ఆడిటర్ నివేదిక Super Syncotex (India) Ltd.

Mar 31, 2012

We have audited the attached balance Sheet of Super Syncotex India limited as at 31st March, 2012 and Statement of Profit & Loss for the year ended on that date annexed thereto, and Cash Flow Statement for the year ended on that. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based an our audit.

01. We have 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 text basis evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountings principles used and significant estimates made by the management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

02. As required by the Companies (Auditors' Report) Order, 2003 issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act 1956. We enclose in the annexure a statement on the matters specified in paragraph 4 and 5 of the said order. 03. The company is registered as a sick company with BIFR. The hon'ble BIFR has passed on order on 23/6/2009 for the merger of Spinning Unit (the industrial undertaking situated at Khari ka Lamba, Gulabpura Dist Bhilwara) into Suzuki Textiles Ltd. Accounting treatement of assets and liabilities and consequential effect thereof has been given in accordance with said order in FY 2009-10.

04. Further to our comments in the Annexure referred to in paragraph 2 above, we report that:

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

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

(c) The Balance Sheet Statement of Profit & Loss and Cash Flow Statement referred to in this repair are in agreement with the books of account.

(d) Except as otherwise stated in accounting policies and Notes on financial statements, in our opinion, the Balance sheet, the Statement of profit & loss and Cash Flow Statement complied with accounting standards specified u/s 211(3C) of the companies Act, 1956.

(e) In our opinion and based on information and explanations given to us, none of the directors are disqualified as on 31/03/2012 from being appointed as directors in terms of clause (g) of sub-section (#) of section 274 of the companies Act, 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said balance sheet statement of profit and loss and Cash flow statement read together with the notes to financial statements referred and subject to-

(i) Note No. 10.1 Physical verification of Inventories could not be carried out during the year. Values of inventories have been taken as stated in scheme approved by BIFR.

(ii) Note No. 12.1 Bank balances being subject to reconciliation and confirmation.

(iii) Note No. 5.2 and 11.2 regarding balances of trade payables and trade receivable respectively, being subject to confirmation, give the information required by the Companies Act, 1956, in the manner so required and give a true & fair view in conformity with the accounting principles generally accepted in India.

(i) In so far as it relates to the Balance Sheet, at the state of affairs of the company as at 31st March, 2012.

(ii) In so far as it relates to the Statement of Profits loss, of the 'Loss' of the company for the year ended on that date.

(iii) In so far as it relates to the Cash flow Statement, of the Cash Flow of the company for the year ended an that date.

ANNEXURE TO AUDITOR'S REPORT

TO THE MEMBERS OF SUPER SYNCOTEX (INDIA) LTD.

I. in Respect of its fixed Assets

(a) The company has maintained proper records to show full particulars including quantitative details and situation of fixed assets on the basis of available information.

(b) As explained to us, Physical verification of fixed assets has been conducted during the year to the best of our knowledge, no material discrepancies have been noticed on such verification.

(c) The company has the merged Spinning unit (Industrial Undertaking at Khari Ka Lamba, Gulabpura) to Suzuki Textiles Limited in pursuance of the scheme approved by BIFR, which has resulted into transfer of substantial assets during Fy 2009-10. As explained to us by the management, residuary undertaking of the Company would be a going concern of the Company.

II. In respect of its inventories;

(a) as explained to us, physical verification of Inventories has not been conducted by the management.

(b) In our opinion and according to information and explanations given to us, the procedures of physical verification of inventories needs to be made adequate in relation to the size of the company and the nature of its business.

(c) On the basis of information and records made available, the Company has maintained proper records of Inventories but in absence of physical verification, the discrepancies between physical inventory and book records can not be commented upon.

III. In respect of loans:

(a) As per Information end explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms or parties covered the register maintained under section 301 of the companies Act, 1956. Accordingly clause (b) (c) & (d) are not applicable.

(b) The Company has taken loans from 9 parties covered in the register maintained under section 301 of the Companies Act, 1956, Maximum amount outstanding was Rs. 1331672/- and year end balance was Rs. 1331672/-

(c) As explained to us, the unsecured loans have been taken interest free, as such are prima facie not prejudicial to the interest of the company.

(d) As explained to us, there are no stipulations for repayment of principal.

IV. In our opinion and according to information and explanations given to us, there are inadequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchases of Inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit we have observed continuing failure to ascertain the value of inventories and exercising internal control for maintaining the usefulness of such inventories. However, there was no purchase and sale of inventories during the year.

V. a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the contract or arrangements 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 according to information and explanation given to us, there were no transactions made in pursuance of contracts or arrangements entered in the registers maintained under Section 301 and exceeding the value of five lakh rupees in respect of any party during the year.

VI. The Company has not taken deposits during the year within meaning of section 58A and 58AA or any other relevant provisions of the Act and Rules framed thereunder. However, the company has taken unsecured loan of Rs. 4.58 lacs from director. Unsecured loan taken from related and non related parties are continued to meet out the expenses. No order has been passed by Company Law Board, NCLT, RBI or any other Tribunal in respect of unsecured loan accepted by the company.

VII. In our opinion and according to information and explanations given to us, the internal audit system of the Company was not commensurate with its size and nature of its business.

VIII. As explained to us, The Central Government has not prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 and since demerger of Khari Ka Lamba. Unit (Textile unit) the company has not yet started any manufacturing of the product so as to attract the provisions of section 209(1)(d).

IX. In respect to Statutory Dues:

(a) During the year, the company is regular in deposing undisputed statutory dues wherever applicable including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duly, Cess and other statutory dues, with appropriate authorities. There was no arrear of outstanding statutory dues as at the last day of financial year for a period of more than six months from the date they become payable.

(b) As explained to us, there was no disputed statutory dues which have not been deposited by the company after demeger of Khari Ka Lamba Unit and transfer to Transferee Company M/s. Suzuki Textiles Ltd.

X. The company has been declared as sick company by BIFR vide its order dated 3.1.2006 in terms of section 3(1)(O) of the Sick Industrial Companies (Special Provisions) Act, 1985.The company has accumulated tosses of Rs.555.15 lacs as on 31.3.2012 and has incurred cash losses during the current financial year, however it has not incurred cash losses in the immediately preceding financial year.

XI. According to the information given to us, the company has no dues of financial institutions, banks and debenture holders during the year.

XII. According to information and explanation given to us, the company has not given any loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence maintenance of adequate records for this purpose is not applicable.

XIII. In our opinion, the company is not chit fund or a Nidhi/mutual benefit fund/society. Therefore the provisions of clause 4(xiii) of the companies (Auditors Report) order, 2003 are not applicable to the company.

XIV. In our opinion the company is not dealing in or trading in shares, securities, debentures and other investment. Accordingly, the provisions of clause 4(xiv) of the companies (Auditors Report) order, 2003 are not applicable to the company.

XV. In our opinion, the company has not given any guarantee for loans taken by others from bank or financial institution.

XVI. The company has not taken any term loan during the year.

XVII. According to information and explanation given to us and on overall examination of the balance sheet and Cash Flow Statement of the company, we report that short term fund of Rs. 10.03 lacs has been utilized for long term investment.

XVIII. According to information and explanation given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the companies Act, 1956.

XIX. As explained to us, the company has not issued any debentures and has not created security or charge during the year.

XX. The company has not raised any money by way of public issue during the year.

XXI. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the year.

For S. S. SURANA & COMPANY

R. N. Goyal Chartered Accountants Partner (Membership No. 07033)

PLACE: JAIPUR DATE: 31st May, 2012

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Mar 31, 2009

We have audited the attached Balance Sheet of Super Syncotex India Limited as at 31st March. 2009 and Profit & Loss Account lor the year ended on that date, annexed thereto. and Cash Flow Statement (or the year ended on that 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.

01. We have conducted our audit in accordance with Auditing Standards generally accepted in India Those Standouts require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are tree of material misstatement. An audit includes examining. on a test basis, evidence suppeting the amounts and disclosures in the financial satements An audit also includes assessing the accounting principles used and sign cant estimates made by the management, as well as evaluating the overall financial statement presentation. wc believe that our audit provides a reasonable basis for our opinion.

02. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub section (4A) of section 227 of the Companies Act 19S6. we enclose in the annexurc a statement on the matters specified in paragraph 4 and 5 of the said order.

03. Further to our comments in the Annexure referred to in paragraph 2 above, we report that:

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

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

(c) The B/S. P & L Account and Cash Flow Statement referred to in this report are in agreement with the books of account.

(d) Except as otherwise stated in accounting policies and Notes on Accounts as per schedule 10. in our opinion, the profit & loss account & balance sheet complied with accounting standards specified u/s 211 (3C) of the companies Act. 1956

(e) In our opinion & based on information and explanation given to us. none of the directors are disqualified as on 31/03/ 2009 from being appointed as directors in terms of clause(g) of sub-section(lj of section 27-1 of companies Act. 1956.

(f) In our opinion and to the best of our information and according to the explanations given to us. the said balance sheet. profit and loss account and Cash flow statement read together with the significant accounting policies and notes to accounts referred, in schedule 10 and subject to-Note No. A(ivj regarding accounting of bonus, gratuity and leave encashment on cash basis. Note No. B(ii) (a) regarding non provision of demand raised by sales tax department amounting to Rs 4.33 lacs being under dispute, since earlier years. Note no. B(ii) (b) regarding non provision of excise demand of Rs 128.16 lacs being under dispute since earlier years. Note no. B(u) (c) regarding non provision of ESI demand of Rs 3.00 lacs being under disputed since earlier year. Note no. B(ii) (d) regarding non accounting of custom duty of Rs. 335.26 against import of capital goods under EPCG licences Note no. B (iv) regarding non provision and ascertainment of impairment loss in carrying amount. As per Scheme submitted to B1FR the values of inventories has been taken lor Rs 6.98 lacs as against book value of Rs 69.75 lacs, the basis of which not explained to us. Note no. B (v) regarding non provision of depreciation amounting to Rs. 246.02 lacs (or the current year and cumulative Rs.738.13 lacs upto 31.3.2009. Note No. B(vi) an amount of Rs 248.86 lacs in respect of devoivement of L/Cs in earlier years which are yet to be credited to the bankers account with corresponding debit to supplier. Note No. B(vuj regarding non accounting of waiver of Interest of Rs 258.70 lacs and principal of Rs. 3997.96 lacs due to financial institution and banks. Note No. B(viii) regarding non provision of Interest on unsecured loan from Suzuki Textile Ltd (a transferee company as per scheme of arrangement approved by shareholdersl, amount not ascertainable. Note No B(x) regarding non provision of Gratuity & Bonus (or the year Rs. Nil. Gratuity amounting to Rs 121.25 lacs cumulative upto 31" March 2006 and Bonus amounting to Rs 51.81 lacs cumulative upto 31st March 2006. Note No 3(xvii) regarding balances of sundry debtors and creditors being subject to confirmation. Note No B(xviii) regarding balances of bank account being subject to confirmation. Note No B(xxvi) regarding non provision of impairment loss of Rs. 920.52 lacs in Fixed Assets. Note No B(xxv) regarding non provision of Deferred Tax assets of lis. 6.43 lacs and cumulative deferred tax assets of Rs.1170.16 lacs Had the provision made for the amount, stated above the loss for the year would have been higher by an amount of Rs 239.59 lacs and fixed assets would have lower by Rs. 246.02 lacs and Deferred Tax Assets would have higher by Rs. 6.43 lacs. The cumulative, loss as on 31" March 2009 would have been lower by Rs 3459.61 lacs, current liabilities would have been higher by Rs 643.81 lacs, secured loans would have been lower by Rs 4256.66 lacs, fixed assets would have been lower by Rs. 1077.38 lacs and Deferred Tax Assets would have been higher 1170.16 lacs, give the information required by the Companies Act. 1956. In the manner so required and give a true & lair view in conformity with the accounting principles of generally accepted in India.

(i) In so far as it relates to the Balance Sheet of the state of affairs, of the company as at 31" March. 2009

(ii) In so far as it relates to the Profit & Loss account of the "loss" of the company lor the year ended on that date.

In so far as it relates to the Cash Flc / Statement. of the Cash Flow of the company for the year ended on that date.

ANNEXTURE TO AUDITORS REPORT

TO THE MEMBERS OF SUPER SYNCOTEX (INDIA) LTD,

1. In Respect of its fixed Assets

(a) The company has maintained proper records to show full particulars including quantitative details and situation of fixed assets on the basis of available information.

(b) As explained to us, Physical verification of fixed assets has not been conducted during the year due to plant operation being under suspension. Discrepancies, if any, in this respect could not ascer tained and commented by us.

(c) In our opinion during the year, the company has not disposed off any substantial part of its fixed assets during the year, hence the going concern is not affected.

2. In respect of its inventories:

(a) As explained to us, physical verification of Inventories has not been conducted by the management due to plant operation being under suspension.

(b) In our opinion and according to information and explanations given to us, the procedures of physical verification of inventories needs to be made adequate in relation to the size of the company and the nature of its business.

(c) On the basis of information and records made available, the Company has maintained proper records of inventories but in absence of physical verification, we are unable to comment on discrep ancies between physical inventory and book records.

3. In respect of loans:

{a) As per Information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms or parties covered the register maintained under section 301 of the companies Act, 1956. Accordingly clause (b) (c) & (d) are not applicable.

(b) The Company has not taken loans from the parties covered in the register maintained undersection 301 of the companies Act, 1956 during the year, However the company has taken unsecured loan form two parties in earlier years and maximum amount outstanding was Rs.131000/- and year end balance was Rs. 131000/-

(c) As explained to us, the unsecured loans have been taken interest free as per stipulation of the financial institutions, as such are prima facie not prejudicial to the interest of the company.

(d) As explained to us, there are no stipulations for repayment of interest & Principal.

4. In our opinion and according to information and explanations given to us, there are inadequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and services. During the course of our audit we have observed continuing failure to ascertain the value of inventories and exercising internal control for maintaining the usefulness of such inventories in internal control System. However, there was no purchase and sale of fixed assets and inventories during the year.

5. In respect of transactions covered under Section 301 of the Companies Act, 1956 In our opinion and according to information and explanation given to us, there were no transactions made during the year in pursuance of contracts or arrangement that need to be entered in to register maintained under section 301 of the companies Act have been so entered.

6. The Company has not taken deposits during the year within meaning of section 58A and 58AA or any other relevant provisions of the Act and rules framed thereunder. However, the company has taken unsecured loan of Rs. 11.95 lacs during the year (Total Rs. 1481.26 lacs) from a body corporate (a transferee company as per scheme of arrangement approved by shareholder;) for payment of OTS amount to FIs/ Banks, statutory and other liabilities. No order has been passed by Company Law Board, RBI or any other Court or any other Tribunal in respect of unsecured loan accepted by the company.

7. In our opinion and according to information and explanations given to us, the internal audit system of the Company was not commensurate with its size and nature of its business

8. The Central Government has prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of manufacturing activities of the Company but the company has not maintained such records in view of closure of manufacturing operation.

9. In respect to Statutory Dues:

(a) The company is generally regular in depositing undisputed statutory dues wherever applicable including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other statutory dues with appropriate authorities. However the undisputed dues outstanding more than six months from the date, they becomes payable as on 31 st March 2009 were as follows.

Rs. in lacs

i. T.C.Cess 0.10

ii. Sales Tax/ Entry Tax 19.48

iii. Electricity Duty 14.69

iv. Service tax 0.18

(b) The disputed statutory dues aggregating to Rs 466.45 lacs have not been deposited on account of matters pending before the forum where disputes were pending as follows:

S.No.Name of the Statue Nature of dues Forum where Amount net of dispute is advances pending Rs in lacs

1 Central Excise Act, 1944 Excise duty A.C Central 12.32 & penalty Excise, Bhilwara Commissioner IICE- Jaipur 20.34 Supreme Court 94.20

2. Sales Tax Sales Tax A.C Bhilwara 01.44

High Court, Jodhpur 02.89

3.Custom Act, 1962 Custom Duty JDGFT 335.26

Total 466.45

10. The company has accumulated losses more than 100% of its Net Worth and has incurred cash losses during the current financial year and in the immediately preceding financial year.

11. According to the information given to us, the company has defaulted in repayment of dues to financial institutions, banks and debenture holders. The entire outstanding dues (Secured Loans and interest accrued there upon) have been recalled and the Term Lending Institutions and Banks have filed suits for recovery of the amount as stated in Schedule 3 of the balance Sheet, along with interest provided / not provided in their books of account. However, the company has en- tered into OTS with the FIs/ Banks and paid the OTS amount but no dues/ charge release is yet to be obtained. The accounting entries in respect of waiver of term loan and interest overdue to the time of Rs.4256.66 lacs have not been accounted for. As per explanation given to us the company intend to account for on approval of scheme and passing of final order by BIFR.

12. According to information and explanation given to us, the company has not given and loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence maintenance of adequate records for this purpose is not applicable.

13. In our opinion, the company is not chit fund or a Nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(Xiii) of the companies (Auditors Report) order, 2003 are not applicable to the company

14. In our opinion the company is not dealing in or trading in shares, securities, debentures and other investment. Accordingly, the provisions of clause 4(xiv) of the companies (Auditors Report) order, 2003 are not applicable to the company.

15. In our opinion, the company has not given any guarantee for loans taken by others from bank or financial institution.

16. The company has not taken any term loan during the year.

17. According to information and explanation given to us the company has not raised fund on short term basis as such there is no utilization for long term investment.

18. According to information and explanation given to us, the company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the companies Act, 1956.

19. The company has created securities in respect of debentures issued.

20. The company has not raised any money by way of public issue during the year.

21. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the year that causes the financial statements to be materially misstated.

For S.S. SURANA & COMPANY

Chartered Accountants

PLACE: JAIPUR (R.N.Goyal)

DATE : 20th June, 2009 Partner