1.  We have audited the attached Balance Sheet of Ashnoor Textile Mills
 Limited as at March 31, 2012, 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 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 (Auditor''s Report) Order, 2003 issued
 by the Central Government of India in terms of sub-section (4A) of
 section 227 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;
 
 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, the 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, the Profit and Loss Account and
 Cash Flow Statement dealt from this report comply with the accounting
 standards referred to in sub-section (3C) of section 211 of the
 Companies Act, 1956;
 
 v) On the basis of written representations received from the directors,
 as on March 31, 2012 and taken on records by the Board of Directors, we
 report that none of the directors is disqualified as on March 31, 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) (a) Speculative loss of Rs.129,11,943.28 (Rs. 8,541,620.63) on
 Trading of Foreign Currency treated as Current Assets in Balance Sheet.
 Due to none charging of speculative loss in the Profit and Loss
 Account, profit has been overstated by Rs. 21,453,563.91. Refer
 paragraph 17.1 of Notes on accounts.
 
 (b) Subject to above, 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 conformity with the accounting
 principles generally accepted in India:
 
 i) In the cases of the Balance Sheet, of the state of affairs of the
 company as at March 31, 2012; and
 
 ii) In the case of the Profit and Loss Account, of the profits for the
 year ended on that date.
 
 iii) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXTURE TO THE AUDITOR''S REPORT OF THE MEMBERS OF ASHNOOR TEXTILE
 MILLS LIMITED ON ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2012 (Referred
 to in paragraph 3 of our report of even date)
 
 (i) (a) The company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) According to the information and explanation given, the company has
 adopted a phased program of physical verification of fixed assets.
 Under this program all the assets would be verified in phased manner
 the frequency of which, in our opinion, is reasonable, having regard to
 the size of the company and nature of its assets. As explained to us no
 material discrepancies were noticed in respect of assets verified
 during the year.
 
 (c) During the year, the company has disposed off old Dryer Machine,
 Hydro Machine and Stenter Machine.
 
 (ii) (a) The inventory has been physically verified during the year by
 the management, In our opinion, the frequency of verification is
 reasonable.
 
 (b) The procedures of physical verification of inventories followed by
 the management are reasonable and adequate in relation to the size of
 the company and the nature of its business.
 
 (c) The company is maintaing proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material.
 
 (iii) The company has not granted or taken any loan, secured or
 unsecured to/from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956. As no
 loans is granted or taken, clauses (b), (c), (d), (e), (fa) and (g) of
 paragraph (iii) of this order are not applicable.
 
 (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. 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 or arrangements
 referred to in section 301 have been entered in the register required
 to be maintained under that section; and
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements have been made at prices which are reasonable having
 regards 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 fixed deposits from the
 public within the meaning of section 58A, 58AA or any other relevant
 provisions of the of the Companies Act, 1956 and the rules framed there
 under. The Company Law Board, National Company Law Tribunal or Reserve
 Bank of India or any Court or any other Tribunal has not passed any
 order.
 
 (vii) In our opinion the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) The Central Government has prescribed for the maintenance of
 cost records by the company under Section 209(l)(d) of the Companies
 Act, 1956 for Cotton Textile Industry. The company has not maintained
 prescribed cost records.
 
 (ix) (a) The Company has generally been regular in depositing
 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 and any other
 statutory dues with the appropriate authorities. There is no
 outstanding statutory liability as at March 31, 2012, which is due for
 a period of more than six months from the date they became payable.
 
 (b) According to the information and explanation given to us,
 Development Tax of Rs. 7,105,146/- levied by the State Government has
 been disputed and the local association on behalf of all the industries
 in the region has filed an appeal with Supreme Court of India.
 
 Name of the      Nature of       Amount       Period to    Forum where
 Statute          the Dues                     which the    dispute is
                                               amout
                                               relates      pending
 
                                    918,034    2002-2003
 
 Local Area       Haryana         2,110,645    2003-2004
 
 Development Tax  Development     1,966,381    2004-2005    Court
 Act, 2000 
                  Tax             1,660,354    2005-2006
 
                                    449,732    2006-2007
 
 Central Excise   Excise Duty    50,000,000    Various 
                                               years        CESTAT
 Act, 1944                                     from 
                                               1998-1999
                                               onwards
 
 (x) The company does not have accumulated losses. The company has not
 incurred cash losses during the financial year covered by our audit and
 in the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the company has not taken loans from the financial
 institutions and has not issued any debentures. Accordingly, there is
 no defaulted in repayment of dues to financial institution, bank or
 debenture holders.
 
 (xii) 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, the company is not a chit fund of a nidhi/mutual
 benefit fund/society. Therefore, the provision 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 (Auditors Report) Order,
 2003 are not applicable to the company.
 
 (xv) The company has not given guarantees for loans taken by others
 from banks or financial institutions.
 
 (xvi) The company has availed term loan from its Bank and according to
 the information and explanation given to us the loan has been applied
 for the purpose for which the same 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 in short-term basis have been used for long-term
 investment. No long-term funds have been used to finance short-term
 assets except permanent working capital.
 
 (xviii) According to the information and explanations 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 Act.
 
 (xix) According to the information and explanations given to us, during
 the year covered by out audit report, the company had not issued any
 debentures and has not created any security in respect of debentures.
 
 (xx) According to the information and explanations given to us, the
 company has not raised any money from the public issue.
 
 (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 KSA& Co.
 
 Chartered Accountants
 
 (Registration No. 003822C)
 
 KAMAL PIYUSH
 
 Partner
 
 Membership Number: 83399
 
 Place: New Delhi
 
 Date : August 07, 2012