We have audited the attached Balance Sheet of M/S CELEBRITY FASHIONS
 LIMITED as at 31st March 2011, the Profit and Loss Account and 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.
 
 1. 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
 preparation.  We believe that our audit provides a reasonable basis for
 our opinion.
 
 2.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended, issued by the Central Government of India in terms of Section
 227(4A) of the Companies Act, 1956, and on the basis of such checks of
 the books and records of the Company as we considered appropriate and
 according to the information and explanations given to us, we enclose
 in the Annexure, a statement on the matters specified in paragraphs 4 &
 5 of the said Order.
 
 3.  Further to our comments in the annexure referred to in paragraph 2
 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 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 appears from our examination of
 those books;
 
 c)The Balance Sheet, Profit & 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 in sub section (3C) of Section 211 of the Companies
 Act, 1956.
 
 e) In view of the losses incurred by the Company during the year under
 review and the accumulated losses of the Company as at the year end, we
 have evaluated the appropriateness of the going concern assumption in
 accordance with SA - 570. In our opinion and on the basis of the
 information and explanations given to us, we report that we have
 obtained sufficient audit evidence to establish continuance of the
 Company as a going concern. The mitigating factors have been outlined
 in Note No.2 of the Notes on Accounts.
 
 f) On the basis of written representations received from the Directors
 as on 31st March, 2011 and taken on record by the Board of Directors,
 we report that none of the directors is prima facie disqualified as on
 31st March 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956; and
 
 g) 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
 Significant Accounting policies and 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:
 
 i) in the case of the Balance Sheet of the state of affairs of the
 Company as at 31st March 2011;
 
 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 that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in paragraph 2 of the Auditor''s Report of even date to the
 members of Celebrity Fashions Limited on the accounts for the year
 ended March 31 st 2011)
 
 (i). In respect of its Fixed Assets:
 
 a) The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets.
 
 b) As explained to us, the fixed assets of the Company have been
 physically verified by the Management during the year in a phased
 periodical manner, which in our opinion is reasonable, having regard to
 the size of the Company and nature of its assets. In accordance with
 the phased programme of verification, certain fixed assets were
 verified during the year and no material discrepancies were noticed on
 such verification.
 
 c) The fixed assets disposed of during the year do not constitute
 
 a substantial part of the fixed assets of the Company and such disposal
 in our opinion has not affected the going concern status of the
 Company.
 
 (ii). In respect of its Inventories
 
 a) As explained to us the inventories of the Company have been
 physically verified by the Management during the year.  In respect of
 inventories lying with third parties, these have substantially been
 confirmed by them. In our opinion the frequency of verification is
 reasonable.
 
 b) In our opinion and according to the information and explanations
 given to us, 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) In our opinion the Company has maintained proper record of
 inventories. As explained to us there were no material discrepancies
 noticed on physical verification of inventories as compared to the book
 records.
 
 (iii).a) The Company has not granted any loans, secured or unsecured,
 to companies, firms or other parties listed in the Register maintained
 under Section 301 of the Act.
 
 b) The Company has not taken any loans, secured or unsecured, from
 companies, firms or other parties listed in the Register maintained
 under Section 301 of the Act.
 
 (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 the purchase of inventory and fixed assets and for the sale of
 goods. On the basis of our examination of the books and information and
 as per the explanations given to us, we have neither come across nor
 have we been informed of any instance of continuing failure to correct
 major weaknesses in the aforesaid internal control.
 
 (v).  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 transactions made in pursuance of contracts or
 arrangements that need to be entered in the register maintained under
 Section 301 of the Companies Act, 1956 have been so entered.
 
 b.  In our opinion and according to the information and explanations
 given to us the transactions made in pursuance of
 contracts/arrangements entered in the Register maintained under section
 301 of the Companies Act, 1956 and exceeding the value of Rs. 500,000/=
 in respect of each party during the year have been made at prices which
 appear reasonable as per information available with the Company.
 
 (vi). The Company has not accepted any deposits from the public.
 Accordingly paragraph 4(vi) of the Order is not applicable.
 
 (vii). The Company has an internal audit system, which in our opinion
 is commensurate with the size and nature of its business.
 
 (viii). According to the information and explanations given to us, the
 Central Government has not prescribed for the maintenance of cost
 records under Section 209(1 )(d) of the Companies Act, 1956.
 Accordingly paragraph 4(viii) of the Order is not applicable.
 
 (ix).a. According to the information and explanations given to us and
 the records of the Company examined by us, in our opinion the Company
 is generally regular in depositing with the appropriate authorities
 undisputed statutory dues including Provident Fund, Employees State
 Insurance, Income Tax, Customs Duty, Cess and other material statutory
 dues applicable to it.
 
 b.  According to the information and explanations given to us, except
 for income tax amounting to Rs 4,150,227 relating to the assessment
 year 2004-05, no undisputed amounts payable in respect of the aforesaid
 dues were in arrears as at 31st March 2011 for a period of more than
 six months from the date they became payable.
 
 c.  According to the information and explanations given to us the
 particulars of the outstanding dues that have not been deposited on
 account of disputed matters pending before the appropriate authorities
 are as under:
 
 Name      Nature of        Period to    Forum where           Amount
 
 of the    Dues             which the    dispute is pending    (Rs. In
 
 Statute                    amount                              Lacs)
                            relate
 
 Income    Income           AY 2003-04   Pending before          5.26
 
 Tax Act,  Tax                           the Assessing
 
 1961      Demand                        officer for
 
                                         re-assessment
 
 Income    Income           AY 2004-05   Pending before
 
 Tax Act,  Tax                           the Income Tax          9.61*
 
 1961      Demand                        Appellate Tribunal
 
 Income    Income          AY 2006 -07   Pending before         26.39
 
 Tax Act,  Tax                           the Assessing
 
 1961      Demand                        Officer for giving
 
                                         effect to the
                                         Order of the
                                         Commissioner
                                         of Income Tax
 
                                         (Appeals)
 
 Income    Fringe           AY 2007-08    Pending for           6.99
 
 Tax Act,  Benefit Tax                    rectification 
                                          before
 1961      Demand.                        the Assessing
                                          Officer
 
 *dues relate to a partnership firm whose assets and liabilities were
 taken over by the Company in an earlier year.
 
 (x). The accumulated losses of the Company are in excess of 50% of the
 net worth of the Company as per the Balance Sheet as at the end of the
 financial year covered by our audit.  The company has incurred a cash
 loss in the current financial year, and also in the immediately
 preceding financial year.  The accumulated losses have totally eroded
 the net worth and the Company has been declared a Sick Industrial
 Company in accordance with the provisions of the Sick Industrial
 Companies Act, by the Board for Industrial and Financial
 Reconstruction.
 
 (xi). In our opinion and according to the information and explanations
 given to us during the year under review the Company has defaulted
 since November 2010 in repayment of interest dues to HDFC Bank Limited
 amounting in all to Rs 51.10 lakhs.
 
 (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. Accordingly paragraph 4(xii) of the Order is not
 applicable.
 
 (xiii). In our opinion and according to the information and
 explanations given to us, the Company is not a chit fund or a nidhi/
 mutual benefit fund/ society. Accordingly paragraph 4(xiii) of the
 Order is not applicable.
 
 (xiv). The Company has maintained proper records of the transactions
 and contracts in respect of dealing in other investments and timely
 entries have been made therein.  All investments have been held by the
 Company in its own name.
 
 (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.  Accordingly paragraph 4(xv) of the
 Order is not applicable.
 
 (xvi). According to the information and explanations given to us, the
 term loans have been applied for the purposes for which they were
 obtained.
 
 (xvii). According to the information and explanations given to us and
 an overall examination of the Balance Sheet of the Company we are of
 the opinion that the funds raised on short term basis have not been
 used for long-term investment.
 
 (xviii).The Company has during the year made preferential allotment of
 shares to a party covered in the Register maintained under section 301
 of the Companies Act, 1956. In our opinion and according to the
 information and explanations given to us, the prices at which such
 shares have been issued is not prejudicial to the interests of the
 Company.
 
 (xix). The company did not have any outstanding debentures during the
 year.
 
 (xx).  The company has not raised any money by public issue during the
 year. Accordingly paragraph 4(xx) of the Order is not applicable.
 
 (xxi). During the course of our examination of the books and records of
 the Company carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, no material fraud on or by the Company has
 been noticed or reported during the course of our audit.
 
 for ANIL NAIR & ASSOCIATES                for CNGSN & ASSOCIATES
 
 Chartered Accountants                      Chartered Accountants
 
 (Registration No 175S)                   (Registration No. 4915S)
 
 G. ANIL                                          C.N. GANGADARAN
 
 Partner                                                  Partner
 
 Membership No 22450                          Membership No 11205
 
 Place: Chennai
 Date :  May 30, 2011