1.  We have audited the attached Balance Sheet of M/s.GANGOTRI TEXTILES
 LIMITED, Coimbatore as at 31st March 2011 and also 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
 of 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 misstatements. 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 the management, as well as evaluating the overall financial
 statements presentation. We believe that our audit provides a
 reasonable basis for our opinion. We report that -
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003, as
 amended, issued by the Government of India in terms of Section 227(4A)
 of the Companies Act, 1956 and on the basis of such checks 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 and 5 of the said order to the
 extent applicable.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 above.
 
 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.  On 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 and Loss Account and Cash Flow Statement
 referred to in this report are in agreement with the books of Accounts.
 
 d.  In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report are in compliance with the
 Accounting standards referred to in Section 211 (3C) of the Companies
 Act, 1956.
 
 e.  On the basis of the written representations received from all the
 directors as on March31, 2011 and taken on record by the Board of
 Directors, we report that none of the Directors of the Company are
 disqualified as on March,31 2011 from being appointed as a director
 under 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 Balance Sheet and Profit and Loss
 Account together with the notes thereon, and attached thereto given in
 the prescribed manner the information required by the Companies Act,
 1956 and together with the Cash Flow Statement also give a true and
 fair view in conformity with the accounting principles generally
 accepted in India:
 
 (i) In the case of Balance sheet, of the state of Company''s affairs as
 on 31st March''2011.
 
 (ii) In the case of Profit and Loss Account, of the Loss for the Year
 ended on that date and 
 
 (iii) In case of the Cash Flow statement, of the cash flow for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 (Referred to in paragraph 3 of our report of even date)
 
 On the basis of such checks as we considered appropriate in terms of
 information and explanations given to us, we state that:- i).  a) The
 Company has maintained proper records showing full particulars,
 including Quantitative details and situation of fixed assets
 
 b) The Fixed assets of the Company have been physically verified by the
 management at reasonable intervals. No material discrepancies were
 noticed on such verification
 
 c) No substantial part of fixed assets of the company has been disposed
 off during the year affecting the status of the company as a going
 concern.
 
 ii). a) As explained to us, inventories of the company at all its
 locations have been Physically verified at reasonable intervals by the
 management during the year.
 
 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) The Company is maintaining proper records of inventory and material
 discrepancies, if any noticed on physical verification have been
 properly dealt with in the books of account
 
 iii) a) According to the information and explanations given to us, The
 Company has not granted any loans, secured or unsecured, to the
 companies firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956. Accordingly, the
 provisions stated in para 4(iii) (b) (c) and (d) of the order are not
 applicable.
 
 b) The Company has taken unsecured interest free loan from two parties
 involving an amount of Rs. 8.70 crores, and year end balances remain
 the same.
 
 c) The terms and conditions in respect of the above loan taken by the
 company are, prima facie, not prejudicial to the interests of the
 Company.
 
 iv). In our opinion and accordingly to the information and explanation
 given to us, the Internal control system needs to be strengthened to
 make it commensurate with the size of the Company and the nature of its
 business with regard to purchase of inventory and fixed assets and the
 sale of goods. During the course of our audit, we have not observed any
 major weakness in such internal control systems.
 
 v). a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the contracts and agreements that need to be entered in the register
 maintained u/s 301 of the Companies Act, 1956 have been so entered;
 
 b) In our opinion and according to the explanations given to us, the
 transactions made in pursuance of contract or arrangements to be
 entered in the Register maintained under Section 301 of the Companies
 Act 1956, and exceeding the value of Rs. 5 lakhs in respect of any
 party during the year have been made at prices which are reasonable
 having regard to the market prices prevailing at that time.
 
 vi).  In our opinion and according to the explanations given to us, the
 Company has complied with the directives issued by the Reserve Bank of
 India, and also provisions of the Section 58A and Section 58AA of the
 Companies Act, 1956 and the rules framed there under, in respect of
 deposits accepted by it. No order has been passed by the Company Law
 Board and the Company has not accepted any deposit under 58A and 58AA
 of the Companies Act, 1956.
 
 vii). In our opinion the company has an internal audit system
 commensurate with its size and nature of its business;
 
 viii). We have broadly reviewed the records maintained by the company
 pursuant to the rules made by the Central Government for the
 maintenance of the cot records u/s 209(1) (d), of the Act. We are of
 the opinion that, prima facie, the prescribed accounts and records
 haven been made and maintained. We have not, however, made a detailed
 examination of the records with a view of determining whether they are
 accurate or complete.
 
 ix). a) According to the records of the Company, it has been regular in
 depositing 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 with the appropriate
 authorities during the year.
 
 b)At the end of the Financial year there were no dues of Sales Tax,
 Customs Duty, Wealth Tax, Excise Duty, Cess which have not been paid
 for a period of more than 6 months from the date they become payable
 except as detailed below:
 
 Name of the    Year     Nature of       Amount       Forum   Provided
 
 Statute                 Dues            in Lacs      where   in the
                                           Rs         dispute 
                                                      is      books of
                                                      pending accounts
 
 Tamilnadu
 
 Additional              Additional                   Supreme
 
               1996-97                    20.07                    Yes
 
 Sales 
 Tax Act                  Sales Tax                   Court of 
                                                      India
 ,1970 
 
                          TNGST,
                                                      STAT
 CST Acts      2002-03   Surcharge AST,   1.82                     No
                                                      Coimbatore
                         penalty
 
                         TNGST
 TNGST, CST                                           STAT
 
              2003-04    Surcharge AST,  13.54                     No
 Acts                                                 Coimbatore
                         penalty
 
 Income Tax              Interest u/s
 
              2004-05                     5.85        ITAT Chennai No
 
 Act 1961                234B / 234C
 
 x). There are accumulated losses at the end of the financial year ended
 31.03.2011. In our opinion, the accumulated losses of the company as on
 31.03.2011 are more than 50% of its net worth. As on 31.03.2011 the
 company has not incurred cash loss during the financial year covered by
 our Audit and had incurred cash loss in the immediately preceding
 financial year.
 
 xi). The Company has not defaulted in repayment of dues to financial
 institution or Bank considering the relief in the CDR package
 sanctioned.
 
 xii). During the year the company has not granted any loans and
 advances on the basis of security by way of pledge of shares,
 debentures and other securities, according to the information and
 explanation given to us.
 
 
 xiii). In our opinion, the provisions of special statue applicable to
 Chit Fund, Nidhi/ Mutual Benefit Fund/ Societies are not applicable to
 the company;
 
 xiv). The Company is not dealing or trading in shares, securities,
 debentures and other investments.
 
 xv). In our opinion and according to the information and explanation
 given to us, the company has not given any guarantee for loans taken by
 others from banks or financial institutions.
 
 xvi). According to the information and explanation given to us, the
 company has utilized term loans for the purpose for which the loans
 were obtained.
 
 xvii). 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, there are no funds raised on short- term
 basis, which have been used for any long-term investments by the
 Company.
 
 xviii).According to the information and explanation given to us, 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.
 
 xix).  During the year the Company has not issued any debentures.
 
 xx). According to the information and explanation given to us, during
 the year the Company has not raised money by public issue.
 
 xxi). To the best of our knowledge and belief and according to the
 information and explanations given to us, no fraud on or by the company
 was noticed or reported during the year.
 
                                              For THAKKER & SANGHANI
 
                                        Firm Registration No:004351S
 
                                               Chartered Accountants
 
                                                             Aswin C
 Coimbatore                                                  Partner
 
 30.05.2011                                      Membership No:22204