Auditor Report of Knitworth Exports Ltd.

Mar 31, 2012

We have audited the attached Balance Sheet of M/S. KNITWORTH EXPORTS LIMITED as at 31st March, 2012 and also the Statement of Profit & Loss and Cash Flow Statement of the company for the year ended on that date. These financial statements are the responsibilities 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 mis-statement. An audit includes examining on test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion and report that -

(1) As required by the Companies (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of Section 227 (4 A) of the Companies Act, 1956 and on the basis of such checks 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.

(2) Further to our comments in the Annexure referred to in Paragraph (1) above :

(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 accounts as required by Law have been kept by the company so far as it appears from our examination of the books.

(c) The said Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of accounts.

(d) In our opinion and to the best of our information, the Balance sheet, Statement of Profit & Loss 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.

(e) 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, 1965.

(f) In our opinion and to the best of our information and according to the explanations given to us, the said statements of accounts together with the other notes appearing thereon as per Additional Notes annexed 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 principle generally accepted in India.

(i) in the case of Balance Sheet, of the state of affairs of the company as at31stMarch,2012

(ii) in the case of Statement of Profit & Loss ,of the Loss of the company for the year ended on that date

AND

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

Annexure to the Auditors' Report

Referred to in Paragraph 1 of our Report of even date

With reference to the Annexure referred to in Paragraph 1 of the Auditors' Report to the Members M/S. KNITWORTH EXPORTS LIMITED on the financial statements for the year ended 31st March 2012, we report the followings:

1) Since the company has no fixed assets as on date therefore, the Provisions of clause 4 (i) of the Order are not applicable to the Company.

2) Since the company has no inventory as on date therefore, the Provisions of clause 4 (ii) of the Order is not applicable to the Company

3) According to the information and explanations given to us, there are no contracts or arrangements referred to in section 301 of the Companies Act, 1956 during the year that need to have been entered in the register maintained under that section.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and nature of its business for the Investments made by the Company. There is no continuing failure to correct major weaknesses in internal control.

5) The Company has neither taken nor given any secured or unsecured loan from/ to companies, firms or other parties covered in the register maintained under section 301 of the companies Act, 1956.

6) The company has not accepted any deposits from the public and consequently, the Directions issued by Reserve Bank of India and the provision of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable.

In our opinion and explanations given to us, the Company has own internal audit system commensurate with the size and nature of its business.

8) In our opinion and according to the information and explanations given to us , the Central Government has not prescribed for maintenance of the Cost Records under Clause-(d) of subsection-(l) of Section-209 of the Companies Act 1956 in respect of any product of the company.

9) a) According to the information and explanations given to us and on basis of our examination of the books of account, the company has been regular in depositing undisputed statutory dues including Income Tax and other material statutory dues with the appropriate authorities during the year.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax and other statutory dues in arrears as at 31st march, 2012 for a period exceeding six months from the date they became payable.

c) According to the information and explanation given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty and excise duty which have not been deposited on account of any dispute.

10) The company has accumulated losses at the end of the financial year which does not exceed fifty percent of its net worth. The Company has incurred cash losses during the financial year and in the immediately preceding financial year.

11) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank.

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

13) In our opinion and according to the information and explanations given to us, the Company is not a Chit fund/ Nidhi/Mutual benefit fund/society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

14) The Company has maintained proper records of the transactions and contracts in respect of dealing or trading in shares, securities, debentures and other investments and timely entries have been made therein.

15) According to the information and explanations given to us, the company has not given any guarantee for loans taken by other from banks or financial institutions.

16) According to the information and explanations given to us and on the basis of examination, the Company has not taken term loan during the period. Therefore, the Provisions of clause 4 (xvi) of the Order are not applicable to the Company.

17) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we are of the opinion that there are no funds raised on short term basis that have been used for long term investments.

18) The Company has not made any preferential allotment of share to companies/firm/parties covered in the register maintained under section- 301 of the Companies Act, 1956.

19) The Company has not issued debenture during the financial year. Therefore, the Provisions of clause 4 (xix) of the Order are not applicable to the Company.

20) The Company has not raised any money by way of public issues during the year.

21) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period.



For J-B.S & Company

Chartered Accountants FRN:323734E

Pankaj Bhusan Bhattachawa)

Partner

Membership No:015416

Place: Kolkata

Dated: 28.05.2012

---

Mar 31, 2010

We have Audited the attached Balance Sheet of M/S. KNITWORTH EXPORTS LIMII ED. as at 31st March/ 2010 and also Pro lit and Loss Account and the 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 are evaluating the overall financial statement presentation. We believe that our audit provides a reasonable ; basis for oar opin ion.

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

2. Further to our comments in the Annexure referred to 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 the law have been kept by the company so far as appears from our examination of those books.

(c) The Balance Sheet, Pro tit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Plow Statement dealt with the this report comply wiJtUhe Accounting standards referred to in Sub-section (3C) of section 21 1 of the companies Act' 1956 ;

(c) On the basis of written representations received from the Directors, as on 31st March1 20! 0, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March' 2010 from being appointed as a Director in terms of clause (g) of sub-section (I) 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 accounts give the information required by the Companies Actr 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generallv accepted in India:

(i) In the case of Balance Sheet, of the state of affairs of the company as at 31st March'2010.

(ii) In the case of the Profit and Loss Account of the Loss of the company 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.

ANNEXURE TO THE AUDITOR'S REPORT

Referred to in paragraph 2 of our Report of even date ;

1. In respect of its Fixed Assets ;

a. The company has maintained proper records showing full particulars incJuding quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the management during the year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and nature of its assets. No material discrepancies were noticed on such physical verification,

c. In our opinion, the company has not disposed of substantial part of fixed assets during the year and the going concern status of the company is not affected.

2. In respect of its inventories :

a. Since there was no business activity, nor any commodity was dealt in/with, it is not required to be reported upon.

3, In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the companies Act, 1956.

a. The company has not laken/accepted unsecured loans from the parties covered in the register maintained u/s 301 of the companies Act1 1956.

b. The company has not granted any loan to any such parties. However the company has overdue loans/ advances given to some companies, firms and to other parties. The parties to whom Joans or advances in the natures of loans has been given by the company are not repaying the principal and /or interest as well and in most of the cases no recovery was made during the year and no provision for doubtful debts amounting to Rs. 1,06,49,772/- has been made in the books.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business for the purchase of inventory, fixed assets and also for the sale of goods. During the course of our audit, we have observed some major weaknesses which is still continuing in internal controls which may be referred to in point no.6 (c) of the notes on Accounts (SCH -13) of the company,

5, In respect of transaction covered under Section 501 of the Companies Act' 1956 :

a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into in the register maintained under Section 301 of the Companies Act, 1956 have been so entered,

b. In our opinion and according to the information and explanations given to us, there are no transactions in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 aggregating during the year to Rs. 5,00,000/- (Rupees Five Lacs only) or more in respect of such party.

6. The company has not accepted any deposits within the meaning of section -58Aof the companies Act1 1956, and the companies (acceptance of deposit) Rules 1975 form the public.

7, In our opinion, the internal audit system of the company is commensurate with its size and nature of its business.

8. The central Government has not prescribed maintenance of cost Records under Section 209 CI) of the Companies Act' 1956 for any of the products of the company for any of the products of the company,

9. In respect of statutory dues :

a. According to the records of the company and informations and explanation given to us, undisputed statutory dues including, P.P. & ESI, Income Tax, Sales tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other statutory dues wherever applicable have been generally regularly deposited with the appropriate authorities.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31 * March' 2010 for a period of more than six months from the date of becoming payable,

10. The company has accumulated loss of Rs, 1,50,59,906/- and has incurred cash losses of Rs. 11,501 during the financial year covered by our audit and had incurred cash loss of Rs.- 37394S in the immediately preceding year,

11. Based on the audit procedures and according to the information and explanation given to us, we are of the opinion that the company has not taken any loan or advances from Bank and financial institutions and no amount is due to them.

12. In our opinion and according to the information and explanation given to us, no loans and advances have been granted by the company on the basis of security by way of pledge of shares, debenture and other securities-

13. In our opinion, the company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, clauses 4(xiii) of the companies (Auditor's Report) order 2003 is not applicable to the company.

14. Based on the records examined by us and according to information and explanations given to us, the company has not dealt in any shares or securities or other investments during the year. Accordingly, the previsions of clause - 4 (XIV) of the companies (Auditors Report ) order 2003 are not applicable to the company.

15. According to the information & explanation given to us the company has not given any guarantee for loans taken by others from banks or financial institutions.

16. According to the information and explanations given to us no term loans has been availed by the company.

17. According to the information and explanations given to us, no funds has been raised on short term basis during the year of Audit.

18. During the year, the company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under section 301 of the Companies Act" 1956-

19. According to the information & explanation given to us and records examined by us, during the year the company has not issued any debentures hene» question of creating security or charges over the same does not arise.

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

21. In our opinion and according to the information and explanations 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.

M/S. AGRAWAL H1MATSTNGKA & CO.

Chartered Accountants

(V.K. AGARWAL)

Kolkata-700 001 Partner

The 1st- Day ofsept 2010 Mem no.:53243