Auditor Report of Tejassvi Aaharam Ltd.

Mar 31, 2024

We have audited the accompanying financial statements of Tejassvi Aaharam Limited (“the Company”), which
comprise the Balance Sheet as at 31 March 2024, the Statement of Profit and Loss, the Statement of Changes
in Equity and the Statement of Cash Flows for the year then ended, and a summary of the significant
accounting policies and other explanatory information.

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 Companies Act 2013 (“the Act”) in the manner so
required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under
section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules 2015 as amended (“ Ind
AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at
31^st March 2024, and its loss and total comprehensive loss, changes in equity and its cash flows for the year
ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(“SA”) specified under Section 143(10)
of the Act. Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the Company in
accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together
with the independence requirements that are relevant to our audit of the financial statements under the
provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the ICAI’s Code of Ethics. 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.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the standalone financial statements of the current period. These matters were addressed in the context of
our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. We have determined the matters described below to be the
key audit matters to be communicated in our report.

Key Audit Matter	How the Key Audit Matter was addressed in our audit
During the year, the company has not conducted	a) We examined the company’s intimation to
any business activity. As evidenced from the	Bombay Stock Exchange Dated 17th March 2023
financial statements the company has following	(TAL/BSE/SEC/2022-23) where the company had
indicators that cast a significant doubt on the	communicated to exchange the following
company’s ability to continue as a going concern.	“management is intends to increase the focus in the foods business with fresh investments in food
a) The net worth of the company has been eroded,	processing, packaging and contract manufacturing of food products, sourcing and trading of food grains
b) Substantial operating losses and significant deterioration in the value of assets used to	and cereals”
generate cash flows,	b) We conducted enquiries with the management regarding future business plans that it intends to
In the absence of business activity and aforementioned adverse indicators on Going Concern this aspect is considered a Key Audit Matter.	undertake.

Information Other than the Financial Statements and Auditor’s Report Thereon

The Company’s Board of Directors is responsible for the preparation of the other information. The other
information comprises the information included in the Management Discussion and Analysis, Board’s Report
including Annexures to Board’s Report, and Shareholder’s Information, but does not include the financial
statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements, or our knowledge obtained during the course of our audit or otherwise appears to be materially
misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and those charged with Governance for the Financial
Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with
respect to the preparation of these financial statements that give a true and fair view of the financial position,
financial performance including other comprehensi⁵⁸ income, cash flows and changes in equity 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 the Companies (Indian Accounting Standards)
Rules, 2015. This responsibility also includes 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 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 effectively for ensuring the accuracy and completeness of the
accounting records, 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.

In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the company’s financial reporting process.

Auditor’s Responsibility for the Audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013,
we are also responsible for expressing our opinion on whether the company has adequate internal financial
controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on Management representation letter obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in a manner
that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor’s Report) Order, 2020 (“the Order”) issued by the Central
Government of India in terms of sub-section (11) of section 143 of the Act, we give in “Annexure A” to
this Report, a statement on the matters specified in para 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, the Statement of Changes in Equity and the
Statement of Cash Flows dealt with by this report are in agreement with the books of account;

(d) in our opinion, the aforesaid financial statements comply with the Accounting Standards specified
under including the Accounting Standards specified under Section 133 of the Act, read with the
Companies (Indian Accounting Standards) Rules, 2015;

(e) On the basis of the written representations received from the directors as on 31

March 2024 taken on record by the Board of Directors, none of the directors is disqualified as
on 31 March 2024 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 effectiveness of such controls, refer to our separate Report in “Annexure B”;

(g) With respect to the other matters to be included in the Auditor’s Report in accordance with the
requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the
remuneration paid by the Company to its directors during the year is in accordance with the
provisions of section 197 of the Act

(h) with respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11
of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information
and according to the explanations given to us:

i. the Company has disclosed the effect of pending litigation on the Note No - 19 to the financial
statement.

ii. the Company does not have any long-term contracts including derivative contracts, for
which there were any material foreseeable losses;

iii. there were no amounts which were required to be transferred to the Investor Education and
Protection fund by the Company;

iv. a) The management has represented that, to the best of it’s knowledge and belief, other than as

disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either
from borrowed funds or share premium or any other sources or kind of funds) by the company
to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the
understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether,
directly or indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries

b) the management has represented, that, to the best of it’s knowledge and belief, other than as
disclosed in the notes to the accounts, ⁶¹ funds have been received by the company from any

person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding,
whether recorded in writing or otherwise, that the company shall, whether, directly or
indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or
on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or
the like on behalf of the Ultimate Beneficiaries; and

c) Nothing has come to our notice that has caused us to believe that the representations under sub¬
clause a and b contain any material misstatement.

v. The Company has not declared or paid any Dividend during the year by the company.

vi. Based on our examination which included test checks, the company has used an accounting software
for maintaining its books of account which has a feature of recording audit trail (edit log) facility
and the same was operated from 12^th April 2023 for all relevant transactions recorded in the
software. Further, during the course of our audit we did not come across any instance of audit trail
feature being tampered with for transactions after 12^th April 2023. The audit trail has been
preserved by the company as per the statutory requirements for record retention. As proviso to
Rule3(1) of Companies (Accounts) Rules,2014 is applicable from April 1,2023, reporting under
Rule 11(g) of Companies (Audit and Auditors) Rules,2014 on preservation of audit trail as per the
statutory requirements for record retention is not applicable for the financial year ended March
31,2024.

for SUNDARAM & SRINIVASAN

Chartered Accountants
(Firm’s Registration No. 004207S)

S Usha
Partner

Place: Chennai Membership No. 211785

Date: 30^th May 2024 UDIN: 24211785BKCPTZ7818

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Mar 31, 2014

We have audited the accompanying financial statements of M/s Sterling Spinners Ltd., Chennai ("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 then ended, and a summary of significant accounting policies and other explanatory information.

Management''s 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 principles generally accepted in India including Accounting Standards referred to in sub-section (3C) of 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 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 auditor''s 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 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 audit opinion.

Opinion

Subject to the following comments:

BIFR SCHEDULE:

The Company has been declared sick by BIFR on 6.5.2003. Pending Proceedings before BIFR action has been initiated under SARFAESI Act, 2002 by TIIC. BIFR has abated the proceedings, since SARFAESI action has been taken. Appeal against the Abatement Order also been dismissed by AAIFR. SARFAESI action has been challenged and when it is pending, settlement has been made to TIIC. There is no liability either with Secured or Unsecured Creditors.

GOING CONCERN BASIS:

The Company has stopped its operations since October, 2007 and whole of the Plant and Machineries has been disposed off leaving only Land and Building. In spite of all the above, accounts has been prepared on a going concern basis.

UN-SECURED LOANS FROM RELATED PARTIES:

In order to settle the dues to Banks and other Creditors, the Company has taken Unsecured Loans from its Managing Director and one of Its related Company. The Company has paid an amount of Rs.241.02 lakhs towards interest on the above loans.

SUBJECT TO ABOVE COMMENTS:

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 Loss 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. Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor''s 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.

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 13th 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 .

ANNEXURE TO THE AUDITORS'' REPORT

Referred to in Paragraph 1 of our Report of even date to the Members of M/s Sterling Spinners Ltd, (the Company) on the Financial Statement for the Year ended March 31, 2014.

(i) In respect of Fixed Assets :

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

(b) All the Fixed Assets were physically verified by the Management during the year and there is a regular programme of verification, which, in our opinion, is reasonable haying regard to size of the Company and the nature of its assets. No material discrepancies were noticed during verification.

(c) During the year the Company has not disposed off any Fixed Assets

(ii) In respect of its Inventory :

The Company has stopped production at the mill. There is no inventory, Therefore the provisions of Clause 4 (ii) of the order are not applicable to the Company.

(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.

(b) 1. The Company has taken Un-Secured loans from two parties covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum Amount involved during the year for those loans was Rs. 1760.94 lakhs. The year end balance of those loans was Rs. 1760.94 Lakhs.

2, The rate of Interest and all other Terms and Conditions for the loans taken are not prima facie, prejudicial to the interest of the Company, they are regular in payment of interest, wherever applicable.

3. The terms of arrangement do no stipulate any principal repayment schedule and is repayable on demand.

4. There is no overdue amount of Loan taken from the party covered in the Register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion, and according to the information and explanations given to us, there is an adequate internal control and procedures 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. During the course of our audit, we have not observed any continuing failure to correct major weakness in the 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, 1956have been entered into the register required to be maintained under that Section.

(b) In our opinion, and according to the Information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, have been made at prices that 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 and consequently the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are: not applicable.

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

(viii) Since the Company has stopped operations in the plant, reporting under Clause 4 (viii) of the Companies'' (Auditor''s Report) Order, 2003 does not arise.

(ix) (a) According to the information and explanations given to us,the Company is regular In depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor education protection fund, Emloyees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

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

(c) Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty and Cess which have not been deposited on account of any dispute

(x) In our opinion, accumulated losses have exceeded its net worth at the end of financial year. The company has incurred cash losses in this financial year, but incurred cash Profit in the immediate preceding financial year.

(xi) According to the information and explanations given to us, the Company has no loans due to bank and Financial Institutions.

(xii) In our opinion and according to information and explanations given to us, no loans and advances have been granted by the Company 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 / Nidhi / Mutual Benefit Fund / Society, therefore, the provisions of Clause 4 (xiii) of the Companies (Auditors Reprot) Order, 2003 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 4 (xiv) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has given guarantee for loans taken by M/s Savorit Limited from Banks. According to the information and explanations given to us, we are of the opinion that the Terms and Conditions thereof are not primafacie prejudicial to the interest of the Company.

(xvi) The Term Loans raised by the Company, was applied for the purpose of loans were 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 have been used for long-term investment.

(xviii) According to the information and explanation given to us, the Company has not made preferential allotment of shares to parties and companies covered In the register maintalned under Section 301 of the Companies Act, 1956

(xix) According to the information and explanations given to us, during the period covered by our audit report, the Company has not issued any debentures.

(xx) The Company has not raised any money by public issues during the year.

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

PLACE: CHENNAI For D.SAMPATH KUMAR & CO., DATE : 30.05.2014 CHARTERED ACCOUNTANTS (FRN. 003556S)

M.K.RAVINDRAN (PARTNER) Membership No: 20887

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Mar 31, 2012

1. We have audited the accompanying financial statements of M/s Sterling Spinners Ltd, Chennai which comprise the Balance Sheet as at 31st March, 2012, the statement of Profit and Loss and the Cash Flow Statement for the Year ended and a summary of the significant accounting policies and other explanatory information.

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 statements 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) ("the order") issued by the Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, ("the Act"), we enclose 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 Annexure referred to above, we report that:

a) i. The Company's networth has eroded due to losses and the Company has become a Sick Industrial Company within the meaning of (Clause 'O') of Sub-Section (1) of Section 3 of Sick Industrial Companies(Special Provisions) of Act, 1985. The Company has made a reference before BIFR on 28.05.2001. The Company has been declared as Sick Industrial Company by the BIFR on 06.05.2003.

However, proceedings before BIFR were abated as per the Order by BIFR on 22.04.2010 and the Company has filed an Appeal against the above said Order of BIFR with AAIFR which has been disallowed. Now, the matter is pending before the High Court of Madras.

Since Oct' 2007 the Company has stopped operations in its plant. Despite erosion of Networth the accounts have been prepared on a going concern basis.

ii. The Company has already settled M/s Punjab National Bank Loans and M/s Tamilnadu Industrial Investment Corporation Limited Term Loans and is in the process of settling dues with M/s State Industries Promotion Corporation of Tamilnadu Ltd., under One Time Settlement Scheme, pending settlement the amount paid Rs. 2,04,00,000/- has been shown under Other Loans and Advances.

iii. Some of the balances of Short Term Loans and Advances and Trade payables are subject to confirmation.

b) Subject to our comments above, we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

c) 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;

d) 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;

e) 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;

f) On the basis of 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 Director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

g) 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 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 31st March, 2012;

ii. In the case of the Statement of Profit and Loss, of the Loss 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 the date.

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 1 of our Report of even date

RE : Sterling Spinners Ltd. ("The Company")

(i) In respect of Fixed Assets :

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

(b) All Fixed Assets were physically verified by the Management during the year and 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. No material discrepancies were noticed on such verification.

(c) During the year, the Company has not disposed off any Fixed Assets.

(ii) In respect of its Inventory :

The Company has stopped production at the mill. Except old stores and spares, there is no inventory. Therefore the provisions of Clause 4(ii) of the order are not applicable to the Company.

(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.

(b) The Company has taken loan from one party covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 678.26 lakhs. The year end balance of loan was Rs. 678.26 Lakhs.

(c) In our opinion, the rate of Interest and other terms and conditions for such loan are not prima facie, prejudicial to the interest of the Company.

(d) The Company is regular in repaying the Principal Amount as stipulated and no interest has been paid as it is waived by the Party.

(e) There is no overdue amount of Loan taken from the party covered in the Register maintained under Section 301 of the Companies Act, 1956.

(iv) 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, with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weakness in the 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 have been entered into the register required to be maintained under that Section.

(b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, have been made at prices that 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 and consequently the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

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

(viii) Since the Company has stopped operations in the plant, reporting under Clause 4 (viii) of the Companies' (Auditor's Report) Order, 2003 does not arise.

(ix)(a) According to the information and explanations given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor education protection fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty and Cess were in arrears, as at 31st March, 2012 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, 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 more than fifty percent of its networth and the Company has incurred cash losses during the financial year, covered by our audit and also in the immediately preceding financial year. The company has been declared as Sick Industrial Company by the BIFR on 06.05.03.

(xi) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to Financial Institutions as detailed below.

Name of the Principal Funded Financial Rs. interest and TOTAL Institution interest accrued Rs. Rs.

A. TERM LOAN: M/s. SIPCOT 3,00,00,000 25,86,63,433 28,86,63,433

TOTAL 3,00,00,000 25,86,63,433 28,86,63,433

Name of the Remarks Financial Institution

A. TERM LOAN: Paid against the Loans M/s. SIPCOT Rs. 2,04,00,000 (under OTS Scheme)

(xii) In our opinion and according to information and explanations given to us, no loans and advances have been granted by the Company 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 4 (xiii) of the Companies (Auditor's Report) Order, 2003 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 4 (xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) The Company has not raised any fresh Term Loan during the year.

(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 explanation given to us, the Company has not made 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, during the period covered by our audit report, the Company has not issued any debentures.

(xx) The Company has not raised any money by public issues during the year.

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

For D. SAMPATHKUMAR & CO., Regn.No.003556S CHARTERED ACCOUNTANTS

M.K. RAVINDRAN Partner CHARTERED ACCOUNTANTS M. No. 20887

Place: Chennai Date : 09.04.2012

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of M/s Sterling Spinners Ltd, Chennai as at 31st March, 2010, the Profit and Loss Account on that date and also 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 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose 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 Annexure referred to above we report that:

a) The Companys net worth has eroded due to losses and the Company has become a Sick Industrial Company within the meaning of (Clause O) of Sub Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act 1985. The Company has made a reference before BIFR on 28.05.2001 and the Company has been declared as Sick Industrial Company by the BIFR on 06.05.2003. The rehabilitation package is still not formulated. Since Oct. 2007 the Company has stopped operations in its Plant. Despite erosion of net worth the accounts have been prepared on a going concern basis.

ii The Company has defaulted in payment to M/s. SIPCOT and M/s. TIIC.

a) M/s. SIPCOT : Principal and interest outstandingRs. 2394 lac. This includes interest of Rs. 417.69 charged during the year. The company is yet to enter into OTS Scheme (one time settlement) M/s. SIPCOT.

b) M/s. TIIC : The company has entered into one time settlement (OTS)on 23.03.2007 for payment of Rs. 270 lakhs, but did not comply with time schedule. M/s. TIIC has taken possession of mill on 10.02.2010 under SARFAESI Act. The company is renegotiating OTS Scheme. Total dues as per earlier OTS Rs. 296.16 lakhs, including interest of Rs.25.02 lacs charged during the year.

iii. Some of the balances of Loans.and Advances, Sundry Debtors and Sundry Creditors are subject to confirmation.

a) Subject to our comments above, 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, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956;

e) On the basis of written representation received from the Directors, as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31 st March, 2010 from being appointed as a director in terms of Clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956;

f) 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 give a true and fair view in conformity with accounting principles generally accepted in India:

i. In the case of the Balance Sheet, of the State of Affairs of the Company as at 31 st March, 2010;

ii. In the case of the Profit and Loss Account, of the Loss 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 the date.

ANNEXURE TO THE AUDITORS REPORT Referred to in paragraph 1 of our Report of even date

i. In respect of Fixed Assets :

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

b) All the assets have been physically verified by the Management during the year and 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. No material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any fixed assets.

ii. In respect of Inventory :

The company has stopped production at the mill. Except old stores and spares, there is no inventory. Therefore the provisions of Clause 4 (ii) of the order are not applicable to the company.

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.

b) The Company has taken loan from one party covered in the Register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs.331.82 lakhs, The year end balance of loan was Rs.288 71 Lakhs.

c) In our opinion, the rate of Interest and other terms and conditions on which loan has been taken from the party covered in the Register maintained under Section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

d) The company is regular in repaying the Principal Amount as stipulated and rrn in*orpSt has been paid as it is waived by him.

e) There is no overdue amount of Loan taken from the party covered in the Register maintained under Section 301 of the Companies Act, 1956.

iv. In our opinion, and according to the information and explanations given to us, there are adequete internal control procedures 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. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

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

b) In our opinion, and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956, have been made at prices that are reasonable having regard to 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 and consequently the provisons of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under are not applicable.

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

viii. Since the Company has stopped operations in the plant, reporting under Clause 4 (viii) of the Companies (Auditors Report) Order, 2003 does not arise.

ix. a) According to the information and explanations given to us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty and Cess were in arrears, as at 31 st March, 2010 for a period of more than six months from the date they became payable.

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

Name of the Nature of Amount Period to which the Forum where dispute State Act Dues Rs. amount relates is pending

P.F. ACT P. F. Dues Rs. 2.95 lakhs 22.09.97 to 05.07.99 Madras High Court

x. In our opinion, the accumulated losses of the Company are more than fifty percent of its networth and the Company has incurred cash losses during the financial year, covered by our audit and also in the immediately preceeding financial year. The company has been declared as Sick Industrial Company by the BIFR on 06.05.03.

xi. In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to Financial Institutions as detailed below.

Rs. in Lakhs

Name of the Financial Institution Prinicipal Funded interest Total and interest accured

A. TERM LOAN:

M/s. SIPCOT 300.00 2094.00 2394.00

M/s. TIIC (Under OTS) 244.32 51.84 296.16

Total 544.32 2145.84 2690.16



xii. In our opinion and according to information and explanations given to us, no loans and advances have been granted by the company on the basis of security byway 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 4 (xiii) of the Companies (Auditors Report) Order, 2003 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 4 (xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi. The Company has not raised any fresh Term Loan during the year.

xvii. According to the infromation 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 explanation given to us, the Company has not made 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,during the period covered by our audit report, the Company has not issued any debentures

xx. The Company has not raised any money by public issues during the year.

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



Place: Chennai For S. DHANYAKUMAR & CO.,

Date: 23.04.2010 Chartered Accountants

(Regn. No.000748S)

D. SAMPATH KUMAR

Proprietor

M. No. 3483