We have audited the attached Balance Sheet of GANESH POLYTEX LIMITED as
 at 31st March, 2011 and the Profit & Loss Account for the year ended on
 that date annexed thereto and 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.
 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
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 1) 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
 hereto a statement on the matters specified in paragraphs 4 and 5 of
 the said 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 & 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 to in sub- section (3 C) of section 211 of the
 Companies Act , 1956, to the extent applicable;
 
 (e) On the basis of written representations received from the Directors
 of the Company, as on 31st March, 2011 and taken on record by the Board
 of Directors, we report that 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 Companies Act,
 1956;
 
 (f) In our opinion and to the best of our information and according to
 the explanations given to us, the said Accounts read together with
 notes thereon, give the information required by the Companies Act,
 1956, in the manner so required;
 
 (g) We draw reference to Note No. 18 of Schedule 18 relating to change
 in method of provision for depreciation on Furniture/ Fixtures and
 Office Equipments at Kanpur unit to Written Down Value Method as
 against hitherto followed Straight Line Method and its effect on the
 Profit for the year understated by Rs 2868009/- and net block of fixed
 assets lower by ,2868009/-.
 
 (h) Subject to what is stated in paragraph (g) above and notes
 appearing in Schedule of Notes 18, the said accounts 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 & 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 of the Company
 for the year ended on that date.
 
 ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE TO THE
 MEMBERS OF k GANESH POLYTEX LIMITED ON THE ACCOUNTS AS AT AND FOR THE
 YEAR ENDED 31st MARCH, 2011.
 
 (1) (i) The Company has maintained proper records showing full
 particulars including quantitative details & situation of fixed assets.
 
 (ii) As explained to us, the fixed assets have been physically verified
 by the management during the year under regular program of
 verification, which in our opinion, is reasonable having regard to the
 size of the Company & nature of its assets. As informed to us, no
 material discrepancies were noticed on such verification.
 
 (iii) There was no substantial disposal of fixed assets during the
 year.
 
 (2) (i) As explained to us, inventory has been physically verified by
 the management at reasonable intervals during the year.
 
 (ii) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventory
 followed by the management are reasonable and adequate in relation to
 the size of the Company and nature of its business.
 
 (iii) On the basis of our examination of inventory records, we are of
 the opinion that the Company is maintaining proper records of
 inventory. As explained to us, there were no material discrepancies
 noticed on physical verification of inventory as compared to the book
 records.
 
 (3) (i) According to the information and explanations given to us, 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 Companies Act, 1956. Accordingly, paragraphs 4 (iii) (a),
 (b), (c) and (d) of the Order, are not applicable to the Company.
 
 (ii) According to the information and explanations given to us, the
 Company has taken Unsecured loans and fixed deposits from two
 Companies, four directors and ten other parties covered in the register
 maintained under section 301 of the Companies Act, 1956. During the
 year Rs 484.35 lakhs were taken as loan and the maximum amount involved
 during the year was Rs 468.86 lakhs and the balance outstanding as on
 31st March, 2011 is Rs 245.72 Lakhs.
 
 (iii) In our opinion and according to the information and explanations
 given to us, the rate of interest & other terms and conditions of such
 loans taken by the company are not prima facie prejudicial to the
 interest of the Company.
 
 (iv) In respect of unsecured loans taken by the Company, principal
 amount including interest is repayable on demand and there are no
 stipulations as to the payment of principal amount & interest thereon.
 In respect of fixed deposits taken by the Company, payment of principal
 amount & interest are regular.
 
 (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 and fixed assets and for the sale of goods and
 services. We have not observed any major weakness in the internal
 control systems during the course of the audit.
 
 (5) (i) 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 of the Act that need to be entered in to the
 register maintained under section 301 have been so entered.
 
 (ii) 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 Rupees five lakhs in
 respect of any party during the year have been made at prices which are
 reasonable having regard to 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 provisions of Section
 58A and 58AA or any other relevant provisions of the Companies Act,
 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard
 to the deposits accepted from the public. No order has been passed by
 the Company Law Board or any Court or any other Tribunal.
 
 (7) In our opinion, the Company has an internal audit system
 commensurate with the size & nature of its business.
 
 (8) The Central Government has prescribed maintenance of Cost Records
 under section 209(1) (d) of the Companies Act, 1956 in respect of
 certain manufacturing activities of the Company. We have broadly
 reviewed the accounts and records of the Company in this connection and
 are of the opinion, that prima facie, the prescribed accounts and
 records have been made & maintained. We have not, however made a
 detailed examination of the same.
 
 (9) (i) According to the information & explanations given to us and the
 records of the Company examined by us, in our opinion, undisputed
 statutory dues including Provident Fund, Investor Education and
 Protection Fund, Employees'' State Insurance, Income Tax, Sales Tax,
 Value Added Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty,
 Cess and other material statutory dues have been regularly deposited
 with the appropriate authorities though there have been a slight delay
 in a few cases.
 
 (ii) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, employees'' state insurance, income tax,
 wealth tax, service tax, sales tax, value added tax, custom duty,
 excise duty, cess and other undisputed statutory dues were outstanding,
 as at 31st March, 2011 for a period of more than six months from the
 date they became payable.
 
 (iii) According to the records of the Company and as per the
 information and explanations given to us, the disputed statutory dues
 as at 31st March, 2011 that have not been deposited on account of
 matters pending before appropriate authorities are as under:
 
 Name of the Statute   Nature of       Amount     Forum where dispute is
                       the Dues        (Rs in              pending
                                       Lakhs)
 
 U. P. Trade Tax 
 Act, 1948             Entry Tax        2.34*     Appeal – Joint 
                                                  Commissioner, Kanpur.
 
 U. P. Trade Tax 
 Act, 1948             Entry Tax       11.99*     Appeal – Joint 
                                                  Commissioner, Kanpur.
 
 U. P. Trade Tax 
 Act, 1948             Entry Tax        9.15*     Appeal – Joint 
                                                  Commissioner, Kanpur.
 
 Customs Act, 1962     Custom Duty      5.79*     Joint Commissioner 
                                                  (Customs)
                       & Penalty                  Central Excise, Kanpur.
 
 Central Excise 
 Act,1944              Cenvat Duty     28.59$     CESTAT, New Delhi.
 
 Central Excise 
 Act,1944              Cenvat Duty     68.43$     The Commissioner 
                                                  (Appeals)
                                                  Central Excise, 
                                                  Kanpur.
 
 * Net of amount deposited under dispute.
 
 $ Net of amount deposited under dispute and Cenvat available against
 disputed dues.
 
 (10) The Company has no accumulated losses at the end of the financial
 year ended on 31st March, 2011 and it has not incurred any cash losses
 during the financial year ended on 31st March, 2011 and in the
 immediately preceding financial year ended on 31st March, 2010.
 
 (11) Based on our audit procedures and according to the information and
 explanations given to us, we are of the opinion that the Company has
 not defaulted in repayment of dues to financial institution, banks and
 debenture holders.
 
 (12) In our opinion and according to the information and explanations
 given to us, the Company has not granted loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 (13) In our opinion, the Company is not a Chit fund or nidhi / mutual
 benefit fund / society. Therefore clause 4(xiii) of the Companies
 (Auditors Report) Order 2003 is not applicable to the Company.
 
 (14) In our opinion, the Company is not dealing or trading in shares,
 securities, debentures and other investments. Therefore clause 4 (xiv)
 of the Companies (Auditors Report) Order, 2003 is not
 
 (15) In our opinion and according to the information & explanations
 given to us, the Company has not given any guarantee for loans taken by
 others from Bank or financial institutions. Therefore clause 4(xv) of
 the Companies (Auditor''s Report) Order 2003 is not applicable to the
 Company.
 
 (16) Based on information and explanations given to us by the
 management, the term loans were applied for the purpose for which the
 loans were obtained.
 
 (17) According to the information & explanations given to us and on an
 overall examination of the Balance Sheet of the Company, we are of the
 opinion that no funds raised on short-term basis have been used
 
 (18) During the year, the Company has made preferential allotment of
 equity shares to the three directors and two other parties covered in
 the register maintained under section 301 of the Companies Act, 1956.
 In our opinion, prices at which, equity shares have been issued, are
 not prejudicial to the interest and these debentures do not have any
 security / charge on the assets of the Company.
 
 (20) The Company has not raised any money by way of public issue during
 the year.
 
 (21) Based upon the audit procedures performed for the purpose of
 reporting true and fair view of the financial statements and according
 to the information and explanations given to us by the management, in
 our opinion, no fraud on or by the Company has been noticed or reported
 during the course of our audit.
 
                                         FOR MEHROTRA RAKESH KUMAR & CO.,
 
                                             Chartered Accountants,
 
                                            Registration No. 002978C
 
                                                  DEEPAK SETH
 Place : Kanpur                                     Partner
 
 Dated: 28th May 2011                           Membership No. 073081