1.  We have audited the attached Balance Sheet of CENTURY TEXTILES AND
 INDUSTRIES LIMITED as at 31st March,2011, and the related Profit and
 Loss Account and Cash Flow Statement for the year ended on that date
 annexed thereto, which we have signed under reference to this report.
 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
 (together the Order), issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of The Companies Act, 1956 of
 India (the Act1) 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 give in the Annexure a
 statement on the matters specified in paragraphs 4 and 5 of the 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 it appears from our examination of
 those books;
 
 (c) The Balance Sheet, Profit and 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 to in sub-section (3C) of Section 211 of the Act;
 
 (e) On the basis of written representations received from the
 directors, as on 31st March, 2011 and taken on record by the Board of
 Directors, none of the directors is 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 Act;
 
 (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 the notes thereon and attached thereto, give in the prescribed
 manner, the information required by the Act, 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 profit 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.
 
 Referred to in paragraph 3 of the Auditors Report of even date to the
 members of Century Textiles and Industries
 
 Limited on the financial statements for the year ended 31st March, 2011
 
 1.  (a) The Company is generally maintaining proper records showing
 full particulars, including quantitative details and situation of its
 fixed assets.
 
 (b) The fixed assets are physically verified by the Management in
 accordance with a phased verification programme designed to cover all
 the items over a period of three years which, in our opinion, is
 reasonable having regard to the size of the Company and the nature of
 its assets. Pursuant to the programme, a portion of the fixed assets
 has been physically verified by the Management during the year and no
 material discrepancies between the book records and the physical
 inventory have been noticed.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 of by the Company during the year.
 
 2.  (a) The inventory (excluding stocks with third parties) has been
 physically verified by the Management during the year. In respect of
 inventory lying with third parties, these have substantially been
 confirmed by them. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion, the procedures of physical verification of
 inventory followed by the Management are, 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 inventory records, in our
 opinion, the Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification of inventory as compared
 to book records, were not material.
 
 3.  (a) The Company has not granted any loans, secured or unsecured, to
 companies, firms or other parties covered 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 covered 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 inventory, fixed assets and for the sale of goods and
 services. Further, on the basis of our examination of the books and
 records of the Company, and according to the information and
 explanations given to us, no major weakness has been noticed or
 reported.
 
 5.  (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 the register
 required to be maintained under that section.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements and exceeding the value of rupees five lakh in respect of
 any party during the year, have been made at prices which are
 reasonable, having regard to the prevailing market prices at the
 relevant time.
 
 6.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the directives issued by
 Reserve Bank of India and the provisions of Sections 58A and 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. According to the information and explanations given to us, no
 order has been passed by the Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or any Court or any other Tribunal on
 the Company in respect of the aforesaid deposits.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the books of account maintained by the
 Company in respect of products where, pursuant to the Rules made by the
 Central Government of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act, and are of the opinion that, prima facie, the prescribed accounts
 and records have been made and maintained. We have not, however, made a
 detailed examination of the records, with a view to determine whether
 they are accurate or complete.
 
 9.  (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 the undisputed statutory dues,
 including provident fund, investor education and protection fund,
 employees state insurance, income-tax, sales-tax, wealth tax, service
 tax, customs duty, excise duty, cess and other material statutory dues
 as applicable, with the appropriate authorities.
 
 (b) According to the information and explanations given to us and the
 records of the Company examined by us, the particulars of dues of
 Income-tax, sales-tax, service-tax, customs duty, excise duty and cess
 as at 31st March, 2011, which have not been deposited on account of
 disputes, are as follows:
 
 Nature of dues     Amount      Period to which 
 
                                the              Forum where the dispute
 
                (Rs. in Crore)  amount relates      is pending
 
 Income Tax         10.68      2006-07 to 2009-10   Departmental 
 
                                                    Authorities
 
 Custom Duty         0.11      2000-01              High Court
 
                     2.54      1996-97 to 2003-04   Tribunal(CESTAT)
 
                     0.01      1999                 Departmental 
 
                                                    Authorities
 
 Excise Duty         5.96      1997-98 to 2001-02   Supreme Court
 
                     0.09      1994-95 to 2006-07   High Court
 
                    35.06      1994-95 to 2009 -10  Tribunal
 
                     0.92      1994 to 2010-11      Department 
  
                                                    Authorities
 
 Sales Tax, 
 
 Entry Tax, etc.    51.81      2005-06 to 2010-11   Supreme Court
  
                    11.52      1999-2000 to 2010-11 High Court
 
                     3.85      1994-95 to 2010-11   Tribunal
 
                    21.35      1985 to 2010-11      Department 
 
                                                    Authorities
 
 Service Tax         0.09      2005-06 to 2007-08   Supreme Court
 
                     0.35      2005-06 to 2007-08   Tribunal
 
                     1.51      2004-05 to 2010-11   Departmental 
 
                                                    Authorities
 
 Cess on Water, 
 
 Royalty,            9.89      2001-02 to 2010-11   Supreme Court
 
 Energy, etc.       33.44      1985 to 2010-11      High Court
 
                    10.39      1978-79 to 2010-11   Departmental 
 
                                                    Authorities
 
 
 There were no disputed amounts due towards Wealth Tax.
 
 10.  The Company has no accumulated losses as at 31st March,2011 and it
 has not incurred any cash losses in the financial year ended on that
 date or in the immediately preceding financial year.
 
 11.  According to the records of the Company examined by us and the
 information and explanations given to us, the Company has not defaulted
 in repayment of dues to any financial institution or bank or debenture
 holder, during the year.
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  In our opinion, the Company has maintained proper records of
 transactions and contracts relating to dealing or trading in shares,
 securities, debentures and other investments during the year and timely
 entries have been made therein.  Further, such securities have been
 held by the Company in its own name.
 
 14.  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, during the year.
 
 15.  In our opinion, and according to the information and explanations
 given to us, on an overall basis, the term loans have been applied for
 the purposes for which they were raised.
 
 16.  On the basis of an overall examination of the Balance Sheet of the
 Company, in our opinion and according to the information and
 explanations given to us, as at the close of the year, short term loans
 aggregating Rs.871.18 Crore stand utilized for long term investment.
 
 17.  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, during the year.
 
 18.  On the basis of documents and records examined by us, the Company
 has, during the year, issued short term privately placed secured
 debentures from time to time, aggregating Rs.2,600 Crore (maximum
 balance outstanding during the year Rs.545 Crore), which have been
 repaid prior to creation of any security in favour of debenture
 holders.
 
 19.  The Company has not raised any money by way of public issue during
 the year.
 
 20.  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, we have neither come across any instances of
 material fraud on or by the Company noticed or reported during the
 year, nor have we have been informed of such a case by the management.
 
 21.  The other clauses, (iii)(b), (iii)(c), (iii)(d), (iii)(f),
 (iii)(g) and (xiii) of paragraph 4 of the Order are not applicable in
 the case of the Company for the year, since, in our opinion, there is
 no matter which arises to be reported under the aforesaid clauses.
 
                                                 For DALAL & SHAH
 
                               Firm Registration Number: 102021 W 
  
                                            Chartered Accountants
 
 
                                                     S. Venkatesh
  
                                                          Partner
 
 Mumbai: 2nd May, 2011                   Membership No.: F-037942