Auditor Report of S Kumars Nationwide Ltd.

Mar 31, 2013

We have audited the accompanying Financial Statements of S. Kumars Nationwide Limited (''the Company'') which comprise the Balance Sheet as at 31st March, 2013 and the Statement of Profit and Loss and also the Cash Flow Statement for the year then ended and a summary of Significant Accounting Policies and other explanatory information.

Management 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 Subsection (3C) of the Section 211 of the Companies Act, 1956 (''the Act''). 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 free from material misstatement, whether due to fraud or error.

Auditor''s 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 (ICAI). Those Standards require that we comply with the 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 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 auditors consider internal control relevant to the Company''s preparation and fair presentation of the Financial Statements 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 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 qualified audit opinion.

Basis for Qualified Opinion

1. The outstanding balances of trade receivables, trade payables, loans & advances and capital advances are subject to confirmation and reconciliation. The consequential adjustments, if any, arising out of these are not quantifiable.

2. Inventories lying with third parties and fixed assets have not been physically verified completely and up to date position of records of fixed assets have not been compiled. The consequential impairment/write down, if any, is not quantifiable {Refer Note 33 (b)}.

Qualified Opinion

In our opinion and to the best of information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, 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 31st March, 2013;

(b) In the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

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

Emphasis of Matter:

We draw attention to –

1. Note 35 of the Financial Statements with regard to the Company facing mismatch in its cash flows and in case the required financial resources are not raised on a timely basis, the operations of the Company may get impacted, thereby affecting the assumption of ''going concern''.

2. Note 31 of the Financial Statements with regard to invocation of Shares in Reid & Taylor (India) Limited (unlisted Indian subsidiary of the Company) pledged by the Company with IL&FS and thereby adjusting its dues amounting to Rs. 11,691.51 Lacs. The Company has not accounted for the effect of such invocation and it continues to show the loan liability and the investments at cost of such pledged shares.

Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003, (as amended), 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.

2. As required under the provisions of 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. Except for the effects of the matter described in the Basis for Qualified Opinion paragraph, 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;

e. Pursuant to Circular No. 8/2002 dated March 22, 2002 issued by the Department of Company Affairs, Ministry of Law, Justice & Company Affairs, Government of India, directors nominated by the Public Financial Institutions / Banks/ Central & State Government are not liable to be disqualified for appointment as directors under the provisions of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956. In respect of other directors, on the basis of the written representations received from the directors, as on 31st March, 2013 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956; [Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditors'' Report of even date to the members of S. Kumars Nationwide Limited (''the Company'') on the Financial Statements for the year ended 31st March, 2013].

(i) (a) The Company is in the process of maintaining proper records of its fixed assets so as to show specific identification of the said assets, including its quantitative details and situation in respect of fixed assets capitalized after 31st March, 2011.

(b) As per documents produced before us, the Company has a regular programme of verification of fixed assets wherein all fixed assets are verified once in a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) As per documents produced before us, the inventories has been physically verified by the Management during the year. In respect of inventories lying with third parties, these have substantially been confirmed by them along with certification of physical verification of such inventories from an independent Chartered Accountant form. In our opinion, the frequency of such verification is reasonable.

(b) The procedures of physical verification of inventories as referred to in (a) above 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 of inventories and no material discrepancies were noticed on physical verification carried out as mentioned in Para (a) above during the year.

(iii) (a) The Company has granted loan to a party covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the yearend balance of loan granted to such party was Rs. 41.25 lacs.

(b) In our opinion and according to the information and explanations given to us, the terms and conditions for such interest free loan are not, prima facie, prejudicial to the interest of the Company.

(c) The said loans are repayable on demand.

(d) There is no overdue amount of loan granted to the Company listed in the register maintained under Section 301 of the Companies Act, 1956.

(e) The Company had taken loans (interest-bearing as well as interest-free) from a Company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 23,250 lacs and the yearend balance of loans taken from such Company was Rs. 23,250 lacs, of which an amount of Rs. 4,000 lacs is interest free.

(f) In our opinion and according to the information and explanations given to us, the rate of interest, wherever applicable and other terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(g) The Company has not repaid the principal amount as stipulated and also not been regular in the payment of interest to the Company.

(iv) In our opinion and according to the information and explanations given to us, the internal control system prevailing in the Company needs to be strengthened so as to make it commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. During

the course of audit, we have not observed continuing failure to correct any major weaknesses in internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rs. five lacs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not complied with the provisions of Section 58A or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

(vii) The Company has an internal audit system, which in our opinion, requires to be strengthened to make it commensurate with the size and nature of its business.

(viii) We have not been made available the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-Section (1) of Section 209 of the Act and hence, we are unable to comment upon whether prescribed records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess have not been regularly deposited with the appropriate authorities and there have been serious delays in many cases.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the yearend for a period of more than six months from the date they became payable are as follows:

Name of the Statute Nature of the Dues Amount ( Rs,in lacs)

Income Tax Act, 1961 Income Tax 7,332.25

Income Tax Act, 1961 Tax Deducted at Source 1,170.55

Provident Fund Act, 1952 Provident Fund 121.40

Employees'' State Insurance Act, 1948 ESIC 30.28

Madhya Pradesh Land Revenue Act, 1959 Property Tax 70.23

Value Added Tax Act, 2005 Value Added Tax 17.12

Entry Tax Act, 1976 Entry Tax 4.26

Central Sales Tax Act, 1956 Central Sales Tax 3.60

Income Tax Act, 1961 Tax Collected at Source 0.03

c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess which have not been paid on account of disputes, are as follows:

Name of the Statute Nature of the Dues Amount Period to which the Forum where dispute (Rs,in lacs) amount relates is pending

Income Tax Act, 1961 Income Tax 29.75 FY 2008-09 Commissioner of Income Tax (Appeals)

Income Tax Act, 1961 Tax Deducted at 514.31 FY 2006-07 to 2008-09 Commissioner of Source Income Tax (Appeals)

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. Further, the Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks, financial institutions and debenture holder as mentioned below:

Defaults in payment of Interest and Principal:

Period of Default Amount of Interest (Rs,in lacs) Amount of Principal ( Rs, in lacs)

0 - 3 Months 4,191.09 18,625.11

(Including interest of Rs,2,317.54 lacs on (Including borrowings of Rs,16,861.16 borrowings recalled by lenders) lacs recalled by lenders)

3 - 6 Months 9,413.80 33,509.97

(Including borrowings of Rs,9,385.63 lacs (Including borrowings of Rs, 33,071.05 recalled by lenders) lacs recalled by lenders)

6 - 12 Months 11,094.87 4,947.82

The above defaults do not include repayments which have been rescheduled by one of the lender as explained in Note 38.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans & advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company during the year, for loans taken by others from banks or financial institutions, are not prejudicial to the interest of the Company.

(xvi) During the year, the Company has not obtained any term loans.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the Company has used funds raised on short term basis amounting to Rs. 3,937.22 lacs for long term investment.

(xviii)According to the information and explanation 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.

(xix) According to the information and explanations given to us, no debentures have been issued by the Company during the year.

(xx) The Company has not raised money by way of public issue during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the Management.

For Haribhakti & Co

Chartered Accountants

Firm Registration No. 103523W

RAKESH RATHI

Partner Membership No.45228

Place : Mumbai

Date : 16th July, 2013

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Mar 31, 2012

1. We have audited the attached Balance Sheet of S. Kumars Nationwide Limited ('the Company') as at 31st March, 2012 and the Statement of Profit and Loss and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Further to our comments in the paragraph 3 above, 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 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 dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v. Pursuant to Circular No. 8/2002 dated March 22, 2002 issued by the Department of Company Affairs, Ministry of Law, Justice & Company Affairs, Government of India, directors nominated by the Public Financial Institutions / Banks / Central & State Government are not liable to be disqualified for appointment as directors under the provisions of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956. In respect of other directors, on the basis of the written representations received from the directors, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the directors is disqualified 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 Companies Act, 1956;

vi. Without qualifying our opinion, we draw attention to Note No.27 regarding the change in accounting policy with respect to amortization of recompense expense amounting to Rs. 14,310.31 lacs as on 1st April, 2011 pertaining to earlier years which has been adjusted against accumulated surplus under the head 'Reserves & Surplus.'

vii. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read with notes there on, 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 the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012 ;

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

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

ANNEXURE TO AUDITORS' REPORT

[Referred to in paragraph 3 of the Auditors' Report of even date to the members of S. Kumars Nationwide Limited on the financial statements for the year ended 31st March, 2012]

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

(b) The Company has a regular programme of verification of fixed assets wherein all fixed assets are verified once in a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) The inventories (excluding stocks with third parties) have been physically verified by the management during the year. In respect of inventories lying with third parties, these have substantially been confirmed by them along with certification of physical verification of such inventories from an independent CA firm. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory 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 of inventory and no material discrepancies were noticed on physical verification carried out at the end of the year.

(iii) (a) The Company has granted loan to a company covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the year end balance of loans granted to such company was Rs. 41.35 lacs.

(b) In our opinion and according to the information and explanations given to us, the terms and conditions for such interest free loans are not, prima facie, prejudicial to the interest of the Company and the said loan is repayable on demand. Accordingly, the provision stated in paragraph 4(iii)(c) of the order is not applicable.

(d) There is no overdue amount of loans granted to the Company listed in the register maintained under Section 301 of the Companies Act, 1956.

(e) The Company has taken loans or advances in the nature of loans amounting to Rs. 8,921.05 lacs during the year from two companies listed in the register maintained under Section 301 of the Act. The maximum amount involved during the year was Rs. 66,702 lacs (including interest bearing loan amounting to Rs. 27,500 lacs) and the year ended balances of all loans or advances in the nature of loans taken from the said companies were Rs. 31,231.05 lacs.

(f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(g) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and has been regular in payment of interest.

(iv) In our opinion and according to the information and explanations given to us, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to 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 internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under Section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess have not been regularly deposited with the appropriate authorities.

According to the information and explanations given to us, such undisputed dues of the Company which were outstanding, at the year end for a period of more than six months from the date they became payable aggregate Rs. 4,917.26 lacs.

(b) According to the records of the Company, the statutory dues of Rs. 546.95 lacs that have not been deposited on account of disputes pending before appropriate authorities are as under:

Name of the Nature of dues Amount Period to which the Forum where Statute (Rs. In lacs) amount relates dispute is pending

Income Tax Act, 1961 Income Tax 29.75 FY 2008-09 CIT (A)

Income Tax Act, 1961 TDS 517.20 FY 2006-07, 07-08 and 08-09 CIT (A) (TDS)

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) The Company has defaulted in repayment of dues to banks and financial institution. As at balance sheet date, the dues include principal aggregating Rs. 7,033.54 lacs and interest aggregating Rs. 3,340.29 lacs which are for a period ranging from one to six months, out of which Rs. 5,431.10 lacs have since been repaid.

(xii) According to the information and explanations given to us and based on the documents and records produced 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.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company, for loans taken by others from banks or financial institutions during the year, are not prejudicial to the interest of the Company.

(xvi) In our opinion, the term loans have been applied for the purpose for which the loans were raised.

(xvii) 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.

(xviii) According to the information and explanations given to us, the Company has made preferential allotment of shares to a company covered in the register maintained under section 301 of the Act. In our opinion, the price, at which shares have been issued, is not prejudicial to the interest of the Company.

(xix) According to the information and explanations given to us, no debentures have been issued by the Company during the year.

(xx) The Company has not raised money by way of public issue during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants Firm Registration No.l03523W

Rakesh Rathi

Place: Mumbai Partner

Date : 30th May, 2012 Membership No.45228

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Mar 31, 2011

1. We have audited the attached Balance Sheet of S. Kumars Nationwide Limited ('the Company') as at 31st March, 2011 and the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956 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 a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the paragraph 3 above, 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards (AS) referred to in sub-section (3C) of Section 211 of the Act, to the extent applicable, except that the accumulated interest and financial charges amounting to Rs. 13,454 lacs and future differential interest on restructured debts on Net Present Value (NPV) basis amounting to Rs. 856 lacs pertaining to earlier years (after amortising Rs. 1,596 lacs during the year) have been carried forward under the head 'Restructured Financial Cost" (RFC) grouped/presented under Schedule 'F' of financial statement i.e. Loans and Advances, which is not in compliance with AS 5 "Net Profit or Loss for the Period, Prior Period Items and Change in Accounting Policies" and has resulted into overstatement of Profit for the year by Rs. 14,310 lacs and overstatement of loans & advances by same amount (Refer Note No. 3(b) of Schedule 'P-II');

v. On the basis of the written representations received from the directors, as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and subject to paragraph 4(iv) above, 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 31st March, 2011;

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

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

ANNEXURE TO AUDITORS' REPORT

[Referred to in paragraph 3 of the Auditors' Report of even date to the members of S. Kumars Nationwide Limited on the financial statements for the year ended 31st March, 2011]

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

(b) All the fixed assets have not been physically verified by the management during the year, but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) As explained to us, inventory lying with the Company have been physically verified by the management at regular intervals during the year. In respect of inventories lying with third parties, certificates confrming substantial portion of the inventories have been received. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book stocks were not material and the same have been properly dealt with in the books of accounts.

(iii) (a) As informed, the Company has granted interest free loan to a company covered in the register maintained under section 301 of the Companies Act, 1956 amounting to Rs. 5 crores.

(b) In our opinion and according to the information and explanations given to us, terms and conditions of above said interest free loan are not, prima facie, prejudicial to the interest of the Company.

(c) The above said company has repaid the principal amount as stipulated and there is no overdue amount with regard to said loan.

(d) The Company has taken loan or advances in the nature of loan of Rs. 11,861 lacs from two Companies listed in the register maintained under Section 301 of the Act, besides interest bearing secured loan of Rs. 44,000 lacs and unsecured interest free loan of Rs. 4,000 lacs from one of the above said company taken in earlier year. The maximum amount involved during the year was Rs. 69,669 lacs (including interest bearing loan of Rs. 38,500 lacs) and the year- end balance of all loans and advances in the nature of such loans taken from the said party was Rs. 40,050 lacs.

(e) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans and advances in the nature of loans are, prima facie, not prejudicial to the interest of the Company.

(f) In respect of the aforesaid loans and advances in the nature of loans, the Company is regular in repaying the principal amounts as stipulated and in payment of interest, wherever applicable.

(iv) In our opinion and according to the information and explanations provided to us, there exists an adequate internal control system commensurate with the size of the Company and nature of its business with regard to purchase of inventories, fixed assets and sale of goods and services. During the course of our audit, we have not observed nor have been informed of any continuing failure to correct major weaknesses in internal control systems of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lacs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained with regard to fabrics by the Company where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) 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 have generally been regularly deposited with the appropriate authorities, except at a unit where there have been delays in depositing certain statutory dues. Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows:

Name of the statute Nature of the dues Amount ( Rs. ) period to which the amount relates

Property Tax Act Property tax 48.38 lacs Earlier years

Wealth Tax Act, 1957 Wealth Tax 32.26 lacs Earlier years

(c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of dispute, except the following:

Name of the statute Nature of Amount ( Rs. ) period to which the Forum at which appeal is the dues amount relates pending

Income Tax Act, 1961 TDS 513.83 lacs F.Y.2007-08, 08-09 Commissioner of Income Tax, and 09-10 Appeals (TDS), Mumbai

(x) The Company has neither accumulated losses as at March 31, 2011 nor has it incurred cash losses during the financial year covered by our audit. However, considering the effect of our audit qualification as stated in para 4(iv) in the Auditors' Report, the Company has incurred cash losses in the immediately preceding financial year.

(xi) The Company has delayed on some occasions, the details of which are being compiled, in repayment of dues to banks, financial institutions and debenture holders.

(xii) As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) The Company has not dealt or traded in shares, securities or debentures. In respect of investments made by it, the Company has maintained proper records and all the investments are held by the Company in its own name.

(xv) According to the information and explanations given to us and the representations made by the management, the Company has given guarantee for loans taken by others from banks or financial institutions, the terms & condition whereof are prima facie, not prejudicial to the interest of the Company.

(xvi) According to the information and explanation given to us and based on the records of the Company examined by us, the Company has applied the term loan for the purpose for which it was obtained.

(xvii) 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 has been used for long-term investment.

(xviii) According to the information and explanation given to us, the Company has made preferential allotment of shares to a Company covered in the register maintained under Section 301 of the Act. In our opinion, the prices at which shares have been issued is not prejudicial to the interest of the Company.

(xix) According to the information and explanations given to us, the Company had issued debentures in the earlier years for which security has been created.

(xx) The Company has not raised any money by issue of any shares/securities to public during the year.

(xxi) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For Haribhakti & Co.

Chartered Accountants

FRN 103523W

Rakesh Rathi

Place: Mumbai Partner

Date: 30th May, 2011 Membership No.45228

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of S. Kumars Nationwide Limited (the Company) as at March 31, 2010 and also the Profit and Loss account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4 A) of Section 227 of The Companies Act, 1956 (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 a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the paragraph 3 above, 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, Profit and Loss account and Cash Flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report comply with the accounting standards, except that the accumulated interest and financial charges amounting to Rs. 14955 lacs and future differential interest on Restructured debts on NPV basis amounting to Rs.951 lacs pertaining to earlier years (after amortising Rs.1596 lacs during the year) have been carried forward under the head Restructured Financial Cost" (RFC) grouped/presented under Schedule F of Financial Statement i.e. Loans and Advances, which is not in accordance with AS-5 "Net Profit or Loss for the period, Prior Period Items and change in Accounting Policies, " and has resulted into overstatement of profit by Rs. 15906 lacs and overstatement of loans & advances by same amount (Refer Note No. 3(b) of Schedule P), referred to in sub-section (3 C) of Section211 of the Act;

v. On the basis of the written representations received from the directors, as on March 31, 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required, subject to Note No. 6 of schedule P relating to pending confirmations and reconciliations of balances of sundry debtors, loans and advances including capital advances and sundry creditors and consequential adjustments, if any and paragraph 4(iv) above, 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, 2010;

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

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

ANNEXURE TO AUDITORS REPORT

[Referred to in paragraph 3 of the Auditors Report of even date to the members of S. Kumars Nationwide Limited on the financial statements for the year ended 31st March, 2010]

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

(b) All the fixed assets have not been physically verified by the management during the year, but there is a regular programme of verification which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

(ii) (a) As explained to us, inventory lying with the Company have been physically verified by the management at regular intervals during the year. In respect of inventories lying with third parties, certificates confirming substantial portion of the inventories have been received. In our opinion, the frequency of verification is reasonable.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) On the basis of our examination of records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book stocks were not material and the same have been properly dealt with in the books of accounts.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and clause (iii)(b), (iii)(c) and (iii)(d) of paragraph 4 of the Companies (Auditors Report) Order, 2003, as amended by the Companies (Auditors Report) (Amendment) Order, 2004, is not applicable to the Company.

(b) The Company has taken unsecured interest free loan or advances in the nature of loan of Rs. 10409 lacs froma Company listed in the Register maintained under Section 301 of the Act, besides secured loan of Rs.44000 lacs and unsecured interest free loan of Rs.4000 lacs from the same party taken in earlier year. The maximum amount involved during the year was Rs. 71276 lacs (including interest bearing loan of Rs. 44000 lacs) and the year- end balance of loans taken from such party was Rs. 52909 lacs.

(c) In our opinion, the rate of interest and other terms and conditions for such loans are, prima facie, not prejudicial to the interest of the Company and the said loan is repayable within a period of four years, after moratorium of one year starting from the year 2009-10.

(d) In respect of the aforesaid loans, the Company is regular in repaying the principal amounts as stipulated and has also been regular in payment of interest.

(iv) In our opinion and according to the information and explanations provided to us in respect of purchase of inventories, capital work in progress and sale of goods of the Company, the documentations and internal control system needs to be strengthened, to be commensurate with the size of the Company and nature of its business. During the course of our audit, we have not observed nor have been informed of any continuing failure to correct major weaknesses in internal control systems of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lacs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) The prevailing internal audit system needs to be strengthened, to be commensurate with size of the Company and nature of its business.

(viii) We have broadly reviewed the books of account maintained with regard to fabrics by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

(ix) (a) 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 have generally been regularly deposited with the appropriate authorities.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employeesstate insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows:

Name of the statute Nature of the dues Amount (Rs) Period to which the amount relates

Income Tax A ct, 1961 Income tax deduc ted at source 536.39lacs F.Y.2009-10

Property Tax Act Property tax 43.38 lacs Earlier years

Wealth Tax A ct, 1957 Wealth Tax 15.96 lacs (exc luding Earlier years interest)

Service Tax Act Service Tax 0.10 lacs F.Y.2009-10

(c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

(x) In our opinion, the accumulated losses of the Company are not more than fifty percent of its net worth. Further, the Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year,

subject to paragraph 4(iv) and 4(vi) in the Auditors Report.

(xi) The Company has delayed on some occasions in repayment of dues to banks, financial institutions and debenture holders.

(xii) As explained to us, the Company has not granted any loans or advances on the basis of security by way of pledge of shares, debentures or any other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) The Company has not dealt or traded in shares, securities or debentures. In respect of investments, the Company has maintained proper records and all the investments are held by the Company in its own name, except to the extent of exemption granted under section 49 of the Act.

(xv) According to the information and explanations given to us and the representations made by the management, the Company has given guarantee for loans taken by others from banks or financial institutions, the terms & condition whereof are, not prejudicial to the interest of the Company.

(xvi) According to the information and explanations given to us and based on the records of the Company examined by us, the Company has applied the term loan for the purpose for which it was obtained.

(xvii) 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 has been used for long-term investment.

(xviii)During the year, the Company has made allotment of shares amounting to Rs. 1312 lacs as a result of conversion of FCDs allotted on preferential basis and further the Company has received 25% share application money of Rs. 1340 lacs towards convertible share warrants from the Company covered in the Register maintained under Section 301 of the Act, and rate at which those have been issued are, prima facie, not prejudicial to the interest of the Company.

(xix) According to the information and explanations given to us, the Company had issued debentures in earlier years for which security has been created.

(xx) The Company has not raised any money by issue of any shares/securities to public during the year.

(xxi) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.



For Haribhakti & Co. Chartered Accountants FR NO.103523W

RAKESH RATHI Place :Mumbai Partner Date :28th May, 2010 Membership No.45228