Soma Textiles & Industries Ltd.की ऑडीटर रिपोर्ट

Mar 31, 2025

We have audited the accompanying Standalone Ind AS Financial Statements of Soma Textiles & Industries Limited (“the
Company”), which comprise the Balance Sheet as at 31st March, 2025, the Statement of Profit and Loss (including Other
Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended on that
date and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the
“Standalone Ind AS Financial Statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind
AS Financial Statements give the information required by the Companies Act, 2013 (the “Act”) in the manner so required and
give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting
Standards (‘Ind AS'') specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules,
2015, as amended (“Ind AS”), of the state of affairs (financial position) of the Company as at 31st March 2025, and its profit
(financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended
on that date.

Basis of opinion

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

Material Uncertainty Related to Going Concern

We draw attention to the fact that the company has stopped manufacturing operations and sold off plant and machineries and
is engaged in trading activities. The company''s profit of '' 6926.87 Lakhs during the year ended 31st March 2025 and as of date
positive net worth of the company stood at ''15783.66 Lakhs is on account of trading activities as well as exceptional items, as
represented in this report under emphasis of matter paragraphs. In the opinion of the management company''s assets including
cash & bank balance are sufficient to meet the liabilities of the company. These conditions, along with other matter as set forth
in aforesaid note, indicate the existence of a material uncertainty that may cost significant doubt about the company''s ability to
continue as going concern. The management has assessed that the company continuous to be going concern.

Our opinion is not modified in respect of the above said matter.

Emphasis of Matter

We draw your attention to:

a) We draw attention to Note No. 30 of Standalone Ind AS Financial Statements wherein Exceptional items for the year
ended 31st March, 2025 represent following components.

Sr. No.	Particulars	Year Ended 31.03.2025 ('' In lakhs)	Remarks, if any
1.	Foreign Exchange Gain on Loan Given to Soma Textiles FZC (associate)	111.83	-
2.	Liabilities no longer required written back	4.21
3.	Profit on sale of fixed assets	6,843.79	-
	Total	6,959.83	-

b) The holding company had advanced a loan to its associate company ‘Soma Textiles FZC'' (UAE) out of GDR proceeds,
classified as Non-Current Loan. The Closing Balance of the same Loan is '' 3780.93/- Lakhs for the year ended 31st
March, 2025 (Previous year '' 5255.90/- Lakhs for year ended 31st March, 2024).

The Company has quasi-equity in addition to the capital contribution to Soma Textiles FZC. When the said loan was
given, the said company was a wholly owned subsidiary, however with effect from 31st March, 2010, the company''s
holding in this company has diluted from 100% to 40%. In the draft audited Financial Statement of Soma Textiles FZC
ended as at 31st March, 2025 the accumulated loss reflects at 9,65,140 (equivalent to '' 224.59/- Lakhs) as against
the total capital of AED 9,00,000 (equivalent to '' 209.43/- lakhs) (Including statutory reserves).

Our opinion is not modified in respect of the above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
Standalone Ind AS Financial Statements of the current period. These matters were addressed in the context of our audit
of the Standalone Ind AS Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.

We have determined following key audit matters to be communicated in our report

Sr. No.	Key Audit Matter	How the matter was addressed in our audit
1.	Profit on sale of fixed assets The Company has made profit on sale of fixed assets aggregating to '' 6,843.79 Lakhs.	The following audit procedures were applied: A. Obtaining and auditing the original documents for purchase and sale of fixed assets such as original invoices, quotation and agreements. B. Audited the receipt on account of sale of fixed assets in the banking operations of the company. C. Audited the appropriateness and correctness of the accounting entries in the books of account.
2.	Foreign Exchange Gain on loan There is a Foreign exchange gain amounting to '' 111.83 Lakhs relating to loan given to Associate.	A. Audited original documents for the transactions during the year and at the year end like Loan Agreement, Repayment schedule and document related to exchange rate. B. Audited the receipt on account of principal of loan and its interest in the banking operations of the company. C. Audited the appropriateness and correctness of the accounting entries in the books of account.

Information other than the Standalone Ind AS Financial Statements and Auditor’s Report thereon

The Company''s Board of Directors are responsible for the preparation of the other information. The other information
comprises the information included in the Company''s annual report, but does not include the Consolidated Ind ASFinancial
Statements, Standalone Ind AS Financial Statements and our auditor''s report thereon.

Our opinion on the Standalone Ind AS Financial Statements does not cover the other information and we do not express
any form of assurance conclusion thereon.

In connection with our audit of the Standalone Ind AS Financial Statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the Standalone Ind AS Financial
Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact.

We have nothing to report in this regard.

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

The Company''s and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to
the preparation and presentation of these Standalone Ind AS Financial Statements that give a true and fair view of the
financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in

accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS)
specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and
the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the
Standalone Ind AS Financial Statements that give a true and fair view and is free from material misstatement, whether
due to fraud or error. The Standalone Ind AS Financial Statements are the responsibility of the Company''s Management.
The accompanying Standalone Ind AS Financial Statements pertain to the period where the Board of Directors holds the
responsibility for the financial transactions and to whom any significant exceptions/ adjustments in the statements are solely
attributable under the audit. The Audited Standalone Ind AS Financial Statements for the year ended 31st March, 2025
have been prepared by the Management of the Company and have been approved by the Company''s Board of Directors.

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

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

Auditor’s Responsibilities for the Audit of the Standalone Ind AS Financial Statements

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

As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:

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

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

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

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

• Evaluate the overall presentation, structure and content of the Standalone Ind AS Financial Statements, including
the disclosures, and whether the Standalone Ind AS Financial Statements represent the underlying transactions and
events in a manner that achieves fair presentation.

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

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

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

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

Other Matters

The company has filed application for voluntary delisting of its shares in terms of Regulation 6(a) and Regulation 7 of SEBI
(Delisting of Equity Shares) Regulations, 2009, however approval is pending from BSE''s. However, the Equity Shares of the
company will continue to be listed on National Stock Exchange of India Limited.

Our conclusion is not modified in respect of the above matters.

Report on other Legal and Regulatory Requirements

1. As required by the section 143(3) of the Act, based on our audit we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief
were necessary for the 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 it appears
from our examination of those books.

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

d) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with Ind AS specified under Section
133 of the Act.

e) The matter described in the material uncertainty related to Going Concern section above, in our opinion, may
have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31st March, 2025 and taken
on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2025 from being
appointed as a director in terms of Section 164(2) of the Act.

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

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

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in the Standalone Ind
AS Financial Statements (refer note 39);

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

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are

material either individually or in the aggregate) have been advanced or loaned or invested (either
from borrowed funds or share premium or any other sources or kind of funds) by the Company to
or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding,
whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly
lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries;

(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are
material either individually or in the aggregate) have been received by the Company from any person
or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in
writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other
persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate
Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

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

v. There was no proposal of Dividend (Interim or Final) during the Current Financial year as well as during the
previous Financial Year.

vi. Based on our examination which included test checks, the Company has used accounting software for
maintaining its books of account for the period ended 31st March, 25 which has a feature of recording audit
trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded
in the software. Further, during the course of our audit we did not come across any instance of audit trail
feature being tampered with in respect of the accounting software.

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

For, Pipara & Co. LLP

CHARTERED ACCOUNTANTS
F.R.N. No.: 107929W/W100219

Suresh Gandhi

PARTNER

Date: 30th May, 2025 M. No.: 046284

Place: Ahmedabad UDIN: 25046284BNQMFG2171

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Mar 31, 2024

SOMA TEXTILES & INDUSTRIES LIMITED

Report on the Audit of Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying Standalone Ind AS Financial Statements of SOMA TEXTILES & INDUSTRIES LIMITED (“the Company”), which comprise the Balance Sheet as at 31^st March, 2024, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended on that date and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the “Standalone Ind AS Financial Statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013 (the “Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (‘Ind AS'') specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (“Ind AS”), of the state of affairs (financial position) of the Company as at 31^st March, 2024, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis of opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note No. 40 of the Standalone Financial Statements, as per Directions of Gujarat High Court dated 23rd September, 2021, the Ahmedabad Municipal Corporation (AMC) had disconnected water and drainage connection. Hence, the operations of the company remain closed from 26th November, 2021 till the date of this report. The company''s profit of '' 2109.23 Lakhs during the year ended 3^st March, 2024 and as of date positive net worth of the company stood at '' 8852.73 Lakhs is on account of trading activities as well as exceptional items, as represented in this report under emphasis of matter paragraphs. In the opinion of the management company''s assets including cash & bank balance are sufficient to meet the liabilities of the company. These conditions, along with other matter as set forth in aforesaid note, indicate the existence of a material uncertainty that may cost significant doubt about the company''s ability to continue as going concern. The management has assessed that the company continuous to be going concern.

Our opinion is not modified in respect of the above said matter.

Emphasis of Matter

We draw your attention to:

a) We draw attention to Note No. 46 of Standalone Ind AS Financial Statements, which discloses that the Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the Company towards Provident Fund and Gratuity. The draft rules for the Code on Social Security, 2020 have been released by the Ministry of Labour and Employment on November 13, 2020. The Company is in the process of assessing the additional impact on Provident Fund contributions and on Gratuity liability contributions and will complete their evaluation and give appropriate impact in the standalone financial statements in the period in which the rules that are notified become effective.

b) We draw attention to Note No. 31 of Standalone Ind AS Financial Statements wherein Exceptional items for the year ended 3^st March, 2024 represent following components.

Sr. No.	Particulars	Year Ended 31.03.2024 ('' In lakhs)	Remarks, if any
1.	Foreign Exchange Gain on Loan Given to Soma Textiles FZC (associate)	87	-
2.	Liabilities no longer required written back	3
5.	Profit on sale of fixed assets	2,148	-
	Total	2,238	-

c) The holding company had advanced a loan to its associate company ‘Soma Textiles FZC'' (UAE) out of GDR proceeds¹, classified as Non-Current Loan. The Closing Balance of the same Loan is '' 5255.90/- Lakhs for the year ended 31^st March, 2024 (Previous year '' 6083.89/- Lakhs for year ended 31^st March, 2023). The Company has quasi-equity in addition to the capital contribution to Soma Textiles FZC. When the said loan was given, the said company was a wholly owned subsidiary, however with effect from 31^st March, 2010, the company''s holding in this company has diluted from 100% to 40%. In the audited Financial Statement of Soma Textiles FZC ended as at 31^st March, 2024 the accumulated loss reflects at 8,99,075 (equivalent to '' 204.20/- Lakhs) as against the total capital of AED 9,00,000 (equivalent to RS. 204.41/- lakhs) (Including statutory reserves).

d) Finance cost includes interest (amounting to '' 29.52/- Lakhs for the year) payable on preference shares which are non-convertible and cumulative in nature and hence, treated as debt and accordingly accounting effect of interest has been provided.

Our opinion is not modified in respect of the above matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind AS Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Ind AS Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined following key audit matters to be communicated in our report.
Sr. No.	Key Audit Matter	How the matter was addressed in our audit
1.	Discontinued Operation According to Directions of Gujarat High Court dated 23rd September, 2021, the Ahmedabad Municipal Corporation (AMC) has disconnected water and drainage connection of the Company. Hence, the operations of the Company are permanently closed and it has to do accounting as per Ind AS 105 ‘Non-current Assets Held for Sale and And Discontinued Operations''.	The following audit procedures were applied: A. Obtaining and Verifying the relevant orders and correspondence, between the Company and Government, those led to stop the operations of Company. B. Observing Procedure and methods followed by Company to determine Fair Value of Assets and Liabilities. C. Verifying the base documents of Financial Assets and Liabilities. D. Assessing the appropriateness and correctness of the entries in the books of account and disclosure requirements in Standalone Ind AS Financial Statements.

Information other than the Standalone Ind AS Financial Statements and Auditor’s Report thereon

The Company''s Board of Directors are responsible for the preparation of the other information. The other information comprises the information included in the Company''s annual report, but does not include the Consolidated Ind AS Financial Statements, Standalone Ind AS Financial Statements and our auditor''s report thereon.

Our opinion on the Standalone Ind AS Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Ind AS Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Ind AS Financial Statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

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

The Company''s and Board of Directors are responsible for the matters stated in Section 134(5) of the Act with respect to the preparation and presentation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS Financial Statements that give a true and fair view and is free from material misstatement, whether due to fraud or error. The Standalone Ind AS Financial Statements are the responsibility of the Company''s Management. The accompanying Standalone Ind AS Financial Statements pertain to the period where the Board of Directors holds the responsibility for the financial transactions and to whom any significant exceptions/ adjustments in the statements are solely attributable under the audit. The Audited Standalone Ind AS Financial Statements for the year ended 31^st March, 2024 have been prepared by the Management of the Company and have been approved by the Company''s Board of Directors.

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

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

Auditor’s Responsibilities for the Audit of the Standalone Ind AS Financial Statements

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

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

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

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

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. ¹

Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone Ind AS Financial Statements, including the disclosures, and whether the Standalone Ind AS Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

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

Other Matters

The company has filed application for voluntary delisting of its shares in terms of Regulation 6(a) and Regulation 7 of SEBI (Delisting of Equity Shares) Regulations, 2009, however approval is pending from BSE''s. However, the Equity Shares of the company will continue to be listed on National Stock Exchange of India Limited.

Our conclusion is not modified in respect of the above matters.

Report on other Legal and Regulatory Requirements

1. As required by the section 143(3) of the Act, based on our audit we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 it appears from our examination of those books.

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

d) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with Ind AS specified under Section 133 of the Act.

e) The matter described in the material uncertainty related to Going Concern section above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31^st March, 2024 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 ^stMarch, 2024 from being appointed as a director in terms of Section 164(2) of the Act.

g) Wit h respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.

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

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in the Standalone Ind AS Financial Statements (refer Note No. 39);

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

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

iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are

material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

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

v. There was no proposal of Dividend (Interim or Final) during the Current Financial year as well as during the previous Financial Year.

vi. Based on our examination which included test checks, the Company has used accounting software for maintaining its books of account for the period ended 31^st March, ‘24 which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with in respect of the accounting software.

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

For, Pipara & Co. LLP

CHARTERED ACCOUNTANTS F.R.N. No.: 107929W/W100219

Naman Pipara PARTNER

Date: 22nd May, 2024 M. No.: 140234

Place: Ahmedabad UDIN: 2414023BKCXEE6540

1

Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the Standalone Ind AS Financial

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Mar 31, 2016

To,

THE MEMBERS OF

Soma textiles & industries limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SOMA TEXTILES & INDUSTRIES LIMITED (“the Company”), which comprise the Balance Sheet as at 31^st March, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

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

Auditor’s Responsibility

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

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the Order under section 143(11) of the Act.

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31^st March, 2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

Without qualifying our opinion, we draw attention to the following matters:

Gross Block as at 31-03-2016	Accumulated Depreciation up to 31-03-2016	Net Block as at 31-03-2016
1837.09	1575.81	261.28

(a) With immediate effect on 14^th May 2016, the Company closed down the spinning and winding unit/department at Ahmedabad because of its high operative cost and other adverse factors. Following are the details of the block of spinning unit assets, which have been re-classified as current assets (earlier classified as fixed assets) under the head ‘Assets Held for Sale'' at as 31^st March, 2016.

The above events have occurred after the balance sheet date however the event being adjusting in nature, have been shown by the company as Held for Sale as per AS-10 as at 31^st March, 2016. Quantification of fluctuation for difference of book value of such block & market value is not available and hence not made as at 31^st March, 2016.

(b) The Company has defaulted in repayment of dues to banks and financial institutions and credit accounts with The State Bank of India, Dena Bank, ICICI Bank, IDBI Bank and EXIM Bank banks have been classified as NPAs. Hence, under The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, The State Bank of India, Dena Bank and ICICI Bank and assigned their respective outstanding loans together with underlying securities thereto along with all rights towards such loan to Invent Assets Securitization & Reconstruction Private Limited (Invent ARC) during the financial year 2015-16. Whereas IDBI Bank and EXIM Bank assigned their respective outstanding loans along with all rights towards such loan to Invent ARC on 29^th April, 2016.

(c) As per the provisions of Section 23 of SICA Act, 1985 the Accumulated Losses of the company as at 31st March 2016 have resulted in erosion of more than 50% of its peak net worth during the four financial years immediately preceding the financial year ended on 31st March 2016. Consequent upon the Company had become a “Potentially Sick Company” under the said provision since FY 2013-14.

Other Matters

(a) We draw attention towards Note relating to accounts receivable of Soma Textiles FZC, an associate enterprise (currently registered in Umm Al Quwain Free Trade Zone) in the Director''s Reports, relating to account receivables. Originally, the debtors had requested the Company for a cooling period of two years for clearing their dues, i.e. till March, 2016, however, their financial position has still not improved & they have once again requested for a period of five years effectively ending on 31-3-2021. Total outstanding that remains of all debtors after receiving part payments remains at AED 6,20,06,411. The Independent Auditor of Soma Textiles FZC has not commented on this matter.

(b) The Company had advanced a loan to the tune of ''10,444.46 Lakhs (previous year Rs.9,852.39 Lakhs) to Soma Textiles FZC (UAE) out of GDR proceeds, classified as long term loan. This loan has been advanced by the Company as quasi equity in addition to the capital contribution to Soma Textiles FZC. When the said loan was given, the said company was a wholly owned subsidiary, however with effect from 31-03-2010, the Company''s holding in this company has diluted from 100% to 40%. In the financial statement of Soma Textiles FZC ended as at 31-03-2016 the accumulated loss reflects at AED 5,53,238 as against total capital of AED 9,00,000 (Including statutory reserve). Also, Soma Textiles FZC was registered in Hamriyah Free Trade Zone - Sharjah, which now has been transferred to Soma Textiles FZC -Umm Al Quwain Free Trade Zone, which is a different free trade zone. Our opinion is not qualified in this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information & explanations given to us, we give in the Annexure ‘A’ a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

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

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

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

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31^st March, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on 31^st March, 2016 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure ‘B’.

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

i. The Company has disclosed the impact of pending litigation on its financial position in its financial statement (Refer note 31 to the financial statement);

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

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

ANNEXURE ‘A’ TO THE INDEPENDENT AUDITOR’S REPORT

Referred to in paragraph 1 of ‘Report on Other Legal and Regulatory Requirements'' of the Independent Auditors'' Report of even date to the members of Soma Textiles & Industries Limited on the standalone financial statements for the year ended March 31, 2016.

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

(b) As explained to us, the fixed assets have been physically verified by the management during the year in accordance with a phased programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. We are informed that no material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties other than self-constructed immovable property (buildings), as disclosed in fixed assets to the financial statements, are held in the name of the Company.

II. As explained to us, physical verification of inventory has been conducted at reasonable intervals by the management and the discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the Company, and the same have been properly dealt with in the books of account.

III. The Company has granted an unsecured interest free loan to its Associate, SOMA TEXTILE FZC. Such Associate is covered in the register maintained under section 189 of the Act. Total amount outstanding on 31^st March 2016, was Rs.10,444.46 Lakhs.

(a) There are no terms and conditions set out by the company as on date for the loan given to Soma Textile FZC, therefore we are unable to report on regularity of receipt of principal amount.

(b) As there is no stipulation of repayment of loan by the Associate, we are unable to report on regularity of repayment of principal.

(c) As there is no set terms and conditions for the repayment, there are no overdue amounts in respect of the loan granted to the Associate.

In our opinion and according to the information and explanations given to us, the Company has not advanced any loan or given any guarantee or provided any security or made any investment covered under section 185 of the Act in the current year (FY 2015-16). The Company has not advanced any loan or given guarantees or provided security or made investments covered under section 186 of the Act in the current year (FY 2015-16). When the loan was issued to SOMA TEXTILE FZC, the provision under the old Companies Act has been complied.

V. 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 Sections 73 to 76 or any other relevant provisions of the Act and rules framed there under.

VI. We have broadly reviewed the cost records maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

VII. (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including

Provident Fund, Employees'' State Insurance, Income Tax, Wealth Tax, Sales Tax, Service Tax, Duty of Custom, Duty of Excise, Value added tax, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of outstanding statutory dues were in arrears as at March 31, 2016 for a period of more than six months from the date they became payable.

(b) Following amount shave not been deposited as on March 31, 2016 on account of dispute are given below:

Name of Statute	Nature of Dues	Amount (Rs.in Lacs)	Period to which it relates	Forum where dispute is pending
Central Excise Act, 1944	Recovery of CENVAT	1.59	2004-05	The Dy. Commissioner of C. Excise, Div-I, Ahmedabad.
Central Excise Act, 1944	Recovery of additional TTA duty of Yarn captively consumed	24.85	2002-03	The Dy. Commissioner of C. Excise, Div-III, Ahmedabad.
Central Excise Act, 1944	Refund claim for amount short received against refund claim of yarn duty after adjusting the old recovery	0.98	2005-06	Commissioner of Central Excise, (Appeals), Ahmedabad
Central Excise Act, 1944	Demand for old duty	0.50	2008-09	CESAT, West Zone, Ahmedabad
Central Excise Act, 1944	Recovery of transitional Cenvat	5.81	2012-13	CESAT, West Zone, Ahmedabad (Appeal)
The Income Tax Act-1961	Demand of Income Tax	9.77	A.Y. 2006-07	Asst. Commissioner of Income Tax, Cir.-8, Ahmedabad
Gujarat Sales Tax Act-1969	Additional Sales Tax	6.17	1997-98, 1998-99 & 2000-01	Gujarat Value Added Tax Tribunal
The Income Tax Act-1961	Demand of Sales Tax	21.66	2005-06	Gujarat Value Added Tax Tribunal

VIII. Based on our audit procedures and on the basis of information and explanation given to us by the management and in view of the restructuring package sanctioned by the CDR cell since withdrawn, we understand that the Company has defaulted in repayment of dues to banks and financial institutions. Accordingly Action has been taken under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 (SARFAESI Act,2002) by the lending banks. State Bank of India, Dena Bank and ICICI Bank and assigned their respective outstanding loans advanced together with underlying securities and all rights thereto to Invent Assets Securitization& Reconstruction Private Limited(Invent ARC) during FY 2015-16.Whereas IDBI Bank and EXIM Bank have also assigned their respective outstanding loans together with all rights thereto on 29^th April,2016 to the Invent ARC.

IX. To the best of our knowledge and belief and according to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.

X. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

XI. To the best of our knowledge and belief and according to the information and explanations given to us, managerial remuneration has been paid/provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

XII. The Company is not a Nidhi Company. Consequently, requirements of clause (xii) of paragraph 3 of the order are not applicable.

XIII. To the best of our knowledge and belief and according to the information and explanations given to us, all transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

XIV. To the best of our knowledge and belief and according to the information and explanations given to us, the Company has not made any preferential allotment or private placement of share or fully or partly convertible debentures during the year under review. Consequently, requirements of clause (xiv) of paragraph 3 of the order are not applicable.

XV. To the best of our knowledge and belief and according to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly provisions of clause 3(XV) of the order are not applicable to the Company.

XVI. According to the nature of the business, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly provisions of clause 3(XVI) of the order are not applicable to the Company.

ANNEXURE ‘B’ TO THE INDEPENDENT AUDITORS’ REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF SOMA TEXTILES & INDUSTRIES LIMITED The Annexure referred to in paragraph 2(f) under the heading “Report on Other Legal and Regulatory Requirements”, in respect to the Internal Financial Control under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”), for the year ended 31^st March, 2016, we report that :

We have audited the internal financial controls over financial reporting of SOMA TEXTILES & INDUSTRIES LIMITED (“the Company”) as of March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on “the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI)”. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established an maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements of external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of dispositions of the assets of the company; (2) provide reasonable assurance that transactions recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Control over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatement due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods aresubject to the risk that the internal financial controls over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2016, based on “the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India”.

For PIPARA & COMPANY

Chartered Accountants

Firm Regn. No. : 107929W

GYAN PIPARA

Place : Ahmedabad (Partner)

Date : 27^th May, 2016 Membership No.034289

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Mar 31, 2015

We have audited the accompanying financial statements of SOMA TEXTILES & INDUSTRIES LIMITED, which comprise the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

2. Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 with respect to the preparation and presentation of these financial statements that gives a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditor's Responsibility

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

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

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

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

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

4. Opinion

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

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

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

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

5. Emphasis of Matter

(a) We draw attention to Note 12.2 to the Financial Statement, relating to Account Receivables of Soma Textiles FZC, an associate enterprise of the company, whereby the debtors have requested the company for 2 years cooling period i.e. till March 2016. The amount of such debtors is AED 6,26,31,823. We are unable to comment on said receivables of Soma Textiles FZC, which are deemed to be good by Independent Auditor of Soma Textiles FZC-'Business Management World Auditors & Business Consultants'. The company has shown a loan amount of Rs.9852.39 lakhs (Previous year Rs.9444.17 lakhs) given to Soma Textile FZC (UAE) out of GDR proceeds, classifies as long term loan. This loan had been advanced by the company as a Quasi- Equity (Note 12) in addition to the capital of Soma Textile FZC when the said loan was given, the said company was a wholly owned subsidiary, however, with effect from 31st March 2010, the company's holding in this company has diluted from 100% to 40%. In the financial statements of Soma Textile FZC ended as at 31.03.2015 the accumulated loss reflects at AED 5,64,690 as against Total Capital of AED 9,00,000 (including Statutory Reserves). Our opinion is not qualified in this matter.

(b) Attention to the following is invited:

As per the provisions of Section 23 of SICA Act, 1985 the Accumulated Losses of the company as at 31st March, 2015 have resulted in erosion of more than 50% of its peak net worth during the four financial years immediately preceding the financial year ended on 31st March, 2015. Consequent upon, the company has become a "Potentially Sick Company" under the said provision.

6. Report on Other Legal and Regulatory Requirements

(i) 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 section143 of the Act, we give in the Annexure a statement on the matters specified in paragraph 3 & 4 of the said Order to the extent applicable.

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

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

(b) In our opinion proper books of account as required by law have been kept by the Company so far as 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 Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act;

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

I. The company has disclosed the impact of pending litigation on its financial position in its financial statements- (Refer Note 31 to the financial statements).

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

III. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the company.

ANNEXURE TO INDEPENDENT AUDITOR'S REPORT

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

(i) In respect of its fixed assets :

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

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

(ii) In respect of its inventory:

(a) The management conducts regular physical verification of inventory at reasonable intervals commensurate and adequate to the size of its operations. In our openion the frequency of physical verification is reasonable having regard to the size and nature of business of company.

(b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of its inventories. Some immaterial discrepancies were noticed on physical verification which have been properly dealt with in the books of account.

(iii) (a) The company has granted interest free loan (quasi-equity) to its Associate, Soma Textile FZC. Total amount

outstanding on 31st March 2015 was Rs. 9852.39 lakhs.

(b) There are no terms and conditions set out by the Company as on date for the loans given to Soma Textile FZC therefore, we are unable to report on regularity of receipt of principal amount.

(c) As there is no stipulation of repayment of loan by Associate, we are unable to report on overdue amount and reasonability of the steps taken by the company for the recovery of the principal.

(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) According to the information and explanations given to us,the Company has not accepted any deposits from the public thus, directives issued by Reserve Bank of India the Provisions of the section 73 to 76 and other relevant provisions of the Companies Act, 2013 and the rules framed there under or any order passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal do not apply to Company.

(vi) We have broadly reviewed the books of accounts maintained by the company pursuant to the rules made by the Central Government of India, regarding the maintenance of cost record under sub-section (1) of section 148 of the Companies Act, 2013 and are of opinion that, prima facie, the prescribed accounts & records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) According to information and explanation given to us in respect of statutory dues:

(a) According to the information and explanations given to us, and on the basis of our examination of the books of accounts, the Company has generally been regular in depositing the undisputed statutory dues including Income- Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty, Custom Duty, Cess and other material Statutory dues during the period with the appropriate authorities. At the end of the year, there were no undisputed amount payable for a period of more than six months from the date they became payable.

(b) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on 31.03.2015 on account of dispute are given below:

Name of Nature of Amount Period to Forum Statute Dues (Rs. in which it where Lacs) dispute is pending relates

Central Recovery 1.59 2004-05 The Dy. Excise Act, of CENVAT Commissi 1944 oner of C. Excise, Div-I, Ahmedabad.

Central Recovery 24.85 2002-03 The Dy. Excise Act, of additional Commissi 1944 TTA duty oner of C. of Yarn Excise, captively Div-III, consumed Ahmedabad.

Central Refund claim for 0.98 2005-06 Commissioner Excise Act, amount of Central 1944 short Excise, received (Appeals), against Ahmedabad refund claim of yarn duty after adjusting the old recovery

Central Demand for 0.50 2008-09 CESAT, West Excise Act, old duty Zone, 1944 Ahmedabad

Central Recovery 5.81 2012-13 CESAT, Excise Act, of West 1944 transit Zone, ional Cenvat Ahmedabad (Appeal)

The Income Demand of 9.77 A.Y.Asst. Commissioner Tax Income Tax of Income Act-1961 2006-07 Tax,Cir.-8, Ahmedabad

The Income Demand of 14.55 A.Y Commissioner Tax Income Tax of Income Act-1961 2007-08 Tax(Appeal), Ahmedabad

Gujarat Additional 6.17 1997-98, Gujarat Sales Tax Sales Tax 1998-99 Value Act-1969 & 2000-01 Added Tax Tribunal

(c) There has been no delay in transferring amount, required to be transferred, to the Investor Education and Protection Fund By Company.

(viii) The accumulated loss of the Company at the end of the financial year exceeds fifty percent of its net worth and also the company has incurred cash losses in the current financial year.

(ix) In our opinion and according to the information & explanations given to us, the company has defaulted in repayment of dues to financial institution and banks. (Please Refer Note 3.3 to Financial Statements)

(x) 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 bank or financial institutions.

(xi) In our opinion and according to the explanations given to us the term loans were applied only for the purpose for which they were obtained.

(xii) To the best of our knowledge and according to the information and explanations given to us, we report that no fraud on or by the company has been noticed or reported during the year under audit and even up to the date of our audit.

For PIPARA & COMPANY Chartered Accountants Firm Regn. No. : 107929W



GYAN PIPARA Place : Ahmedabad (Partner) Date : 30th May, 2015 Membership No.034289

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Mar 31, 2014

1. We have audited the accompanying financial statements of Soma Textiles & Industries Limited (the company), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. 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 read with the General Circular 15/2013 dated 13th September, 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

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

4. 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 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.

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

6. Emphasis of Matter

(a) We draw attention to Note 12.2 to the Financial Statements, relating to Account Receivables of Soma Textiles FZC, an associated enterprise of the company, whereby the debtors have requested the company for 2 years cooling period. The amount of such debtors is AED 6,28,38,125/-. We are unable to comment on the said receivables of Soma Textiles FZC, which are deemed to be good by the Independent Auditor of Soma Textiles FZC– ''Business Management World Auditors & Business Consultants''. The company has shown a loan amount of Rs. 9444.17 Lakhs (Previous Year Rs. 8558.24 Lakhs) given to Soma Textile FZC (UAE) out of GDR proceeds, classified as a long term loan. This loan had been advanced by the Company as a Quasi- Equity (Note 12) in addition to the Capital of Soma Textiles FZC. When the said loan was given, the said Company was a wholly owned subsidiary, however, with effect from 31st March, 2010, the Company''s holding in this company has diluted from 100% to 40%. In the financial statements of Soma Textile FZC ended as at 31.03.2014 the accumulated loss reflects at AED 585,540 as against Total Capital of AED 9,00,000 (including Statutory Reserves). Our opinion is not qualified in this matter.

(b) We draw attention to Note 4 ''Other Long Term Liabilities'' [Non-Current Liabilities] whereby Trade Payables by the company against purchase of goods, to the tune of Rs. 20,43,58,109/-, have been restated as Long Term [Non-Current Liabilities] from its ordinary classification as Short Term [Current Liabilities]. The company has obtained and presented letter of confirmations from its creditors stating that their payment is re-scheduled, becoming due as at April 2015, and that the same is acceptable to these creditors. We have relied upon these confirmation letters as received by the company from its vendors. Our opinion is not qualified in this matter.

(c) We draw attention to Note 35 to the Financial Statements, whereby the company has sold its Cotton Spinning Unit at Baramti, Pune to M/s GTN Engineering (India) Ltd. at a Lump-sum consideration of Rs. 29.8 Crores under a Business Transfer Agreement signed on 01st April 2013,and the company has handed over the possession of the said unit to M/s GTN Engineering (India) Ltd. on 09th June, 2013. Our opinion is not qualified in this matter.

7. Opinion

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

(i) In the case of the Balance Sheet, of the state of affairs of the Company as at March31, 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;

8. Attention to the following is invited:

As per the provisions of section 23of SICA Act,1985, the Accumulated Losses of the Company as at 31st March, 2014 have resulted in erosion of more than 50% of its peak net worth during the four financial years immediately preceding the financial year ended on 31st March, 2014. Consequent upon, the Company has become a "Potentially Sick Company" under the said provision.

9. Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors'' Report) Order, 2003 as amended by the Companies (Auditors'' Report) (Amendment) Order, 2004 (together the ''Order'') issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 of India 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 enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

10. As required by section 227(3) of the Act, 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 appears from our examination of those books and proper reports adequate for the purposes of our audit have been received from the branch not audited by us. The financial records of Baramati unit of the company for the period upto 9-6-2013 have been audited by M/S Shankarlal Jain & Associates, Chartered Accountants, Mumbai, (Firm Registration No. 109901W) a copy of whose report has been forwarded to us. We have relied on that report and have appropriately dealt with the same in our report.

(iii) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts along with the audited report of the branch.

(iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash flow statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013.

(v) On the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

ANNEXURE TO INDEPENDENT AUDITOR''S REPORT (Reffered to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date) (i) In respect of its fixed assets :

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

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

(c) The fixed assets disposed off during the year, including the Sale of Cotton Spinning Unit of Baramati, in our opinion, although consituted a division of the company, such disposal has, in our opinion, not affected the going concern status of the Company.

(ii) In respect of its inventory:

(a) The management conducts regular physical verification of inventory at reasonable intervals commensurate and adequate to the size of its operations.

(b) In our opinion and according to the information and explanation given to us, the procedure of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company has maintained proper records of its inventories. Some immaterial discrepancies were noticed on physical verification which have been properly dealt with in the books of account.

(iii) (a) The company has granted interest free loan (quasi-equity) to its Associate, Soma Textile FZC. Total amount outstanding on 31st March 2014 was Rs. 9444.17 lakhs.

(b) There are no terms and conditions set out by the Company as on date for the loans given to Soma Textile FZC and therefore, we are unable to comment on terms and conditions of the said loan.

(c) As there is no stipulation made for repayment of loan by Associate, we are unable to report on regularity of receipt of principal amount.

(d) As there is no stipulation of repayment of loan by Associate, we are unable to report on overdue amount.

(e) According to the information and explanations given to us the Company has taken unsecured loans from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and the same are as under.

(Rs. In lacs)

Opening Balance 500

No. of Parties involved : 1

Maximum Amount Involved during the year : 50

Amount Outstanding as on 31.03.2014 : 562

(f) Interest free unsecured loan has been taken from promoters to fulfill stipulation of Financial Institutions so there is no rate of interest specified. Terms and conditions of loans taken are prima facie not prejudicial to the interest of the company;

(g) No stipulation has been specified for the repayment of these loan.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) In respect of contracts or arrangements entered in Register maintained in pursuance Section 301 of Companies Act,1956, to the best of our knowledge and belief and according to the information and explanation given to us :

(a) The particulars of contracts or arrangements reffered to in section 301 that need to be entered in the Register maintained under the said Section have been so entered.

(b) where each of such transaction is in excess of Rs. Five Lakhs in respect of any party, the transaction have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public thus, the Provisions of the section 58A and 58AA and other relevant provisions of the Companies Act,1956 and the rules framed there under or any order passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal do not apply to Company.

(vii) In our opinion and according to information and explanations given to us, the Company has an adequate internal audit system commensurate with its size and nature of its business.

(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made by the Central Government of India, regarding the maintenance of cost records under clause (d) of sub- section (1)of section 209 of the Act and are of opinion that, prima facie,the prescribed accounts & records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) According to information and explanation given to us in respect of statutory dues:

(a) According to the information and explanations given to us, and on the basis of our examination of the books of accounts, the Company has generally been regular in depositing the undisputed statutory dues including Income-

Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty, Custom Duty, Cess and other material Statutory dues during the period with the appropriate authorities. At the end of the year, there were no undisputed amount payable for a period of more than six months from the date they became payable. (b) Details of dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on 31.03.2014 on account of dispute are given below:

Name of Statute Nature of Dues Amount Period to (Rs. in Lacs) which it relates

Central Excise Act, Recovery of CENVAT 1.59 2004-05 1944

Central Excise Act, Recovery of additional 24.85 2002-03 1944 TTA duty of Yarn captively consumed

Central Excise Act, Refund claim for 0.98 2005-06 1944 amount short received against refund claim of yarn duty after adjusting the old recovery

Central Excise Act, Demand for old duty 0.50 2008-09 1944

Central Excise Act, Recovery of transitional 5.81 2012-13 1944 Cenvat

The Income Tax Demand of Income Tax 9.77 A.Y. Act-1961 2006-07

The Income Tax Demand of Income Tax 14.55 A.Y. Act-1961 2007-08

Gujarat Sales Tax Additional Sales Tax 6.17 1997-98, Act-1969 1998-99 & 2000-01

Name of Statute Forum where dispute is pending

Central Excise Act, 1944 The Dy. Commissioner of C. Excise, Div-I, Ahmedabad.

Central Excise Act, 1944 The Dy. Commissioner of C. Excise, Div-III, Ahmedabad.

Central Excise Act, 1944 Commissioner of Central Excise, (Appeals), Ahmedabad

Central Excise Act, 1944 CESAT, West Zone, Ahmedabad

Central Excise Act, 1944 CESAT, West Zone, Ahmedabad (Appeal)

The Income Tax Act-1961 Asst. Commissioner of Income Tax, Cir.-8, Ahmedabad

The Income Tax Act-1961 Commissioner of Income Tax (Appeal), Ahmedabad

Gujarat Sales Tax Act-1969 Gujarat Value Added Tax Tribunal

(x) The accumulated loss of the Company at the end of the financial year exceeds fifty percent of its net worth and also the company has incurred cash losses in the current financial year.

(xi) Company is under Corporate Debt Restructuring (CDR) package under scheme of RBI which was duly approved and implemented. In our opinion and according to the information & explanations given to us, the company has not defaulted in repayment of dues to financial institution and banks.

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

(xiii) The company is not a chit fund / nidhi company / mutual benefit fund or society which would be governed by any special statute. Accordingly this clause along with sub clauses does not apply.

(xiv) The company is not dealing or trading in shares, securities, debentures and other investments. Accordingly this clause does not apply.

(xv) In our opinion and according to the information and explanations given to us and management representation received, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) In our opinion and according to the explanations given to us and management representation received the term loans were applied only for the purpose for which they were obtained.

(xvii) In our opinion, and according to the information & explanations given to us and management representation received, funds raised on short-term basis have, prima facie, not been used during the year for long-term investment .

(xviii) According to the information & explanations given to us, during the period under our audit report, the Company has not allotted any shares on preferential basis to the parties and companies covered in the register maintained under section 301 of the Act.

(xix) According to the information and explanations given to us, during the period covered by our audit report, the Company has not issued debentures.

(xx) According to the information and explanations given to us, the Company has not raised any money by way of public issue during the year.

(xxi) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For PIPARA & COMPANY Chartered Accountants Firm Regn. No. : 107929W

GYAN PIPARA Place: Ahmedabad (Partner) Date:30th May, 2014 Membership No.034289

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Mar 31, 2013

Report On Financial Statement

1. We have audited the accompanying financial statements of Soma Textiles & Industries Limited, which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and Cash Flow Statement for the year ended, and a summary of Significant Accounting Policies and other explanatory information.

Management''s Responsibility For The Financial Statement

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

Auditor''s Responsibility

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

4. 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.

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

Opinion

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

(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. 7 Without qualifying our opinion, we draw attention to Note No. 13, 13.1 and 13.2 regarding loan amount of

Rs. 8,558.24 Lacs (Previous Year Rs. 8,021.18 Lacs) given to Soma Textile FZC (UAE) out of GDR proceeds, being classified as a long term loan which had been advanced by the Company as a quasi- equity. When the loan was given, the said Company was a wholly owned subsidiary, however, with effect from 31st March, 2010, the Company''s holding has diluted from 100% to 40% (of the paid up Capital of Soma Textile FZC – UAE). Hence the said Company has become an associate of Soma Textiles & Industries Ltd. The loan amount is classified as Long Term under "Loans & Advances" (Note 13 of Financial Statements).

In the financial statements of Soma Textile FZC the accumulated loss reflects at AED 623,647 as against Total Capital of AED 900,000 (including Statutory Reserves); The said advance has been considered good by the management placing reliance on the Statutory Auditor''s Report of Soma Textile FZC (UAE) dated 16th April, 2013. The Audit was conducted by an independent Auditor viz Business Management World Auditors & Business Consultants, Dubai, U.A.E. for the financial year ended 31st March, 2013.

8. The Company has signed Business Transfer Agreement on 01.04.2013 to dispose off the Baramati Unit, situated at D-49, M.I.D.C., Baramati on a slump sale basis as a going concern for a lumpsum consideration of Rs. 29.80 crores. The sale of the unit is governed by the terms & conditions laid down in Business Transfer Agreement, transaction will be given effect in books of accounts in the Financial Year 2013-14.

Report On Other Legal And Regulatory Requirements

9. As required by the Companies (Auditors'' Report) Order, 2003 as amended by the Companies (Auditors'' Report) (Amendment) Order, 2004 (together the ‘Order'') issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 of India 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 enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

10. As required by section 227(3) of the Act, 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 appears from our examination of those books and proper reports adequate for the purposes of our audit have been received from the branch not audited by us. The financial records of Baramati unit of the Company have been audited by M/S Shankarlal Jain & Associates, Chartered Accountants, Mumbai, (Firm Registration No. 109901W) a copy of whose report has been forwarded to us. We have relied on that report and have appropriately dealt with the same in our report.

(iii) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts along with the audited report of the branch.

(iv) In our opinion, the Balance Sheet, Statement of Profit & Loss along with the Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

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

Annexure referred to in paragraph 3 of our report of even date to the members of SOMA TEXTILES & INDUSTRIES LIMITED on the accounts for the year ended on 31st March, 2013.

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

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

(c) The Company has not disposed off a substantial part of its fixed assets during the year and the "Going Concern" status of the Company is not affected.

(ii) (a) The management conducts regular physical verification of inventory at reasonable intervals commensurate and adequate to the size of its operations.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. Some immaterial discrepancies were noticed on physical verification which have been properly dealt with in the books of account.

(iii) (a) The Company has granted interest free loan (quasi-equity) to its Associate, Soma Textile FZC. Total amount outstanding on 31st March, 2013 was Rs. 8,558.24 lacs.

(b) There are no terms and conditions set out by the Company as on date for the loans given to Soma Textile FZC and therefore, we are unable to comment on terms and conditions of the said loan.

(c) As there is no stipulation made for repayment of loan by Associate, we are unable to report on regularity of receipt of principal amount.

(d) As there is no stipulation of repayment of loan by Associate, we are unable to report on overdue amount.

(e) According to the information and explanations given to us the Company has taken unsecured loans from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and the same are as under.

(Rs. In lacs)

No. of Parties Involved Two Parties

Opening Balance 500

Loan Taken 244

Balance Outstanding at the end of year 744

(f) Interest free unsecured loan has been taken from promoters to fulfill stipulation of Financial Institution so there is no rate of interest specified. Terms and conditions of loans taken are prima facie not prejudicial to the interest of the Company;

(g) No stipulation has been specified for the repayment of these loan.

(iv) There is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and service. (v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. (b) In our opinion and as explained 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 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) The Company has not accepted any deposits from the public during the year. Therefore the provisions of Sections 58A, 58AA or any other relevant provisions of the Act and the rules framed thereunder or any order passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal do not apply to Company. (vii) In our opinion and according to information and explanations given to us, the Company has an internal audit system

commensurate with its size and nature of its business. (viii) In our opinion, prima facie the Company has maintained proper cost records as prescribed by the Central Government under clause (d) of sub-section (1) of Section 209 of the Companies Act,1956. We have, however, not made a detailed examination of cost records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of books of account, we are of the opinion that the Company is generally regular in depositing 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 any other statutory dues with the appropriate authorities. At the end of the year, there were no undisputed dues payable for a period of more than six months from the date they became payable. (b) As on 31st March 2013, according to records of the Company, some statutory dues were disputed and not deposited as given below:

Name of Statute Nature of Dues Amount Period to Forum where dispute is pending (Rs. in Lacs) which it relates

Central Excise Act, Recovery of CENVAT 1.59 2004-05 The Dy. Commissioner of C. Excise, Div-I, 1944 Ahmedabad.

Central Excise Act, Recovery of additional 24.85 2002-03 The Dy. commissioner of C. Excise, Div-III, 1944 TTA duty of Yarn Ahmedabad. captively consumed

Central Excise Act, Refund claim for 0.98 2005-06 Commissioner of Central Excise, (Appeals), 1944 amount short received Ahmedabad against refund claim of yarn duty after adjusting the old recovery

Central Excise Act, Demand for old duty 0.50 2008-09 CESAT, West Zone, Ahmedabad 1944

Central Excise Act, Recovery of transitional 5.81 2012-13 CESAT, West Zone, Ahmedabad (Appeal) 1944 Cenvat

The Income Tax Demand of Income 9.77 A.Y. Asst. Commissioner of Income Tax, Act-1961 Tax 2006-07 Cir.-8, Ahmedabad

The Income Tax Demand for Penalty 7.43 A.Y. Asst. Commissioner of Income Tax, Cir.-8, Act-1961 U/s. 271(1)(C) 2008-09 Ahmedabad

The Income Tax Demand of Income Tax 14.55 A.Y. Commissioner of Income Tax (Appeal), Act-1961 2007-08 Ahmedabad

Gujarat Sales Tax Additional Sales Tax 6.17 1997-98, Gujarat Value Added Tax Tribunal Act-1969 1998-99 & 2000-01

(x) The Company has accumulated losses at the end of the Financial Year. However such losses do not exceed 50% of its net worth.

(xi) Company is under Corporate Debt Restructuring (CDR) package under scheme of RBI which was duly approved and implemented. Company has defaulted in repayment of Loans and interest as stated in Note No 4.3 which is mentioned under head "Long term borrowing".

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

(xiii) The Company is not a chit fund / nidhi Company / mutual benefit fund or society which would be governed by any special statute. Accordingly this clause along with sub clauses does not apply.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly this clause does not apply.

(xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions. Accordingly this clause does not apply.

(xvi) In our opinion and according to the explanations given to us the term loans were applied only for the purpose for which they were obtained.

(xvii) In our opinion and according to explanations given to us, the funds raised on short-term basis have not been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Act during the year and accordingly this clause does not apply.

(xix) The Company has not issued debentures during the year. Accordingly this clause does not apply.

(xx) The Company has not raised any money from public issue during the financial year. Accordingly this clause does not apply.

(xxi) In our opinion and according to explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For Pipara & Co.

Chartered Accountants

(Firm Registration No. 107929W)

Gyan Pipara

Place: Ahmedabad Partner

Date:24th May, 2013 Membership No. 034289

---

Mar 31, 2012

We have audited the attached Balance Sheet of SOMA TEXTILES & INDUSTRIES LIMITED, as at 31st March, 2012 and also the Profit and Loss Statement and Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditors' Report) Order, 2003 as amended by the Companies (Auditors' Report) (Amendment) Order, 2004 (together the 'Order') issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 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 enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

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

(ii) 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 and proper reports adequate for the purposes of our audit have been received from the branch not audited by us. The financial records of Baramati branch of the Company have been audited by M/S Shankarlal Jain & Associates, Chartered Accountants, Mumbai, (Firm Registration No. 109901W) a copy of whose report has been forwarded to us. We have relied on that report and have appropriately dealt with the same in our report;

(iii) The Balance Sheet, Profit and Loss Statement and Cash Flow Statement dealt with by this report are in agreement with the books of account and with the audited reports from the branch;

(iv) In our opinion, the Balance Sheet, Profit and Loss Statement and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section(3C) of Section 211 of the Companies Act, 1956;

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

(vi) Without qualifying our opinion, we draw attention to Note No. 13, 13.1 and 13.2 regarding loan amount of Rs. 8021.18 lakhs given to Soma Textile FZC out of GDR proceeds, being long term loan which has been termed by the Company as quasi-equity as when the loan was given, the said Company was a wholly owned subsidiary. However, with effect from 31st March, 2010, upon dilution of the Company's holding to 40% from 100% of the paid up Capital of the said subsidiary, the said Company has become an associate of the Company. However, the loan amount as shown in the long term "Loans & Advances" has been considered as good, relying on the statutory auditor report of Soma Textile FZC conducted by the independent Auditor viz AL SAIF AUDITING & ACCOUNTANTS, Sharjah,U.A.E. (as per the audited accounts as on 31st March 2012) though the accumulated loss incured by the said Soma Textile FZC as on 31st March 2012 is AED 6,56,046 as against Total Capital of AED 9,00,000 (including Statutory Reserves).

(vii) In our opinion and to the best of our information and according to the explanations given to us, accounts read together with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

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

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

Annexure referred to in paragraph 3 of our report of even date to the members of SOMA TEXTILES & INDUSTRIES LIMITED on the accounts for the year ended on 31st March 2012.

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

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

(c) The Company has not disposed off a substantial part of its fixed assets during the year and the "Going Concern" status of the Company is not affected.

(ii) (a) The management conducts regular physical verification of inventory at reasonable intervals commensurate

and adequate to the size of its operations.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. Some immaterial discrepancies were noticed on physical verification which have been properly dealt with in the books of account.

(iii) (a) The Company has granted interest free loan (quasi-equity) to its Associate, Soma Textile FZC. Total amount outstanding on 31st March 2012 was Rs. 8021.18 lakhs.

(b) There are no terms and conditions set out by the Company as on date for the loans given to Soma Textile FZC and therefore, we are unable to comment on terms and conditions of the said loan.

(c) As there is no stipulation made for repayment of loan by Associate, we are unable to report on regularity of receipt of principal amount.

(d) As there is no stipulation of repayment of loan by Associate, we are unable to report on overdue amount.

(e) According to the information and explanations given to us the Company has taken unsecured loans from companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and the same areas under.

(Rs. In lakhs)

No. of Parties involved Three Parties

Opening Balance 355

Loan Taken 145

Balance Outstanding at the end of year 500

(f) Interest free unsecured loan has been taken from promoters to fulfill stipulation of Financial Institution so there is no rate of interest specified. Terms and conditions of loans taken are prima facie not prejudicial to the interest of the Company;

(g) No stipulation has been specified for the repayment of these loan.

(iv) There is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and service.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and as explained 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 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) The Company has not accepted any deposits from the public. Therefore the provisions of Sections 58A, 58AA or any other relevant provisions of the Act and the rules framed there under or any order passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal do not apply to Company.

(vii) In our opinion and according to information and explanations given to us, the Company has an internal audit system commensurate with its size and nature of its business.

(viii) In our opinion, prima facie the Company has maintained proper cost records as prescribed by the Central Government under clause (d) of sub-section (1) of Section 209 of the Companies Act,1956. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of books of account, we are of the opinion that the Company is generally regular in depositing 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 any other statutory dues with the appropriate authorities. At the end of the year, there were no undisputed dues payable for a period of more than six months from the date they became payable.

(b) As on 31st March 2012, according to records of the Company, some statutory dues were disputed and not deposited as given below:

Name of Statute Nature of Dues Amount Period to Forum where dispute is pending (Rs. in Lakhs) which its relates

Central Excise Act, Recovery of CENVAT 1.59 2004-05 The Dy. Commissioner of C. Excise Div-I, 1944 Ahmadabad.

Central Excise Act, Recovery of additional 24.85 2002-03 The Dy. Commissioner of C. Excise Div-III, 1944 TTA duty of Yarn Ahmadabad. captively consumed

Central Excise Act, Refund claim for 0.98 2005-06 Commissioner of Central Excise, (Appeals), 1944 amount short received Ahmadabad against refund claim of yarn duty after adjusting the old recovery

Central Excise Act, Demand for old duty 0.50 2008-09 CESAT, West Zone, Ahmadabad 1944

The Income Tax Demand of Income 9.77 A.Y. Asst. Commis sioner of Income Tax, Act-1961 Tax 2006-07 Cir.-8, Ahmadabad

The Income Tax Demand for Penalty 7.43 A.Y. Asst. Commis sioner of Income Tax, Cir.-8, Act-1961 U/s. 271(1)(C) 2008-09 Ahmadabad

The Income Tax Demand for Penalty 17.42 A.Y. Commissioner of Income Tax (Appeal),

Act-1961 U/s. 271(1)( C) 2006-07 Ahmadabad

The Income Tax Demand of Income Tax 14.55 A.Y. Commissioner of Income Tax (Appeal),

Act-1961 2007-08 Ahmadabad

Gujarat Sales Tax Additional Sales Tax 6.17 1997-98, Gujarat Value Added Tax Tribunal Act-1969 1998-99

&2000-01

(x) The Company has accumulated losses at the end of the financial year not exceeding 50% of its net worth.

(xi) Company is under Corporate Debt Restructuring (CDR) package under scheme of RBI which was duly approved and implemented. Company has defaulted in repayment of Loans and interest at Note No 4.3 which is mentioned under head "Long term borrowing".

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly this clause does not apply.

(xiii) The Company is not a chit fund / nidhi Company / mutual benefit fund or society which would be governed by any special statute. Accordingly this clause along with sub clauses does not apply.

(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly this clause does not apply.

(xv) The Company has not given any guarantee for loans taken by others from bank or financial institutions. Accordingly this clause does not apply.

(xvi) The term loans were applied only for the purpose for which they were obtained.

(xvii) In our opinion and according to explanations given to us, the funds raised on short-term basis have not been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Act during the year and accordingly this clause does not apply.

(xix) The Company has not issued debentures during the year. Accordingly this clause does not apply.

(xx) The Company has not raised any money from public issue during the financial year. Accordingly this clause does not apply.

(xxi) In our opinion and according to explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For PIPARA & COMPANY

Chartered Accountants

Firm Registration No. 107929W

GYAN PIPARA

Place : Ahmedabad (Partner)

Date : 24th May, 2012 Membership No.034289

---

Mar 31, 2011

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

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

As required by the Companies (Auditors' Report) Order, 2003 as amended by the Companies (Auditors' Report) (Amendment) Order, 2004 (together the 'Order') issued by the Central Government of India in terms of sub-Section (4A) of Section 227 of the Companies Act, 1956 of India 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 enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

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

(ii) 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 and proper report adequate for the purposes of our audit have been received from the branch not audited by us. The financial records of Baramati branch of Company have been audited by Shankarlal Jain & Associates, Chartered Accountants, Mumbai, (Firm Registration No. 109901W) a copy of whose report has been forwarded to us. We have relied on that report and have appropriately dealt with the same in our report.

(iii) The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account and with the audited reports from the branch;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-Section(3C) of Section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2011, and 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(l) 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, and subject to our observations in Note No. 23 of Schedule 22(B) - Notes on Accounts, relating to income of Rs. 26,724,438/- shown by the Company under the head "Prior Period" in the Profit and Loss Account, pertaining to its claims for Deemed Duty Drawback for the period 1st April, 1994 to 31st March, 2003; and further Note No. 24 of Schedule 22(B) - Notes on Accounts, pertaining to amount of investment as well as amount advanced by the Company to Soma Textile FZC, the said accounts read together with the notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

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

(b) In the case of the Profit and 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 for the year ended on that date.

Annexure referred to in paragraph 3 of our report of even date to the members of SOMA TEXTILES & INDUSTRIES LIMITED on the accounts for the year ended on 31st March 2011.

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

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

(c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concerns status of the Company is not affected.

(ii) (a) The management conducts regular physical verification of inventory at reasonable intervals.

(b) In our opinion, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. Some immaterial discrepancies were noticed on physical verification which have been properly dealt with in the books of account.

(iii) (a) The Company has granted interest free loan to its Associate, Soma Textile FZC. Total amount outstanding on 31st March 2011 was Rs.703,101,360/-.

(b) There are no terms and conditions set out by the Company as on date for the loans given to Soma Textile FZC and therefore, we are unable to comment on terms and conditions of the said loan.

(c) As there is no stipulation made for repayment of loan by Associate, we are unable to report on regularity of receipt of principal amount.

(d) As there is no stipulation of repayment of loan by Associate, we are unable to report on overdue amount.

(e) According to the information and explanations given to us the Company has taken unsecured loans from companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and the same are as under.

No. of Parties involved Three Parties

Loan Taken Rs. 35,500,000

Balance Outstanding at the end of year Rs. 35,500,000

(f) Interest free unsecured loan taken from promoters to fulfill stipulation of Financial Institution so there is no rate of interest specified. Terms and conditions of loans taken are prima facie not prejudicial to the interest of the Company;

(g) No stipulation has been specified for the repayment of these loan.

(iv) There is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and service.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and as explained 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 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) The Company has not accepted any deposits from the public. Therefore the provisions of Sections 58A, 58AA or any other relevant provisions of the Act and the rules framed thereunder or any order passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal do not apply to Company.

(vii) In our opinion and according to information and explanations given to us, the Company has a interna! audit system communsurate with its size and nature of its business, which may be further strengthened.

(viii) In our opinion, the Company has maintained proper cost records prescribed by the Central Government under clause (d) of sub-Section (1) of Section 209 of the Act. However, we are not required to carry out and have not carried out any detailed examination of such accounts and records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of books of account, we are of the opinion that the Company is generally regular in depositing 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 any other statutory dues with the appropriate authorities. At the end of the year, there were no undisputed dues payable for a period of more than six months from the date they became payable.

(b) As on 31st March 2011, according to records of the Company, some statutory dues were disputed and not deposited as given below:

Name of Statute Nature of Dues Amount (Rs.) Period to Forum where dispute is pending which its relates

Central Excise Act, Penalty for filing 25,428 1996-97 CEGAT, Mumbai and the Hon'ble High Court 1944 wrong declaration 1997-98 of Gujarat, Ahmedabad.

Central Excise Act, Recovery of CENVAT 158,973 2004-05 The Dy. Commissioner of C. Excise, Div-I, 1944 Ahmedabad.

Central Excise Act, Recovery of additional 2,485,486 2002-03 The Dy. Commissioner of C.Excise, Div-lll, 1944 TTA duty of Yam Ahmedabad. captively consumed

Central Excise Act, Refund claim for 97,711 2005-06 Commissioner of Central Excise, (Appeals), 1944 amount short received Ahmedabad against refund claim of yarn duty after adjusting the old recovery

Central Excise Act, Demand for old duty 50,179 2008-09 OESAT, West Zone, Ahmedabad 1944

The Income Tax Demand of Income 976,730 A.Y. Asst. Commissioner of Income Tax, Act-1961 Tax 2006-07 Cir.-8, Ahmedabad

The Income Tax Demand of Income 26,076,000 A.Y. Asst. Commissioner of Income Tax, Cir Act-1961 Tax 2008-09 8, Ahmedabad

The Income Tax Demand for Penalty 1,742,070 A.Y. Commissioner of Income Tax (Appeal), Act-1961 U/s. 271(1)(C) 2006-07 Ahmedabad

The Income Tax Demand of Income 2,213,276 A.Y. Commissioner of Income Tax (Appeal), Act-1961 Tax 2007-08 Ahmedabad

Gujarat Sales Tax Additional Sales Tax 617,257 1997-98 Gujarat Value Added Tax Tribunal Act, 1969 1998-99 &2000-01

(x) The Company has accumulated losses at the end of the financial year not exceeding 50% of its net worth. It has not incurred cash losses in the financial year but incurred cash losses in the immediately preceding financial year.

(xi) Company is under Corporate Debt Restructuring (CDR) package under scheme of RBI which was duly approved and implemented. Company has not defaulted in repayment of dues to any financial institution or bank as per reschedulement under CDR package. ' , '

(xii) In our opinion and according to explanations given to us, the Company Has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly this clause does not apply.

(xiii) The Company is not a chit fund / nidhi Company / mutual benefit, fund or society which would be governed by any special statute. Accordingly this clause along with sub clauses do As not’ apply.

(xiv) In our opinion and according to explanation TO given to us, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly this clause does not apply.

(xv) In our opinion and according to explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. Accordingly this clause does not apply.

(xvi) In our opinion and according to explanations given to us, the term loans were applied only for the purpose for which they were obtained.

(xvii) In our opinion and according to explanations given to us, the funds raised on short-term basis have not been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Act during the year and accordingly this clause does not apply.

(xix) The Company has not issued debentures during the year. Accordingly this clause does not apply.

(xx) The Company has not raised any money from public issue during the financial year. Accordingly this clause does not apply.

(xxi) In our opinion and according to explanations given to us, no fraud on or by the Company has been noticed or reported during the year.



For PIPARA & COMPANY

Chartered Accountants

GYAN PIPARA

(Partner)

Place : Ahmedabad Membership No.034289

Date : 18th May, 2011 Firm Registration No. 107929W

---

Mar 31, 2010

We have audited the attached Balance Sheet of SOMA TEXTILES & INDUSTRIES LIMITED, as at 31st March, 2010 and also the Profit and Loss Account and Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) (Amendment) Order, 2004 (together the "Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956 of India 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 enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

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

(ii) 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 and proper report adequate for the purposes of our audit have been received from the branches not audited by us. The financial records of Baramati branch of company have been audited by Shankarlal Jain & Associates, Chartered Accountants, Mumbai, a copy of whose report has been forwarded to us. We have relied on that report and have appropriately dealt with the same in our report;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account and with the audited reports from the branches;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow statement dealt with by this report comply with the accounting standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956;

(v) On the basis of written representations received from the directors, as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the directors are 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, and subject to our observations as aforesaid, and particularly Note No. 23 of Schedule 22(B) of Notes on Accounts, the said accounts read together with notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) In the case of the Profit and 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 for the year ended on that date.

Annexure referred to in paragraph 3 of our report of even date to the members of SOMA TEXTILES & INDUSTRIES LIMITED on the accounts for the year ended on 31st March 2010.

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

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

(c) In our opinion, the Company has not disposed off a substantial part of its fixed assets during the year and the going concerns status of the company is not affected.

(ii) (a) The management conducts regular physical verification of inventory at reasonable intervals.

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

(c) The company is maintaining proper records of inventory. Some immaterial discrepancies were noticed on physical verification which have been properly dealt with in the books of account.

(iii) (a) The company has granted interest free loan to its 100% subsidiary, Soma Textiles FZE. Total amount outstanding on 31st March 2010 was Rs.707,878,454/-.

(b) The terms and conditions of loans given by the company are prima facie not prejudicial to the interest of the company.

(c) As there is no stipulation made for repayment of loan by subsidiary, we are unable to report on regularity of receipt of principal amount.

(d) As there is no stipulation of repayment of loan by subsidiary, we are unable to report on overdue amount.

(e) The company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly sub-clauses (f) and (g) are not applicable.

(iv) There is an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and service.

(v) (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and as explained to us, the transactions made in pursuance of contracts or arrangements entered into the register maintained under section 301 of the Companies Act, 1956 and exceeding 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) The company has not accepted any deposits from the public. Therefore the provisions of sections 58A, 58AA or any other relevant provisions of the Act and the rules framed thereunder or any order passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal do not apply to company.

(vii) In our opinion and according to information and explanations given to us, the company has a internal audit system commensurate with its size and nature of its business, which may be further strengthened.

(viii) In our opinion, the company has maintained proper cost records prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Act. However, we are not required to carry out and have not carried out any detailed examination of such accounts and records.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of books of account, we are of the opinion that the company is generally regular in depositing 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 any other statutory dues with the appropriate authorities. At the end of the year, there were no undisputed dues payable for a period of more than six months from the date they became payable.

(b) As on 31st March 2010, according to records of the company, some statutory dues were disputed and not deposited as given below:

Name of Statute Nature of Dues Amount Period to (Rs.) which its relates

Central Excise Act, Penalty for filing 25,428 1996-97 1944 wrong declaration 1997-98 Central Excise Act, Recovery of CENVAT 158,973 2004-05 1944

Central Excise Act, Recovery of additional 2,485,486 2002-03 1944 TTA duty of Yarn captively consumed

Central Excise Act, Refund claim for 97,711 2005-06 1944 amount short received against refund claim of yarn duty after adjusting the old recovery

Central Excise Act, Demand for service tax 444,139 2005-06 1944 on goods transport

Central Excise Act, Demand for excise on 251,047 2006-07 1944 scrap sale

Central Excise Act, Demand for old duty 50,179 2008-09 1944

Gujarat Sales Tax Additional Sales Tax 617,257 1997-98 Act, 1969 1998-99 &2000-01

Name of Statute Forum where dispute is pending

Central Excise Act, CEGAT, Mumbai and the Honble High Court 1994 of Gujarat, Ahmedabad.

Central Excise Act, The Dy. Commissioner of C. Excise, Div-I, 1994 Ahmedabad.

Central Excise Act, The Dy. Commissioner of C. Excise, Div-III, 1994 Ahmedabad.

Central Excise Act Commissioner of Central Excise, (Appeals), 1994 Ahmedabad

Central Excise Act Dy. Commissioner Service Ta x Div - II 1994

Central Excise Act Asst. Commissioner of Central Excise. 1994 Central Excise Act CESAT, West Zone, Ahmedabad 1994

Central Sales Act Gujarat Value Added Ta x Tribunal 1969



(x) The company has accumulated losses at the end of the financial year but the same are less than 50% of its net worth. It has incurred cash losses in the financial year as well as in the immediately preceding financial year.

(xi) Company is under Corporate Debt Restructuring (CDR) package under scheme of RBI which was duly approved and implemented. Company has not defaulted in repayment of dues to any financial institution or bank as per reschedule under CDR package.

(xii) In our opinion and according to explanations given to us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly this clause does not apply.

(xiii) The company is not a chit fund / nidhi company / mutual benefit entity or society which would be governed by any special statute. Accordingly this clause along with sub clauses does not apply.

(xiv) In our opinion and according to explanations given to us, the company is not dealing or trading in shares, securities, debentures and other investments. Accordingly this clause does not apply. (xv) In our opinion and according to explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions. Accordingly this clause does not apply.

(xvi) In our opinion and according to explanations given to us, the term loans were applied only for the purpose for which they were obtained.

(xvii) In our opinion and according to explanations given to us, the funds raised on short-term basis have not been used for long-term investment.

(xviii) The company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Act during the year and accordingly this clause does not apply.

(xix) The company has not issued debentures during the year. Accordingly this clause does not apply. (xx) The company has not raised any money from public during the financial year. Accordingly this clause does not apply.

(xxi) In our opinion and according to explanations given to us, no fraud on or by the company has been noticed or reported during the year.



For PIPARA & COMPANY CHARTERED ACCOUNTANTS Firm Registration No. 107929W

GYAN PIPARA

Place: Ahmedabad PARTNER Date:29th May, 2010 Membership No.034289