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Auditor Report of Vardhman Textiles Ltd.

Mar 31, 2023

Vardhman Textiles Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Vardhman Textiles Limited ("the Company"), which comprise the Balance Sheet as at March 31,2023, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2023, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified

under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibility for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No.	Key Audit Matter	Auditor''s Response
1	Uncertain income-tax positions - Refer to Notes 2.15,	Principal audit procedures performed:
	2.19.1.4, 38(a) and 39 to the standalone financial statement	â¢ Obtained an understanding of and performed testing of
		design, implementation and operating effectiveness of the
	The Company has material uncertain income-tax	control established by the Company with regard to uncertain
	positions including matters under dispute relating	income tax positions.
	to Income Taxes. These matters involve significant management judgement to determine the possible outcome of these disputes.	â¢ We obtained details of complete income tax matters from the Company''s internal tax experts during the year ended March 31,2023.

Sr.

No.

Key Audit Matter

Auditor''s Response

â¢ We involved our internal direct tax experts to challenge the management''s underlying assumptions in estimating the tax provisions and possible outcome of the disputes. Our internal direct tax experts also considered legal precedence and other rulings in evaluating management''s position on these uncertain tax positions relating to Income Taxes.

â¢ Assessed the adequacy of the disclosures made in the financial statements.

Information Other than the Financial Statements and Auditor''s Report Thereon

â¢ The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis Report, Business Responsibility and sustainability Report, Director''s Report including Annexures to the Director''s Report and Corporate Governance Report, but does not include the consolidated financial statements, standalone financial statements and our auditor''s report thereon.

â¢ Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

â¢ In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

â¢ If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

Ind AS and other accounting principles generally accepted in India. 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 standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Company''s Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibility for the Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

â¢ Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

â¢ Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.

â¢ Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

â¢ Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit

we report that:

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

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

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

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

e) On the basis of the written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating

effectiveness of such controls, refer to our separate Report in "Annexure A" Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls with reference to standalone financial statements.

g) With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended,

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

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, as amended 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 standalone financial statements - Refer Note 38(a) to the standalone financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses - Refer Note 38(e) (iii) to the standalone financial statements.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company - Refer Note 50 to the standalone financial statements.

iv. (a) The Management has represented that, to the

best of it''s knowledge and belief, as disclosed in the note 51(v) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented, that, to the best of it''s knowledge and belief, as

disclosed in the note 51(vi) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. As stated in note 51 (x) to the standalone financial statements, the Board of Directors of the Company has proposed final dividend for the year which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend proposed is in accordance with section 123 of the Act, as applicable.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company w.e.f. April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

2. As required by the Companies (Auditor''s Report) Order, 2020 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

For Deloitte Haskins & Sells LLP

Chartered Accountants (Firm''s Registration No. 117366W/W-100018)

Rajesh Kumar Agarwal

(Partner)

Place: Gurugram (Membership No. 105546)

Date: May 05, 2023 UDIN: 23105546BGXMRP8933

Mar 31, 2022

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Vardhman Textiles Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2022, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2022, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor''s Responsibility for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matter described below to be the key audit matter to be communicated in our report.

Sr. No.	Key Audit Matter	Auditor''s Response
1	Uncertain income-tax positions - Refer to Notes 2.15,	Principal audit procedures performed:
	2.19.1.4, 38 and 39 to the standalone financial statement	â¢ Obtained an understanding of and performed testing of
	The Company has material uncertain income-tax positions	design, implementation and operating effectiveness of
	including matters under dispute relating to Income Taxes.	the control established by the Company with regard to
	These matters involve significant management judgement	uncertain income tax positions.
	to determine the possible outcome of these disputes.	â¢ We obtained details of complete income tax matters from
		the Company''s internal tax experts during the year ended March 31, 2022.

Information Other than the Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis Report, Business Responsibility Report, Director''s Report including annexures to the Director''s Report and Corporate Governance Report, but does not include the consolidated financial statements, standalone financial statements and our auditor''s report thereon.

â¢ Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon

Management''s Responsibility for the Standalone Financial Statements

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 standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibility for the Audit of the Standalone Financial Statements

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Sr.

No.

Key Audit Matter

Auditor''s Response

â¢ Assessed the adequacy of the disclosures made in the financial statements.

â¢ Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of

the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our audit

we report that:

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

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

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

d. In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.

e. On the basis of the written representations received from the directors as on 31 March, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2022 from being appointed as a director in terms of Section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and

the operating effectiveness of such controls, refer to our separate Report in "Annexure A" Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting

g. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended,

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, as amended 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 standalone financial statements - Refer to Note 38(a) to the standalone Ind AS financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses - Refer to Note 38(f) to the standalone Ind AS financial statements.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company -Refer to Note 51 to the standalone Ind AS financial statements.

iv. (a) The Management has represented that,

to the best of it''s knowledge and belief as disclosed in note 53 (v) to the financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner

whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented, that, to the best of it''s knowledge and belief as disclosed in note 53 (vi) to the financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under subclause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. The final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with section 123 of the Act, as applicable. Also, The interim dividend declared and paid by the Company during the year and until the date of this report is in compliance with section 123 of the Act.

For DELOITTE HASKINS AND SELLS LLP

Chartered Accountants (Firm''s Registration No. 117366W/W-100018)

Rajesh Kumar Agarwal

(Partner)

Place: Gurugram (Membership No. 105546)

Date: May 21, 2022 (UDIN: 22105546AJISFG4463)

Mar 31, 2021

To The Members of Vardhman Textiles Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Vardhman Textiles Limited (âthe Company"), which comprise the Balance Sheet as at 31 March 2021, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (âthe Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, (âInd AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2021, and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

Key Audit Matters

Sr.

No.

Key Audit Matter

Auditorâs Response

Uncertain income-tax positions - Refer to Notes 2.15, 2.19.1.4, 38 and 39 to the standalone financial statement

The Company has material uncertain income-tax positions including matters under dispute relating to Income Taxes. These matters involve significant management judgement to determine the possible outcome of these disputes.

Principal audit procedures performed:

â¢ Obtained an understanding of and performed testing of design, implementation and operating effectiveness of the control established by the Company with regard to uncertain income tax positions.

â¢ We obtained details of complete income tax matters from the Company''s internal tax experts during the year ended 31 March 2021.

Sr. No.	Key Audit Matter	Auditorâs Response
2	Valuation of Inventory - Refer to Notes	â¢ Assessed the adequacy of the disclosures made in the financial statements. Principal audit procedures:
	2.14, 2.19.1.6 and 8 to the standalone financial statement	â¢ Evaluating the accounting policy followed for valuation of inventory
	The Company''s inventory primarily	and appropriateness thereof with respect to relevant accounting standards in this respect.
	comprises cotton, yarn and fabric. Inventories are valued at lower of cost	â¢ Obtained an understanding of and performed the test of design,
	or net realizable value. There is a risk that	implementation and operating effectiveness of the Company''s key
	inventories may be stated at values that are	internal controls over the process for valuation of inventories.
	more than their net realizable value (âNRV'').	â¢ Compared the cost of raw materials with supplier invoices for selected
	We identified the valuation of inventories	samples. For work-in-progress and finished goods, we understood
	as a key audit matter because the Company	the determination of the net realizable value and assessing, testing
	held significant inventories at the reporting	and evaluating the reasonableness keeping in view the significant
	date and significant degree of management	judgements applied by the management concerning overhead
	judgement and estimation was involved in	allocation by assessing the cost of the items included in overhead
	valuing the inventories.	absorption for selected samples.
		â¢ In connection with NRV testing, we have compared carrying value to the selling price prevailing around and subsequent to the year end for the selected samples.

cted samples.

Information Other than the Financial Statements and Auditorâs Report Thereon

â¢ Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon

Managementâs Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. 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 standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable,

matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditorâs Responsibility for the Audit of the Standalone Financial Statements

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

â¢ Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

â¢ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management.

â¢ Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, based on our

audit 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.

d. In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.

e. On the basis of the written representations received from the directors as on 31 March, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2021 from being appointed as a director in terms of Section 164(2) of the Act.

f. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in âAnnexure A". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting

g. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended,

In our opinion and to the best of our information and according to the explanations given to us, the

remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer to Note 38(a) to the standalone Ind AS financial statements.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company - Refer to Note 48.4 to the standalone Ind AS financial statements.

2. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in âAnnexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

For DELOITTE HASKINS AND SELLS LLP

Chartered Accountants (Firm''s Registration No. 117366W/W-100018)

Rajesh Kumar Agarwal

(Partner)

Place: New Delhi (Membership No. 105546)

Date: 25 May 2021 (UDIN: 21105546AAAACW5114)

Mar 31, 2017

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Vardhman Textiles Limited (âthe Company), which comprise the balance sheet as at 31 March 2017, the statement of profit and loss (including other comprehensive income), the statement of cash flows and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as âstandalone Ind AS financial statementsâ).

Managementâs Responsibility for the Standalone Financial Statements

The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditorâs Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

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

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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the financial position of the Company as at 31 March, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) 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, which forms a part of this report, a statement on the matters specified in the paragraph 3 and 4 of the order.

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

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

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

(c) the balance sheet, the statement of profit and loss (including other comprehensive income) , the statement of cash flows and the statement of changes in equity dealt with by this Report are in agreement with the books of account;

(d) in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with relevant rule issued thereunder;

(e) on the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 from being appointed as a director in terms of Section 164 (2) of the Act;

(f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in âAnnexure Bâ; and

(g) with respect to the other matters to be included in the Auditorâs 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 standalone Ind AS financial statements. Refer Note No. 37 of standalone Ind AS 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 has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and

iv. the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 2016 to 30 December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer Note No. 55 of standalone Ind AS financial statements.

Annexure - A to the Auditorsâ Report

The Annexure referred to the Independent Auditorsâ Report to the members of the Company on the Standalone Ind AS financial statements for the year ended 31 March 2017, we report that:

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

b) According to the information and explanations given to us, the Company has adopted a policy of physical verification of the fixed assets once in every three years. Pursuant to the said policy, the Company has physically verified the entire block of Plant and Machinery during the year under audit. Discrepancies noticed on such physical verification were not material and have been properly dealt with in the books of account.

c) According to information and explanations given to us and on the basis of our examination of the records of the company, the title deeds of immovable properties are held in the name of the company.

(ii) According to the information and explanations given to us, the inventories have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable.

According to the information and explanations given to us, discrepancies noticed on physical verification of inventory as compared to the book records were not material and have been dealt with in the books of account.

(iii) According to the information and explanations given to us, we report that the Company has granted loans to two companies covered in the register maintained under section 189 of the Companies Act, 2013.

(a) In our opinion, the rate of interest and other terms and conditions on which the loans had been granted to the bodies corporate listed in the register maintained under Section 189 of the Act were not, prima facie, prejudicial to the interest of the Company

(b) The borrowers have been regular in the payment of the principal and interest as stipulated.

(c) There are no overdue amounts in respect of the loan granted to a body corporate listed in the register maintained under section 189 of the Act.

(iv) According to the information and explanations given to us, the Company has complied with the requirements of the section 186 of the Companies Act, 2013 pursuant to loans granted and investments made. The company has not granted loans to directors or to the person in whom directors are interested. Therefore the provisions of the section 185 of the Companies Act, 2013 are not applicable to the company.

(v) According to the information and explanations given to us, the Company has not accepted any deposits covered under the provisions of sections 73 to 76, other relevant provisions of the Companies Act, 2013 and the rules framed there under. According to the information and explanations given to us, no order under the aforesaid sections has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company.

(vi) We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of such records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of the records of the Company examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues including provident fund, employeesâ state insurance, income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts in respect of statutory dues payable were outstanding as on the last day of the financial year concerned for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of duty of custom, which have not been deposited with the appropriate authorities on account of any dispute. However according to information and explanations given to us, the following dues of Income Tax, Value Added Tax, Sale Tax Act, Service Tax and duty of Excise have not deposited by the company on account of dispute:

(Amount in Lakhs)

Sr. No.	Name of Statute	Total Demand	Paid under Protest	Unpaid	Financial Year to which it relates	Forum at which dispute is pending.
1	Central Excise Act 1944	1.02	-	1.02	2009-10	Commissioner Appeals, Bhopal
2	Central Excise Act 1944	26.67	8.00	18.67	2009-10	Customs Excise & Service Tax Appellate Tribunal, Delhi
3	Central Excise Act 1944	216.06	-	216.06	2009-10	Customs Excise & Service Tax Appellate Tribunal, Delhi
4	Central Excise Act 1944	34.59	-	34.59	2013-14	Customs Excise & Service Tax Appellate Tribunal, Chandigarh
5	Central Excise Act 1944	4.26	-	4.26	2008-09	Honâble Supreme Court, New Delhi
6	Central Excise Act 1944	6.51	1.63	4.88	2008-09	Commissioner Appeals, Chandigarh
7	Central Excise Act 1944	5.80	1.00	4.80	2006-07	Customs Excise & Service Tax Appellate Tribunal, Delhi
8	Central Excise Act 1944	66.66	1.94	64.72	Jan 2008 to March 2011	Customs Excise & Service Tax Appellate Tribunal, Delhi
9	Central Excise Act 1944	4.95	2.88	2.07	2003-04, 2004-05	Commissioner Appeals, Chandigarh
10	Central Excise Act 1944	1.57	1.39	0.18	2002-03	Assistant Commissioner, Central Excise, Ludhiana
11	Central Excise Act 1944	112.00	-	112.00	2011-12	Customs Excise & Service Tax Appellate Tribunal, Delhi
12	Central Excise Act 1944	2.59	-	2.59	Oct 2001 to April 2004	Commissioner Appeals, Chandigarh
13	Central Excise Act 1944	5.16	-	5.16	2015-16	Commissioner Appeals, Chandigarh
14	Central Excise Act 1944	0.37	-	0.37	2012-13 & 2013-14	Commissioner Appeals, Chandigarh

15	Central Excise Act 1944	0.19	-	0.19	2013-14 & 2014-15	Commissioner Appeals, Chandigarh
16	Central Excise Act 1944	0.20	-	0.20	2014-15 & 2015-16	Commissioner Appeals, Chandigarh
17	Central Sales Tax Act,1956	6.19	-	6.19	2009-10	Deputy Excise & Taxation Commissioner Appeals, Jalandhar
18	Central Sales Tax Act,1956	2.45	0.65	1.80	2005-06	Deputy Commissioner Of Sales Tax, Mumbai
19	Commercial Tax Act, 1994	6.10	1.06	5.04	2001-02	Assistant Commissioner, Commercial Tax, Bhopal
20	Entry Tax Act, 1976	0.74	0.21	0.53	2001-02	Assistant Commissioner, Commercial Tax, Bhopal
21	Entry Tax Act, 1976	11.26	3.16	8.10	2003-04	Assistant Commissioner, Commercial Tax, Bhopal
22	MP VAT Act,2002	51.46	20.59	30.87	2006-07	Appellate Board, Commercial Tax, Bhopal
23	MP VAT Act,2002	8.25	4.30	3.95	2010-11	Appellate Board, Commercial Tax, Bhopal
24	MP VAT Act,2002	5.95	3.34	2.61	2011-12	Appellate Board, Commercial Tax, Bhopal
25	MP VAT Act,2002	2.60	1.51	1.09	2012-13	Appellate Board, Commercial Tax, Bhopal
26	Punjab VAT Act, 2005	1.10	0.28	0.82	2002-03	Joint Director Enforcement, Patiala
27	The Finance Act 1994	5.02	-	5.02	2007-08 to 2009-10	Commissioner Appeals,Chandigarh.
28	The Finance Act 1994	11.22	-	11.22	2005-06	Commissioner Appeals, Chandigarh
29	The Finance Act 1994	0.66	-	0.66	2015-16	Commissioner Appeals, Chandigarh
30	Income tax Act,1961	12,397.35	6,873.59	5,523.76	2009-10 to 2011-12	Income tax Appellant Tribunal, Chandigarh
31	Income tax Act,1961	2,823.80	169.62	2,654.18	2012-13	Commissioner of Income tax, Appeals, Ludhiana
32	Income tax Act,1961	3.81	-	3.81	2000-01	Income tax Appellant Tribunal, Chandigarh

(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to a financial institution, bank or government. The Company has not issued any debentures during the year or in the preceding year.

(ix) In our opinion and according to the information and explanations given to us, the term loans taken during the year by the Company have been applied for the purpose for which they were raised. The company has not raised money by way of initial public offer or further public offer (including debt instruments) during the year.

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

(xi) According to the information and explanations given to us and based on our examination of records of company, the company has paid / provided for the managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) According to the information and explanation given to us, the company is not a Nidhi Company. Therefore the provisions of paragraph 3(xii) of the Order are not applicable.

(xiii) According to the information and explanations given to us, and based on our examination of the records of the company, transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable and the details of the transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us, the company has not made preferential allotment or private placement of shares or fully or partly convertible debentures during the year under audit. Thus the provisions of paragraph 3(xiv) of the Order are not applicable.

(xv) According to information and explanations given to us, and based on our examination of the records of the company, the company has not entered into non-cash transactions with director or person connected with him. Accordingly, provisions of paragraph 3 (xv) of the Order are not applicable.

(xvi) According to the information and explanations given to us, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For S.C. Vasudeva & Co,

Chartered Accountants

Firm Reg. No.000235N

(Sanjiv Mohan)

Partner

M. No. 086066

Ludhiana

10th May, 2017

Mar 31, 2016

1. We have audited the accompanying Standalone Financial Statements of Vardhman Textiles Limited (''the Company'') which comprise the Balance Sheet as at 31st March 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone 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 and presentation of these Standalone 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 mis-statement, whether due to fraud or error.

Auditor''s Responsibility

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

4. 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.

5. 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 mis-statement.

6. 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. 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.

7. 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.

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone 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, of the state of affairs of the Company as at 31st March, 2016 and its profits and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

9. As required by the Companies (Auditor''s Report) Order, 2016 ("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, which forms part of this report, a statement on the matters specified in the paragraph 3 and 4 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 aforesaid Standalone Financial Statements 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 the written representations received from the directors as on 31st March 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2016 from being appointed as a director in terms of sub-section (2) of section 164 of the Act; and

f. with respect to the adequacy of the internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in "Annexure- B"; and

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

(i) the Company has disclosed the impact of pending litigations on its financial position in its financial statements. Refer Note No. 31 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 are no amounts required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE - A TO THE AUDITORS'' REPORT

The Annexure referred to in Independent Auditors'' Report to the members of the Company on the Standalone Financial Statements for the year ended 31st March 2016, we report that:

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

b) According to the information and explanations given to us, the Company has adopted a policy of physical verification of the fixed assets once in every three years. Pursuant to the said policy, the Company has physically verified the entire block of office equipment and furniture and fixtures during the year under audit. Discrepancies noticed on such physical verification were not material and have been properly dealt with in the books of account.

c) According to information and explanations given to us and on the basis of our examination of the records of the company, the title deeds of immovable properties are held in the name of the company, except the land at Baddi (Himachal Pradesh) for which title deeds are yet to be executed in favour of Company. Refer Note No. 13 to the financial statements.

(ii) According to the information and explanations given to us, the inventories have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable.

According to the information and explanations given to us, discrepancies noticed on physical verification of inventory as compared to the book records were not material and have been dealt with in the books of account.

(iii) According to the information and explanations given to us, we report that the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnership or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Therefore the provisions of paragraph (iii) (a), (b) and (c) of the Order are not applicable to the Company.

(iv) According to the information and explanations given to us, the Company has complied with the requirements of the section 186 of the Companies Act, 2013 pursuant to loans granted and investments made. The company has not granted loans to directors or to the person in whom directors are interested. Therefore the provisions of the section 185 of the Companies Act, 2013 are not applicable to the company.

(v) According to the information and explanations given to us, the Company has not accepted deposits covered under the provisions of sections 73 to 76, other relevant provisions of the Companies Act, 2013 and the rules framed there under. According to the information and explanations given to us, no order under the aforesaid sections has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company.

(vi) We have broadly reviewed the books of account maintained by the company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of such records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and on the basis of the records of the Company examined by us, in our opinion, the Company has been regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts in respect of statutory dues payable were outstanding as on the last day of the financial year concerned for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of duty of custom, which have not been deposited with the appropriate authorities on account of any dispute. However according to information and explanations given to us, the following dues of Income Tax, Value Added Tax, Service Tax and duty of Excise has not been deposited by the company on account of dispute:

S. Name of Statute Amount Financial Year to which Forum at which dispute is pending No. (in Lacs) it relates

1 Central Excise Act,1944 25.88 2005-06 Hon''ble Supreme Court, New Delhi

2 Central Excise Act,1944 1.68 2005-06 Commissioner Appeals, Chandigarh

3 Central Excise Act,1944 13.18 2006-07 CESTAT, Delhi

4 Central Excise Act,1944 1.02 2009-10 Commissioner Appeals, Bhopal

5 Central Excise Act,1944 18.67 2009-10 CESTAT, Delhi

6 Central Excise Act,1944 216.06 2009-10 CESTAT, Delhi

7 Central Excise Act,1944 34.59 2013-14 CESTAT, Chandigarh

8 Central Excise Act,1944 4.26 2008-09 Hon''ble Supreme Court, New Delhi

9 Central Excise Act,1944 4.88 2008-09 Commissioner Appeals, Chandigarh

10 Central Excise Act,1944 4.80 2006-07 CESTAT, Delhi

11 Central Excise Act,1944 64.72 Jan 2008 to March 2011 CESTAT, Delhi

12 Central Excise Act,1944 2.06 2003-04, 2004-05 Commissioner Appeals, Chandigarh

13 Central Excise Act,1944 0.17 2002-03 Assistant Commissioner , Central Excise, Ludhiana

14 Central Excise Act,1944 3.55 2005-06 CESTAT, Delhi

15 Central Excise Act,1944 0.52 2011-12 Commissioner Appeals, Bhopal

16 Central Excise Act,1944 449.64 2011-12 CESTAT, Delhi

17 Central Excise Act,1944 112.00 2011-12 CESTAT, Delhi 18 Central Sales Tax Act, 1956 1.80 2005-06 Deputy Commissioner of Sales Tax, Mumbai

19 Central Sales Tax Act, 1956 6.19 2009-10 Deputy Excise & Taxation Commissioner Appeals, Jalandhar

20 Commercial Tax Act, 1994 5.03 2001-02 Assistant Commissioner, Commercial Tax, Bhopal

21 Entry tax Act, 1976 0.52 2001-02 Assistant Commissioner, Commercial Tax, Bhopal

22 Entry tax Act, 1976 8.10 2003-04 Additional Commissioner, Commercial Tax, Bhopal

23 MP Vat Act,2002 30.87 2006-07 Appellate Board, Commercial Tax, Bhopal

24 MP Vat Act,2002 3.95 2010-11 Appellate Board, Commercial Tax, Bhopal

25 MP Vat Act,2002 2.60 2011-12 Appellate Board, Commercial Tax, Bhopal

26 MP Vat Act,2002 1.09 2012-13 Appellate Board, Commercial Tax, Bhopal

27 Punjab VAT Act, 2005 0.83 2002-03 Joint Director Enforcement, Patiala

28 The Finance Act 1994 5.02 2007-08 to 2009-10 Commissioner Appeals, Chandigarh.

29 The Finance Act 1994 11.22 2005-06 Commissioner Appeals, Chandigarh

30 Income tax Act,1961 8,626.27 2009-10 to 2011-12 Income tax Appellant Tribunal

31 Income tax Act,1961 2,823.80 2012-13 Commissioner of Income tax, Appeals

(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to a financial institution, bank or government. The Company has not issued any debentures during the year or in the preceding year.

(ix) In our opinion and according to the information and explanations given to us, the term loans taken during the year by the Company have been applied for the purpose for which they were raised. The company has not raised money by way of initial public offer or further public offer (including debt instruments) during the year.

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

(xi) According to the information and explanations given to us and based on our examination of records of company, the company has paid / provided for the managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us, the company is not a Nidhi Company. Therefore the provisions of paragraph 3(xii) of the Order are not applicable.

(xiii) According to the information and explanations given to us, and based on our examination of the records of the company, transactions with the related parties are in compliance with section 177 and 188 of the Act, where applicable and the details of the transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us, the Company has not made Preferential Allotment or Private Placement of Shares or Fully or Partly Convertible Debentures during the year under audit. Thus the provisions of paragraph 3(xiii) of the Order are not applicable.

(xv) According to information and explanations given to us, and based on our examination of the records of the company, the company has not entered into non-cash transactions with Director or person connected with him. Accordingly, provisions of paragraph 3 (xv) of the Order are not applicable.

(xvi) According to the information and explanations given to us, the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For S.C. Vasudeva & Co. Chartered Accountants

Firm Regn. No. 000235N

(Sanjiv Mohan)

Place: Ludhiana Partner

Dated: 9th May, 2016 M. No. 086066

Mar 31, 2015

We have audited the accompanying standalone financial statements of M/s. Vardhman Textiles Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone 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 judgements 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

Our responsibility is to express an opinion on these standalone 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 thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls 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 control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of 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.

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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 profit for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements

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, which forms part of this report, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 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 aforesaid standalone financial statements 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 31st March, 2015 and 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 Section 164(2) of the Act;

f. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, we have to state that 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.

(ii) The Company has made provision as required under the applicable law or accounting standards in respect of long term derivative contracts on mark to market basis. There are no other long term contacts for which there were any material foreseeable losses.

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

Annexure to the Independent Auditor's Report

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of even date)

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

(b) According to the information and explanations given to us, the Company has adopted a policy of physical verification of the fixed assets once in every three years. Pursuant to the said policy, the Company has physically verified the entire block of Land, Building and Vehicles during the year under audit. Discrepancies noticed on such physical verification were not material and have been properly dealt with in the books of account.

(ii) (a) The physical verification has been carried out by the Management in respect of inventory at reasonable intervals during the year. In our opinion, the frequency of verification is reasonable.

(b) Based on information and explanations given to us and the records produced to us, in our view, procedures of physical verification of inventory followed by the management during the year 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. As per the information given to us, the discrepancies noticed on physical verification of Inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) The Company has not granted any secured or unsecured loans to the parties covered in the register maintained under section 189 of the Companies Act.

(iv) 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 for the purchase of inventory and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal control systems.

(v) According to the information and explanations given to us, the Company has not accepted any deposits from public during the year under the provisions of section 73 and 76 and any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules 2014. According to the information and explanation given to us, no order under its aforesaid sections has been passed by the Company Law Board or the Reserve Bank of India or any Court or any other Tribunal on the Company.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the sub-section (1) of section 148 of the Companies Act, specified by the Central Government and are of the opinion that, prima facie, such accounts and records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) (a) According to the information and explanations given to us and records of the Company examined by us, the Company has been regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of custom, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts in respect of statutory dues payable wereout standing as at the last day of the financial year concerned for a period of more than six months from the date they became payable.

(b) According to the records of the Company, the disputed statutory dues that have not been deposited on account of matters pending before the appellate authorities in respect of sales tax, duty of custom , service tax, duty of excise, value added tax and income tax are given below:

Nature of Dues/ Amount Financial Forum where dispute Name of (Rs.in year to is pending statute lac) which it relates

Central Excise 0.17 2002-03 Assistant Commissioner Act, 1944 Central Excise, Ludhiana

Central Excise 3.55 2005-06 CESTAT, Delhi Act, 1944

Central Excise 1.02 2009-10 Commissioner (Appeals), Act, 1944 Bhopal

Central Excise 18.67 2009-10 CESTAT, Delhi Act, 1944

Central Excise 216.06 2009-10 CESTAT, Delhi Act, 1944

Excise Act, 1.68 2005-06 Commissioner (Appeals) , 1944 Chandigarh

Central Excise 25.88 2005-06 Hon'ble Supreme Court, Act, 1944 New Delhi.

Central Excise 13.18 2006-07 CESTAT, Delhi Act, 1944

Central Excise 13.51 2007-08 Additional Commissioned Act, 1944 P & V), Chandigarh

Central Excise 4.26 2008-09 Hon'ble Supreme Court, Act, 1944 New Delhi.

Central Excise 4.88 2008-09 Commissioner ( Appeals ), Act, 1944 Jalandhar

Central Excise 112.00 2011-12 CESTAT, Delhi Act, 1944

Central Excise 0.52 2011-12 Commissioner (Appeals), Act, 1944 Bhopal

Central Excise 449.64 2011-12 CESTAT, Delhi Act, 1944

Central Excise 4.80 2006-07 CESTAT, Delhi Act, 1944

Central Excise 64.72 Jan 2008 CESTAT, Delhi Act, 1944 to March, 2011

Central Excise 34.59 2013-14 CESTAT, Delhi Act, 1944

Central Sales 6.19 2009-10 Deputy Excise & Taxation Tax Act,1956 Commissioner (Appeal), Jalandhar

Commercial Tax 0.52 2001-02 Assistant Commissioner Act, 1994 Commercial Tax, Bhopal

Entry tax Act, 1.81 2000-01 Assistant Commissioner 1976 Commercial Tax, Bhopal

Entry tax Act, 8.10 2003-04 Additional Commissioner 1976 Commercial Tax, Bhopal

Central Sales 1.80 2005-06 Deputy Commissioner of Tax Act,1956 Sales Tax, Mumbai

MP VAT Act, 30.87 2006-07 Appellate Board Commercial 2002 Tax, Bhopal

MP VAT Act, 5.26 2010-11 Appellate Board Commercial 2002 Tax, Bhopal

MP VAT Act, 6.68 2011-12 Additional Commissioner 2002 (Appeals) Commercial Tax, Bhopal

MP VAT Act, 3.70 2012-13 Additional Commissioner 2002 (Appeals) Commercial Tax, Bhopal

Punjab VAT Act, 0.83 2002-03 Joint Director Enforcement, 2005 Patiala

The Finance Act, 11.22 2005-06 Joint Secretary Revenue 1994 Department, Ministry of Finance, Delhi

Income Tax Act, 193.22 2009-10 Income Tax Appellant 1961 Tribunal

Income Tax Act, 10,065.51 2010-11 Commissioner of Income 1961 and Tax (Appeals) 2011-12 (c) According to the information and explanations given to us, the amount required to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under has been transferred to such fund within time.

(viii) The Company does not have accumulated losses and has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institutions or banks. The Company has not issued any debentures during the year under audit.

(x) In accordance with the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xi) In our opinion and according to the information and explanations given to us, the term loans taken during the year by the Company have been applied for the purpose for which they were raised.

(xii) We have been informed that some of the employees of the Company along with the outsiders had misappropriated raw material of the Company at its unit at Budhni, Madhya Pradesh involving an amount of approximately Rs.767.16 lac. The incident was reported to Police authorities at Budhni and accordingly FIR was registered by them. The Police have filed a charge sheet in the court against the concerned employees as well as other persons involved in the crime and court proceedings in the matter are in progress. The Company has also filed a fidelity insurance claim in this matter.

Further, on the basis of information and explanation given to us, we report that no other fraud on or by the Company has been noticed or reported during the course of our audit.

For S.C. Vasudeva & Co.

Chartered Accountants Firm Regn. No. 000235N

(SANJIV MOHAN) Place: Ludhiana Partner Dated: 8th May, 2015 M. No. 086066

Mar 31, 2014

1. We have audited the accompanying financial statements of Vardhman Textiles Limited (''the Company''), which comprise the Balance sheet as at March 31, 2014, 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 management is responsible for the preparation of these financial statements that give a true and fair view of the financia position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub- section (3C) of section 211 of the Companies Act, 1956 (''the Act''). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

3. Our responsibility is to express an opinion on these financia 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 financia statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, ncluding 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 contro relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity interna 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 overal 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

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

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

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

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

Report on Other Legal and Regulatory Requirements

5. As required by the Companies (Auditor''s Report) Order, 2003 (as amended) (''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.

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

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

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

c. The Balance sheet, Statement of Profit and Loss, and Cash flow statement dealt with by this Report are in agreement with the books of account;

d. In our opinion, the Balance sheet, Statement of Profit and Loss, and Cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act;

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

Annexure to Independent Auditor''s Report a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

b) According to the information and explanations given to us, the Company has adopted a policy of physically verifying the fixed assets once in every three years. Pursuant to the said policy, the Company has physically verified the entire block of Plant and Machinery during the year. Discrepancies which were not material noticed on such physical verification have been properly dealt with in the books of account. Further, in our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has not disposed off substantial part of its fixed assets during the year.

i. a) According to the information and explanations given to us, nventories have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the Company and nature of its business.

c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of Inventories as compared to book records were not material and have been dealt properly with in the books of account.

iii (a) The Company has not granted secured or unsecured loans to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of paragraph 4(ii)(b)(c) and 9(d) of the above said order are not applicable to the Company.

(b) According to the information and explanations given to us, the rate of interest and other terms and conditions in respect of unsecured loan given by the Company, are not prima-facie prejudicial to the interest of the Company.

(c) In our opinion and according to the information and explanations given to us, the payment of principal amount and interest in respect of the aforesaid loan was regular.

(d) The Company has during the year taken unsecured loans from sixteen companies covered in the register maintained under section 301 of the Companies Act, 1956. The amount nvolved in the transaction is Rs.26,969.04 lac. The amount payable as at the close of the year is Rs.1,605.58 lac.

(e) According to the information and explanations given to us, the rate of interest and other terms and conditions in respect

of unsecured loan taken by the Company, are not prima-facie prejudicial to the interest of the Company.

(f) In our opinion and according to the information and explanations given to us, the payment of principal amount and interest in respect of the aforesaid loan was regular.

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 nature of its business for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in nternal control systems.

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

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rupees five lac or more in respect of the party during the year, have been made at price which are reasonable having regard to the prevalent market prices at the relevant time.

vi. According to the information and explanations given to us, the Company has not accepted deposits from public during the year covered under the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975.

vii. In our opinion and 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.

viii. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to the Company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2014, for a period of more than six months from the date they became payable.

b) According to the records of the Company, the details of disputed statutory dues aggregating to Rs.9,650.16 lac that have not been deposited on account of matters pending before the appellate authorities in respect of sales tax, custom duty, service tax, excise duty and income tax are given below:

Nature of Dues/Name of Statute Disputed Amount Financial yeartowhich (Rsinlac) amount relates

Sales tax/Central Sales Tax/ Entry Tax M. P. VAT Act, 2002 38.58 2006-07

The Maharashtra Sales Tax Act, 1 956 1.80 2005-06

Central Sales Tax Act, 1 956 6.19 2009-10

The Punjab VAT Act, 2005 0.83 2002-03

M.P. Commercial Tax Act, 1994 0.52 2001-02

Central Sales Tax Act, 1 956 11.16 2010-11

The Entry Tax Act, 1976 13.04 2003-04 & 2010-11

The Entry Tax Act, 1976 5.03 2000-01

Excise/Custom Duty

Central Excise Act, 1944 870.40 2003-04 to 2010-11

Customs Act, 1 962 7.15 2006-07

Central Excise Act, 1944 1.25 2006-07 to2010-11

Central Excise Act, 1944 112.62 2003-04 & 2005-06

Central Excise Act, 1944 0.17 2002-03

Central Excise Act, 1944 4.88 2013-14

Central Excise Act, 1944 3.55 2005-06

Central Excise Act, 1944 1.68 2005-06 & 2006-07

Service tax

Finance Act, 1994 13.67 2006-07

Finance Act, 1994 11.22 2008-09

Finance Act, 1994 113.20 2010-11

Income Tax

Income Tax Act, 1961 37.99 2001-02 & 2002-03

Income Tax Act, 1961 8395.23 2010-11

Name of the Statute Forum where Dispute is pending Sales tax/Central SalesTax/ Entry Tax M. P. VAT Act, 2002 Deputy Commissioner (Appeal), Commercial Tax, Bhopal

The Maharashtra Deputy Commissioner of Sales Tax, Mumbai Sales Tax Act,1956

Central Sales Tax Act 1956 Deputy Excise & Taxation Commissioner (Appeal), Jalandhar.

The Punjab VAT Act, 2005 Joint Director (Enforcement), Patiala

MP.Commercial TaxAct,1994 Add. Commissioner Commercial Tax, Bhopal

Central Sales Tax Act1956 Add. Commissioner Commercial Tax, Bhopal

The Entry Tax Act, 1976 Add. Commissioner Commercial Tax, Bhopal

The Entry Tax Act, 1976 Asstt. Commissioner Commercial Tax, Bhopal

Excise/Custom Duty

Central Excise Act, 1944 Custom, Excise & Service Tax Appellate Tribunal, New Delhi

Customs Act, 1 962 Custom, Excise & Service Tax Appellate Tribunal, New Delhi

Central Excise Act, 1944 Commissioner (Appeals), Bhopal

Central Excise Act, 1944 Hon''ble Supreme Court, New Delhi

Central Excise Act, 1944 Asstt. Commissioner Central Excise, Ludhiana

Central Excise Act, 1944 Commissioner (Appeals) Jalandhar

Central Excise Act, 1944 Additional. Commissioner Central Excise, Ludhiana

Central Excise Act, 1944 Commissioner(Appeals) Central Excise & Customs, Chandigarh Service tax

Finance Act, 1994 Commissioner (Appeals) Central Excise, Chandigarh Finance Act, 1994 Ministry of Finance, Department of Revenue, New Delhi Finance Act, 1994 Custom, Excise & Service Tax Appellate Tribunal, New Delhi

Income Tax

Income Tax Act, 1961 Income Tax Appellate Tribunal, Chandigarh Income Tax Act, 1961 CIT (Appeals) Ludhiana

According to the information and explanations given to us there are no disputed dues in respect of wealth tax and cess.

x. The Company does not have accumulated losses as at 31st March 2014. The latter part of the question relating to net worth is thus not applicable to the Company. Further, the Company has not ncurred cash losses during the financial year covered under audit and 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 banks.

xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore the provisions of the clause 4 (xii) of the above said order are not applicable to the Company.

xiii. The Company is not a chit fund or a nidhi mutual benefit fund/ society. Accordingly, the provisions of clause 4 (xiii) of the above said order are not applicable to the Company.

xiv. According to the information and explanations given to us, the Company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the Company.

xv. The Company has not given guarantees for loans taken by others from banks. Therefore provisions of clause 4(xv) of above said order are not applicable to the Company.

xvi. In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied for the purpose for which they were obtained.

xvii. According to information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis have not been used for long term investment.

xviii. According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix. According to the information and explanations given to us, the Company has not issued debentures during the year. Accordingly the provisions of clause 4 (xix) of the above said order are not applicable to the Company.

xx. The Company has not raised any money by way of public issue during the year. Accordingly the provisions of clause 4 (xx) of the above said order are not applicable to the Company.

xxi. According to the information and explanations given to us by the management and based upon the audit procedures performed we report that no fraud on or by the Company has been noticed or reported during the year.

For S.C. Vasudeva & CO. Chartered Accountants Firm Reg. No. 000235N

Sanjiv Mohan Place: New Delhi Partner Dated: 23rd May, 2014 M. No. 86066

Mar 31, 2013

Report on the Financial Statements

1. We have audited the accompanying financial statements of Vardhman Textiles Limited, which comprise the Balance sheet as at 31st March, 2013, and the Statement of Profit and Loss and Cash flow statement for the year ended on that date, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. 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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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

4. In our opinion and to the best of our information and according to the explanations given to us, the financial statements read together with significant accounting policies and notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

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

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

Report on Other Legal and Regulatory Requirements

5. As required by the Companies (Auditor''s Report) Order, 2003 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.

6. As required by section 227(3) of the Companies Act, 1956, we report that:

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

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

c. The Balance sheet, Statement of Profit and Loss, and Cash flow statement dealt with by this Report are in agreement with the books of account;

d. In our opinion, the Balance sheet, Statement of Profit and Loss and Cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

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

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 5)

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

b) According to the information and explanations given to us, the Company has adopted a policy of physically verifying the fixed assets once in every three years. Pursuant to the said policy, the Company has physically verified the entire block of office equipment and furniture and fixtures during the year. Discrepancies, which were not material, noticed on such physical verification have been properly dealt with in the books of account. Further, in our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has not disposed off substantial part of its fixed assets during the year.

ii. a) According to the information and explanations given to us, inventories have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the Company and nature of its business.

c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of Inventories as compared to book records were not material and have been dealt properly within the books of account.

iii. a) The Company has not granted secured or unsecured loans to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore the provisions of paragraph 4 (iii) (b) (c) and (d) of the above said order are not applicable to the Company.

b) The Company has during the year taken unsecured loans from twelve companies covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved in the transaction is Rs. 3,358.80 lac. The amount payable as at the close of the year is Rs. 147.80 lac.

c) According to the information and explanations given to us, the rate of interest and other terms and conditions in respect of unsecured loans taken by the Company, are not prima-facie prejudicial to the interest of the Company.

d) In our opinion and according to the information and explanations given to us, the payment of principal amount and interest in respect of the aforesaid loans was regular.

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 nature of its business for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

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

b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rupees five lac or more in respect of the party during the year, have been made at price which are reasonable having regard to the prevalent market prices at the relevant time.

vi. According to the information and explanations given to us, the Company has complied with the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975 with regard to deposits accepted from the public. According to the information 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.

vii. In our opinion and 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.

viii. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix. a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to the Company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2013, for a period of more than six months from the date they became payable.

b) According to the records of the Company, the details of disputed statutory dues aggregating to Rs. 451.29 Lac that have not been deposited on account of matters pending before the appellate authorities in respect of sales tax, custom duty, service tax, excise duty and income tax are given below:

Nature of Dues/ Disputed Period to Forum where Name of Statute Amount which amount Dispute is pending (Rs. in Lac) relates

Sales Tax/Central Sales Tax/Entry Tax

M. P. VAT Act, 2002 38.58 2007 Deputy Commissioner (Appeal), Commercial Tax, Bhopal

The Maharashtra Sales Tax 1.80 2006 Deputy Commissioner Act, 1956 of Sales Tax, Mumbai

M. P. VAT Act, 2002 0.04 2010 Add. Commissioner Commercial Tax, Bhopal

The Punjab VAT Act, 2005 0.83 2003 Joint Director (Enforcement), Patiala

M.P. Commercial Tax Act, 0.52 2002 Deputy Commissioner 1994 Commercial Tax, Bhopal

Central Sales Tax Act, 1956 27.44 2010 Add. Commissioner Commercial Tax, Bhopal

The Entry Tax Act, 1976 13.04 2004 & 2011 Add. Commissioner Commercial Tax, Bhopal

The Entry Tax Act, 1976 5.03 2001 Asstt. Commissioner Commercial Tax, Bhopal

Excise/Custom Duty

Central Excise Act, 1944 205.96 2006 to 2011 Custom, Excise & Service Tax Appellate Tribunal, New Delhi

Customs Act, 1962 7.15 2007 Custom, Excise & Service Tax Appellate Tribunal, New Delhi

Central Excise Act, 1944 1.02 2010 Commissioner (Appeals), Bhopal

Central Excise Act, 1944 108.36 2004 Hon''ble Supreme Court, New Delhi

Central Excise Act, 1944 0.17 2006 Asstt. Commissioner Central Excise,Ludhiana

Service tax

Service Tax Act, 1994 2.10 2010 & 2011 Commissioner (Appeals) Central Excise, Chandigarh

Service Tax Act, 1994 1.26 2008 & 2010 Custom, Excise & Service Tax Appellate Tribunal, New Delhi

Income Tax

Income Tax Act, 1961 37.99 2002 & 2003 Income Tax Appellate Tribunal, Chandigarh

According to the information and explanations given to us there are no disputed dues in respect of wealth tax and cess.

x. The Company does not have accumulated losses as at 31st March, 2013. The latter part of the question relating to net worth is thus not applicable to the Company. Further, the Company has not incurred cash losses during the financial year covered under audit and 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 banks.

xii. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore, the provisions of the clause 4 (xii) of the above said order are not applicable to the Company.

xiii. The Company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the above said order are not applicable to the Company.

xiv. According to the information and explanations given to us, the Company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the Company.

xv. The Company has not given guarantees for loans taken by others from banks. Therefore, provisions of clause 4(xv) of above said order are not applicable to the Company.

xvi. In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied for the purpose for which they were obtained.

xvii. According to information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis have not been used for long term investment.

xviii. According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

xix. According to the information and explanations given to us, the Company has not issued debentures during the year. Accordingly, the provisions of clause 4 (xix) of the above said order are not applicable to the Company.

xx. The Company has not raised any money by way of public issue during the year. Accordingly, the provisions of clause 4 (xx) of the above said order are not applicable to the Company.

xxi. According to the information and explanations given to us by the management and based upon the audit procedures performed we report that no fraud on or by the Company has been noticed or reported during the year.

For S.C. VASUDEVA & CO.

CHARTERED ACCOUNTANTS

Firm Regn. No.: 000235N

(SANJIV MOHAN)

PLACE : NEW DELHI PARTNER

DATED :28th May, 2013 MEMBERSHIP NO. 86066

Mar 31, 2012

1. We have audited the attached Balance Sheet of Vardhman Textiles Limited as at 31st March, 2012, and also the statement of profit and loss and the cash flow statement of the Company 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 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 misstatement. 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 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 sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order.

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that:

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

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

c) the balance sheet, statement of profit and loss and cash flow statement dealt with by this report are in agreement with the books of account;

d) in our opinion, the balance sheet, statement of profit and loss and cash flow statement dealt with by this report comply with the accounting standards referred to in section 211 (3C) of the Companies Act; 1956.

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

f) As indicated in note- 36 in Notes to accounts there is significant uncertainty associated with the derivative options referred to in the said note, resolution of which is dependent upon future events which are not under the direct control of the Company, on account of which the Company could not determine the possible loss, if any, on valuation of open derivative options. The ultimate outcome of these future events and their affect on the financial statements cannot be ascertained at this stage.

Subject to above, in our opinion and to the best of our information and according to the explanations given to us, they said accounts read together with the significant accounting policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

ii) in the case of Statement of Profit and Loss, of the profit 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)

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

b) According to the information and explanations given to us, the Company has adopted a policy of physically verifying the fixed assets once in every three years. Pursuant to the said policy, the Company has physically verified the entire block of land, buildings and vehicles during the year. No discrepancies were noticed on such physical verification. Further, in our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has not disposed off substantial part of its fixed assets during the year.

(ii) a) According to the information and explanations given to us, inventories have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the Company and nature of its business.

c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of Inventories as compared to book records were not material and have been dealt properly within the books of account.

(iii) a) The Company has not granted secured or unsecured loans to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore the provisions of paragraph 4 (iii) (b) (c) and (d) of the above said order are not applicable to the Company.

(b) The Company has during the year taken unsecured loans from twelve companies covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved in the transactions is Rs. 4217.05 lacs. The amount payable as at the close of the year is Rs. 1947.30 lacs.

(c) According to the information and explanations given to us, the rate of interest and other terms and conditions in respect of unsecured loan taken by the Company, are not prima-facie prejudicial to the interest of the Company.

(d) In our opinion and according to the information and explanations given to us, the payment of principal amount and interest in respect of the aforesaid loan was regular.

(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 nature of its business for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

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

(b) In our opinion and according to information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding Rupees five lacs or more in respect of the party during the year, have been made at prices which are reasonable having regard to the prevalent market prices at the relevant time.

(vi) According to the information and explanations given to us the Company has complied with the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules 1975 with regard to deposits accepted from the public. According to the information 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.

(vii) In our opinion and 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.

(viii) We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) a) According to the records of the Company, undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to the Company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2012, for a period of more than six months from the date they became payable.

b) According to the records of the Company, the details of disputed statutory dues aggregating to Rs. 3,46,88,884/- that have not been deposited on account of matters pending before the appellate authorities in respect of sales tax, custom duty, service tax and excise duty are given on the next page:

Nature of Dues/ Disputed Forum where Dispute is Name of Statute Amount (Rs.) pending

Sales Tax/Central Tax

M.P. Vat Act, 2002 5,145,532 Asstt. Commissioner Circle-2, Bhopal

The Maharashtra 179,691 Deputy Commissioner of Sales Tax Act, 1956 Sales Tax, Mumbai

M. P. VAT Act, 2002 1,447,063 Asstt. Commissioner Commercial Tax, Ratlam

The Punjab VAT 82,500 Joint Director (Enforcement), Act, 2005 Patiala

M.P. Commercial 52,137 Commercial Tax Appellate Tax Act, 1994 Board, Bhopal

Excise/Custom Duty

Central Excise 16,157,082 Custom, Excise & Service Tax Act, 1944 Appellate Tribunal, New Delhi

Central Excise 10,835,845 Hon'ble Supreme Court, New Act, 1944 Delhi

Central Excise 17,378 Asstt. Commissioner Central Act, 1944 Excise, Ludhiana Service tax

Service Tax 169,547 Commissioner (Appeals), Act, 1994 Central Excise, Chandigarh

Service Tax 604,109 Custom, Excise & Service Tax Act, 1994 Appellate Tribunal, New Delhi

According to the information and explanations given to us there are no disputed dues in respect of wealth tax and cess and in respect of income tax, disputed dues have been deposited with the income tax department.

(x) The Company does not have accumulated losses as at 31st March 2012. The latter part of the question relating to net worth is thus not applicable to the Company. Further, the Company has not incurred cash losses during the financial year covered under audit and 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 banks.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Therefore the provisions of the clause 4 (xii) of the above said order are not applicable to the Company.

(xiii) The Company is not a chit fund or a nidhi mutual benefit fund/society. Accordingly, the provisions of clause 4 (xiii) of the above said order are not applicable to the Company.

(xiv) According to the information and explanations given to us, the Company has not dealt or traded in share, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the Company.

(xv) The Company has not given guarantees for loans taken by others from banks. Therefore provisions of clause 4(xv) of above said order are not applicable to the Company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied for the purpose for which they were obtained.

(xvii) According to information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short-term basis have not been used for long term investment.

(xviii) According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the Company has not issued debentures during the year. Accordingly the provisions of clause 4 (xix) of the above said order are not applicable to the Company.

(xx) The Company has not raised any money by way of public issue during the year. Accordingly, the provisions of clause 4 (xx) of the above said order are not applicable to the Company.

(xxi) According to the information and explanations given to us by the management and based upon the audit procedures performed, we report that no fraud on or by the Company has been noticed or reported during the year.

For S.C. VASUDEVA & CO.

CHARTERED ACCOUNTANTS

Firm Regn. No.: 000235N

(SANJIV MOHAN)

PLACE : NEW DELHI PARTNER

DATED: 9th May, 2012 MEMBERSHIP NO. 86066

Mar 31, 2010

1. We have audited the attached Balance Sheet of Vardhman Textiles Limited as at 31st March, 2010, the Profit and Loss Account and the Cash Flow Statement of the company for the year ended on that date annexed thereto. These financial statements are the responsibility of the companyÃs 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. These 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 test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Further to our comments in the annexure referred to in paragraph 3 above, we report that:

a) we have obtained all the information 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, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

d) in our opinion, the balance sheet, profit and loss account and 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 the written representations received from the directors as on 31st March,2010 and taken on record by the Board of Directors, we report that none of the director is disqualified as on 31st March, 2010 from being appointed as a director in terms of section 274(1)(g) of the Companies Act,1956; and

f) As indicated in note-13 in Schedule-18 there is significant uncertainty associated with the derivative options referred to in the said note, resolution of which is dependant upon future events which are not under the direct control of the company, on account of which the company could not determine the possible loss, if any, on valuation of such derivative options. The ultimate outcome of these future events and their affect on the financial statements, cannot be ascertained at this stage.

Subject to above, 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 significant accounting policies and notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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 Profit and Loss account, of the profit 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 AUDITORSÃ REPORT (Referred to in paragraph 3)

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

b) According to the information and explanations given to us, the company has adopted a policy of physically verifying the fixed assets once in every three years. Pursuant to the said policy, the company has physically verified the entire block of furniture and fixtures during the year. No material discrepancies were noticed on such physical verification. Further, in our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the company and nature of its business.

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

(ii) a) According to the information and explanations given to us, inventories have been physically verified by the management during the year. In our opinion the frequency of verification is reasonable.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the company and nature of its business.

c) On the basis of our examination of the records of inventories, we are of the opinion that the company is maintaining proper records of inventories. The discrepancies noticed on physical verification of Inventories as compared to book records were not material and have been properly dealt with in the books of account.

(iii) (a) The company has not granted secured or unsecured loans to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore the provisions of paragraph 4 (iii) (b) (c) and (d) of the above said order are not applicable to the company.

(e) The company has during the year taken unsecured loans from eleven companies covered in the register maintained under section 301 of the Companies Act, 1956. The amount involved in the transactions is Rs. 2,301.00 lacs. The amount payable as at the close of the year is Rs 619.75 lacs.

(f) According to the information and explanations given to us, the rate of interest and other terms and conditions in respect of unsecured loans taken by the company, are not prima-facie prejudicial to the interest of the company.

(g) In our opinion and according to the information and explanations given to us, the payment of principal amount and interest in respect of the aforesaid loans was regular.

(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 nature of its business for the purchase of inventory and fixed assets and sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control systems.

(v) According to the information and explanations given to us, there are no contracts or arrangements the particulars of which need to be entered in the register maintained under section 301 of the Companies Act, 1956.

(vi) According to the information and explanations given to us the company has complied with the provisions of section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to deposits accepted from the public. According to the information 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.

(vii) In our opinion and 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.

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

(ix) a) According to the records of the company, undisputed statutory dues including provident fund, investor education and protection fund, employeesÃ state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues applicable to the company, if any, have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2010, for a period of more than six months from the date they became payable.

b) According to the records of the company, the details of disputed statutory dues aggregating to Rs. 13,56,96,030/- that have not been deposited on account of matters pending before the appellate authorities in respect of income tax, sales tax, custom duty, service tax and excise duty are given below:

Nature of Dues/ Disputed Forum where Dispute is Name of Statute Amount (Rs.) pending

Sales Tax

The Punjab VAT Act, 1,04,740 Punjab & Haryana High 2005 Court, Chandigarh

The Punjab Sales Tax 3,66,500 Joint Director Mobile Wing Act, 1957 Patiala Division , Patiala

The Punjab VAT Act, 2,00,000 Joint Director Mobile Wing 2005 Patiala Division , Patiala

The Punjab VAT Act, 82,500 Joint Director (Enforcement), 2005 Patiala

M.P. Commercial Tax 52,137 Commercial Tax Appellate Act, 1994 Board, Bhopal

Excise Duty

Central Excise Act, 27,78,084 Commissioner (Appeals) 1944 Central Excise, Chandigarh

Central Excise Act, 4,15,723 Chief Commissioner Central 1944 Excise, Chandigarh

Central Excise Act, 1,72,18,335 Custom, Excise & Service Tax 1944 Appellate Tribunal, New Delhi

Central Excise Act, 1,08,33,843 HonÃble Supreme Court, 1944 New Delhi

Central Excise Act, 17,378 Asstt. Commissioner Central 1944 Excise, Ludhiana

Service Tax

Finance Act, 1994 2,09,095 Commissioner (Appeals) Central Excise, Chandigarh

Finance Act, 1994 10,97,888 Custom, Excise & Service Tax Appellate Tribunal, New Delhi

Finance Act, 1994 1,19,807 Commissioner Appeals Custom, Central Excise, and Service Tax, Bhopal

Income-Tax

Income-Tax Act, 1961 10,22,00,000 Commissioner of Income-Tax ((Appeals)

According to the information and explanations given to us, there are no disputed dues in respect of wealth tax and cess.

(x) The company does not have accumulated losses as at 31st March 2010. The later part of the question relating to net worth is thus not applicable to the company. Further, the company has not incurred cash losses during the financial year covered under audit and 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 banks, financial institutions or debenture holders.

(xii) The company has not granted any loans and advances on the basis of security by way of pledge of shares, de- bentures and other securities. Therefore the provisions of the clause 4 (xii) of the above said order are not ap- plicable to the company.

(xiii) The company is not a chit fund or a nidhi mutual ben- efit fund/society. Accordingly, the provisions of clause 4 (xiii) of the above said order are not applicable to the company.

(xiv) According to the information and explanations given to us, the company has not dealt or traded in shares, secu- rities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the above said order are not applicable to the company.

(xv) The company has not given guarantees for loans taken by others from banks. Therefore provisions of clause 4(xv) of above said order are not applicable to the company.

(xvi) In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied for the purpose for which they were obtained.

(xvii) According to information and explanations given to us and on an overall examination of the balance sheet of the company, we report that funds raised on short-term basis have not been used for long term investment.

(xviii) According to the information and explanations given to us, the company has not made any preferential allot- ment of shares during the year to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) According to the information and explanations given to us, the company has not issued debentures during the year. Accordingly the provisions of clause 4 (xix) of the above said order are not applicable to the company.

(xx) The company has not raised any money by way of pub- lic issue during the year. Accordingly the provisions of clause 4 (xx) of the above said order are not applicable to the company.

(xxi) According to the information and explanations given to us by the management and based upon the audit proce- dures performed we report that no fraud on or by the company has been noticed or reported during the year ended 31st March, 2010.

For S.C. VASUDEVA & CO.

CHARTERED ACCOUNTANTS

Firm Registration No.: 000235N

SANJIV MOHAN PLACE:NEW DELHI PARTNER

DATED: 7th May, 2010 MEMBERSHIP NO. 86066

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