Auditor Report of Titan Intech Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of M/S. INNOVATION TECHNOLOGIES LIMITED ("Company"), which comprise the Balance Sheet as at 31.03.2015, the Statement of Profit and Loss account 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 the 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 section 133 of the Companies Act, 2013("Act"), read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 the 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 of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of the material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the company's preparation and fair presentation of the financial statements in order to design audit procedures that are in appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 reasonable 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 Balance Sheet, of the state of affairs of the company as at March 31,2015;

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

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

Report on other legal and regulatory requirements

1. As required by the Companies (Audit Report) Order, 2015 issued by the Central Government of India in terms of sub-section 11 of section 143 of the Companies Act, 2013, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said 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 our knowledge and belief were necessary for the purposes of our audit;

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

c) The Balance Sheet, Statement of Profit and Loss Account 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 and Statement of Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in section 133 of the Companies Act, 2013; read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of written representations received from the Directors, as on 31st March, 2015 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2014 from being appointed as a Director in terms of section 164 (2) of the Companies Act, 2013.

f) In our opinion, and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business.

g) In our opinion, and according to the information and explanations given to us, the company has disclosed the pending litigations of the company which will have impact on the financial statements.

h) In our opinion, and according to the information and explanations given to us, the company is not foreseeing any losses, and therefore the provision of the same does not arise.

i) In our opinion, and according to the information and explanations given to us, the company has not holding amounts such as unclaimed dividends, share application money etc requiring the transfer of the same to the Investor Education and Protection Fund.

ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT

The Annexure referred to in the Auditor's Report to the Members of M/s. INNOVATION TECHNOLOGIES LIMITED for the year ended 31st March, 2015.

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

b) The fixed assets have been physically verified by the management during the period and no serious discrepancies have been noticed on such verification.

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

b) In our opinion, the procedures of physical verification of inventory followed by the management reasonable and adequate considering the size of the company and the nature of its business.

c) No material discrepancies have been noticed on physical verification of stocks as compared to book records in so far as appears from our examination of the books.

3) In our opinion and 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, and therefore, the receipt of the principal amount and interest thereon and overdue thereon does not arise.

4) In our opinion, and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. Further during the course of our audit, we have not come across any instances of major weaknesses in internal control that in our opinion, requiring correction.

5) In our opinion and according to the information and explanations given to us and as shown by the books of accounts, the company has not accepted deposits within the meaning Section 73 to 76 of the Companies Act, 1956 and hence compliance of provisions of Section 73 to 76 of the companies Actl956 does not arise.

6) The Central Government had not prescribed any cost records U/s. 148(1) of the Companies Act, 1956 and hence the maintenance of cost records does not arise.

7) a) According to the books and records examined by us and the information and explanations given to us, the company is regular in depositing with appropriate authorities the undisputed statutory dues in respect of provided fund, ESI, income-tax, wealth-tax, service tax, sales-tax, customs duty and excise duty and there were no undisputed statutory dues and arrears as at the date of the Balance Sheet under report for the period exceeding six months from the date they became payable.

b) According to the books and records examined by us and the information and explanations given to us, there was no disputed statutory dues in respect of provided fund, ESI, wealth-tax, service tax, sales-tax, customs duty and excise duty etc., excepts the income tax liability as mentioned below which is outstanding for more than six months as at the date of the Balance Sheet under report.

S.No Particulars Situation Amount

1 Asst. Commissioner of Penalty order Rs.41,80,872/- Income tax, circle-2(3) U.S 271 (i) (c)

08) According to the information and explanations furnished to us the company has been incorporated for a period exceeding 5 years. The accumulated losses at the end of the year as on 31.03.2015 Rs.139.95 lacs which accounts 56.55% of its net worth and the company has not incurred cash losses during the financial years 2014-15 and whereas the cash loss of Rs.7.60lacs was incurred for the financial year 2013-14.

09) According to the books and accounts examined by us and the information and explanations given to us the company has not availed any loans from any of the financing institutions, bank or debenture holders and therefore the defaults thereof does not arise.

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

11) According to the books and accounts examined by us and the information and explanations given to us the company has not taken any term loans during the year

12) During the course of our examination of the accounts of the company in accordance with generally accepted auditing practices, we have not come across any instances of fraud on or by the company, nor has the management, of any such instance being noticed or reported during the year.

Place: Vijayawada Hanumaiah & Co Date: 20.04.2015 Chartered Accountants

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Mar 31, 2014

We have audited the accompanying financial Statements of M/s INDOVATION TECHNOLOGIES LIMITED which comprise the Balance Sheet as at 31si March 2014, The statement of Profit & Loss Account and the cash flow Statement for the year ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements

The Companies management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the company in accordance with the accounting standards referred to in Sub-section (3C) of section 211 of the companies Act, 1956. 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 misstatements, whether due to fraud orerror.

Auditors Responsibility

We have audited the attached Balance Sheet of M/s INDOVATION TECHNOLOGIES LIMITED, Visakhapatnam as at 31st March 2014, the Profit & Loss Account and also 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.

We conducted our audit in accordance with auditing standards generally accepted in India. These 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 includes examining on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management as well as evaluating the overall financial statement presentation.

We believe that our audit 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 said accounts read with other notes to accounts and accounting policies 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 Balance Sheet of the state of the affairs of the Company as at 31st March 2014and

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

iii) In the Cash Flow statement of the Cash Flow 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 in terms of Section 227(4A) 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 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, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

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

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE

(Annexure to the Auditors''Report (referred to in paragraph 3 of our Report of even date to the Members of IWs. Indovation Technologies Limited (Formerly Known as Priyadarshini Thread Limited for the year ended March 31,2014)

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

(b). According to the information and explanations given to us, fixed assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

(c). ln our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the company during the year.

2. In our opinion and according to the information and explanations given to us, the Company is not having any inventory. Accordingly, the provisions of clause 4(ii) of the Order are not applicable to the Company.

3. (a) The Company has taken unsecured loans amounting to Rs.3,51,118/- from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has not granted any loans to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act. 1956 and the terms and conditions of the loans are reasonable.

4. On the basis of checks carried out during the course of audit and as per explanations given to as, we are of the opinion tnat there are adequate internal control procedures commensurate with the size of the company and the nature of its business; for the purchases of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.

5. a) In our opinion and according to the information and explanations given to us, we are of the opinion that the transactions that need to 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, 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 Rupees five lakhs in respect of each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

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

8. To the best our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under Section 209 (i) (d) of the of the Companies Act, 1956 in respect of the Company''s nature of business.

9. (a) According to the records of the company, the company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, Income Tax, Wealth Tax, Customs Duty, Excise duty, cess and other material statutory dues applicable at the end of the year 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 some disputes and pending tax payments with Income tax department. Except the given below there were no dues on account of cess under 441A of the Companies Act 1956, since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

16. Members holding shares in single name and physical form are advised

S.No. Particulars Situation Amount

1 Asst. Commissioner of Penalty order Rs.41, 80,872 Income Tax, Circle - 2(3) U/S.271(1)(c)

10. The company has accumulated losses of Rs. 1,72,21,874/- as at the end of the financial year 2013-14 and it has incurred cash losses of Rs. 14,67,3251- during the current financial year and has not incurred any cash losses in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company did not have any outstanding dues to financial Institutions, Banks or Debenture holders.

12. According to the information and expiations 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.

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

14. The company is not in the business of dealing ortrading in shares, securities, debenture and other instruments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. The company has not given any guarantee for loans taken by others from banks orfinancial institutions.

16. The company has not taken term loans from banks.

17. Based on our examination of the balance sheet of the company as at 31.03.2014, since there is no loans availed by the company, the utilization of funds does not arise.

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

19. During the year covered by our audit report, the Company does not have any outstanding debentures during the year.

20. During the year the company has not raised money through the Public Issue, the utilization of funds does not arise.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For CHANAMOLU & CO., Chartered Accountants

Place: Hyderabad G. Murali Date : May 27th, 2014 Partner Membership No.234971

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Mar 31, 2013

We have audited the attached Balance Sheet of Indovation Technologies Limited (Formerly Known as Priyadarshini Thread Limited) as at March 31, 2013, the Profit and Loss Account and 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 our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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.

1. As required by the Companies Auditors'' Report order (CARO) 2003 as amended by the Companies (Auditors report) (Amendment) Order,2004, 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.

2. Further to our comments in the Annexure referred to above, We report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the 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, the Profit and Loss Account 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, the Profit and Loss account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956.

e) On the basis of information and explanations given to us and representations received from the Directors of the company as on 31st March, 2013 and taken on record by the Board of Directors, We report that none of the Directors are disqualified as on 31st March, 2013 from being appointed as Director of the company under Section 274 (1) (g) of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereto, 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.

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

(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 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 to the Members of M/s. Indovation Technologies Limited (Formerly Known as Priyadarshini Thread Limited for the year ended March 31, 2013)

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

(b) According to the information and explanations given to us, fixed assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the company during the year.

2. In our opinion and according to the information and explanations given to us, the Company is not having any inventory. Accordingly, the provisions of clause 4(ii) of the Order are not applicable to the Company.

3. (a) The Company has taken unsecured loans amounting to Rs.3,51,118/- from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. (b) The Company has not granted any loans to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 and the terms and conditions of the loans are reasonable.

4. On the basis of checks carried out during the course of audit and as per explanations given to us, we are of the opinion that there are adequate internal control procedures commensurate with the size of the company and the nature of its business; for the purchases of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.

5. a) In our opinion and according to the information and explanations given to us, we are of the opinion that the transactions that need to 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, 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 Rupees five lakhs in respect of each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

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

8. To the best our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under Section 209 (i) (d) of the of the Companies Act, 1956 in respect of the Company''s nature of business.

9. (a) According to the records of the company, the company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, Income Tax, Wealth Tax, Customs Duty, Excise duty, cess and other material statutory dues applicable at the end of the year 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 some disputes and pending tax payments with Income tax department. Except the given below there were no dues on account of cess under 441A of the Companies Act 1956, since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

S. No.Particulars Situation Amount

1 Asst. Commissioner of Penalty order U/S.271(1)(c) Rs.41,80,872 Income Tax, Circle - 2(3)

10. The company has incurred accumulated losses of Rs. 1,56,40,303 /- as at the end of the financial year 2012-13 and it has not incurred any cash losses during the current financial year covered by our audit and has not incurred any cash losses in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company did not have any outstanding dues to financial Institutions, Banks or Debenture holders.

12. According to the information and expiations 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.

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

14. The company is not in the business of dealing or trading in shares, securities, debenture and other instruments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. The company has not given any guarantee for loans taken by others from banks or financial institutions.

16. The company has not taken term loans from banks.

17. Based on our examination of the balance sheet of the company as at 31.03.2013, since there is no loans availed by the company, the utilization of funds does not arise.

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

19. During the year covered by our audit report, the Company does not have any outstanding debentures during the year.

20. During the year the company has not raised money through the Public Issue, the utilization of funds does not arise.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For CHANAMOLU & CO.,

Chartered Accountants

Firm Registration No.010000S

Sd/-

P. Sriram

Partner

Place: Hyderabad Membership No. 227395

Date : 30.05.2013

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Mar 31, 2011

We have audited the attached Balance Sheet of Phyadarshini Thread Limited as at March 31,2011, the Profit and Loss Account and Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibly is to express an opinion on these financial statements based our audit,

We conducted our audit In accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 welt as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies Auditors" Report order (CARO) £003 as amended by the Companies {Auditors report) (Amendment) Order,2004. 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.

2. Further to our comments in the Annexure referred to above, We report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary tor 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, the Profit and Loss Account 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, the Profit and Loss account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Ad, 1956.

e) On the basis of information and explanations given to us and representations received from the Directors of the company as on 31st March, £011 and taken on record by the Board of Directors, We report that none of the Directors are disqualified as on 31st March, 2011 from being appointed as Director of the Company under Section 274 (1) (g) of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereto, 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.

i) In the cage of Balance Sheet, of the state of affairs of the Company as at 31st March, 2011,

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 Cash Flow Statement, of the cash flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT Of EVEN DATE

{Annexure to the Auditors" Report (referred to in paragraph 3 of our Report of even date to the Members of Priyadarshini Thread Limited for the year ended March 31, 2011)

1. (a). The company is maintaining proper records showing full

particulars including quantitative details and situation of fixed assets,

[b)h According to the information and explanations given Jo us, fixeo1 assets were physically verified by the management during the year and no material discrepancies were noticed on such verification.

(c). In our opinion and according to the information and emanations given to us, a substantial part of fixed assets has not been disposed of by the company during the year,

2. In our opinion and according g to the information and explanations given to us, the Company is not having any inventory, Accordingly, the provisions of clause 4(ii) of the Order are not applicable to the Company,

3. (a) The Company has taken unsecured loans amounting to

Rs.7,21,31,018/- from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1958.

(b) The Company has not granted any bans to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 and the terms and conditions of the Joans are Reasonable.

4. On the basis of checks carried out during the course of audit and as per explanations given to us we are of the opinion that there are adequate internal control procedures commensurate with the size of the company and the nature of its business; for the purchases of inventory and fixed assets and for the sale of goods. During the course of cur audit, no major weakness has been noticed in the internal controls.

5. a) In our opinion and according to the information and explanations

given to us we are of the opinion that the transactions that need to 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, transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Acts 1956 and exceeding the value of Rupees five lakhs in respect of each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the Jr deposits accepted from the public.

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

8. To the best our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under Section 209 (i) {d) of the of the Companies Act, 195S in respect of the Company's nature of business.

9. (a) According to the records of the company, the company is regular in depositing undisputed statutory dues including provident fund, employees' state insurance. Income Tax, Wealth Tax, Customs Duty, Excise duty, cess and other material statutory dues applicable at the end of the year 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 some disputes and pending tax payments with Income tax department. Except the given below there were no dues on account of cess under 441A off the Companies Act 1956, since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

S.No. Particulars Situation Amount

1. Asst.Commissioner of Penalty order Rs.41.60,872 Income Tax. Circle -2(3) U/S,271(1)(c)

10. The company having amount Rs. 103,604,654/- accumulated losses as at the end of the financial year and it has not incurred any cash losses during the current financial year covered by our audit and has not incurred any cash losses- in the immediately preceding financial year

11. Based on our audit procedures and on the information and explanations given by the management, we are or the opinion that the company did not have any outstanding dues to financial Institutions, Banks or Debenture holders.

12. According to the information and expiations 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.

13. In our opinion, the Company is not a chit or a nidhi/ mutual Benefits fund/ society. Therefore. the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. The company is not in the business of dealing or trading in shares securities, debenture and other instruments. Accordingly, the provision of clause 4(xiv) of the Order are not applicable to the Company,

15. The company has not given any guarantee for loans taken by other from banks or financial institutions,

16. The company has not taken term loans from banks.

17. Based on our examination of the balance sheet of the company as a 31.03.2011, since there is no loans availed by the company, the utilization of funds does not arise,

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

19. During the year covered by our audit report, the Company does not have any outstanding debentures during the year.

20. During the year the company has not raised money through the Publics Issue, the utilization of funds does not arise.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on by the company has been noticed or reported during the course of our audit,

For M M REDDY & CO.,

Chartered Accountants

Firm Reg. No. 010371S

Sd/-

CA M. Madhusudhana Reddy

Place: Hyderabad Partner

Date: 15.07.2017 Membership No.213077

---

Mar 31, 2010

We have audited the attached Balance Sheet of Priyadarshini Thread Limited as at March 31, 2010, the Profit and Loss Account abd Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys managemennt. Our responsibility is to express an opinion on these financial statements based our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit included 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 out audit provides a reasonable basis for our opinion.

1. As required by the Companies Auditors Report order (CARO) 2003 as amended by the Companies (Auditors report) (Amendment) Order,2004, 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.

2. Further to our comments in the Annexure referred to above, We report that:

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

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

c) The Balance Sheet, the Profit and Loss Account 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, the Profit and Loss account and the Cash Flow Statement delat with by this report comply with the Accounting Standards referred to in Section 211(3c) of the Companies Act, 1956.

e) On the basis of information and explanations given to us and representations received from the Directors of the company as on 31st March, 2010 and taken on record by the Board of Directors, We report that none of the Directors are disqualified as on 31st March, 2010 form being appointed as Director of the company under Section 274(1) (g) of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes thereto, 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.

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

ANNEXURE REFERRED TO IN PARAGARH 1 OF OUR REPORT OF EVEN DATE

(Annexure to the Auditors Report (referred to in paragraph 3 of our Report of even date to the Members of Priyadarshini Thread Limited for the year ended March 31, 2010)

1. The company does not have any fixed assets during the year under review.

2. In our opinion and according to the information and explanations given to us, the Company is not having any inventory. Accordingly, the provisions of clause 4(ii) of the Order are not applicable to the Company.

3. (a) The Company has taken unsecured loans from companies, firms or other parties amounting to Rs. 7,21,31,018/- covered in the register maintained under Section 301 of the Companies Act, 1956.

(b) The Company has not granted any loans to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956 and the terms and conditions of the loans are reasonable

4. On the basis of checks carried out during the course of audit and as per explanations given to us, we are of the opinion that there are adequate internal control procedures commensurate with the size of the company and the nature of its business; for the purchases of inventory and fixed assets and for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.

5. a) In our opinion and according to the information and explanations given to us, we are of the opinion that the transactions that need to 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, transactions made in pursuance of contacts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees five lakhs in respect of each party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits within the meaning of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted form the public.

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

8. To the best our knowledge and as explaines, the Central Government has not prescribed maintenance of cost records under Section 209 (i) (d) of the Companies Act, 1956 in respect of the Companys nature of business.

9. (a) According to the records of the company, the company is regular in depositing undisputed statutory dues including provident fund, employees state insurance, Income Tax, Wealth Tax, Customs Duty, Excise duty, cess and other material statutory dues applicable at the end of the year for a period of more than six months from the date they became payable.

(b) According to the information and explanatins given to us, there are some disputes and pending tax payments with Income tax department. Except the given below there were no dues on account of cess under 441A of the Companies Act 1956, since the date from which the aforesaid section comes into force has not yet been notified by the Central Government.

Sl. Particulars Situation Amount (Rs.) No.

1. Asst. Commissioner of Penalty order U/S.271(1)(c) 41,80,872 Income Tax, Circle-2(3)

10. The company having Rs. 10,41,96,621/- accumulated losses as at the end of the financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that the company did not have any outstanding dues to financial Institutions, Banks or Debenture holders.

12. According to the information and expiations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, deventures and other securities.

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

14. The Company is not in the business of dealing or trading in shares, securities, debenture and other instruments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

15. The company has not given any guarantee for loans taken by others from banks or financial institutions.

16. The company has not taken term loans from banks.

17. Based on our examination of the balance sheet of the company as at 31.03.2010, since there is no loans availed by the company, the utilization of funds does not arise.

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

19. During the year covered by our audit report, the Company does not have any outstanding debentures during the year.

20. During the year the company has not raised money through the public Issue, the utilization of funds does not arise.

21. Based upon the audit procedures performed and information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

FOR M M REDDY & CO., Chartered Accountants Firm Reg. No. 010371S

Sd/- M. Madhu sudhana Reddy Proprietor Membership No.213077

Place: Hyderabad Date : September 3, 2010