Vishal Fabrics Ltd Auditors Report.

To The Members of Vishal Fabrics Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Vishal Fabrics Limited (‘the Company), which comprise the Balance Sheet as at March 31, 2017, and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accou ting policies and other explanatory information.

Managements responsibility for the 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 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 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 the 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 the frauds and other irregularities; selection and application of appropriate accounting policies; making judgment and estimates that are reasonable and prudent; and design, implementation and maintenance of internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of 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 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 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 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 auditors 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 Companys preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by companies 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 financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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:

(i) in the case of the Balance sheet, of the state of affairs of the company as at March 31, 2017; (ii) in the case of the Statement of Profit and Loss, the profit 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016 ("The Order") issued by the central government of India in terms of sub-section 11 of Section 143 of the Act, We give in the annexure a statement on the matter specified in paragraphs 3 & 4 of the 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 purpose 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014.

e. on the basis of written representations received from the directors as on March 31, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017, from being appointed as a director in terms of sub section (2) of Section 164 of the Companies Act, 2013.

f. In our opinion, the Company has, in all material respects, an adequate internal financial controls, system over financial reporting and such internal financial control over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the Company.

g. With respect to the other matters included in the auditors report and to best of our information and according to the explanation given to us.

1 . The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 29 (c ) to (k) to the financial statements;

2 . The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

3 . There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For, Anil S. Shah & Co.

Chartered Accountants Firms Reg. No.: 100474W

Krunal A. Shah

Partner

Membership No.: 115801

Place: Ahmedabad Date: 30.05/2017

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT

The Annexure referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirements" section of our report of even date

(i) In Respect of its Fixed Assets:

a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets,

b) These Fixed A sets have been physically verified by the management at the reasonable intervals in accordance with regular programme of verification. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

c) The title deeds of immovable properties are held in the name of the company.

(ii) In Respect of its invent ry:

According to the information and explanation given to us, physical verification of inventory has been conducted at reasonable intervals by the management and no material discrepancies were noticed on physical verification during the year.

(iii) The Company has given loans to three parties covered in the register maintained u/s 189 of the Companies Act, 2013.

(a) According to information and explanation, the Company has granted interest free loan to two parties and interest bearing loan to one party, covered in the register maintained U/s. 189 of the Companies Act, 2013, prima facie, the terms and conditions are not prejudicial to companys interest; (b) According to the information and explanations given to us, the loans granted by the Company are interest free loans except to one party, hence the question of recovery of interest does not arise in case of two parties and in case of principal, as explained to us there is no stipulation for repayment of loan.

In case of interest bearing loan, interest recovered and question of recovery of principal, does not arise as explained to us, there is no stipulation for repayment of loan.

(c) In respect of loan granted by the Company during the year, since there is no stipulation for repayment, overdue exceeding more than ninety days does not arise.

(iv) According to information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of loans, investments, guarantees and security.

(v ) According to information and explanations given to us the Company has not accepted any deposits during the year.

(vi) 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 under Section 148(1) of the Companies Act, 2013 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have not, however made a detailed examination of the said records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) The Company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities.

According to information and explanation given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31, 2017 for a period of more than six months from the date of becoming payable.

(b) According to the information and explanation given to us, the following dues of income tax, excise duty have not bee deposited on account of disputes,

(Rs. In Lacs)
Name of the statute Nature of dues Amount (in Rs) Period to which the amount relates Forum where dispute is pending
The Central Excise Act, 1944 Excise 11.42 2001-02 to 2004-05 Textile Cess Appelate Tribulanal
6.33 2004-05 to 2006-07
Labour Laws Labour Law Matters 12.65 2013 Labour Commisisoner Ahmedabad
Labour Laws Civil Suit 4.57 2005 to 2013 City Civil Court Ahmedabad
Income Income Tax 7.30 AY 2011 -12 ITAT
Tax Act 19 61 28.42 AY 2013 -14 CIT(A)
0.81 AY 2014 -15 CIT(A)

(viii) Based on our audit procedures and according to the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions, banks and debenture holders.

(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) and term loans during the year.

During the Year Company has made Right Issue of 8782667 Shares @ Rs. 100/- each including Premium of Rs.90 per share fully paid up; Issue commenced on 16.03.2017 and pending allotment as on 31.03.2017.(Refer Note No.5 & 20)

(x ) We have not noticed or reported any fraud by the Company or any fraud on the Company by its officers or employees during the year.

(xi) The 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, 2013.

(xii) In our opinion and according to information and explanation given to us, the Company is not a Nidhi Company, accordingly paragraph 3(xii) of the Order is not app icable to the Company.

(xiii) According to the information and explanation given to us, all transactions with the related parties are in compliance with Section 177 and 188 of the Companies Act, 2013 wherever applicable and the details have been disclosed in the financial statements etc. as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him and the provisions of Section 192 of Companies Act, 2013 have been complied with.

(xvi) The paragraph 3(xvi) of the Order is not applicabl to the Company as the company is not a required to be registered under section 45-IA of he Reserve Bank of India Act, 1934.

For, Anil S. Shah & Co.

Chartered Accountants Firms Reg. No.: 100474W

Krunal A. Shah Partner

Membership No.: 115801

Place: Ahmedabad

Date: 30.05.2017

ANNEXURE TO T E INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF VISHAL FABRICS LIMITED

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 over financial reporting of Vishal Fabrics Limited ("the Company") as of March 31, 2017 in conjunction with our audit of the 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 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. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively 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 Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting 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 the Institute of Chartered Accountants of India. 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 interna financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, 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 my /our audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A companys internal financial control over financial reporting 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 over financial reporting includes those policies and procedures that ( ) 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misst tements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may d teriorate.

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 over financial reporting were operating effectively as at March 31, 2017, 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.

For, Anil S. Shah & Co.

Chartered Accountants Firms Reg. No.: 100474W

Krunal A. Shah

Partner

Membership No.: 115801

Place: Ahmedabad

Date:30.05.2017