Arunoday Mills Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2014

We have audited the accompanying financial statements of Arunoday Mills Limited ("the Company") which comprise the Balance Sheet as at 31st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and accompanying notes thereto.

Management''s Responsibility for the Financial Statements:

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (the "Act") read with the General Circular No. 15/2013 Dt. 13-9-2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing and other applicable authoritative pronouncements 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 risks of material misstatement in the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion:

As more explained in note no. 4, no provision has been made in respect of differential liability of Rs. 339.69 Lacs due to secured lender viz. Bank of Baroda.

Qualified Opinion:

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Emphasis of Matter:

We draw attention to:

a) note no. 17 re: Company''s net worth being fully eroded due to accumulated losses, with corresponding effects in the loss for the year and period end net assets to the extent indicated therein and despite continued default in re-payment of significant re-called and overdue loans etc., the accounts have been prepared on ''going concern'' basis as followed hitherto. In view of acquisition of manufacturing facilities under Securitisation Act and disposal thereof by secured lenders and in the absence of any other business activity, the Company''s ability to continue as ''going concern'' is subject to and dependent upon future plans of the Company and

b) note no. 18 re: Balances under Current Liabilities and Current Assets being subject to confirmation and reconciliation, if any

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor''s Report) (Amendment) Order, 2004 (the "Order"), as amended, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in par agraphs 4 and 5 of the Order.

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

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit, except for the matter described in the Basis for Qualified Opinion paragraph;

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, except for the matters described in the Basis of Qualified Opinion paragraph;

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. except for the possible effects of the matters described in the Basis for Qualified Opinion, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards notified under the Act, read with the General Circular No. 15/2013 Dt. 13-9-2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

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

3. As required by the Companies (Auditor''s Report) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks of books and records of the Company as were considered appropriate and on the basis of information and explanations given to us during the course of our audit, we further state on the matters specified in Paragraphs 4 of the said order to the extent applicable to the Company as follows:

i) All the Fixed Assets of the Company were acquired by Secured Lenders under Securitisation Act and sold by public auction in the year 2006-07.

ii) The Company did not carry any stocks during the year.

iii) (a) As per the information furnished, the Company has not granted any loans to Companies,

Firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(b) In addition to amounts borrowed in earlier years towards interest-free, short term loans taken by the Company from associate bodies corporate, covered in the Register maintained under Section 301 of the Companies Act, 1956 and aggregating to Rs. 256.15 Lacs as stated below, a further sum of Rs. 11.28 Lacs was received during the year as under, leaving a balance of Rs. 267.43 Lacs.

Name of the Party Relationship Balance Amt. Balance Amt. with the as on recd / as on involved Company 1-4-13 paid / adj 31-3-14 during the during year the year Amount Rs. Lacs

Resons Investments Pvt. Ltd. Associate 251.15 6.55 257.70 257.70

Udaysons Inves tments Pvt. Ltd. Associate 5.00 - - 5.00

Ashita K. Sheth Shareholder - 4.62 4.62 4.62

Kantilal K. Sheth Mg. - 0.10 0.10 0.10 Director

(c) The terms and conditions on which the said interest free short term loans are taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(d) During the year, Resons Investments Pvt. Ltd. had re-called the outstanding loan of Rs. 257.70 Lacs. The Company has defaulted in re-payment of the said loan. The Company is regular in repayment of the rest of the loans as stipulated.

iv. The Company has not purchased any fixed assets or undertaken any trading activity during the year. In our opinion and according to the explanations given to us, there is adequate internal control system commensurate with the size and nature of the business of the Company. During the course of our audit, no major weakness has been noticed in the internal control system.

v. (a) On the basis of the information and explanations given to us and representations made, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section.

(b) According to the information and explanations given to us, the Company did not have any transactions in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year.

vi. According to the information and explanations given to us, no deposits from the public within the meaning of Reserve Bank of India Directives and Section 58A and 58 AA or any relevant provisions of the Act and the rules framed thereunder have been accepted by the Company.

vii. During the year under review, no internal audit was carried out.

viii. In the absence of any manufacturing activity the requirements for maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 are not applicable.

ix. (a) In our opinion and according to the information and explanations given to us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues, where applicable, have generally been regularly deposited in time with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues, where applicable, were in arrears as at 31st March, 2014 for a period of more than six months from the date they become payable.

(c) The particulars of disputed statutory dues that have not been deposited with the appropriate authorities on account of dispute and the forum where the dispute is pending are given below.

Name of Statute Nature of the Dues Amount Forum where Dispute is (Rs. in Pending Lacs)

Income-tax Act Re-assessment Dues 999.21 Income-tax Appellate Tribunal

Electricity Duty Electricity Duty 95.98 Inspecting Authority Act

E. S. I. Act E. S. I. Contribution 11.73 ESI Appellate Tribunal

Maharashtra VAT VAT & C.S.T. 38.38 Joint Commissioner of Act Appeals

x. The accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the current financial year under audit as well as in the immediately preceding financial year.

xi. The Company has defaulted in repayment of Secured Loans due to a Bank amounting to Rs. 785.92 Lacs as per Notice of demand issued by D.R.T. Mumbai under R.D.B. Act.

xii. Based on our examination of records and information and explanations given to us, as the Company has not granted loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities; the requirements of clause 4 (xii) of the Order relating to maintenance of documents and records in this regard are not applicable.

xiii. As the Company is not a chit fund, nidhi, mutual benefit fund or society, the provisions of clause 4 (xiii) of the Companies (Auditors'' Report) Order, 2004 are not applicable to the Company.

xiv. As the Company is not dealing or trading in shares, securities, debentures & other investments, provisions of clause 4 (xiv) of the Companies (Auditor''s Report) Order, 2004 are not applicable to the Company.

xv. Based on the records examined by and according to the information and explanations given to us, as the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions, clause 4 (xv) of the Order relating to comments as to the terms and conditions whereof being prejudicial to the interest of the Company are not applicable.

xvi. Based on the examination of the books of account and related records, the Company had, prima facie, applied the term loans for the purpose for which they were obtained. However, in the recent past the Company has no fresh borrowings.

xvii. According to information & explanations given to us and on an overall examination of the financial statements of the Company and after placing reliance on the reasonable assumptions made by the Company for classification of the long term and short term usage of the funds, we are of the opinion that, prima facie, the Company has not applied short term borrowings for long term use, except for repayment of overdue loans due to banks & financial institutions classified under current liability under One Time Settlement.

xviii. The Company has not made any preferential allotment of shares during the year.

xix. The Company has not issued any debentures during the year.

xx. The Company has not raised any money by way of public issue during the year.

xxi. According to the information & explanations given to us and to the best of our knowledge and belief, no material fraud on or by the Company has been noticed or reported during the year.

For J. C. MISTRY Chartered Accountants

(J. C. Mistry) Proprietor M. No. : 041971

Place : Mumbai Dated : 27th May, 2014

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Mar 31, 2013

Report on the Financial Statements:

We have audited the accompanying financial statements of Arunoday Mills Limited (''the Company'') which comprise the Balance Sheet as at 31st March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and accompanying notes thereto.

Management''s Responsibility for the Financial Statements:

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

Auditor''s Responsibility:

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of risks of material misstatement in 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.

Basis for Qualified Opinion:

As more explained in note no. 4 no provision has been made in respect of differential liability of Rs. 369.69 Lacs due to a Secured Lender.

Qualified Opinion:

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

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

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

Emphasis of Matter:

We draw attention to:

a) note no. 17 re: Company''s net worth being fully eroded due to losses, with corresponding effects in the profit/loss for the year and period end net assets to the extent indicated therein and despite continued default in re-payment of significant overdue loans etc., the accounts have been prepared on ''going concern'' basis as followed hitherto. In view of acquisition of manufacturing facilities under Securitisation Act and disposal thereof by secured lenders and in the absence of any other business activity, the Company''s ability to continue as ''going concern'' is subject to and dependent upon future plans of the Company and

b) note no. 18 re: Balances under Current Liabilities and Current Assets being subject to confirmation and reconciliation, if any

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements:

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

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

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit except for the matter described in the Basis for Qualified Opinion paragraph;

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, except for the matters described in the Basis of Qualified Opinion paragraph;

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. except for the possible effects of the matters described in the Basis for Qualified Opinion, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956; and

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.

3. As required by the Companies (Auditor''s Report) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks of books and records of the Company as were considered appropriate and on the basis of information and explanations given to us during the course of our audit, we further state on the matters specified in Paragraphs 4 of the said order to the extent applicable to the Company as follows:

i) Fixed Assets of the Company were acquired by Secured Lenders under Securitisation Act and sold by public auction in the year 2006-07.

ii) The Company did not carry any stocks during the year.

iii) (a) As per the information furnished, the Company has not granted any loans to Companies, Firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(c) The terms and conditions on which the said interest free short term loans are taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(d) The Company is regular in repayment of the above loans as stipulated.

iv. The Company has not purchased any fixed assets or undertaken any trading activity during the year. In our opinion and according to the explanations given to us, there is adequate internal control system commensurate with the size and nature of the business of the Company. During the course of our audit, no major weakness has been noticed in the internal control system.

v. (a) On the basis of the information and explanations given to us and representations made, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section.

(b) According to the information and explanations given to us, the Company did not have any transactions in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year.

vi. According to the information and explanations given to us, no deposits from the public within the meaning of Reserve Bank of India Directives and Section 58A and 58 AA or any relevant provisions of the Act and the rules framed thereunder have been accepted by the Company.

vii. During the year under review, no internal audit was carried out.

viii. In the absence of any manufacturing activity the requirements for maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 are not applicable.

ix. (a) In our opinion and according to the information and explanations given to us, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth-tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues, where applicable, have generally been regularly deposited in time with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of aforesaid dues, where applicable, were in arrears as at 31st March, 2013 for a period of more than six months from the date they become payable.

X. The accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the current financial year under audit as well as in the immediately preceding financial year.

xi. The Company has defaulted in repayment of Secured Loans due to a Bank amounting to Rs. 785.92 Lacs as per Notice of demand issued by D.R.T. Mumbai under R.D.B. Act.

xii. Based on our examination of records and information and explanations given to us, as the Company has not granted loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities; the requirements of clause 4 (xii) of the Order relating to maintenance of documents and records in this regard are not applicable.

xiii. As the Company is not a chit fund, nidhi, mutual benefit fund or society, the provisions of clause 4 (xiii) of the Companies (Auditors'' Report) Order, 2004 are not applicable to the Company.

xiv. As the Company is not dealing or trading in shares, securities, debentures & other investments, provisions of clause 4 (xiv) of the Companies (Auditor''s Report) Order, 2004 are not applicable to the Company.

xv. Based on the records examined by and according to the information and explanations given to us, as the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions, clause 4 (xv) of the Order relating to comments as to the terms and conditions whereof being prejudicial to the interest of the Company are not applicable.

xvi. Based on the examination of the books of account and related records, the Company had, prima facie, applied the term loans for the purpose for which they were obtained. However, in the recent past the Company has no fresh borrowings.

xvii. According to information & explanations given to us and on an overall examination of the financial statements of the Company and after placing reliance on the reasonable assumptions made by the Company for classification of the long term and short term usage of the funds, we are of the opinion that, prima facie, the Company has not applied short term borrowings for long term use, except for repayment of overdue loans due to banks & financial institutions classified under current liability under One Time Settlement.

xviii. The Company has not made any preferential allotment of shares during the year.

xix. The Company has not issued any debentures during the year.

xx. The Company has not raised any money by way of public issue during the year.

xxi. According to the information & explanations given to us and to the best of our knowledge and belief, no material fraud on or by the Company has been noticed or reported during the year.

For J. C. MISTRY

Chartered Accountants

(Jaychandra C. Mistry)

Place : Mumbai Proprietor

Dated : 31st May, 2013 M. No. : 041971

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Mar 31, 2011

1. We have audited the attached Balance Sheet of ARUNODAY MILLS LIMITED, as at 31st March, 2011 and also the annexed Profit & Loss Account of the Company for the year ended on that date annexed thereto and Cash Flow Statement for the period ended on that date. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We report that:

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

ii. In our opinion, proper Books of Account as required by law have been kept by the Company so far as it appears from our examination of those books, except for non provision of differential liabilities due to Secured Lenders, Sales-tax, Bonus & Leave Encashment liability as stated in note no. 4, note no. 7 and note no. 8 of Schedule XVI respectively.

iii. The Balance Sheet and Profit & Loss Account dealt with by the Report are in agreement with the books of account.

iv. Subject to note no. 4 re: non-provision of differential liabilties due to Secured Lenders and note no. 8 re: non provision of Bonus & accrued Leave Encashment under Schedule XVI, in our opinion the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub section (3 C) of Section 211 of the Companies Act, 1956. to the extent applicable.

v. On the basis of the written representations received from the Directors as on 31st March, 2011 and taken on record by the Board of Directors and further certified by the Company, we report that none of the Directors are prima facie disqualified from being appointed as a Director in terms of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956.

vi. As referred to in note no. 5 of Schedule XVI, despite the.Company's net worth being fully eroded due to losses [without considering our remarks in paragraph (iv) above] with corresponding effects in the profit/loss for the year and period end net assets to the extent indicated in para (viii) below and despite significant overdue loans etc., the accounts have been prepared on 'going concern' basis as followed hitherto. In view of manufacturing facilities acquired and disposed off by secured lenders and in the absence of any business activity, the Company's ability to continue as 'going concern' is subject to and dependant upon future plans of the Company.

vii. Balances of Secured Loans, Sundry Debtors, Sundry Creditors, Loans Advances & Deposits and Bank Balances are subject to confirmation and reconciliation, if any, as referred to in note no. 11.

viii. In the absence of any provision made in respect of differential liability of Rs. 822.02 Lacs between the amount claimed/payable by/to secured lenders and the amount carried in the books; nor any quantification made in respect of additional liability arising on account of interest as referred to in note no. 4, we are unable to comment on the impact thereof on the loss for the year and the consequential accumulated losses at the year end.

ix. Subject to our comment in para (viii) above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read with note no. 5 re: preparation of accounts on the fundamental accounting assumption of 'going concern', note no. 4 re: non provision of liabilities due to Secured Lenders, note no. 8 re: non provision of Bonus & Leave encashment and note no. 9 re: Interest on Delayed Payment to Micro, Small and Medium Enterprises (Development) Act, 2006 in Schedule XVI and other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

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

b) In the case of the Profit & Loss Account of the 'Loss' for the year ended on that date and;

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

4. As required by the Companies (Auditor's Report) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks of books and records of the Co mpany as were considered appropriate and on the basis of information and explanations given to us during the course of our audit, we further state on the matters specified in Paragraphs 4 of the said order to the extent applicable to the Company as follows:

i) (a) All the Fixed Assets of the Company were acquired by Secured Lenders under the Securitisation Act and sold by public auction in the financial year 2006-07 and as such the question of maintenance of records and propriety thereof does not arise.

(b) In the absence of any fixed assets, the comments as to physical verification by the Management, reasonability of frequency and discrepancy are not applicable.

(c) In the absence of any fixed assets, the comment as to disposal of substantial undertaking affecting its going concern status is not applicable.

ii) (a) In the absence of any stocks during the year, the question of verification by the management does not arise.

(b) In the absence of any stocks during the year, the comment as to procedures of physical verification and adequacy thereof does not arise.

(c) In the absence of any inventories during the year, the comment as to examination of records of the Company, propriety thereof and discrepancey between physical stock and book records does not arise.

iii) (a) As per the information furnished, the Company has not granted any loans to Companies, Firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(b) As the Company has not granted any loans, the question of commenting on whether the rate of interest and other terms and conditions on which the said loans are given by the Company, secured or unsecured, are prima facie not prejudicial to the interest of the Company, does not arise.

(c) Also the question of commenting on regularity as to payment of principal amount and interest thereon does not arise.

(d) Also whether reasonable steps have been taken by the company if overdue amount is more than rupees one lac does not arise.

(e) In addition to amount borrowed in earlier years towards interest free, short term loans taken by the Company from an associate body corporate, covered in the Register maintained under Section 301 of the Companies Act, 1956 and aggregating to Rs. 114.95 Lacs as stated below, a further net sum of Rs. 7.30 Lacs was received during the year leaving a balance of Rs. 114.95 Lacs.

Name Relation Balance Amount Recd. Balance Max. amt. the ship with as on /Paid/Adj. as on involved Party the 1.4.2010 during 31.3.2011 during Company the year the year

Amount Rupees in Lacs

Resons Associate 114.95 7.30 122.25 124.20 Inves tment P. Ltd.

(f) The terms and conditions on which the said interest free short term loans are taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(g) The Company is regular in repayment of the above loans as stipulated.

iv. The Company has not purchased any fixed assets or undertaken any trading activity during the year. In our opinion and according to the explanations given to us, there are adequate internal control system commensurate with the size and nature of the business of the Company. During the course of our audit, no major weakness has been noticed in the internal control system.

v. (a) On the basis of the information and explanations given to us and representations made, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the 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 the value of rupees five lacs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. According to the information and explanations given to us, no deposits from the public within the meaning of Reserve Bank of India Directives and Section 58A and 58 AA or any relevant provisions of the Act and the rules framed thereunder have been accepted by the Company.

vii. During the year under review, no internal audit was carried out.

viii. Pursuant to acquisition of all the assets of the Company by Secured Lenders and disposal thereof under Securitisation Act, the manufacturing operations of the Company have been ceased hence no records thereof have been maintained and as such the question of review thereof pursuant to relevant rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956, in respect of the Company's products to which the said rules are made applicable does not arise.

ix. (a) In our opinion and according to the information and explanations given to us, 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, where applicable, have generally been regularly deposited in time with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income-tax, Sales-tax, Wealth-tax, Service Tax, Custom duty, Excise duty and Cess, where applicable, were in arrears as at 31st March, 2011 for a period of more than six months from the date they become payable.

(c) In our opinion and according to the information and explanations given to us, the dues in respect of Income-tax, Sales-tax*, Wealth-tax, Service tax, Custom Duty, Excise Duty and Cess, where applicable, that have not been deposited with the appropriate authorities on account of dispute and the forum where the dispute is pending are given below.

Name of Statute Nature of the Amount Forum where Dues (Rs. in Dispute is Lacs) Pending

Electricity Electricity 95.98 Inspecting Duty Act Duty Authority

E.S.I.Act E. S. I. 11.73 Appellate Contribution Authorities

Bombay Sales VAT&C.S.T 249.66 Joint Com. of Tax Act Appeals

*As regards Gujarat Sales-tax demands of Rs. 177.79 Lakhs for the years 2005-06 & 2006-07; we are explained that the same were forwarded to Nandan Exim Pvt. Ltd. (the buyers of assets under auction sale) who as per terms of sale & Hon'ble Gujarat High Court are liable for statutory dues. Hence the status thereof is not known to the Company.

x. The accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the current financial year under audit as well as in the immediately preceding financial year.

xi. The Company has defaulted in repayment of Secured Loans due to Banks & Financial Institutions and for recovery of which applications have been filed by them with respective jurisdictional D.R.T for a total sum of Rs. 11,396.26.

xii. Based on our examination of records and information and explanations given to us, as the Company has not granted loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities; the requirements of clause 4 (xii) of the Order relating to maintenance of documents and records in this regard are not applicable.

xiii. As the Company is not a chit fund, nidhi, mutual benefit fund or society, the provisions of clause 4 (xiii) of the Companies (Auditors' Report) Order, 2004 are not applicable to the Company.

xiv. As the Company is not dealing or trading in shares, securities, debentures & other investments, provisions of clause 4 (xiv) of the Companies (Auditor's Report) Order, 2004 are not applicable to the Company.

xv. Based on the records examined by and according to the information and explanations given to us, as the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions, clause 4 (xv) of the Order relating to comments as to the terms and conditions whereof being prejudicial to the interest of the Company are not applicable.

xvi. Based on the examination of the books of account and related records, the Company had, prima facie, applied the term loans for the purpose for which they were obtained.

xvii. According to information & explanations given to us and on an overall examination of the financial statements of the Company and after placing reliance on the reasonable assumptions made by the Company for classification of the long term and short term usage of the funds, we are of the opinion that, prima facie, the Company has not applied short term borrowings for long term use, except cross usage, if any, resulting or caused due to transfer of excess drawings in cash credit accounts to term loan account on restructuring of credit facilities.

xviii. The Company has not made any preferential allotment of shares during the year.

xix. The Company has not issued any debentures during the year.

xx. The Company has not raised any money by way of public issue during the year.

xxi. According to the information & explanations given to us and to the best of our knowledge and belief, no material fraud on or by the Company has been noticed or reported during the year.

ForJ.C.MISTRY Chartered Accountants

(Jaychandra C. Mistry) Proprietor M. No. : 041971 Place : Mumbai Dated : 28th July, 2011

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of ARUNODAY MILLS LIMITED, as at 31st March, 2010 and also the annexed Profit & Loss Account of the Company for the year ended on that date annexed there to and Cash Flow Statement for the period ended on that date. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We report that:

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

ii. In our opinion, proper Books of Account as required by law have been kept by the Company so far as it appears from our examination of those books, except for non recognition of Subsidy as stated in note no. 7; non provision of differential liabilities due to Secured Lenders, Sales-tax, Bonus & Leave Encashment liability as stated in note no. 4, note no. 6 and note no. 9 of Schedule XVI respectively.

iii. The Balance Sheet and Profit & Loss Account dealt with by the Report are in agreement with the books of account.

iv. Subject to note no. 7 re: non recognition of Subsidy of Rs. 37.72 Lacs, note no. 4 re: non-provision of differential liabilties due to Secured Lenders and note no. 9 re: non provision of Bonus & accrued Leave Encashment under Schedule XVI, in our opinion the Balance Sheet and Profit and Loss Account dealt with by this report comply with the Accounting Standards referred to in sub section (3 C) of Section 21.1 of the Companies Act, 1956, to the extent applicable.

v. 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 and further certified by the Company, we report that none of the Directors are Prima facie disqualified from being appointed as a Director in terms of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956.

vi. As referred to in note no. 5 of Schedule XVI, despite the Companys net worth being fully eroded due to losses [without considering our remarks in paragraph (iv) above] with corresponding effects in the profit/loss for the year and period end net assets to the extent indicated in para (viii) below and despite significant overdue loans etc., the accounts have been prepared on going concern1 basis as followed hitherto. In view of manufacturing facilities acquired and disposed off by secured lenders and in the absence of any business activity, the Companys ability to continue as going concern is subject to and dependant upon future plans of the Company.

vii. Balances of Secured Loans, Sundry Debtors, Sundry Creditors, Loans Advances & Deposits and Bank Balances are subject to confirmation and reconciliation, if any, as referred to in note no. 12.

viii. In the absence of any provision made in respect of differential liability of Rs. 1,126.72 Lacs between the amount claimed/payable by/to secured lenders and the amount carried in the books; nor any quantification made in respect of additional liability arising on account of interest as referred to in note no. 4 (e), we are unable to comment on the impact thereof on the loss for the year and the consequential accumulated losses at the year end.

ix. Subject to our comment in para (viii) above, in our opinion and to thebest of our information and according to the explanations given to us, the said accounts read with note no. 5 re: preparation of accounts on the fundamental accounting assumption of going concern, note no. 7 re: non recognition of Subsidy, note no. 4 re: non provision of liabilities due to Secured Lenders, note no. 9 re: non provision of Bonus & Leave encashment and note no. 10 re: Interest on Delayed Payment to Micro, Small and Medium Enterprises (Development) Act, 2006 in Schedule XVI and other notes thereon, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view:

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

b) In the case of the Profit & Loss Account of the Loss for the year ended on that date and;

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

4. As required by the Companies (Auditors Report) Order, 2004 issued by the Central Government in terms of Section 227 (4A) of the Companies Act, 1956 and on the basis of such checks of books and records of the Company as were considered appropriate and on the basis of information and explanations given to us during the course of our audit, we further state on the matters specified in Paragraphs 4 of the said order to the extent applicable to the Company as follows:

i) (a) All the Fixed Assets of the Company were acquired by Secured Lenders under the Securitisation Act and sold by public auction in the previous year and as such the question of maintenance of records and propriety thereof does not arise.

(b) In the absence of any fixed assets, the comments as to physical verification by the Management, reasonability of frequency and discrepancy are not applicable.

(c) In the absence of any fixed assets, the comment as to disposal of substantial undertaking affecting its going concern status is not applicable.

ii) (a) In the absence of any stocks during the year, the question of verification by the management does not arise.

(b) In the absence of any stocks during the year, the comment as to procedures of physical verification and adequacy thereof does not arise.

(c) Jn the absence of any inventories during the eyar, the comment as to examination examination of records of the Company, propriety thereof and discrepancey between physical stock and book records does not arise.

iii) (a) As per the information furnished, the Company has not granted any loans to Companies, Firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

(b) As the Company has not granted any loans, the question of commenting on whether the rate of interest and other terms and conditions on which the said loans are given by the Company, secured or unsecured, are prima facie not prejudicial to the interest of the Company, does not arise.

(c) Also the question of commenting on regularity as to payment of principal amount and interest thereon does not arise.

(d) Also whether reasonable steps have been taken by the company if overdue amount is more than rupees one lac does not arise.

(e) In addition to amount borrowed in earlier years towards interest free, short term loans taken by the Company from an associate body corporate covered in the Register maintained under Section 301 of the Companies Act, 1956 and aggregating to Rs. 106.45 Lacs as stated below, a further sum of Rs. 8.50 Lacs was received during the year leaving a balance of Rs. 114.95 Lacs.

Name Relationship Balance Amount Reed. Balance Max.amt. the Party with the as on / Paid /Adj. as on involved during Company 1.4.2009 during the year 31.3.2010 the year

Amount Rupees in Lacs

Resons Investment Associate 106.45 8.50 114.95 114.95 Pvt. Ltd.

({) The terms and conditions on which the said interest free short term loans are taken by the Company are not, prima facie, prejudicial to the interest of the Company.

(g) The Company is regular in repayment of the above loans as stipulated.

iv. The Company has not purchased any fixed assets or undertaken any trading activity during the year. In our opinion and according to the explanations given to us, there are adequate internal control system commensurate with the size and nature of the business of the Company. During the course of our audit, no major weakness has been noticed in the internal control system.

v. (a) On thebasis of the information and explanations given to us and representations made, we are of the opinion that particulars of contracts or arrangements referred to in Section 301 of the Act have been entered in the register required to be maintained under that Section.

(b) In our opinion and according to the 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 the value of rupees five lacs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi. According to the information and explanations given to us, no deposits from the public within the meaning of Reserve Bank of India Directives and Section 58A and 58 AA or any relevant provisions of the Act and the rules framed thereunder have been accepted by the Company.

vii. During the year under review, no internal audit was carried out.

viii. Pursuant to acquisition of all the assets of the Company by Secured Lenders and disposal thereof under Securitisation Act, the manufacturing operations of the Company have been ceased hence no records thereof have been maintained and as such the question of review thereof pursuant to relevant rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956, in respect of the Companys products to which the said rules are made applicable does not arise.

ix. (a) In our opinion and according to the information and explanations given to us, 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, where applicable, have generally been regularly deposited in time with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payabfe in respect of Income-tax,Sales-tax, Wealth-tax, Service Tax, Custom duty, Excise duty and Cess, where applicable, were in arrears as at 31st March, 2010 for a period of more than six months from the date they become payable.

(c) In our opinion and according to the information and explanations given to us, the dues in respect of Income-tax, Sales-tax*, Wealth-tax, Service tax, Custom Duty, Excise Duty and Cess, where applicable, that have not been deposited with the appropriate authorities on account of dispute and the forum where the dispute is pending are given below.



Name of Statute Nature of the Dues Amount Forum where

(Rs. in Lacs) Dispute is Pending

Electricity Duty Act Electricity Duty 95.98 Inspecting Authority

E.-S.I.Act E. S.I. Contribution 11.73 Appellate Authorities



-Reference is invited to note no. 6 in Schedule XVI to the accounts. We are explained that as per order of Gujarat High Court, the buyers of assets are liable for statutory dues. Sales-tax demands for the financial years 2003-04 to 2006-07 raised in the name of the Company, were forwarded to the buyers of the assets for doing needful. Hence the status thereof is not known to the Company.

x. The accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses during the current financial year under audit; however, no cash losses were incurred in the immediately preceding financial year.

xi. The Company has defaulted in repayment of Secured Loans due to Banks & Financial Institutions and for recovery of which applications have been filed by them with respective D.R.T. for a total sum of Rs. 11,396.26.

xii. Based on our examination of records and information and explanations given to us, as the Company has not granted loans and /or advances on the basis of security by way of pledge of shares, debentures and other securities; the requirements of clause 4 (xii) of the Order relating to maintenance of documents and records in this regard are not applicable.

xiii. As the Company is not a chit fund, nidhi, mutual benefit fund or society, the provisions of clause 4 (xiii) of the Companies (Auditors Report) Order, 2004 are not applicable to the Company.

xiv, As the Company is not dealing or trading in shares, securities, debentures & other investments, provisions of clause 4 (xiv) of the Companies (Auditors Report) Order, 2004 are not applicable to the Company.

xv. Based on the records examined by and according to the information and explanations given to us, as the Company has not given any guarantee for loans taken by others from Banks or - Financial Institutions, clause 4 (xv) of the Order relating to comments as to the terms and conditions whereof being prejudicial to the interest of the Company are not applicable.

xvi. Based on the examination of the books of account and related records, the Company has, prima facie, applied the term loans for the purpose for which they were obtained.

xvii. According to information & explanations given to us and on an overall examination of the financial

statements of the Company and after placing reliance on the reasonable assumptions made by the Company for classification of the long term and short term usage of the funds, we are of the

- opinion that, prima facie, the Company has not applied short term borrowings for long term use, except cross usage, if any, resulting or caused due to transfer of excess drawings in cash credit accounts to term loan account on restructuring of credit facilities.

xviii. The Company has not made any preferential allotment of shares during the year.

xix. The Company has not issued any debentures during the year.

xx. The Company has not raised any money by way of public issue during the year.

xxi. According to the information & explanations given to us and to the best of our knowledge and belief, no material fraud on or by the Company has been noticed or reported during the year.

For J.C. MISTRY

Chartered Accountants

(Jaychandra C. Mistry)

Proprietor

M. No.: 041971

Place : Mumbai

Dated : 17th August, 2010