1. We have audited the attached Balance Sheet of AARVEE DENIMS AND
 EXPORTS LIMITED (the Compaqny) as at 31st March, 2010, the Profit and
 Loss Account and the Cash Flow Statment of the Company for the year
 ended on that date, both 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 the auditing standards
 generally accepted India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements. An audit also includes the according principles
 used and the significant estimates made by the 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 (CARO)
 issued by the Central Government 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 reffered to in paragraph 3
 above, we report as follows:
 
 (a) we have obtained all the information and explainations which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit;
 
 (b) in our opinion, proper books of account as required by law have
 been kept by the Company so far as it appears from our examination of
 those books;
 
 (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account; 
 
 (d) in our opinion, the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report are in compliance
 with the Accounting Standards reffered to in Section 211 (3C) of the
 Companies Act, 1956;
 
 (e) 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, 2010;
 
 (ii) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date and
 
 (iii) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 5. On the basis of the written representations received from the
 Directors as on 31st March. 2010 taken on record by the Board of
 Directors, none of the Directors is disqualified as on 31st March, 2010
 from being appointed as a director in terms of Section 274(l)(g) of the
 Companies Act, 1956.
 
 
 ANNEXURE TO THE AUDITORS REPORT
 (Referred to in paragraph 3 of our report of even date)
 
 (i) Having regard to the nautre of the Companys business, clauses (x),
 (xii), ((xiii) and (xiv) of paragraph 4 of CARO are not applicable.
 
 (ii) In respect of its fixed assets:
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of the fixed assets.
 
 (b) The fixed assets were physically verfied during the year by the
 Management in accordance with a regular programme of verfication which,
 in our opinion, provides for physical verfication of all the fixed
 assets at reasonable intervals. According to the information and
 explanation given to us, no material discrepancies were noticed on such
 verification.
 
 (c) The fixed assests disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the Company
 and such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 (iii) In respect of its inventory:
 
 (a) As explained to us, the inventories were physically verified during
 the year by the Management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanation
 given to us, the procedures of physical verification of inventories
 followed by the Management were reasonable and adequate in relation to
 the size of the Company and the nature of its business.
 
 (c) In our opinion and according to the information and explanattions
 given to us, the Company has maintained proper records of its
 inventories and no material discrepanies were noticed on physical
 verification. 
 
 (iv) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other parties covered in the register mainted under
 section 301 of the Companies Act, 1956.
 
 In respect of loans, secured or unsecured, taken by the Company from
 companies, firms or other parties coverd in the Register maintained
 under Section 301 of the Companies Act, 1956, according to the
 information and explanations given to us:
 
 (a) The Company has taken unsecured loans aggregting Rs 1,34,027(000)
 from 9 parties during the year. At the year-end, the outstanding
 balance of such loans taken aggregated Rs. 2,33,115 (000). (Number of
 parties - 11) and the maximum amount involved during the year was Rs.
 2,37,128(000) (number of parties - 11).
 
 (b) The rate of interest and other terms and conditions of such loans
 are, in our opinion, prima facie not prejudicial to the interests of
 the Company.
 
 (c) The payments of principal amounts and interest in respect of such
 loans are as per stipulations.
 
 (v) There is an adequate internal control system commensurate with size
 of the Company ans the nature of its business with regard to purchases
 of inventory and fixed not assets and sale of goods and services.
 During the course of our audit, we have not observed any major weakness
 in such internal control system.
 
 (vi) In respect of contracts or arrangements entered in the Register
 maintained in pursuance of Section 301 of the Companies Act, 1956, to
 the best of our knowledge and belicf and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to Section
 301 that needed to be entered in the Register maintained under the said
 Section have been so entered.
 
 (b) Where each of such transaction is in excess of Rs.5 laksh in
 respect of any party, the transactions have been made at prices which
 are prima facie reasonable having regard to the prevailing market
 prices at the relevant time.
 
 (vii) In our opinion and according to the informations and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA or any other relevant provisions of the Compnies Act, 1956
 and the Comanies (Acceptance of Deposits) Rules, 1975 with regard to
 the deposits accepted from the public. According to the Company law
 Board or the National Company Law Tribunal or the Reserve Bank of India
 or any Court or any other Tribunal.
 
 (viii) In our opinion, the Company has an adequate internal audit
 system commensurate with the size and the nature of its business.
 
 (ix) We have broadly reviewed the books of accounts maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1) (d) of the Companies
 Act, 1956 and are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained, We havge, however,
 not made a detailed examination of the records with a view to
 determining whether they are accurate or complete.
 
 (x) According to the information and explanations given to us in
 respect of statutory dues:
 
 (a) The Company has generally been regular in depositing undisputed
 dues, including Provident Fund, Investor Education and Protection Fund,
 Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
 Tx, Custom Duty, Excise Duty, Cess and other material statutory dues
 applicable to it with the appropriate authorities.
 
 (b) There were no undisputed amounts payable in respect of Provident
 Fund, Investor Education and Protection Fund, Employees State
 Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty,
 Excise Duty, Cess and other material statutory dues in arrears as at
 31st March, 2010 for a period of more than six months from the date
 they became payable.
 
 (c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax,
 Custom Duty, Excise Duty and Cess which have not been deposited as on
 31st March, 2010 on account of disputes are given below:
 
 Nature of Dues   Forum where      Period to which      Amount involved
                  Dispute is       the amount           (Rs. in 
                  pending           relates              thousand)
 
 Service Tax      Gujarat          July 2003 to            
                  High Court       March 2007             5,693
 
 
 (xi) In our opinion and according to the inforamtion and explanations
 given to us, the Company has not defaulted in the repayment of dues to
 banks, financial institutions and debenture holders.
 
 (xii) In our opinion and according to the information and explanations
 given to us, the terms and conditions of the guarantees given the
 Company for loans taken by others from banks and financial institutions
 are not prima facie prejudicial to the interests of the Company.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purpose for which
 they were obtained.
 
 (xiv) In our opinion and according to the information and explanation
 given to us and on an overall examination of the Balance Sheet, we
 report that funds raised on short-term basis have not been used during
 the year for long-terms investment.
 
 (xv) According to the information and explanations given to us, the
 Company has not made any preferential alloment of shares to parties and
 companies covered in the Register maintained under Section 301 of the
 Companies Act, 1956 at a price which is prima facie prejudicial to the
 interests of the Company.
 
 (xvi) According to the information and explanations given to us..
 during the period covered by our audit report, no debentures have been
 issued by the Company.
 
 (xvii) During the year, the Company has not raised any money by way of
 public issue.
 
 (xviii) To the best of our knowledge and according to the information
 and explanations givento us, no fraud by the Company and no fraud on
 the Company has been noticed or reported during the year.
 
 For N.C. Shah & Associates               For Deloitte Haskins & Sells
 Chartered Accountants                          Charatered Accountants
 (Registration No 109692W)                   (Registration No 117365W)
 
 Nitin C. Shah                                          Gaurav J. Shah
 Proprietor                                                    Partner
 Membership No. 34633                             Membership No. 35701
 
 Place: Ahmedbad                                      Place: Ahmedabad
 Date: 28th May 2010                               Date: 28th May 2010