Auditor Report of Veena Textiles Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Veena Textiles Limited (the Company) which comprise the Balance Sheet as at 31st March 2015, the Profit and loss Statement, the Cash flow Statement for the year then ended and a summary of 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 flow 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 financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS' 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 thereunder.

We have 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 statement 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 but not for the purposes of expressing an opinion on whether the Company has in place an adequate internal financial controls system over the financial reporting and the operating effectiveness of such controls. 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 accompanying financial statement 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 31st March 2015 and its loss and its cash flows for the year ended on that date.

Reports on Other Legal and Regulatory Requirements:

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 Annexure a statement on the matters specified in paragraphs 3 and 4 of the said order to the extent applicable.

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 accounts 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 Profit and loss Statement and the Cash Flow Statements 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 written representation received from the directors as on31st March 2015, taken on records by the Board of Directors, none of the directors are disqualified as on 31st march 2015, from being appointed as director in terms of Sectrion164(2) of the Act.

f) With respect to other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies Act (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 litigations on its financial positions in its financial statements as referred to in Note 3 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 THE INDEPENDENT AUDITORS' REPORT

The Annexure referred to in our Independent Auditor's Report to the members of the Company on the standalone financial statements for the year ended 31st March 2015 1.In respect of Fixed Assets:

a) The Company has generally maintained proper records showing particulars, including ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT The Annexure referred to in our Independent Auditor's Report to the members of the Company on the standalone financial statements for the year ended 31st March 2015 1.In respect of Fixed Assets:

a) The Company has generally maintained proper records showing particulars, including quantitative details and situations of fixed assets.

b) The Company has phased programmed of physical verification of fixed over a period of three years which in our opinion is reasonable having regard to the size of the Company and the nature of its business; accordingly the physical verification part of the Fixed assets was carried out by the management during the year and we are informed that no material discrepancies were noticed on such verification.

2. In respect of inventories

(a) Physical verification of inventories other than those held by the third parties have been conducted by the management

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

(c ) In our opinion the Company is maintaining proper record of inventory. The discrepancies which were noticed on physical verification of inventory as compared to book records, have been properly dealt with in the books of account;

iii. The Company has not granted any loans secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act 2013.

iv. In our opinion and according to the information and explanations and representations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and for sale of goods. In our opinion and according to the information and explanations given to us we have not observed any major weakness in the internal control system during the course of audit.

v. In our opinion and according to the information and explanations given to us the Company has not accepted any deposits.

vi. Cost records have not been prescribed to the Company.

vii. a. According to the records of the Company it has been regularly depositing undisputed statutory dues like Investor Education and protection Fund, Provident Fund, income Tax, Sales Tax, Wealth Tax, Custom duty, Service Tax, Central Excise duty and Cess and other statutory duties with appropriate authorities.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Service Tax, Excise Duty and Cess were in arrears as at 31st March 2015 for a period more than six months from the date they become payable.

c. According to the information and explanations given to us there are no dues of Sales Tax Income tax, customs duty Wealth Tax Excise duty and cess which have not been deposited on account of dispute.

d. According to the information and explanation given to us there are no amount required to be transferred to Investor education and protection fund in accordance with the relevant provisions of the Companies Act and rules made there under.

viii. The accumulated losses at the end of the financial year has exceeded its 50% of Net worth. There is cash loss during the year and also in the immediately preceding financial period..

xi. The Company has not repaid the dues to the financial Institutions as detailed below:

Particulars Amount in Lakhs Period from Which Outstanding

IIBI 157.77 1996

x. According to the information and explanations given to us, and the representations made by the management, the company has not given any guarantee for loans taken by the others from any bank or financial institution.

xi. The Company has not received any new term loan during the year under review.

xii. According to the information and explanations given to us no fraud on or by the company has been noticed or reported during the year.

For V.N.G. NATH ASSOCIATES Chartered Accountants. Gopinath M.S. Partner Komarapalayam Membership No. 200608 27 / 06 / 2015 Firm Regn. No. 7159 S

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Mar 31, 2014

Report on the Financial Statements

1. We have audited the accompanying financial statements of VEENA TEXTILES LIMITED("the company"), which comprise the Balance Sheet as at 31st March, 2014, the statement of Profit and Loss and the Cash Flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principles generally accepted in India. 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.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these financial statments 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 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 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 Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 the information required by the Act in the manner so required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March,2014;

(b) in the case of the Statement of Profit and Loss, of the Loss of the Company 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.

Report on Other Legal and Regulatory Requirements

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

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 Balance Sheet, the statement of Profit and Loss, and the Cash Flow statement com ply with the Accounting Standards referred to in Section 211(3C) of the Act.

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

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITORS'' REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2014 OF VEENA TEXTILES LIMITED On the basis of such checks as we considered appropriate and In terms of the information and explanations given to us, we state that.

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

(b) As explained to us, fixed assets, according to the practice of the company, are physically verified by the management at reasonable intervals in phased verification programme which in our opinion is reasonable, looking to the size of the company and the nature of its business. According to the information and explanations give to us, discrepancies noticed on physical verification have been adjusted in the books of account.

(c) The Company has not disposed any fixed assets during the year.

ii (a) As explained to us, inventories have been physically verified during the year by the management.

(b) The produces explained to us, which are followed by the management for physical verifications of inventories, are in our opinion reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records of the company, we are of the opinion that, the Company is maintaining proper records of its inventory, Discrepancies which were noticed on physical verification of inventory as compared to book records, have been properly dealt with in the books of account;

iii. The Company has neither granted nor taken any loans secured or unsecured to /from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1 956.

iv. In our opinion and according to the information and explanations and representations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and for sale of goods. During the course of our previous assessment, no major weakness in internal control had come to our notice;

v. To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements, particulars of which needed to be entered in the Register maintained under Section 301 of the Companies Act,1 956.

vi. The Company has not accepted any deposits from public during the year within the meaning of section 58A of the Companies act, 1956 and the rules framed there under.

vii. In our opinion, the Company though not having internal audit system but has adequate internal control 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 for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956, without carrying out a detailed examination, and are of the opinion that prima facie the prescribed accounts and records have been maintained.

ix. (a) According to the records of the Company it has been regularly depositing undisputed statutory dues like Investor Education and and protection Fund, income Tax, Sales Tax, Wealth Tax, Custom duty, Service Tax, Central Excise duty and Cess and other statutory duties with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Service Tax, Excise Duty and Cess were in arrears as at 31st March 2014 for a period more than six months from the date they become payable.

(b) On the basis of our examination of the documents and records, there are no disputed statutory dues which have not been deposited with the appropriate authorities as at 31st March,201 4.

x. (i) The accumulated losses at the end of the financial year has exceeded its 50% of Net worth.

(ii) There is cash loss of Rs.5.99 lacs during the year and there is cash loss Rs.0.94 during the financial year ended 31.03.2013.

xi. The Company has not repaid the dues to the financial Institutions/Banks/Debenture Holders

Particulars Amount in Lacs Period from Which Outstanding

IIBI 157.77 1996

xii. As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of Shares,debentures or any other Securities.

xiii. The provisions of any special statue applicable to chit fund/nidhi/ mutual benefit fund / societies are not applicable to the Company.

xiv. The company is not dealing or trading in shares, securities debuntures and other investments.

xv. According to the information and explanations given to us, and the representations made by the management, the company has not given any guarantee for loans taken by the others from any bank or financial institution.

xvi. On the basis of the records examined by us , and the information and explanations given to us the company has not obtained any term loan during the year.

xvii. 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 investment.

xviii. According to the information and explanations given to us and the records examined by us, during the year, 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, 1 956.

xix. On the basis of the records and documents examined by us, the company has not issued any debentures during the year ;

xx. The Company has not raised any money by public issue, during the year;

xxi. In our opinion and according to the information and explanations given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For V.N.G. NATH ASSOCIATES Chartered Accountants. Gopinath M.S. Komaraplaym Membership No: 200608 30th May 2014 Firm Regn. No. 7159 S

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Mar 31, 2013

Report on the Financial Statements

1.We have audited the accompanying financial statements of VEENA TEXTILES LIMITED("the company”), which comprise the Balance Sheet as at 31st March, 2013, the statement of Profit and Loss and the Cash Flow statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

2. The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956 ("the Act”) and in accordance with the accounting principles generally accepted in India. 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.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on these financial accordance 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

4. 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 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 Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 the information required by the Act in the manner so required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March,2013;

(b) in the case of the Statement of Profit and Loss, of the Loss of the Company 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.

Report on Other Legal and Regulatory Requirements

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

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

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 Balance Sheet, the statement of Profit and Loss, and the Cash Flow statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of the written representations received from the directors as on 31st March,2013 taken on record by the Board of Directors, none of the directors Fost r V.N.G. NATH ASSOCIATES is disqualified as on 31 March,2013 from being Chartered Accountants. appointed as director in terms of Section 274(1) (g) of Gopinath M.S.

Komatrhaep Aaclat.yam Partner

30th May, 2013 Membership No. 200608

Firm Regn. No. 7159 S

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITORS'' REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2013 OF VEENA TEXTILES LIMITED

On the basis of such checks as we considered appropriate and In terms of the information and explanations given to us, we state that.

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

(b) As explained to us, fixed assets, according to the practice of the company, are physically verified by the management at reasonable intervals in phased verification programme which in our opinion is reasonable, looking to the size of the company and the nature of its business. According to the information and explanations give to us, discrepancies noticed on physical verification have been adjusted in the books of account.

(c) The Company has not disposed any fixed assets during the year.

ii (a) As explained to us, inventories have been physically verified during the year by the management.

(b) The produces explained to us, which are followed by the management for physical verifications of inventories, are in our opinion reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of the inventory records of the company, we are of the opinion that, the Company is maintaining proper records of its inventory, Discrepancies which were noticed on physical verification of inventory as compared to book records, have been properly dealt with in the books of account;

iii. The Company has neither granted nor taken any loans secured or unsecured to /from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act 1956.

iv. In our opinion and according to the information and explanations and representations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and for sale of goods. During the course of our previous assessment, no major weakness in internal control had come to our notice;

v. To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements, particulars of which needed to be entered in the Register maintained under Section 301 of the Companies Act,1956.

vi. The Company has not accepted any deposits from public during the year within the meaning of section 58A of the Companies act, 1956 and the rules framed there under.

vii. In our opinion, the Company though not having internal audit system but has adequate internal control 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 for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, without carrying out a detailed examination, and are of the opinion that prima facie the prescribed accounts and records have been maintained.

ix. (a) According to the records of the Company it has been regularly depositing undisputed statutory dues like

Investor Education and and protection Fund, income Tax, Sales Tax, Wealth Tax, Custom duty, Service Tax, Central Excise duty and Cess and other statutory duties with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Service Tax, Excise Duty and Cess were in arrears as at 31st March 2013 for a period more than six months from the date they become payable.

(b) On the basis of our examination of the documents and records, there are no disputed statutory dues which have not been deposited with the appropriate authorities as at 31st March,2013.

x. (i) The accumulated losses at the end of the financial year has exceeded its 50% of Net worth.

(ii) There is cash loss of Rs.0.94 lacs during the year and there is cash loss Rs.10.75 during the financial year ended 31.03.2012.

xi. The Company has not repaid the dues to the financial Institutions/Banks/Debenture Holders

Particulars Amount in Lacs Period from Which

Outstanding

IIBI 157.77 1996

xii. As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of Shares,debentures or any other Securities.

xiii. The provisions of any special statue applicable to chit fund/nidhi/ mutual benefit fund / societies are not applicable to the Company.

xiv. The company is not dealing or trading in shares, securities debuntures and other investments.

xv. According to the information and explanations given to us, and the representations made by the management, the company has not given any guarantee for loans taken by the others from any bank or financial institution.

xvi. On the basis of the records examined by us , and the information and explanations given to us the company has not obtained any term loan during the year.

xvii. 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 investment.

xviii. According to the information and explanations given to us and the records examined by us, during the year, 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. On the basis of the records and documents examined by us, the company has not issued any debentures during the year ;

xx. The Company has not raised any money by public issue, during the year;

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

For V.N.G. NATH ASSOCIATES of our audit. Chartered Accountants.

Gopinath M.S.

Partner

Komarapalayam

Membership No. 200608

30th May, 2013 Firm Regn. No. 7159 S

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Mar 31, 2010

We have audited the attached Balance Sheet of VEENA TEXTILES LIMITED, as at 31st March 2010, the annexed Profit and Loss Account for the year ended on that date. These financial state- ments are the responsibility of the Companys management. Our responsibility is to express opinion on these financial state- ments based on our audit.

1. We conducted our audit In accordance with the auditing standards generally accepted in India.These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from any material misstatement. An audit includes, examining on a test basis, evidence supporting the amounts ant3 disctosurea in the financial statements. An audlt also Includes, assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227 (4A) of (he Companies Act, 1956, we annex hereto a Statement on the matters specific in paragraphs 4 and 5 of the said order.

3. 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 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 out examination of the books of the Company;

(iii) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are In agreement with the books of account of the Company;

(iv) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the accounting standards refered to in sub-section (3d of Section211 of the Companies Act, 1956;

(v) Based on 1he representations made by the Directors as on 31 st March, 2010 and taken on records by the Board of Directors of the Company . and the information and explanalions given to us, none of the Directors Is, as at 31st March, 2010, prima-facie diquaified from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of tha Companies Act, 1956.

(vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read together with notes thereon, give the Information required by the Companies Act, 1956, In the manner so required and present 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 3Tst March. 2010; and

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

(c) in the case of the Cash Flow Statement of the cash flows tor the year ended on (hat dale.

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITORS RE- PORT OF EVEN DATE ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 SI MARCH. 20T0 OF VEENA TEXTILES LIMITED On the basis of such checks as we considered appropriate and in terms of the information and explanotions given to us, we state that.

i. (a) The Companv has generally maintained proper records showing particulars, including quantitative detaiis and situations of fixed assets: fb) As explained to us, fixed assets, according to the practice of the Company, are physically verified by the management at reasonable intervals, In a phased verification programme, which, in our opinion, is reasonable, looking to the size ot the Company and the nature of its business. According to the information and explanations give to us, discrepancies noticed on physical verification have been adjusted in the books of account (C) In our opinion though the Company has sold certain fixed assets, the going concern status of the Company is not affected ii. (a) As explained to us, inventories have been physically verified during the year by the management. (b) The procedures explained to us, which are followed by the management for physical verifications of inventories, are, in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

(a) on the basis of our examination of the inventory records o* the Company, we are of the opiniothat, the Company is maintaining proper records of its inventory, Discrepancies which were noticedon physical verification o( inventory as compared to book records, have-been properly dealt with inthe books of account;

iii. In respect of the loans, secured or unsecured, granted ortaken by the Company to/from companies, firms or other parties covered in the Register maintained under section 301 of the Companies Act. 19s6:

(o) The Company has given Inter Corporative Deposit to a Company. In respect of the said deposit, the maximum amount outstanding at any time during the year was Rs, 20 lacs and !he year-end balance is Rs. 15 lacs .

(b) In our opinion and according to the information and explanations given to us, ihe rate of interest, where applicable and other terms and conditions, are not prima facie prejudicial to the interest of the Company.

(c) The principal amounts, are .repayable on demand and there is no repayment schedule. The interest, where appli- cable, is payable on demand.

(d) In respect of the said loons, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of interest, where applicable, there are no overdue amounts.

(e) The Company has not taken any loan during the year from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. Consequently, the requirements of Clauses (iii) (f) and (iii) (g) of paragraph 4 of the Order are not applicable:

iv. in our opinion and according to the information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the Company and the nature of Its business with regard to purchase of inventory, fixed assets and for sale of goods. During the course of our previous assessment, no major weakness in internal control, had come to our notice; v. (a) On the basis of the audit procedures performed by us, and according to the information,. explanations and representations given to us, we are of the opinion that, the transactions in which directors were interested as contemplated under Section 297 and sub-section ;6) of Section 299 of the Companies Act, 1956 and which were required to be entered in the register maintained under Section 30! of he said Act, have been so entered; [b) In our ooinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 exceeding the value of rupees five lacs in respect of any party during the year have been made at prices during the year.have been made or prices which are reasonable have regard to prevailing market prices at that time; vi. The Company has not accepted any deposits from public during the year within the meaning of section 58A of the Companies Act, 1956 and the rules framed thereunder. vii. In our opinion, the Company though not having internal audit system has adequate internal control 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 for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956, without carrying out a detailed examination, and are of the opinion lhat prima facie the prescribed accounts and records have been maintained.



Ix. (a)According to the records of the Company it has been regularly depositing undisputed statutory dues like Investor Education and Protection Fund, income Tax, Sales Tax, Wealth Tax, Custom duty, Service Tdx, Central Excise duty and Cess and other statutory duties with appropriate authorities. In respect of Provident Fund and Employees State insurance there is delay in depositing the amount. According to the information and explanations given to us, no undisputed amounts payable in respect of income Tax, Wealth Tax, Sales Tax, Customs Duty, Service Tax, Excise Duty and Cess were in arrears as at 31 st March 2010 for a period more than six months from the date they become payable.

(b) On the basis of our examination of the documents and records, there are no disputed statutory dues which have not been deposited with the appropriate authorities as at 31 st March, 2010.

x. (i) The accumulated losses at the end of the financial year has exceeded its 50% of Net worth. (ii) There is no cash loss during the financial year ended 31.03.2010 and 31.03.2009.

xi. The Company has not repaid the dues to the financial institutions/ Banks/ Debenture Holders

Particulars Amount in Lacs Period from Which

Outstanding

1131 157.77 1996

xii. As explained to us. the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities.

xiii. The provisions of any special statute applicable to chit fund / nidhi /.mutual benefit fund / societies are not appii cable to the Company.

xiv. in respect of shares, securities, debentures and other investments dealt or traded by the Company, • proper records dre maintained in respect of transactions and contracts and timely entries have been made therein, all the investments are held by the Company in its own name;

xv. According to the information and explanations given to us, and the representations made by the management, fhe Company has not given any guarantee for loans taken by others from any bank or financial institution.

xvi. On the basis of the records examined by us, and the information and explanations given to us the Company has not obtained any term loan during the year.

xvii. 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 investment.

xviii. Tha Company has not made any preferential allotment of shares to parlies and companies covered in the register maintained under Section 301 of the Companies Act, 1956;

xix. On the basis of the records and documents examined by us, the company has not issued any debentures during the year;

xx. The Company has hot raised any money by public issue, during the year;

xxi. In our opinion and according to the information and expianations given to us, no material fraud on or by the company has been noticed or reported during the course of our audit.

For V.N.G. NATH ASSOCIATES Chartered Accountants. Valdynathan M.S. Komarapalayam Partner

31st May, 2010 Membership No. 14393

Firm Bean, No. 7159 S