Auditor Report of Sree Jayalakshmi Autospin Ltd.

Mar 31, 2015

1. We have audited the accompanying Financial Statements of M/s. SREE JAYALAKSHMI AUTOSPIN LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March 2015, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

3. Our responsibility is to express an opinion on these stand alone Financial Statements based on our audit.

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

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Basis for Qualified Opinion

6. Attention of the members is invited of financial statements of the company having been prepared on a going concern basis, notwithstanding the fact that its entire net worth has been eroded. The appropriateness of the said basis is inter-alia dependent on the company's ability to infuse the requisite funds for meeting its obligations.

Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the basis for qualified opinion paragraph, 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 31st March 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. Emphasis of Matter

8. We draw attention to the following notes:

Note No. 25 of the financial statements regarding balances shown under debtors, advances, deposits and creditors are subject to confirmation/reconciliation /adjustment if any.

Our opinion is not qualified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

9. As required by ‘the Companies (Auditor's Report) order, 2003', as amended by ‘the Companies (Auditors Report) (Amendment) order, 2004', issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act (Section 143(11) of the Companies Act, 2013) (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

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

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

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

(c) The Balance Sheet, the Statement of Profit and Loss, 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 Cash Flow statement dealt with by this report comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

(f) The going concern matter described in basis of our qualified opinion Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

(g) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of clause

(g) of sub-section 91) of section 274 of the Act (Section 164 (2) of the Act, 2013.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note to the financial statements;

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

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

Annexure to the Independent Auditor Report (referred in our report of the even date)

i.

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

b. The Company has a regular programme of physical verification of its fixed assets by which all fixed assets are verified in a phased manner. In accordance with this programme, the fixed assets have been physically verified by the management during the year and no material discrepancies have been noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

ii.

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

b. The procedures for the physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

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

iii. 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 Act.

iv. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventories and fixed assets and sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weakness in internal control system.

v. The Company has not accepted any deposits from the public in accordance with the provisions of sections 73 to 76 of the Act and the rules framed there under.

vi. As per the rules prescribed by the Central Government for maintenance of cost records under subsection 1 of Section 148 of the Act and not applicable to the company, this clause is not applicable

vii.

a. According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of 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, Professional tax and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Value added tax, Cess,

Professional tax and other material statutory dues were in arrears as at March 31, 2015 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, Wealth tax, Sales tax, Value added tax, Service tax, Customs duty, Excise duty and Cess which have not been deposited with the appropriate authorities on account of any dispute other than those mentioned in Annexure I to this report

c. According to the information and explanations given to us and on the basis of our examination of the records of the Company, the amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund within time

viii. The Company has accumulated losses of Rs.450.08 lakhs as at the end of the financial year and has incurred cash losses of Rs.77.84 lakhs in the financial year and 0.09 lakhs in the immediately preceding financial year, which is more than its net worth.

ix. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to its bankers. The Company did not have any outstanding dues to any financial institution or debentures holders during the year

x. According to the information and explanations given to us, Company has not given any guarantee for loan taken by others from banks or financial institutions, this clause is not applicable.

xi. In our opinion and according to the information and explanations given to us, the Company has not raised any term loans during the period, this clause is not applicable.

xii. According to the information and explanations given to us no instances of material fraud on or by the Company has been noticed or reported during the course of our audit.

for H.M.V.Murthy & Co.,

Firm Registration No. 004966S Chartered Accountants

H. M. Vrushabhendra Murthy Proprietor. Membership No.026432 Place: Bangalore Date: 29-05-2015

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Mar 31, 2012

1 We have audited the attached Balance sheet of M/s. SREE JAYALAKSHMI AUTOSPIN LIMITED, CHITRADURGA, as on 31st March 2012 and also the Profit & Loss Account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We have 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 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 over all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies' (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, and according to the information and explanation given to us during the course of the audit and on the basis of such checks of the books and records of the company as we consider appropriate, 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 report that:

(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 accounts as required by law have been kept by the Company so far as appears from our examination of the books.

(iii) The Balance Sheet, Profit & Loss Account and cash flow statement dealt by this report are in agreement with the books of Account.

(iv) In our opinion, the balance sheet, profit & loss account and cash flow statement dealt by this report comply with accounting standards mentioned under sub section (3C) of section 211 of the Companies Act 1956.

(v) Based on written representation made by the directors of the company and taken on record by the board of directors, in our opinion the directors of the Company are not prima fade disqualified from being appointed as directors under Section 274(l)(g) of "The Act". '

(vi) We draw the attention to the fact that the company is having a accumulated loss of Rs. 274.00 Lakhs as at the year ended 31-3-2012 which is morethan 50% of its netwoth, the company has to be treated as sick as per the provisions of the SICA 1985, in our opinion and to the best of our knowledge and according to the explanation given to us, the said accounts give the information required by the Companies Act, 1956 in the mahner so required and give a true and fair view: -

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

ii) In the case of Profit & Loss Account, of the Loss of the company 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 AUDITOR'S REPORT

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 situation of fixed assets.

(b) The fixed assets have been physically verified by the management as per phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of Company and the nature of its assets. .The Discrepancies reported on such verification were not material and have been properly dealt with in the books of accounts.

(c) There is no disposal of substantial part of fixed assets during the year so as to have an impact on the operations of the company or affects its going concern.

(2) (a) The Management is conducting physical verification of inventory at reasonable intervals.

(b) In our opinion, the procedures followed by the management for such physical verification are, 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 physical inventories and the book records were not material in relation to the operation of the company and the same have been properly dealt with in the books of accounts.

(3) (a) The company has not granted loan, unsecured, to/firm companies, firms or other parties listed in in the register

maintained under section 301 of the Companies Act 1956. Paragraph 4 (iii)(a) (b) (c) and (d) of the order is not applicable.

(b) The Company has taken interest free unsecured loans during the year from other parties covered in the registered maintained under section 301 of the Companies Act 1956.

(4) In our opinion and according to 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 for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit no major weakness has been observed in the internal controls.

(5) (a) Based on the audit procedure applied by us and according to the information and explanation provided by the

management, we are of the opinion that all transaction that need to be entered into the register in pursuance of section 301 of the Act have been entered.

(b) In our opinion and according to the information and explanation given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the companies act, 1956 and exceeding the value of Rs. Five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of section 58A and 58AA of the companies Act, 1956 and the rules framed thereunder.

7. In our openion & according to the information & explanation given to us, the company has on internal audit system, which is commensurate with the size & nature of business of the company. However the same needs to be further streamlined & strengthened.

8. The central Government has prescribed maintenance of cost records under section 209-(l) (d) of the companies act, 1956 in respect of manufacturing activities of the company. We have broadly reviewed the accounts and records of the company in this connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same

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

(b) According to the information and explanation given to us, there are no undisputed amounts payable in respect of income tax. Sales tax, Wealth tax, Customs duty, Excise duty and Cess outstanding as at the year end, for a period of more than six months from the date they become payable.

(c) According to the information and explanation given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth tax. Excise duty or Cess outstanding on account on any dispute.

10. The Company has accumulated loss of Rs. 274.00 Laks at the end of the financial year which is morethan 50% of its net. worth & it has incurred cash loss of Rs. 158.00 lakhs in the current year & not incurred a cash loss immidiatly proceeding the financial year.

11. According to information and explanation given to us and the records examined by us, the Company has not defaulted in repayment of dues to a financial institution or bank or debenture holders.

12. In our opinion and according to information and explanation given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanation given to us, the nature of the activities of the Company does not attract any special statute applicable to chit fund and nidhi /mutual benefit fund/societies.

14. The company does not deal or trade in shares, securities, debentures and other investments.

15. According to the information and explanations given to us and the records examined by us, the Company has not given any guarantees for loans taken by others from banks or financial institutions, the terms and conditions whereof are prima facie prejudicial to the interest of the Company.

16. In our opinion and based on information and explanations given to us by the management, term loans were applied by the Company for the purpose for which they were obtained.

17. On the basis of an overall examination of the balance sheet and cash flows of the Company and the information and explanation given to us, we report that the Company has not utilized any funds raised on short term basis for long term investments and vice-versa.

18. The Company has not made any preferential allotment of shares to parties or companies covered under section 301 of the Act.

19. The company has not issued any debentures.

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

21. In our opinion and according to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year that causes the financial statements to be materially misstated.

For H.M.V. MURTHY & CO.,

CHARTERED ACCOUNTANTS

Place: Bangalore

Date: 24-05-2012

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Mar 31, 2010

1 We have audited the attached Balance sheet of" M/s. SREE JAYALAKSHMI AUTOSPIN LIMITED, CHITRADURGA, as on 31st March 2010 and also the Profit & Loss Account and the cash flow statement for the year ended on that date annexed thereto. These financial-statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2 We have 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 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 over all 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 as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, and according to the,. information and explanation given to us during the course of the audit and on the basis of such checks of the books and records of the company as we consider appropriate, 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 report that:

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

(ii) 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 the books.

(iii) The Balance Sheet, Profit & Loss Account and cash flow statement dealt by this report are in agreement with the books of Account.

(iv) In our opinion, the balance sheet, profit & loss account and cash flow statement dealt by this report comply with accounting standards mentioned under sub section (3C) of section 211 of the Companies Act 1956.

(v) Based on written representation made by the directors of the company and taken on record by the board of directors, in our opinion the directors of the Company are not prima facie disqualified from being appointed as directors under Section 274(l)(g) of "The Act".

(vi) In our opinion and to the best of our knowledge and according to the explanation given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view: -

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

ii) in the case of Profit & Loss Account, of the Profit of the company 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 AUDITORS REPORT 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 situation of fixed assets.

(b) The fixed assets have been physically verified by the management as per phased programme of verification. In our opinion, the frequency of verification is reasonable having regard to the size of Company and the nature of its assets. The Discrepancies reported on such verification were not material and have been properly dealt with in the books of accounts.

(c) There is no disposal of substantial part of j fixed assets during the year so as to have an impact on the operations of the company or affects its going concern.

(2) (a) The Management is conducting physical verification of inventory at reasonable intervals.

(b) In our opinion, the procedures followed by the management for such physical verification are, 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 physical inventories and the book records were not material in relation to the operation of the company and the same have been properly dealt with in the books of accounts.

(3) (a) The company has not granted loan,

unsecured, to/firm companies, firms or other parties listed in in the register maintained under section 301 of the Companies Act 1956. Paragraph 4 (iii)(a) (b) (c) and (d) of the order is not applicable.-

(b) During the year the company has taken interest free unsecured loans from Directors amounting to Rs. 33,00,000/- and the same has been repaid during the year.

(4) In our opinion and according to 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 for the purchase of inventory and fixed assets and for the sale of goods. During the course of our audit no major weakness has been observed in the internal controls.

(5) (a) Based on the audit procedure applied by us

and according to the information and explanation provided by the management, we are of the opinion that all transaction that need to be entered into the register in pursuance of section 301 of the Act have been entered.

(b) In our opinion and according to the information and explanation given to us, transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the companies act, 1956 and exceeding the value of Rs. Five lakhs in respect of any party during the year have been.made at prices which are reasonable having regard to prevailing market prices at the relevant time where such market prices are available.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from the public within the meaning of section 58A and 58AA of the companies Act, 1956 and the rules framed thereunder.

7. The Company has an internal audit system. Commenasate with size of the company and the nature of its business.

8. The central Government has prescribed

maintenance of cost records under section 209-(l) (d) of the companies act, 1956 in respect of manufacturing activities of the company. We have broadly reviewed the accounts and records of the company in this

connection and are of the opinion, that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

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

(b) According to the information and explanation given to us, there are no undisputed amounts payable in respect of income tax, Sales tax, Wealth tax, Customs duty, Excise duty and Cess outstanding as at the year end, for a period of more than six months from the date they become payable.

(c) According to the information and explanation given to us, there are no dues of Sales tax, Income tax, Custom duty, Wealth tax, Excise duty or Cess outstanding on account on any dispute.

10. The Company has accumulated losses of Rs. 105.24 Lakhs at the end of the financial year and it has incurred a cash loss of Rs. NIL in the current year and Rs. NIL Lakhs immediately preceding financial year.

11. According to information and explanation given to us and the records examined by us, the Company has not defaulted in repayment of dues to a financial institution or bank or debenture holders.

12. In our opinion and according to information and explanation given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanation given to us, the nature of the activities of the Company does not attract any special statute applicable to chit fund and nidhi /mutual benefit fund/ societies,

14. The company does not deal or trade in shares, securities, debentures and other investments.

15. According to th&* information and explanations given to us and the records examined by us, the Company has not given any guarantees for loans taken by others from banks or financial institutions, the terms and conditions whereof are prima facie prejudicial to the interest of the Company.

16. In our opinion and based on information and explanations given to us by the management, term loans were applied by the Company for the purpose for which they were obtained.

17. On the basis of an overall examination of the balance sheet and cash flows of the Company and the information and explanation given to us, we Veport that the Company has not utilized any funds raised on short term basis for long term investments and vice-versa.

18. The Company has not made any preferential allotment of shares to parties or companies covered under section 301 of the Act.

19. The company has not issued any debentures.

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

21. In our opinion and according to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year that causes the financial statements to be materially misstated.



For H.M.V.MURTHY & CO.

CHARTERED ACCOUNTANTS

(H.M.Vrushabhendra Murthy)

PLACE: BANGALORE Proprietor

DATE : 24-08- 2010 MM No.26432