (INDIA) LIMITED

(FORMERLY TIRUMALA SEUNG HAN TEXTILES LIMITED)

[Referred to in paragraph 3 of our report of even date]

1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situations of Fixed Assets.

(b) These assets have been physically verified by the management during the year through 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 were noticed on such verification.

(c) During the year the company has not disposed off any fixed assets.

2. (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. According to the information and explanations given to us during the year the company has not granted any loans secured or unsecured to the companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956, hence clause (a) to (d) of the order are not applicable.

(e) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the Act.

4. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our Audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to enter in the registers maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, there are no transactions made during the year, in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956.

6. During the year, the company has not accepted deposits from the public within the meaning of Section 58 A and 58 A A and other relevant provisions of the Companies Act, 1956. However with regard to the Deposits accepted in earlier years, according to the information and explanations given to us, no order has been passed by the Company law board or National Company law tribunal or Reserve Bank of India or any court or any other tribunal on the company in respect of those Deposits accepted by the company.

7. According to the information and explanations given to us, the Company has an internal audit system commensurate with its size and nature of its business.

8. During the year Company has not carried any manufacturing operations. Hence as informed to us the maintenance of cost records is not applicable for this year.

9. (a) According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, and Employees State Insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it. A sum of Rs. 71392/- required to be transferred to Investor and protection fund is yet to be transferred by the company to the above fund.

(b) According to the information and explanations given to us, there are dues of sales tax, income tax, wealth tax, service tax, custom duty, central excise duty and cess which are not deposited on account of dispute are as follows:

Name of Amount Forum The Statute (Rs.)

The A P C T O General 462,454 Sec'bad Sales Tax

The Central C T O Sales Tax 756,519 Sec'bad Act

The Central Appellate Excise Act, Authorities 1944 2,78,27,332 of Customs & Central Excise.

10. The Company's accumulated losses are more than fifty percent of its net worth as on 31.3.2012 and it has incurred cash losses in the financial year ended on that date and also in the immediately preceding financial year.

11. According to the information and explanations given to us, the company has not defaulted in repayment dues to any debenture holders / financial institutions / bank during the year.

12. In our opinion and according to the information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly the provisions of clause 4 (xii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

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. In our opinion, the company is not dealing in or trading in shares, securities, debentures, and other investments. Accordingly the provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

15. 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. During the year the company has not taken any term loan and hence the provisions of clause 4 (xvi) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

17. According to the information and explanations given to us and on the 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. According to the information and explanations given to us, 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. Accordingly the provisions of clause 4 (xviii) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

19. According to the information and explanations given to us, the company has not issued any secured debentures during the year.

20. According to the information and explanations given to us, the company has not raised any money by public issue during the year. Accordingly the provisions of clause 4 (xx) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

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

For LAXMINIWAS & JAIN

CHARTERED ACCOUNTANTS

Firm Reg. No. 001859

Sd/-

(SURESH KUMAR JAIN)

PARTNER

MEMBERSHIP NO. 018465

Place: Hyderabad

Date :14-08-2012

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s. TIRUMALA SEUNG HAN TEXTILES LIMITED, Hyderabad, as at 31st March 2010 and the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed there to. 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.

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 misstatements. An audit included examining on test basis evidence supporting the amounts and disclosures in the financial statement. 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.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) 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.

4. Further to our comments in the Annexure referred to above, we state 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 accounts as required by law have been kept by the company so far as appears from our examination of such books.

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

d) In our opinion, the Balance sheet, Profit and Loss account and Cash Flow Statements dealt with by this report comply with the accounting standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956.

e) On the basis of wri tten representations received from the Directors as on 31.03.2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31.03.2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956 on the said date.

f) Our comments on financial statements:

i) Debtors include Rs. 13.87 Lakhs Long pending for which no provision is made in the accounts;

ii) Loans and advances included Rs.7 Lakhs Long pending for which no provision is made in the accounts;

iii) Non confirmation reconciliation of Balances of Creditors, Debtors, Bank Balances, other Liabilities, Unsecured loans and Loan and advances, refer Note No 11(6) in Schedule 16, the impact of which is unascertained.

iv) The provisions for interest on unsecured loans is not made, as the request for waiver of interest / reduction in the rate of interest is made - RefNote No 11(8) in Schedule 16, the impact of which could not be ascertained.

v) Impairment loss, if any on assets of the company which could not be ascertained in absence of technical evaluation from experts, refer Note no. 11(10) in Schedule 16.

g. In our opinion and to the best of our information and according to the explanations given to us, the said account read with the Accounting Policies and notes forming part of accounts appearing in Schedule no. 16 and subject to matters referred in Para ((f) above, gives the information required by the Companies Act 1956 in the manner so required and give the true and fair view. In conformity with the accounting principles generally accepted in India:

i) In the case of the Balance Sheet, of the state of affairs of the company as at 31st March 2010.

ii) In the case of the Profit and Loss Account, of the Profit of the company for the year ended on that date; and

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 TIRUMALA SEUNG HAN TEXTILES LIMITED [Referred to in paragraph 3 of our report of even date]

1. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situations of Fixed Assets which requires to be updated for some particulars, which are to be gathered from financial books.

(b) These assets have been physically verified by the management during the year through 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 were noticed on such verification.

(c) During the year the company has not disposed off any fixed assets.

2. (a) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(b) The procedure of physical verification of inventories followed by the management is reasonable and adequate in relation to the size of the company and the nature of its business.

(c) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. (a) According to the information and explanations given to us during the year the company has not granted any loans secured or unsecured to the companies firms or other parties covered in the register maintained, under section 301 of the Companies Act, 1956, hence clause (a) to (d) are not applicable.

(b) During the year the company has taken unsecured loans from two parties covered in the register maintained under section 301 of the Companies Act, 1956 amounting to Rs. 3.50 lakhs. The maximum amount involved during the year and year end balance amounts to Rs. 63.82 lakhs payable to eleven parties.

(c) In our opinion, the rate of interest and other terms and conditions on which loan have been taken from companies, firms, or other parties listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(d) As the terms and conditions for repayment of loans taken are not stipulated, we are unable to comment whether the Company is regular in payment or otherwise.

4. In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to the purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our Audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to enter in the registers maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, there are no transactions made during the year, in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 which are exceeding the value of Rs. Five Lakhs in respect of each party.

6. During the year, the company has not accepted any deposits from the public within the meaning of Section 58A and 58AA any other relevant provisions of the Companies Act, 1956 and rules framed there under.

7. According to the information and explanations given to us, in our opinion, the company does not have any internal audit system during the year.

8. During the year Company has not carried any manufacturing operations. Hence it is informed to us that the cost records maintenance required is not applicable for this year.

9. (a) According to the information and explanations given to us and the records of the company examined by us, the company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, investor education and protection fund, and Employees State Insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are dues of sales tax, income tax, wealth tax, service tax, custom duty, central excise duty and cess which are not deposited on account of dispute are as follows:

Name of Amount (Rs.) Forum The Statute

The AP CTO General Secbad Sales Tax 462,454

The Central CTO Sales Tax Secbad. Act 756,519

The Central Appellate Excise Act, Authorities 1944 2,14,69,042 of Customs & Central Excise.

10. The Companys accumulated losses are more than fifty percent of its net worth as on 31.3.2010 and it has incurred cash losses in the financial year ended on that date and immeditly in preceeding year

11. According to the information and explanations given to us, the company has not defaulted in repayment of its dues to any debenture holders / financial institutions / bank during the year.

12. In our opinion and according to the information and explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly the provisions of clause 4 (xii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

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. In our opinion, the company is not dealing in or trading in shares, securities, debentures, and other investments. Accordingly the provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

15. 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. During the year the company has not taken any term loan and hence the provisions of clause 4 (xvi) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

17. According to the information and explanations given to us and on the 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. According to the information and explanations given to us, the company has not made preferential allotment of snares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly the provisions of clause 4 (xviii) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

19. According to the information and explanations given to us, the company has not issued any secured debentures during the year.

20. According to the information and explanations given to us, the company has not raised any money by public issue during the year. Accordingly the provisions of clause 4 (xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

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

For LAXMINIWAS & JAIN

CHARTERED ACCOUNTANTS Firm Reg. No. 001859 S

Sd/- (SURESH KUMAR JAIN)

PARTNER MEMBERSHIP NO. 018465

Place: Hyderabad Date :05-08-2010