Alok Industries

1 We have audited the attached Balance Sheet & Alok Industries Limited,
 as at 31 March 2009. 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 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 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
 (“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 in 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 purposes 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 referred to in sub-section (3C) of Section 211 of
 the Act
 
 (v) On the basis of written representations received from the
 directors, as on 31 March 2009 and taken on record by the Board of
 Directors, we report that none of the directors is prima-facie
 disqualified as on 31 March 2009 from being appointed as a director in
 terms of clause (g) of sub-section (1) of section 274 of the Act; 
 
 (vi) We draw attention to Note No. 17 of part B Schedule 19
 regarding investment in subsidiary company, aggregating to Rs.368.l2
 Crore, considered good for the reasons stated in the note and note no:
 19 of part B of Schedule 19 regarding insurance claim receivable
 amounting to Rs.80.63 Crore, considered recoverable for the reasons
 stated in the note.
   
 (vii) In our opinion and to the best of our information and according
 to the explanations given to us, the said accounts read together with
 the notes thereon 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 31 March 2009;
 
 (b) in the case of the Profit and Loss Account, of the profit for the
 year ended 31 March 2009; and
 
 (c) in the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 Annexure referred to in paragraph 3 of our report of even date to the
 members of the Alok Industries Limited on the financial statements for
 the year ended 31 March 2009.
 
 (I) a) The Company has maintained proper records showing full
 particulars including quantitative details and
 
 situation of fixed assets.
 
 b) As explained to us, considering the nature of fixed assets, physical
 verification of major portion of fixed assets as at 31 March 2009 was
 conducted by the management during the year, which is reasonable having
 regard to the size of the company and nature of its business,, On the
 basis of explanations received and documents produced to us for our
 verification, in our opinion, the net variance found on physical
 verification were not significant and have been properly dealt with in
 the books of account.
 
 c) The fixed assets disposed off during the year, in our opinion, do
 not constitute 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.
 
 (II) a) As explained to us, inventories (except stocks lying with third
 parties and in transit, confirmation/
 
 subsequent receipt have been obtained in respect of such inventory)
 have been physically verified during the year by the management.
 
 b) The procedure explained to us, which are followed by the management
 for physical verification of inventories is 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 the records of inventory, we are
 of the opinion that the Company is maintaining proper records and
 inventory. Discrepancies noticed on physical verification of inventory
 as compared to book records, were not material and have been properly
 dealt with in the books of accounts.
 
 (III) According to the information and explanation given to us, the
 Company has neither granted nor taken loans secured or unsecured!
 Deposits to/from parties covered in the register maintained under
 section 301 of the Act. Therefore, the provisions of clause 4(iii) of
 the Order are not applicable to the Company.
 
 (IV) In our opinion and according to the information and explanations
 given to us. there is an adequate Internal Control System commensurate
 with the size of the company and the nature of its business with regard
 to purchases of inventory, fixed assets and with regard to the sale of
 goods and services. Further on the basis of our examination, and
 according to the information & explanation given to us we have neither
 come across nor have been informed of any instance of continuing
 failure to correct major weaknesses in the aforesaid Internal Control
 System.
 
 (V) In our opinion and according to the information and explanation
 given to us, there are no contracts entered in the register maintained
 as referred to in section 301 of the Act. Therefore, the provisions of
 clause 4(v) of the Order are not applicable to the Company.
 
 (VI) In our opinion and according to the information and explanations
 given to us, the company has complied with the directives issued by the
 Reserve Bank of India and the provisions of Sections 58A, 58AA or any
 other relevant provisions of the Act, and the Companies (Acceptance of
 Deposits) Rules, 1975 with regard to the deposits accepted from the
 public.. To the best of our knowledge and accordingly to the
 information and explanation given to us no order has been passed by the
 Company Law Board, National Company Law Tribunal or Reserve Bank of
 India or any other tribunal.
 
 (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 accounts and records maintained by
 the Company pursuant to the Rules made by the Central Government for
 the maintenance of cost records under clause (d) of sub-section (1) of
 Section 209 of the Act in respect of the Companys textile products to
 which the said rules are made applicable, 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 complete and
 accurate.
 
 (IX) a) According to the records of the Company, the Company is
 generally 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, Custom Duty, Excise Duty, Cess and other material
 statutory dues applicable to it..  According to the information and
 explanations given to us, no undisputed amounts payable in respect of
 Income Tax, Wealth Tax, Sales Tax, Service Tax, Customs Duty and Excise
 Duty, Cess were outstanding, as at 31March 2009 for a period of more
 than six months from the date they became payable.  b) According to the
 information & explanation given to us, there are no dues in respect of
 Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty and Cess
 that have not been deposited on account of any disputes
 
 (X) The Company neither has accumulated losses at the end of the year.
 nor incurred cash losses during the current year and the immediately
 preceding financial year
 
 (XI) According to the information and explanation given to us, the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders,
 
 (XII) According to the information and explanation given to us, the
 Company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures and other securities
 
 (XIII) In our opinion, according to the information & explanation given
 to us, the company is not a Chit Fund or a Nidhi I mutual benefit fund
 society. Therefore, the provisions of clause 4(xiii) of the Order are
 not applicable to The Company.
 
 (XIV) The Company is not dealing in or trading in shares, securities,
 debentures and other investments.  Therefore, the provisions of clause
 4(xiv) of the Order are not applicable to the Company.
 
 (XV) According to the information and explanation given to us, the
 Company has given corporate guarantee for loan taken by its
 subsidiaries, the terms and conditions whereof in our opinion are not
 prima facie prejudicial to the interest of the Company.
 
 (XVI) On the basis of the records examined by us, and relying on the
 information compiled by the Company for co-relating the funds raised to
 the end use of term loans, we have to state that, the company has,
 prima-facie, applied the term loans for the purposes for which they
 were obtained, other than amounts temporarily invested pending
 utilisation of the funds for the intended use.
 
 (XVII) According to the information & explanation given to us and on
 overall examination of the Balance Sheet of the Company and after
 placing reliance on the reasonable assumptions made by the Company for
 classification of Long Term & Short Term usages of the funds, we are of
 the opinion that, prima-facie, no funds raised on short-term basis have
 been utilised for long-term investment.
 
 (XVIII) During the year. the Company has not made any preferential
 allotment of shares to parties covered in the register maintained under
 Section 301 of the Companies Act, 1956. Therefore, the provisions of
 clause 4(xviii) of the order are not applicable to the Company.
 
 (XIX) Security I charges have been created in respect of debentures
 issued, as detailed in Note No. 1 to Schedule 3of the Balance Sheet.
 
 (XX) The company has not raised any money by public issue during the
 year. The company, however, has vide offer letter dated March 19. 2009
 offered to its existing share holders on Right Basis 408.723.061 equity
 shares of Rs. 101- each at a premium of Re. 1/- per share. The Rights
 issue opened on 31 March 2009 and closed on 22 April 2009 as at balance
 sheet date the Company received application money of Rs.. 137.50 crore.
 End use is disclosed in Note No. 4 of part B Schedule 19).
 
 (XXI) To the best of our knowledge and belief and according to the
 information & explanation given to us, no fraud on or by the Company
 has been noticed or reported during the year that cause the financial
 statements to be materially misstated.
 
                                                 For Gandhi & Parekh
                                               Chartered Accountants
                                                    Devang B. Parekh
                                                       Partner 
 Mumbai: 29 July 2009.                         Membership No. 105789