Gandhidham Spg & Mfg Company Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2015

We have audited the accompanying financial statements of Gandhidham Spinning and Manufacturing Co. Ltd ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, and the Statement of Profit and Loss, cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Management and Board of Directors of the Company are responsible for the matter stated in Section 134(5) of the Companies Act 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting principles generally accepted in india, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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; implementation and maintenance of adequate internal financial controls, that are 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 financial statements based on our audit. While conducting the 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 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 and fair presentation 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 management, as Board of 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 financial statements.

OPINION

The Manufacturing operations of the company have been stopped with effect from 25.07.1986 with a view to prevent further losses. The accounts of the Company for the year ended 31st March 2015 have been prepared on the "GOING CONCERN" basis, which is dependent upon the availability of continuing finance and the Company's future performance. In this connection, attention is drawn to para 3 of directors report.

In our opinion and to the best of our information and according to the explanations given to us, the financial statements subject to note no. 19(a) about the non-redemption of 200000,9.5% Redeemable Cumulative Preference Shares of Rs.10 each due for redemption on 31.12.1990 (see note No. 19(a) of the notes to the accounts) and note no. 20(a) and 20(b) about amount of Rs. 26,32,586.00 (net) due from M/s. Sabnani Export Pvt. Ltd. & Asha Fabrics Rs.8,71,940.00 since had these been provided the loss would have been increased by Rs.35,04,526.00 and debtors would have been reduced by an equal amount and total Loss would have been Rs. 3,02,92,031.18, instead of Rs. 2,67,87,505.18 (see note No. 20(a) and 20(b) of the notes to the accounts) read together with notes appearing in schedule of significant accounting policies and notes to accounts give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2015.

(b) in the case of the Profit and Loss Account, of the profit for the year ended on that date.

(c) in the case of the Cash flow statement, of the cash flows of the company for the year ended on that date.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (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 Companies Act 2013, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. We have obtained all the information and explanations which to the best of 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 aforesaid financial statements comply with the applicable 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 31" March, 2015, and taken on record by the Board of Director, non of the directors is disqualified as on 31st March, 2015 from being appointed as director in terms of Section 164 (2) of the Act.

f. In our opinion, and to the best of our information and according to explanations given to us, We Report as under with respect to the matters to be included in the Auditor's Report in accordance with Rule 11 for the Companies (Audit and Auditors) Rules, 2014: '

i. The Company has disclosed the impact of pending litigation on its financial position in its financial Statements as of March 31,2015.

ii. The Company did not have any long-term contract during the year under report to transfer any sums to the investor education and protection fund; as such the question of delay in transferring such sums does not arise.

Annexure to the Independent Auditors Report for the year ended on 31s8 March. 2015

On the basis of such checks as we considered appropriate " id according to the information and explanations given to us during the course of our audit, we report that: -

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

(b) The fixed assets have not been physically verified by management during the year. We are unable to express our opinion about the discrepancies, if any compared to the book records.

(ii) In our opinion and according to the information & explanations given to us, as there is no inventory as on Balance sheet date, the requirement of clause (ii) of paragraph 3 of the said Order is not applicable to the Company.

(lis) The Company has not granted any loans secured or unsecured to Companies, firms or other parties listed in the register maintained under section 189 of The Companies Act,2013. Accordingly, the provisions of clause 3(iii)(a), and(iii)(b) of the Companies (Auditors Report) Order 2015 are not applicable to the company.

(iv) In our opinion and according to the information and explanation given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regards to purchase of inventory and fixed assets and with regards to sale of goods and service further, on the basis of our examination of the books and records of the Company, and according to the information and explanation give to us, no major weakness has been noticed and reported.

(v) In our opinion and according to the information and explanation given to us, the Company has not accepted any deposit from the public within the meaning of section 73 to 76 or any other relevant provision of the act and the rules framed there under.

(vi) As informed to us, the central Government has not prescribed maintenance of Cost records under section 148(1) of the Companies act, 2013.

(vii) (a) According to the information and explanation given to us, and based on the records of the company examined by us, the company is regular in depositing undisputed statutory dues including Provident fund, Employee's State Insurance, Income tax, Wealth Tax, Excise Duty, Custom Duty, Sales Tax, Cess and other material dues, and applicable with the appropriate authorities during the year.

(b) According to the information and explanation given to us, the dues in respect of Income tax, Wealth Tax, Service Tax, Excise Duty, Customs Duty, Sales Tax & Value Added tax, Cess and other material statutory dues that have not been deposited with the appropriate authorities on accouts of dispute and the forum where the disputes are pending are given below:

No. Name of the Status Nature of Amount Forum where the Dues dispute is pending

1. Sales Tax Act, 1969 Sales Tax 2,26,830 Sales Tax Commissioner (Appeals)

2. Income Tax Act, 1961 Income Tax 6,07,130 CIT Appels, Rajkot

(c.) There has not been as occasion in case of the Company during the year report to transfer any sums to the Investor Education and Protection Fund; as such the question of delay in transferring such does not arise.

(vii) In our opinion, the accumulated losses of the Company at the end of the Financial Year are more than fifty percent of its net worth. The Company has incurred cash loss in the financial year ended covered by our audit but no such cash loss were there in the immediately preceding financial year.

(ix) According to the records of the company examined by us and as per the information and explanations given to us the company has not availed of any loans from any financial institution or bank and has not issued debentures.

(x) In our opinion and according to the information and explanations given to us, the company has not given any guarantee of loans taken by other from banks or financial institutions during the year. Accordingly the provision of clause 3 (x) of the Order are not applicable to the Company.

(xi) In our opinion and according to the information and explanations given to us, the company has not raised any term loans during the year.

(xii) During the course of our examination of the books and records of the company, carried in accordance with the auditing standards generally accepted in India, we have neither come across any instance of fraud on or by the company noticed or reported during the course of our audit we have not been informed of any such instance by the Management.

For Khimji Kunverji & Co. (Gandhidham) Chartered Accountants (Registration No: 105147W)



(Padamshi L. Shah) Place: Gandhidham - Kutch Partner Date: 25th August, 2015 Membership No. 5136

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Mar 31, 2013

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Gandhidham Spinning & Manufacturing Company Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2013 and the Statement of Profit & Loss for the Year then ended, and a summary of significant accounting policies and other explanatory information.

MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

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

The Manufacturing operations of the company have been stopped with effect from 25.07.1986 with a view to prevent further losses. The accounts of the Company for the year ended 31st March 2013 have been prepared on the "GOING CONCERN" basis, which is dependent upon the availability of continuing finance and the Company''s future performance. In this connection, attention is drawn to para 3 of directors report.

In our opinion and to the best of our information and according to the explanations given to us, the financial statements subject to note no. 19(a) about the non-redemption of 200000 9.5% Redeemable Preference Shares of Rs.10 each due for redemption on 31.12.1990 (see note No. 19 (a) of the notes to the accounts) and note no. 19 (d) and 19(e) about amount of Rs. 26,32,586.00 (net) due from M/s. Sabnani Export Pvt. Ltd. & Asha Fabrics Rs.8,71,940.00 since had these been provided the loss would have been increased by Rs.35,04,526.00 and debtors would have been reduced by an equal amount and total Loss would have been Rs.2,93,27,924.96, instead of Rs. 2,58,23,398.96. (see note No. 19 (d) and 19 (e) of the notes to the accounts) read together with notes appearing in schedule of significant accounting policies and notes to accounts 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 2013, and

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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

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

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

b. In our opinion proper books of 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 subsection (3C) of section 211 of the Companies Act, 1956 ;

e. On the basis of information and explanations given to us and representations received by a Company from the Directors, which have been taken on record by the Board of Directors, we report that 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 Auditors Report for the year ended on 31~March 2013.

As required by the companies (auditor''s report) order, 2003 issued by the Department of Company Affairs, Govt. of India in terms of section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanation given to us, we further report on the matters specified in the paragraph 4 and 5 of the said order as under:

(I) In respect of its fixed assets:

a) In our opinion the Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

b) The fixed assets have not been physically verified by management during the year. We are unable to express our opinion about the discrepancies, if any compared to the book records.

c) In our opinion and according to the information and explanations given to us. No substantial part of the fixed assets of the company have been disposed off during the year.

(II) In our opinion and according to the information & explanations given to us, as there is no inventory as on Balance sheet date, the Provision of clause 4(ii) of the order is not applicable to the company.

(III) a) The Company has not granted any loans secured or unsecured to Companies, firms or other parties listed in the register maintained under section 301 of The Companies Act,1956. Accordingly, the provisions of clause 4(iii)(b), (iii)(c) and (iii)(d) of the Companies (Auditor''s Report) Order 2003 are not applicable to the company. .

(b) The company has taken interest free unsecured loans from two parties listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 29,30,000/- and the year-end balance of loans taken from such parties was Rs. 29,30,000/-.

(c) According to the information and explanations given to us, there are no stipulations for rates of interest and other terms & conditions on which the loans have been taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956

(d) In respect of the loan taken from party listed in the Register maintained under section 301 of the companies act, 1956. The loans are interest free and are repayable on demand. Accordingly the provision of clause 4(iii)(g) of the order is not applicable to the company.

(IV) In our opinion and according to the information and explanations given to us. There are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuity failure to correct major weaknesses in the aforesaid internal control procedure.

(V) a) To the best of our knowledge and belief and according to the information and explanations given to us, the transactions that needed to be entered in to the Register in pursuance of Section 301 of the Companies Act, 1956 have been so entered.

b) Since there are no purchases & sales during the year this does not apply to the Company.

(VI) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the Public within the meaning of section 58 A and section 58 AA of the Act and the rules framed there under.

(VII) In our opinion and according to the information and explanations given to us, the Company has no internal audit system.

(VIII) Since there is no manufacturing activity, the provision of clause 4 (viii) of the order is not applicable to the company.

(IX) (a) According to the information and explanations given to us, the company has been regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Investors Education and protection fund, Income Tax, Wealth Tax, Excise Duty, Sales Tax and Cess with the appropriate authorities during the year and there are no undisputed Statutory dues, as noted above, outstanding for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues in respect of Sales Tax that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are given below:

Forum where dispute is Name of the Status Name of the Dues Amount pending

Sales Tax Act, 1969 Sales Tax Rs. 226830.00 Sale Tax commissioner (Appeals) Rajkot

(X) In our opinion, the accumulated losses of the Company at the end of the Financial Year are more than fifty percent of its net worth. The company has not incurred cash loss in the financial year ended on that date or in the immediately preceding financial year.

(XI) In our opinion and according to the information and explanations given to us, the Company has neither taken any loans from financial institutions or banks nor issued any debentures. Accordingly, the provisions of clause 4 (xi) of order are not applicable to the company.

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

(XIII) In our opinion, the company, is not a chit fund or nidhi / mutual benefit fund/ society, therefore, clause 4 (xiii) of the order is not applicable to the company.

(XIV) In our opinion the Company is not a dealer or trader in shares, securities, debentures and other investments.

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

(XVI) The Company has not obtained any term loan. Accordingly, the provision of clause 4(xvi) of the order is not applicable to the company.

(XVII) On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, no funds are raised on a short-term basis, which have been used for long-term investment

(XVIII) The Company has not made Preferential Allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(XIX) The Company has not issued any debentures. Accordingly, the provisions of clause 4(xix) of the order are not applicable to the company.

(XX) The Company has not raised any money through a public issue during the year.

(XXI) Based upon the Audit procedure performed and information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For and Behalf of

For Khimji Kunverji & Co. (Gandhidham )

Chartered Accountants

(Registration No. 105147W)

(Padamshi L. Shah)

Partner

Membership No. 5136

Place: Gandhidham - Kutch

Date: 14.08.2013

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Mar 31, 2011

We have audited the attached Balance Sheet of the Gandhidham Spinning & Manufacturing Company Limited as at 31st March 2011 and also the Profit & Loss Account 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.

1. The Manufacturing operations of the company have been stopped with effect from 25.07.1986 with a view to prevent further losses. The accounts of the Company for the year ended 31st March 2011 have been prepared on the “GOING CONCERN” basis, which is dependent upon the availability of continuing finance and the Company's future performance. In this connection, attention is drawn to para 3 of directors report.

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

3. As required by the Companies (Auditor's Report) order 2003 as amended by Companies (Auditor's Report) (Amendment) Order, 2004 (here in after referred to as the Order), issued by the Central Government of India in terms of Section 227(4-A) of the Companies Act, 1956 (here in after referred to as act), we enclose in the annexure a statement on the matter specified in paragraphs 4 & 5 of the said order.

4. Further to our comments above,

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

ii) In our opinion, proper books of accounts as required by the Law have been kept by the company as appears from our examination of those books.

iii) The Balance Sheet and Profit & Loss Accounts dealt with by this report are in agreement with the books of accounts.

iv) In our opinion Profit & Loss Account and Balance Sheet comply with the accounting standards referred to in sub-section 3 (C) of section 211 of Companies Act 1956.

v) On the basis of information and explanations given to us and representations received by a Company from the Directors, other than Smt. Shobhana Desai (Government Director) which have been taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2011 from being appointed as a Director in terms of clause (g) of Sub – Section (1) of Section 274 of the Companies Act, 1956

vi) In our opinion and to the best of our information and according to the explanations given to us, the said years Accounts subject to note No.1 about the non redemption of 200000, 9.5% Redeemable Cumulative Preference Shares of Rs.10 each due for redemption on 31.12.1990 (see note No. 1 of the notes to the accounts) & note No. 7 (a) & 7 (b) about amount of Rs. 26,32,586.00 (net) due from M/s. Sabnani Export Pvt. Ltd. & Asha Fabrics Rs.8,71,940.00 since had these been provided the loss would have been increased by Rs. 35,04,526.00 and debtors would have been reduced by an equal amount and total Loss would have been Rs.3,21,49,933.96 instead of Rs.2,86,45,407.96 read together with notes appearing in schedule of significant accounting policies and notes on accounts given the information required by the Act in the manner so required and give a true and 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 2011,

and

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

Annexure to the Auditors Report for the year ended on 31st March 2011

As required by the companies (auditors report) order, 2003 issued by the Department of Company Affairs, Govt. of India in terms of section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanation given to us, we further report on the matters specified in the paragraph 4 and 5 of the said order as under: -

(I) In respect of its fixed assets:

a) In our opinion the Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

b) The fixed assets have not been physically verified by management during the year. We are unable to express our opinion about the discrepancies, if any compared to the book records.

c) In our opinion and according to the information and explanations given to us. No substantial part of the fixed assets of the company have been disposed off during the year.

(II) In our opinion and according to the information & explanations given to us, as there is no inventory as on Balance sheet date, the Provision of clause 4(ii) of the order is not applicable to the company.

(III) (a) The Company has granted unsecured loans to two companies, firms or other parties listed in the register maintained under section 301 of The Companies Act,1956. The maximum amount involved during the year was Rs. 33,53,561/- and the year end balance of the loans granted to such party was Rs. NIL/-.

(b) According to the information and explanations given to us there are no specifications for rates of interest and other terms and conditions on which the loans have been granted to the companies, firms or other parties listed in the register maintained under section 301 of The Companies Act,1956

(c) In respect of loan granted to companies, firms or other parties listed in the register maintained under section 301 of The Companies Act, 1956, the loan is interest free and is repayable on demand. Accordingly, the provisions of Clause 4(111) (c) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company

(d) The company has taken interest free unsecured loans from one party listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 49,00,000 and the year end balance of loans taken from such parties was Rs. 24,00,000

(e) According to the information and explanations given to us, there are no stipulation for rates of interest and other terms & conditions on which the loans have been taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956.

(f) In respect of the loan taken from party listed in the Register maintained under section 301 of the companies act,1956 the loans are interest free and are repayable on demand. Accordingly the provision of clause 4(iii)(g) of the order is not applicable to the company.

(IV) In our opinion and according to the information and explanations given to us. There are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuity failure to correct major weaknesses in the aforesaid internal control procedure.

(V) a) To the best of our knowledge and belief and according to the information and explanations given to us, the transactions that needed to be entered in to the Register in pursuance of Section 301 of the Companies Act, 1956 have been so entered.

b) Since there are no purchases & sales during the year this does not apply to the Company.

(VI) In our opinion and according to the information and explanations given to us, The Company has not accepted any deposits from the Public within the meaning of section 58 A and section 58 AA of the Act and the rules framed there under.

(VII) In our opinion and according to the information and explanations given to us, the Company has no internal audit system.

(VIII) Since there is no manufacturing activity, the provision of clause 4 (viii) of the order is not applicable to the company.

(IX) (a) According to the information and explanations given to us, the company has been regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Investors Education and protection fund, Income Tax, Wealth Tax, Excise Duty, Sales Tax and Cess with the appropriate authorities during the year and there are no undisputed Statutory dues, as noted above, outstanding for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues in respect of Sales Tax that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are given below:

Name of the Nature of the Amount Forum where Status Dues dispute is pending

Sales Tax Act, Sales Tax Rs.226830.00 Sale Tax 1969 Commissioner (Appeals) Rajkot

(X) In our opinion, the accumulated losses of the Company at the end of the Financial Year are more than fifty percent of its net worth. The company has not incurred cash loss in the financial year ended on that date or in the immediately preceding financial year.

(XI) In our opinion and according to the information and explanations given to us, the Company has neither taken any loans from financial institutions or banks nor issued any debentures. Accordingly, the provisions of clause 4 (xi) of order are not applicable to the company.

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

(XII) In our opinion, the company, is not a chit fund or nidhi / mutual benefit fund/ society, therefore, clause 4 (xiii) of the order is not applicable to the company.

(XIV) In our opinion the Company is not a dealer or trader in shares, securities, debentures and other investments.

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

(XVI) The Company has not obtained any term loan. Accordingly, the provision of clause 4(xvi) of the order is not applicable to the company.

(XVII) On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, no funds are raised on a short-term basis, which have been used for long-term investment

(XVIII) The Company has not made Preferential Allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(XIX) The Company has not issued any debentures. Accordingly, the provisions of clause 4(xix) of the order are not applicable to the company.

(XX) The Company has not raised any money through a public issue during the year.

(XXI) Based upon the Audit procedure performed and information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For and Behalf of For Khimji Kunverji & Co. (Gandhidham) Chartered Accountants (Registration No: 105147W)

Padamshi L. Shah) Partner Membership No. 5136

Place : Adipur – Kutch Dated : 15.07.2011

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Mar 31, 2010

We have audited the attached Balance Sheet of the Gandhidham Spinning & Manufacturing Company Limited as at 31st March 2010 and also the Profit & Loss Account for the Year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

1. The Manufacturing operations of the company have been stopped with effect from 25.07.1986 with a view to prevent further losses. The accounts of the Company for the year ended 31st March 2010 have been prepared on the “GOING CONCERN” basis, which is dependent upon the availability of continuing finance and the Companys future performance. In this connection, attention is drawn to para 3 of directors report.

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

3. As required by the Companies (Auditors Report) order 2003(here in after referred to as the Order), issued by the Central Government of India in terms of Section 227(4-A) of the Companies Act, 1956 (here in after referred to as act), we enclose in the annexure a statement on the matter specified in paragraphs 4 & 5 of the said order.

4. Further to our comments above,

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

ii) In our opinion, proper books of accounts as required by the Law have been kept by the company as appears from our examination of those books.

iii) The Balance Sheet and Profit & Loss Accounts dealt with by this report are in agreement with the books of accounts.

iv) In our opinion Profit & Loss Account and Balance Sheet comply with the accounting standards referred to in sub-section 3 (C) of section 211 of Companies Act 1956.

v) On the basis of information and explanations given to us and representations received by a Company from the Directors, other than Smt. Shobhana Desai (Government Director) which have been taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March 2010 from being appointed as a Director in terms of clause (g) of Sub – Section (1) of Section 274 of the Companies Act, 1956

vi) In our opinion and to the best of our information and according to the explanations given to us, the said years Accounts subject to note No.1 about the non redemption of 200000 9.5% Redeemable Preference Shares of Rs.10 each due for redemption on 31.12.1990 (see note No. 1 of the notes to the accounts) & note No. 7 (a) & 7 (b) about amount of Rs. 26,32,586.00 (net) due from M/s. Sabnani Export Pvt. Ltd. & Asha Fabrics Rs.8,71,940.00 since had these been provided the loss would have been increased by Rs.35,04,526.00 and debtors would have been reduced by an equal amount and total Loss would have been Rs3,43,84,551.96 instead of Rs.3,08,80,025.96 read together with notes appearing in schedule of significant accounting policies and notes on accounts given the information required by the Act in the manner so required and give a true and 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 2010, and

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

Annexure to the Auditors Report for the year ended on 31st March 2010

As required by the companies (auditors report) order, 2003 issued by the Department of Company Affairs, Govt. of India in terms of section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate and according to the information and explanation given to us, we further report on the matters specified in the paragraph 4 and 5 of the said order as under: -

(I) In respect of its fixed assets:

a) In our opinion the Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

b) The fixed assets have not been physically verified by management during the year. We are unable to express our opinion about the discrepancies, if any compared to the book records.

c) In our opinion and according to the information and explanations given to us. No substantial part of the fixed assets of the company have been disposed off during the year.

(II) In our opinion and according to the information & explanations given to us, as there is no inventory as on Balance sheet date, the Provision of clause 4(ii) of the order is not applicable to the company.

(III) (a) The Company has granted unsecured loans to one party listed in the register maintained under section 301 of The Companies Act,1956. The maximum amount involved during the year was Rs. 541411/- and the year end balance of the loans granted to such companies was Rs. 541411/-.

(b) In respect of loan granted to companies, firms or other parties listed in the register maintained under section 301 of The Companies Act, 1956, the loan is interest free and is repayable on demand. Accordingly, the provisions of Clause 4(iii)(c) of the Companies (Auditors Report) Order 2003 is not applicable to the Company.

(c) The company has taken interest free unsecured loans from two parties listed in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.61,18,589/- and the year end balance of loans taken from such parties was Rs.49,00,000/-.

(d) According to the information and explanations given to us, there are no stipulation for rates of interest and other terms & conditions on which the loans have been taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) In respect of the loan taken from parties listed in the Register maintained under section 301 of the Companies Act, 1956. The loans are interest free and are repayable on demand. Accordingly the provision of clause 4(iii)(g) of the order is not applicable to the company.

(IV) In our opinion and according to the information and explanations given to us. There are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to sale of goods. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanations given to us, we have neither come across nor have been informed of any continuity failure to correct major weaknesses in the aforesaid internal control procedure.

(V) a) To the best of our knowledge and belief and according to the information and explanations given to us, the transactions that needed to be entered in to the Register in pursuance of Section 301 of the Companies Act, 1956 have been so entered. b) Since there are no purchases & sales during the year this does not apply to the Company.

(VI) In our opinion and according to the information and explanations given to us, The Company has not accepted any deposits from the Public within the meaning of section 58 A and section 58 AA of the Act and the rules framed there under.

(VII) In our opinion and according to the information and explanations given to us, the Company has no internal audit system.

(VIII) Since there is no manufacturing activity, the provision of clause 4 (viii) of the order is not applicable to the company.

(IX) (a) According to the information and explanations given to us, the company has been regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Investors Education and protection fund, Income Tax, Wealth Tax, Excise Duty, Sales Tax and Cess with the appropriate authorities during the year and there are no undisputed Statutory dues, as noted above, outstanding for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues in respect of Sales Tax that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are given below:

Name of the Status Nature of the Dues Amount Forum where dispute is pending

Sales Tax Act, 1969 Sales Tax Rs.226830.00 Sale Tax Commissioner (Appeals) Rajkot

(X) In our opinion, the accumulated losses of the Company at the end of the Financial Year are more than fifty percent of its net worth. The company has not incurred cash loss in the financial year ended on that date or in the immediately preceding financial year.

(XI) In our opinion and according to the information and explanations given to us, the Company has neither taken any loans from financial institutions or banks nor issued any debentures. Accordingly, the provisions of clause 4 (xi) of order are not applicable to the company.

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

(XII) In our opinion, the company, is not a chit fund or nidhi / mutual benefit fund/ society, therefore, clause 4 (xiii) of the order is not applicable to the company.

(XIV) In our opinion the Company is not a dealer or trader in shares, securities, debentures and other investments.

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

(XVI) The Company has not obtained any term loan. Accordingly, the provision of clause 4(xvi) of the order is not applicable to the company.

(XVII) On the basis of an overall examination of the balance sheet of the company, in our opinion and according to the information and explanations given to us, no funds are raised on a short-term basis, which have been used for long-term investment

(XVIII) The Company has not made Preferential Allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act, 1956.

(XIX) The Company has not issued any debentures. Accordingly, the provisions of clause 4(xix) of the order are not applicable to the company.

(XX) The Company has not raised any money through a public issue during the year.

(XXI) Based upon the Audit procedure performed and information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For and Behalf of

For Khimji Kunverji & Co. (Gandhidham)

Chartered Accountants

(Registration No: 105147W)

(Padamshi L. Shah)

Partner

Membership No. 5136

Place: Adipur - Kutch

Date: 15.07.2010