We have audited the attached Balance Sheet of BOMBAY RAYON FASHIONS
 LIMITED as at March 31, 2012 and the Profit and Loss Account & 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.
 
 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
 disclosure 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.
 
 1.  As required by the Companies (Auditors 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. We enclose
 the annexure statement on the matters specified in paragraphs 4 and 5
 of the Order.
 
 2.  Further to our comments in the Annexure referred to in paragraph 1
 above, 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, the Company has kept proper books of accounts as
 required by law so far as appears from our examination of those books.
 
 c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
 referred to in this report are in agreement with the books of accounts.
 
 d) In our opinion and to the best of our information and according to
 the explanations given to us, the Balance Sheet, Profit & Loss Account
 & Cash Flow Statement are prepared in accordance with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1961.
 
 e) On the basis of written representations received from directors as
 on March 31, 2012 and taken on record by the Board of Directors, we
 report that none of the Directors are 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.
 
 f) In our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements together
 with notes thereon and attached thereto give in the prescribed manner
 the information required by the Companies Act, 1956, required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 i.  In so far as it relates to the Balance Sheet of the state of
 affairs of the Company as at March 31, 2012,
 
 ii.  In so far as it relates to the Profit & Loss Account of the PROFIT
 of the company for the year ended on that date, and
 
 iii. In so far as it related to the Cash Flow Statement, of the Cash
 Flows for the year ended on that date.
 
 Annexure to the Auditors Report of even date
 
 (Referred to in paragraph 1 thereof)
 
 1.  In respect of fixed assets:
 
 a) The company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed assets.
 
 b) Rhe fixed assets have been physically verified by the management at
 reasonable intervals during the year. We are informed that no material
 discrepancies were noticed by the management on such verification.
 
 c) Based on our scrutiny of the records of the company and the
 information & explanation received by us, we report that there were
 sale of fixed assets during the year but the fixed assets disposed off
 did not constitute a substantial part of the fixed assets of the
 company.
 
 2.  In respect of inventories:
 
 a) As explained to us physical verification of inventories has been
 conducted during the year by the management at reasonable intervals.
 
 b) In our opinion, the procedures of physical verification of
 inventories followed by the management are reasonable and adequate in
 relation to the size of the company and nature of its business.
 
 c) In our opinion and according to the information and explanation
 given to us, the Company is maintaining proper records of its
 inventories and no material discrepancies were noticed on physical
 verification.
 
 3.  In respect of loans, unsecured, granted and taken:
 
 a) The company has granted interest free advances to five companies
 including four subsidiaries covered in the register maintained under
 section 301 of the companies Act, 1956, the maximum amount outstanding
 at any time during the year is Rs. 578.42 Crores and the year balance
 is Rs. 569.77 Crores.
 
 b) In our opinion and according to the information and explanations
 given to us, other terms and conditions are not prima facie prejudicial
 to the interest of the Company.
 
 c) In respect of the said advances amounting to Rs. 210.00 Crores is
 repayable within the period of one year and remaining over a period of
 5 to 7 years.
 
 d) In respect of the said loans, there are no overdue amounts.
 
 e) During the year the company has not taken any loans from parties
 covered in the registered maintained under section 301 of the Companies
 Act, 1956.
 
 f) In view of our comments above, clause (iii) (f) and (g) of the said
 order is not applicable to the company.
 
 4.  In our opinion and according to the information and explanations
 given to us, there is adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of inventory and fixed assets and for the sale of goods and
 fixed assets. Further, on the basis of our examination of the books and
 records of the company, carried out in accordance with the auditing
 standards generally accepted in India and according to the information
 and explanations given to us, we have neither come across nor have we
 been informed of any continuing failure to correct weaknesses in the
 aforesaid internal control system.
 
 5.  In respect of the contracts or arrangements referred to in Section
 301 of the Companies Act, 1956:
 
 a) In our opinion and according to the information and explanations
 given to us the particulars of contracts or arrangements referred to in
 section 301 of the Act have been entered in to the register required to
 be maintained under that section.
 
 b) In our opinion and according to the information and explanations
 given to us, transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Act and exceeding the value of Rupees five lakhs in respect of any
 party during the year, have been made at prices, which are prima facie
 reasonable having regard to the prevailing market prices at the
 relevant time.
 
 6.  According to the information and explanations given to us, the
 Company has not accepted any deposits from public.
 
 7.  In our opinion the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  As per the information and explanations provided to us, we are of
 the opinion that in pursuant to prescribed rules by the central
 government, the company has maintained cost records u/s. 209(1) (d) of
 the Companies Act, 1956 however we have not done a detailed examination
 of the same.
 
 9.  In respect of statutory dues:
 
 a) According to the records of the company produced before us, the
 Company is generally regular in depositing with appropriate authorities
 undisputed statutory dues, including Provident Fund, Employees State
 Insurance, Income Tax, Wealth Tax, Custom Duty, Excise Duty, Service
 Tax, Cess and other statutory dues applicable to it.
 
 Accordingly to the information and explanation given no undisputed
 amounts payable in respect of Provident Fund, Employees State
 Insurance, Income Tax, Wealth Tax, Custom Duty, Excise Duty, Service
 Tax, Cess and other statutory dues applicable to it which were
 outstanding as at the last day of the financial year for a period of
 more than six months from the date they became payable.
 
 b) According to the records of the company, there are no disputed dues
 of Income Tax, sales tax, customs duty, wealth tax, service tax and
 excise duty / cess except as under:
 
                       Amount 
                      (Rs. In      Period for
 Name of the Statute                             Forum where dispute
                                                 is pending
                       Crores)     which it
                                   relates
 
 Income Tax Act, 1961     0.53     AY 2009-10    Commissioner of Income 
                                                 Tax (Appeals 14), Mumbai
 
 Income Tax Act, 1961     0.14     AY 2008-09    Commissioner of Income 
                                                 Tax (Appeals 14), Mumbai
 
 Income Tax Act, 1961     0.10     AY 2008-09    Commissioner of Income 
                                                 Tax (Appeals) 16, Mumbai
 
 Income Tax Act, 1961     0.72     AY 2006-07    Commissioner of Income
                                                 Tax (Appeals 14), Mumbai
 
 Income Tax Act, 1961     0.06     AY 2005-06    Commissioner of Income 
                                                 Tax (Appeals 41), Mumbai
 
 Income Tax Act, 1961     0.06     AY 2004-05    Income Tax Appellate
                                                 Tribunal, Mumbai
 
 Income Tax Act, 1961     0.09     AY 2004-05    Commissioner of Income 
                                                 Tax (Appeals 41), Mumbai
 
 Income Tax Act, 1961     0.27     AY 2003-04    Income Tax Appellate 
                                                 Tribunal, Mumbai
 
 10.  Dhe company has no accumulated losses at the end of the financial
 year. The company has not incurred any cash loss during the financial
 year covered by our audit and in the immediately preceding financial
 year.
 
 11.  As per the information and explanations given to us the company is
 generally regular in repayment of dues to banks, however in some cases
 an amount of Rs. 28.75 crores remained to be unpaid.
 
 12.  According to the information and explanations given to us the
 company has not granted any loans and advances on the basis of security
 by way of pledge of shares, debentures or other securities.
 
 13.  In our opinion, and to the best of our information and according
 to the explanations provided by the management, we are of the opinion
 that the company is neither a Chit Fund nor a nidhi/mutual benefit
 society. Hence, in our opinion, the requirements of para 4 (xiii) of
 the Order do not apply to the company.
 
 14.  As per records of the company and information and explanations
 given to us by the management, company is not dealing or trading in
 shares, securities, debentures and other investments.
 
 15.  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.
 
 16.  According to the records of the Company, the Company has applied
 the term loans for the purposes of which it was taken during the year.
 
 17.  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 by the company.
 
 18.  The company has made preferential allotment of shares to companies
 covered in the register maintained under section 301 of the Act. In our
 opinion the prices at which the shares have been issued is not
 prejudicial to the interest of the company.
 
 19.  During the period covered by audit report the company has not
 issued any debentures.
 
 20.  During the year the company has not raised any money by way of
 public issue.
 
 21.  Based upon the audit procedures performed and information and
 explanations given by the management, we report that no fraud on or by
 the Company has been noticed or reported during the course of our
 audit.
 
                                          For V.K.BESWAL & ASSOCIATES
 
                                                CHARTERED ACCOUNTANTS
 
                                                     C.A. R.P. LADDHA
 
                                                             [PARTNER]
 
 Place - Mumbai                             Membership Number - 48195
 
 Date: May 29, 2012                           Firm Regn. No.: 101083W