Chandni Textiles Engineering Industries Ltd

CHANDNI TEXTILES ENGINEERING INDUSTRIES LIMITED

1. We have audited the attached Balance Sheet of CHANDNI TEXTILES ENGINEERINGINDUSTRIES LIMITED as at 31st March, 2012 and the Profit and Loss Account and the CashFlow Statement for the year ended on that date, annexed thereto. These financialstatements are the responsibility of the Company's management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally acceptedin India. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 issued by the CentralGovernment of India in terms of section 227(4A) of the Companies Act, 1956, we enclose inthe Annexure a statement on the matters specified in paragraphs 4 and 5 of the said orderto the extent applicable to the company.

4. Further to our comments in theAnnexure referred to above, we report that:

i) we have obtained all the information and explanations which to the best of ourknowledge 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 theCompany so far as appears from our examination of those books;

iii) the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt withby this report are in agreement with the books of account;

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

v) on the basis of written representations received from the directors as on 31stMarch, 2012 and taken on record by the Board of Directors, none of the directors isdisqualified 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 CompaniesAct, 1956;

vi) in our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with notes thereon, give the informationrequired by the Companies Act, 1956, in the manner so required and give a true and fairview in conformity with the accounting principles generally accepted in India:

a) in case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2012;

b) in the case of the Profit and LossAccount, of the profit for the year ended on thatdate; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on thatdate.

(Referred to in paragraph (3) of our report of even date)

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

(b) These fixed assets have been physically verified by the management at reasonableintervals during the year and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of auditprocedures performed by us, in our opinion, the company has not disposed off substantialpart of its fixed assets.

[ii] (a) As informed to us, the inventory in the company's possession has beenphysically verified at reasonable intervals during the year by the management. In respectof inventory lying with the third parties, the same have substantially been confirmed bythem at reasonable intervals during the year.

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

(c) In our opinion, the company is maintaining proper records of inventory. Thediscrepancies noticed on verification between physical stock and book records were notmaterial.

[iii] The company has neither granted nor taken, any loans, secured or unsecured,to/from the companies, firms or other parties covered in the register maintained u/s.301of the Companies Act, 1956. Accordingly, clause 4(iii) of the Order is not applicable.

[iv] In our opinion and according to the information and explanations given to us,there are adequate internal control procedures commensurate with the size of the companyand the nature of its business, for the purchase of inventory and fixed assets and for thesale of goods and services. During the course of our audit, we have not observed anycontinuing failure to correct major weaknesses in internal controls.

[v] (a) Based on the audit procedures applied by us and according to the informationand explanations provided by the management, we are of the opinion that the particulars ofcontracts or arrangements that need to be entered into the register maintained undersection 301 of the CompaniesAct, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, therewere no transactions made in pursuance of contracts or arrangements entered in theregister maintained under section 301 of the Companies Act, 1956 and exceeding the valueof rupees five lakhs in respect of each party during the year.

[vi] The company has not accepted any deposits from the public.

[vii] In our opinion, the internal audit system of the company is commensurate with thesize and nature of its business.

[viii] As informed to us, maintenance of cost records has not been prescribed by theCentral Government u/s. 209(1)(d) of the CompaniesAct, 1956 for any of the product of theCompany.

[ix] (a) In our opinion and according to the information and explanations given to us,the company has generally been regular in depositing with the appropriate authorities theundisputed statutory dues applicable to it. There were no arrears of outstandingundisputed statutory dues as at the last day of the financial year concerned for a periodof more than six months from the date they became payable.

(b) According to the explanations given to us, there are no dues of income tax, salestax, custom duty, wealth tax, service tax, excise duty, cess tax which have not beendeposited on account of any dispute.

[x] The company does not have any accumulated loss as at 31st March, 2012 and it hasnot incurred cash loss during the year ended on that date. Further, it has not incurredcash losses in the immediately preceding financial year.

[xi] According to the information and explanations provided to us, the company has beenregular in making repayment of dues to the banks.

[xii] According to the information and explanations given to us, the company has notgranted loans and advances on the basis of security by way of pledge of shares, debenturesand other securities. Accordingly, clause 4(xii) of the Order is not applicable.

[xiii] The company is not a chit fund or a nidhi/mutual benefit fund or a society.Accordingly, clause 4(xiii) of the Order is not applicable.

[xiv] According to the information and explanations given to us, in our opinion, thecompany is not dealing in or trading in shares, securities, debentures and otherinvestments. Accordingly, clause 4(xiv) of the Order is not applicable.

[xv] According to the information and explanations given to us, the company has notprovided any guarantees for loans taken by others from banks.Accordingly, clause 4(xv) ofthe order is not applicable.

[xvi] According to the information and explanation given to us, the company has appliedthe term loans for the purpose for which they were obtained.

[xvii] According to the information and explanation given to us and on an overallexamination of the balance sheet of the company, in our opinion, the funds raised on shortterm basis have not been used for long term investments.

[xviii] The company has not made any preferential allotment of shares during the year.Accordingly, Clause 4(xviii) of the Order is not applicable.

[xix] The company has not issued any debentures.Accordingly, clause 4(xix) of the Orderis not applicable.

[xx] The company has not raised any money by public issues during the year.Accordingly, clause 4(xx) of the Order is not applicable.

[xxi] According to the information and explanations given to us, no fraud on or by thecompany has been noticed or reported during the course of our audit.