VTX Industries Ltd Auditor Reports

TO THE MEMBERS OF VTX INDUSTRIES LIMITED,

Report on Financial Statements

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

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, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13^th 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 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

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 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 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 control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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.

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 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 March 31, 2014;

b) in the case of the Statement of Profit and Loss, of the losses for the year ended on that date; and

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

Emphasis of Matter:

We draw attention to Note No.40 of the statement which indicates that the company has incurred a net loss of Rs.23696.51 Lacs during the year ended March 31, 2014 and as of that date, the Companys total liabilities exceeds its total assets by Rs.14417.02 Lacs. These conditions along with other matters set forth in Note No.43, indicates the existence of the material uncertainty regarding the Companys ability to continue as a going concern. Attention is also drawn to the fact explained by the management that necessary efforts are being taken for revival of the unit. We have not qualified our opinion in respect of this matter.

We draw attention to Note No.41 of the statement that balances under Trade Receivables, Other Current and Non Current Assets, Loans & Advances, Trade Payables, Other Current Liabilities and Long term and short term borrowings from Banks and financial institutions are subject to confirmation and reconciliation if any. We have not qualified our opinion in respect of this matter.

We draw attention to Note No.42 to the financial statements regarding adoption of depreciation rates applicable to continuous process plant in respect of plant and machinery of spinning and processing units and wind mills which is a technical matter. Due to this policy adopted by the company, the depreciation for the year is lowered by Rs.287.21 Lacs (PY Rs.488.01 Lacs) with consequential effect on the loss for the year and also on reserves and surplus. We have not qualified our opinion in respect of this matter.

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

Report on other Legal and Regulatory Requirements:

2. 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 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 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 subsection (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13^,h September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

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

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

For Suri & Co.

Chartered Accountants Firm Regn. No: 004283S

	M. Sivaram
Place : Coimbatore	(Partner)
Date : 28.06.2014	Membership No. :211916

ANNEXURE TO THE AUDITORS REPORT

The Annexure referred to in paragraph 1 of our report of even date to the members of VTX Industries Limited of the accounts of the company for the year ended 31^st March, 2014:

1. In respect of its fixed assets

(a) The company is in the process of updating its fixed asset register.

(b) The fixed assets have been physically verified by the management in accordance with a phased programme of verification, which in our opinion is reasonable, considering the size and nature of business. The frequency of verification is reasonable and discrepancies noticed on such physical verification were not material and have been properly dealt with in books of account.

(c) In our opinion, the company has not disposed off a substantial part of its fixed assets during the year and the going concern status of the company is not affected.

2. In respect of its inventories

(a) According to information and explanation furnished to us, the inventories have been physically verified by the management at reasonable intervals.

(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 has maintained proper records of inventories, and no material discrepancies were noticed on such physical verification of inventories and other discrepancies noticed have been appropriately dealt with.

3. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has neither taken nor granted any loans, secured or unsecured, to or from parties covered in the register maintained under Section 301 of the Companies Act, 1956. Consequently, the provisions of clauses iii (a) to iii (g) are not applicable.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventories, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct any major weaknesses in the internal control system.

5. a) Based on the audit procedures applied

by us and according to the information and explanations provided by the management, the particulars of contracts or arrangements referred to in section 301 of the Act have been entered in the register required to be maintained under that section.

b) According to the information and explanation furnished to us these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has accepted deposits from the public within the meaning of Section 58A of the Companies Act, 1956. The company has complied with the directives issued by Reserve Bank of India and the provisions of section 58A and section 58AA of the companies Act,1956 and the companies (Acceptance of Deposits) Rules,1975,With regard to the deposits from the public.

7. As per information & explanations given by the management, the Company has an internal audit system commensurate with its size and the nature of its business.

8. We have broadly reviewed the cost records maintained by the company pursuant to the companies (Cost Accounting Records) Rules, 2011 prescribed by the central government under section 209(1) (d) of the companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) According to the records of the company, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales-tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess to the extent applicable and any other statutory dues have generally been regularly deposited with the appropriate authorities during the year, except the following cases which are outstanding as on 31" March, 2014 for a period of more than 6 months from the date they became payable:

No.	Nature of Dues	Amount Rs in Lakhs
1.	Provident Fund	149.58
2.	Employees State Insurance	20.27
3.	Wealth Tax	0.96
4.	Income Tax	162.68
5.	Fringe Benefit Tax	1.11
6.	Dividend Distribution Tax	17.68
7.	Tax Deducted at Source	17.23
8.	Tax Collection at Source	2.19
9.	Investor Education and Protection Fund	12.08

(b) There are no disputed dues which are not paid on account of Income Tax, Sales Tax, Service Tax, Custom Duty, Wealth Tax, Excise Duty and Cess.

10. The Company has accumulated losses at the end of the financial year, it has exceeded fifty percent of its net worth. The company has incurred cash loss during the financial year covered by our audit but not in the immediately preceding financial year.

11. In our opinion and according to information and explanations given to us, the company has defaulted in repayment of its dues to financial institutions and banks in case of working capital facilities and term loans. In case of term loans the instalments are due from April 2012 to March 2014 of Rs 6842.29 Lacs (Rs 3699.43 Lacs towards Principal and Rs 3142.86 Lacs towards interest).

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

13. The Company not being a chit fund, Nidhi or mutual benefit society. The requirements of clause (xiii) of Paragraph 4 of the order are not applicable to the Company.

14. The Company is not dealing or trading in Shares, securities, debentures and other Investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the order are not applicable.

15. According to the information and explanations given to us, the Company has not given any guarantees for loan taken by others from banks or financial institutions.

16. To the best of our knowledge and belief and according to the information and explanation given to us the term loans availed by the company were, prima facie applied by the company during the year for the purposes for which the loans were obtained.

17. 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 purposes by the Company.

18. The Company has not made any preferential allotment of shares during the year to parties and companies covered in the register maintained u/s 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by public issue during the year.

21 According to the information and explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the year.

	For Suri & Co.
	Chartered Accountants
	Firm Regn. No: 004283S
	M. Sivaram
Place : Coimbatore	(Partner)
Date : 28.06.2014	Membership No. :211916