Nitin Spinners Ltd Auditors Report.

To

The Members of

NITIN SPINNERS LIMITED

REPORT ON THE IND AS FINANCIAL STATEMENTS

We have audited the accompanying Ind AS financial statements of NITIN SPINNERS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

MANAGEMENTS RESPONSIBILITY FOR THE IND AS FINANCIAL STATEMENTS

The Companys 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 Ind AS financial statements that give a true and fair view of the state of affairs(financial position), Profit and loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 eff ectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements 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 Ind AS 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 there under. We conducted our audit of the Ind AS financial statements 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 Ind AS financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, as well as evaluating the overall presentation of the Ind AS 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 Ind AS financial statements.

OPINION

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements 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, including Ind AS of the state of affairs (financial position) of the Company as at 31st March, 2018 and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

OTHER MATTERS

The comparative financial information of the Company for the year ended 31st March, 2017 and the transition date opening balance sheet as at 1st April, 2016 included in these Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 and audited by the predecessor auditor, whose audit report for the year ended 31st March, 2017 and 31st March, 2016 dated 06th May, 2017 and 3rd May, 2016 respectively expressed an unmodified opinion on those financial statements, as adjusted for the diff erences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us. Our opinion is not modified in respect of above matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Government of India in terms of sub-section (11) of Section 143 of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure 1 a statement on the matters specified in the paragraphs 3 and 4 of the said Order.

2. 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 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 (including Other Comprehensive Income), Statement of Cash Flow and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act. (e) On the basis of the written representations received from the directors as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating eff ectiveness of such controls, refer to our separate report in

Annexure 2.

(g) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us: a. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements. Refer Note 29 to the financial statements; b. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. c. There are no amounts, which are required to be transferred, to the Investor Education and Protection Fund by the Company.

For Kalani & Company

Chartered Accountants

FRN- 000722C

[Bhupender Mantri]

Partner

M. No. 108170 Place of Signature : Bhilwara Dated : 10th May, 2018

Annexure 1

To the Independent Auditors Report

Referred to in our report of even date to the members of NITIN SPINNERS LIMITED on the accounts for the year ended 31st March, 2018

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets (Property, Plant & Equipment);.

(b) The fixed assets (Property, Plant & Equipment) have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties are held in the name of the Company (ii) Physical verification of inventory has been conducted at reasonable intervals by management. As informed to us no material discrepancies have been noticed on such verification.

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

(iv) No loans have been given to parties covered under section 185 of the Companies Act, 2013. The Company has not given any guarantee or provided any security to any party covered under section 185 or 186 of the Companies Act, 2013. In case of investments provisions of section 185 and 186 of the Companies Act, 2013 has been complied.

(v) The Company has not accepted deposits from the public within the meaning of Sections 73 to 76 of the Companies Act, 2013 and the rules made there under, hence this clause is not applicable.

(vi) The maintenance of cost records has been prescribed by the Central Government under section 148(1) of the Companies Act, 2013, and as informed to us such accounts and records have been so made and maintained. However, we have not conducted a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund, employee state insurance, income tax, sales-tax, wealth tax, service tax, custom duty, excise duty, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities and there are no undisputed dues outstanding as on 31st March, 2018 for a period of more than six months from the date they became payable. (b) According to information and explanations given to us, the gross disputed statutory dues of income tax, sales tax or service tax or duty of customs or duty of excise or value added tax amounts to 1,194.10 Lacs in aggregate as on 31st March, 2018, out of which 376.58 Lacs has been deposited under protest/adjusted by tax authorities and the balance of 817.52 Lacs of dues have not been deposited on account of matters pending before appropriate authorities as detailed below:

Sl. No Name of Statute Nature of the disputed statutory dues Period to which the amount relates (FY) Forum where the dispute is pending Gross Amount due ( Rs. in Lacs.) Amount deposited under protest/ adjusted by tax authorities ( Rs. in Lacs.) Amount not deposited (in Lacs.)
1 Central Excise Interest on Excise Duty 2008 Supreme Court, New Delhi 787.02 Nil 787.02
2. Central Excise Excise duty and penalty 2006-07 High Court, Jodhpur 9.25 9.25 Nil
3. Customs Redemption Fine 2009-10 CESTAT Ahmadabad 0.50 Nil 0.50
4 Central excise Excise Duty and Penalty 01.04.2000 to 30.06.2000 Commissioner (A) Jaipur 20.37 Nil 20.37
5 Central Excise Refund- Rebate Claim 2017 Commissioner (A) Jaipur 9.63 Nil 9.63
6. Rajasthan Vat Act Input Credit 2012-13 Dy. Commissioner (A) Ajmer 5.78 5.78 Nil
7 Rajasthan Vat Act Input Credit 2013-14 Dy. Commissioner (A) Ajmer 250.25 250.25 Nil
8 Rajasthan Vat Act Input Credit 2014-15 Dy. Commissioner (A) Ajmer 111.30 111.30 Nil
Total 1194.10 376.58 817.52

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowing to a financial institution, banks government or dues to debenture holders.

(ix) The Company has not raised any money by way of initial public off er or further public off er. According to the information and explanations given to us, the money raised by the Company by way of term loans have been applied for the purpose for which they were obtained.

(x) According to the information and explanations given to us and as represented by the Management and based on our examination of the books and records of the Company and in accordance with generally accepted auditing practices in India, we have been informed that no case of frauds has been committed on or by the Company or by its officers or employees has been noticed or reported during the year. (xi) Managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(xii) The provisions of clause 3 (xii) of the Order, for Nidhi Company, are not applicable to the Company.

(xiii) The Company has complied with the provisions of Section 177 and 188 of the Companies Act, 2013 w.r.t. transactions with the related parties, wherever applicable. Details of the transactions with the related parties have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) During the year Company has made preferential allotment/ private placement of shares in compliance with the requirement of Section 42 of Companies Act, 2013 and the amount raised has been used for the purpose for which the funds were raised.

(xv) The Company has not entered into any non-cash transactions with the directors or persons connected with him as covered under Section 192 of the Companies Act, 2013.

(xvi) According to information and explanation given to us, the Company is not required to be registered u/s 45-IA of Reserve Bank of India Act, 1934. Accordingly, provision of clause 3(xvi) of the Order is not applicable to the Company.

For Kalani & Company

Chartered Accountants

FRN- 000722C

[Bhupender Mantri]

Partner

M. No. 108170 Place of Signature : Bhilwara Dated : 10th May, 2018

Referred to in paragraph 2(f) under ‘Report on other Legal and Regulatory Requirements section of our report of even date to the members of NITIN SPINNERS LIMITED on the Ind AS financial statements for the year ended 31st March, 2018

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT, 2013 ("THE ACT")

We have audited the internal financial controls with reference to Ind AS financial statements of NITIN SPINNERS LIMITED ("the Company") as of 31st March, 2018 in conjunction with our audit of the Ind AS Financial Statements of the Company for the year ended on that date.

MANAGEMENTS RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

The Companys management is responsible for establishing and maintaining internal financial controls w.r.t. Ind AS financial statements based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating eff ectively for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on the Companys internal financial controls w.r.t. Ind AS financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013 to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by ICAI.

Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls w.r.t. Ind AS financial statements was established and maintained and if such controls operated eff ectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system w.r.t. Ind AS financial statements and their operating eff ectiveness. Our audit of internal financial controls w.r.t. Ind AS financial statements included obtaining an understanding of internal financial controls w.r.t. Ind AS financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating eff ectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system w.r.t. Ind AS financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS W.R.T. IND AS FINANCIAL STATEMENTS

A Companys internal financial control w.r.t. Ind AS financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control w.r.t. Ind AS financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material eff ect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS W.R.T. IND AS FINANCIAL STATEMENTS

Because of the inherent limitations of internal financial controls w.r.t. Ind AS financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls w.r.t. Ind AS financial statements to future periods are subject to the risk that the internal financial controls w.r.t. Ind AS financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

OPINION

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls w.r.t. Ind AS financial statements were operating eff ectively as at 31st March, 2018, based on the internal controls w.r.t. Ind AS financial statements criteria established by the Company considering the components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the ICAI.

For Kalani & Company

Chartered Accountants

FRN- 000722C

[Bhupender Mantri]

Partner

M. No. 108170

Place of Signature : Bhilwara

Dated : 10th May, 2018