Cheslind Textiles Ltd Auditor Reports

TO THE MEMBERS OF CHESLIND TEXTILES LIMITED

1. REPORT ON THE FINANCIAL STATEMENTS

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

2. Managements Responsibility for the Financial Statements:

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Company in accordance with Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of the internal controls relevant to the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

3. Auditors Responsibility:

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditorsjudgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the Companys 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 entitys internal controls. An audit also includes evaluating the appropriateness of 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.

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

4. Opinion:

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a) in case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2014 and

(b) in case of the Statement of Profit and Loss, of the profit for the year ended on that date.

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

5. Emphasis of Matter

Without qualifying our opinion, we draw your attention to Note no 29 regarding change in the Accounting policy in respect of accounting for derivatives wherein the gain/loss on account of change in effective portion of forward contracts are taken to Hedge reserve account. Had the company continued to follow with the earlier policy, the profit of the company would have been higher by Rs 117.43 lakhs.

6. Report on Other Legal and Regulatory Requirements:

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

b) As required by Section 227(3) of the Companies Act, 1956, we report that:

i. we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit;

ii. in our opinion, proper books of account as required by Law have been kept by the Company so far as appears from our examination of those books;

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

iv. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

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

For K. P. Rao & Co For M. Bhaskara Rao & Co

Chartered Accountants	Chartered Accountants
Firm Regn. No. 003135S	Firm Regn. No.000459S
K Viswanath	V.K. Muralidhar
Partner	Partner
Membership No. 022812	Membership No. 201570
Place : Batnhgalore
Date :18th April 2014

ANNEXURE TO AUDITORS REPORT

STATEMENT REFERRED TO IN PARAGRAPH 6(A) OF OUR REPORT OF EVEN DATE

We report that:

1. a) The Company has maintained proper records showing full particular including quantitative details and situation of fixed assets.

b) The management has conducted physical verification of major fixed assets during the year and as explained to us, no material discrepancies have been noticed on such physical verification.

c) According to information and explanations given to us, the Company has not disposed off any substantial part of its fixed assets during the year as to affect the going concern assumption in preparing the financial statements under report.

2. a) The inventory has been physically verified during the year by the management. In our opinion the frequency of verification is reasonable.

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

c) The Company is maintaining proper records for inventories and, based on the information and explanation given to us discrepancies noticed on physical verification have been properly dealt with in the books of accounts.

3. a) According to the information and explanation given to us, the Company has not granted loans, secured or unsecured to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore clauses (b), (c), and (d) of para (iii) of the order are not applicable.

b) According to the information and explanation given to us, the Company has not taken any loans, secured or unsecured from the Companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956 except for interest free unsecured loan from its holding company, the terms and conditions of which are not prima facie prejudicial to the interests of the Company. Therefore clauses (f), and (g) of para (iii) of the order are not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems

commensurate with the size of the Company and nature of its business for the purchase of inventories and fixed assets and for the sale of goods and services. During the course of audit we have not observed any continuing failure to correct any major weaknesses in internal controls.

5. a. According to the information and explanations given to us, and based on the representations by the management, we are of the opinion that the contracts or arrangements that need to be entered in to the register, maintained under Section 301 of the Companies Act, 1956 have been so entered.

b) According to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements to be entered into the register maintained under Section 301 of the Companies Act, 1956, and exceeding Rs five lakhs in respect of any party during the period have been made at prices which are reasonable having regard to the prevailing market prices, if available, at relevant time.

6. According to the information and explanations given to us, the Company has not accepted deposits from the public under the provisions of Section 58A and 58AA of Companies Act, 1956 and the rules framed thereunder.

7. During the year under report, the Internal Audit of the Company has been conducted by a firm of Chartered Accountants. In our opinion, the scope and coverage of internal audit is commensurate with the size of the Company and nature of its business.

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records prescribed under Section 209(1) (d) of the Companies Act, 1956, and we are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we are not required to and have not carried out a detailed audit of the same.

9. a. The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employee State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Cess and other statutory dues applicable to it with the appropriate authorities.

b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and Cess were in arrears, as at 31st March 2014 for a period of more than six months from the date they became payable.

c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty and Cess, which have not been deposited on account of any dispute except:

Name of the Statute	Nature of the dues	Amount (Rs. in Lakhs)	Period to which the amount relates	Forum where the dispute is pending
Tamilnadu Electricity Act	Electricity Cess	140.69	01.04.03 to 03.09.12	High Court of Tamilnadu
Tamilnadu Electricity Act	Cross Subsidy Surcharge	155.56	11.07.12 to 31.03.13	High Court of Tamilnadu
Income Tax Act	Income Tax	8.61	Assessment Year 2004 - 05	CIT (Appeals)

10. The Company has accumulated losses at the end of the financial year. The company has not incurred any cash losses in the financial year under reportand in the immediately preceding reporting period.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions/ banks. The Company has not issued any debentures.

12. According to the information and explanations given to us, the Company has not granted any loans or advances on the basis security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a Chit Fund or Nidhi / Mutual Benefit Fund/society.

14. In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from Banks and Financial Institutions.

16. According to the information and explanations given to us, the term loans availed are applied for the purpose for which they are obtained.

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

18. According to the information and explanations given to us, 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 and explanations given to us, the Company has not issued any Debentures during the year.

20. According to the information and explanations given to us, the Company has not raised any money through public issue during the year.

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

For K. P. Rao & Co	For M. Bhaskara Rao & Co
Chartered Accountants	Chartered Accountants
Firm Regn. No. 003135S	Firm Regn. No.000459S
K Viswanath	V.K. Muralidhar
Partner	Partner
Membership No. 022812	Membership No. 201570
Place: Bangalore
Date :18t April 2014