1.  We have audited the attached Balance Sheet of M/S CELEBRITY
 FASHIONS LIMITED as at March 31, 2012, the Statement of Profit and Loss
 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.
 
 2.  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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 (the
 Order) 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 &
 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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 and proper returns adequate for the purposes of our audit
 have been received from the branches not visited by us;
 
 c.  The Balance Sheet, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account.
 
 d.  In our opinion the Balance Sheet, Statement of Profit and Loss and
 Cash Flow Statement dealt with by this report are in compliance with
 the Accounting Standards referred in sub-section (3C) of Section 211 of
 the Companies Act, 1956.
 
 e.  Considering 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. Based on such evaluation, 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 27 of the Notes on Accounts.
 
 f.  On the basis of written representations received from the Directors
 as on 31st March 2012 and taken on record by the Board of Directors, we
 report that none of the directors is prima facie disqualified as on
 31st March 2012 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956.
 
 g.  In our opinion and to the best of our information and according to
 the explanations given to us, they 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 2012:
 
 ii) in the case of the Statement of Profit and Loss, of the loss 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.
 
 
 ANNEXURE TO THE AUDITOR''S REPORT
 
 Referred to in paragraph 3 of our report of even date
 
 1.  In respect of its Fixed Assets:
 
 a.  The Company has maintained proper records showing full particulars
 including quantitative details and situation of fixed assets on the
 basis of available information.
 
 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.
 
 2.  In respect of its inventories :
 
 a.  The inventories have been physically verified during the year by
 the management. In our opinion the frequency of verification is
 reasonable.
 
 b.  In our opinion and according to the information and explanations
 given to us, the 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 has maintained proper records of inventories. As
 explained to us, there were no material discrepancies noticed on
 physical verification of inventories as compared to the book records.
 
 3.  In respect of loans, secured or unsecured, granted or taken by the
 Company to/from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956 :
 
 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.
 
 4.  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 for the
 purchase of fixed assets, inventory and for the sale of goods. During
 the course of our audit, we have not observed any continuing failure to
 correct major weaknesses in the internal control system.
 
 5.  In respect of contracts or arrangements referred to in section 301
 of 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 or
 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 having regard to the prevailing market prices at the
 relevant time, as per information available with the Company.
 
 6.  According to the information and explanations given to us the
 Company has not accepted any deposits from the public.  Therefore the
 provisions of Clause (vi) of paragraph 4 of the Order (as amended) are
 not applicable to the Company.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the cost records maintained by the Company
 pursuant to the Companies (Cost Accounting Records) Rules 2011
 prescribed by the Central Government under section 209(1) (d) of the
 Companies Act, 1956 and are of the opinion that prima facie the
 prescribed cost records have been maintained. We have however not made
 a detailed examination of the cost records with a view to determine
 whether they are accurate or complete.
 
 9.  In respect of statutory dues:
 
 a.  According to the information and explanations given to us, and on
 the basis of our examination of the records of the Company, amounts
 deducted/accrued in the books of account in respect of undisputed
 statutory dues, including Provident Fund, Employees State Insurance
 Scheme, Income Tax, Excise Duty, Service Tax, Customs Duty and other
 material statutory dues, as applicable have been regularly deposited
 during the year by the Company with the appropriate authorities.
 
 Further since the Central Government has till date not prescribed the
 amount of cess payable under section 441A of the Companies Act, 1956,
 we are not in a position to comment upon the regularity or otherwise of
 the Company in depositing the same.
 
 b.  According to the information and explanations given to us, except
 for income tax amounting to Rs.41,50,227/- relating to assessment year
 2004-05, no undisputed amounts payable in respect of the aforesaid dues
 were in arrears as at 31st March 2012 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
 disputed statutory dues aggregating to Rs.47.34 Lacs that has not been
 deposited on account of matters pending before the appropriate
 authority are as under:-
 
 Name of the     Nature of    Period to which   Forum where   Amount
 Statute         Dues         the amount 
                              relate            ispute is    (In Lacs)
                                                pending
 
 Income 
 Tax Act,       Income Tax    AY 2003-04        Pending for    5.26
 1961           Demand                          re-assessment
                                                before the 
                                                Assessing 
                                                Officer
 
 Income 
 Tax Act,       Fringe        AY 2007 - 08      Pending for    6.99
 1961           Benefit Tax                     rectification
                Demand.                         before the
                                                Assessing 
                                                Officer
 
 Service Tax    Service Tax   April 2009 to     Pending       35.09 *
                Demand        September 2011    Before
                                                Supreme
                                                Court
 
 *As per the directions of the Supreme Court the Company has remitted
 
 a sum of Rs.17.55 Lacs against this demand.
 
 10.  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.
 
 11.  According to the information and explanations given to us during
 the year under review, the Company has defaulted in repayment of term
 loans and interest thereon to HDFC Bank Ltd. Repayment of term loan ,
 amounting to '' 0.22 crore, is pending since February 2012 while
 interest on term loans amounting to '' 1.55 crores, remains unpaid since
 January 2011.
 
 12.  According to the information and explanations given to us, and
 based on the records and documents produced before us, The Company has
 not granted loans and advances on the basis of security by way of
 pledge of share, debentures and other securities.
 
 13.  In our opinion and to the best of our information and according to
 the explanations provided by the management, the Company is not a Chit
 Fund or a Nidhi / Mutual Benefit Fund / Society. There- for the
 provisions of Clause 4(xiii) of the Companies (Auditors Report) Order
 2003 (as amended) do not apply to the Company.
 
 14.  According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, deben- tures
 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 information and explanations given to us, the
 term loans have been applied for the purposes for which they were
 obtained.
 
 17.  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 a short term basis have not been used
 for long term investments.
 
 18.  The Company has not made any preferential allotment of shares to
 companies/firms/parties covered in the register maintained un- der
 Section 301 of the Companies Act, 1956.
 
 19.  The Company did not have any outstanding debentures during the
 period.
 
 20.  The Company has not raised any money by way of public issue during
 the period. Hence in our opinion Clause 4(xx) of the Companies
 (Auditor''s Report) Order 2003 (as amended) is not applicable to the
 Company.
 
 21.  Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements, and as
 per the information and explanations given to us 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 ANIL NAIR & ASSOCIATES                    for CNGSN & ASSOCIATES
 
 Chartered Accountants                          Chartered Accountants
 
 Registration Number: 000175S             Registration Number:004915S
 
 G. ANIL                                              C.N. GANGADARAN
 
 Partner                                                      Partner
 
 Membership Number:22450                      Membership Number:11205
 
 Chennai, 15th May, 2012