1.  We have audited Balance Sheet of GARWARE SYNTHETICS LIMITED as at
 31st March, 2012 and also the annexed Profit and Loss Account and the
 Cash Flow Statement of the Company for the year ended on that date.
 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 required 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 presentation of the
 financial statements. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  As required by the Companies (Auditors Report) Order, 2003 issued
 by the Central Government of India in terms of sub section (4A) of
 section 227 of the Companies Act, 1956 and on the basis of such checks
 as we considered appropriate, and according to the information and
 explanation given to us, we enclose in the Annexure hereto a statement
 on the matters specified in paragraphs 4 and 5 of the said order to the
 extent applicable to the Company.
 
 4.  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 purpose 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 the
 books of account.
 
 c) The Balance Sheet and Profit and Loss Account and Cash Flow
 Statement dealt with by 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 sub section (3c) of Section 211 of
 the Companies Act, 1956.
 
 e) As per the information and explanation given to us, all the
 Directors of the Company are qualified from being appointed as
 Directors in terms of clause (g) of sub-section (1) of Section 274 of
 the Companies Act, 1956.
 
 5.  We further report that -
 
 a) The Accounts have been prepared on going concern basis.
 
 b) Subject to Para (a) above, we are of the opinion, that to the best
 of our information and according to the explanation given to us the
 accounts read together with the accounting policies and the notes
 thereon, give 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.
 
 c) In the case of Balance Sheet of the State of affairs of the Company
 as at 31.03.2012 and
 
 d) In the case of the Profit and Loss Account, of the Profit for the
 year ended on that date.
 
 e) In so far as it relates to the Cash Flow Statement of the Cash Flow
 for the year ended on that date.
 
 ANNEXURE REFFERED TO IN PARAGRAPH 3 OF AUDITORS'' REPORT OF EVEN DATE TO
 THE MEMBERS OF GARWARE SYNTHETICS LIMITED ON THE ACCOUNTS FOR THE YEAR
 ENDED 31ST
 
 MARCH, 2012.  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 information available.
 
 b.  According to the information and explanations given to us, the
 fixed assets have been physically verified by the management during the
 year in a phased periodic manner, which in our opinion is reasonable,
 having regard to the size of the Company and nature of the assets. No
 material discrepancies were noticed on such verification. However the
 fixed assets include land & Building. The title of the same is under
 dispute and the case is pending with the court of law.
 
 c.  The Company has not disposed off any substantial part of fixed
 assets that would affect the going concern status of the Company.
 
 2.  In respect of its inventories:
 
 a.  The inventory has been physically verified during the year by the
 Management. In our opinion, the frequency of verification is
 reasonable.
 
 b.  The procedure of physical verification of inventories followed by
 the management is 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 inventory. As
 explained to us, the discrepancies noticed in physical verification of
 the stock as compared to book records were not material and the same
 have been properly dealt with in the books of accounts.
 
 3.  In respect of loans covered under Section 301 of the Companies Act,
 1956.
 
 a.  As per the information and explanation given to us and the records
 produced to us for our verification, the company has granted/taken
 interest-free loans, to a Company listed in the register maintained
 under Section 301 and also to directors in which no stipulation has
 been made as to repayment of principal.
 
 b.  The Company has taken any loans, secured or unsecured, during the
 current financial year from companies, firms or other parties covered
 in the register maintained under section 301 of the Companies Act, 1956
 to repay its outstanding bank liabilities.
 
 c.  The loan given by the Company are not prima facie prejudicial to
 the interest of the Company.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the Company and the nature of its
 business with regard to the purchases of inventories, fixed assets and
 with regard to sale of goods. As per the information given to us, no
 major weaknesses in the internal controls have been identified by the
 management during the year. During the course of our audit, nothing had
 come to our notice that may suggest a major weakness in the internal
 control systems of the company;
 
 5.  In respect of transactions covered under Section 301 of the
 Companies Act, 1956.
 
 a In our opinion and according to the information and explanations
 given to us, no any such the transactions made in pursuance of
 contracts or arrangements, that needed to be entered into the register
 maintained under Section 301 of the Companies Act, 1956.
 
 b.  In our opinion and according to the information and explanations
 given to us, there are no transactions in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act, 1956 aggregating during the year to Rs.5,00,000/-
 (Rupees Five Lakhs Only) or more in respect of any party.
 
 6.  During the year the Company has not accepted any deposits under the
 provisions of Section 58 A, 58 AA of the Companies Act 1956 and the
 Rules framed there under.
 
 7.  The Company has Internal Audit system, which in our opinion is
 commensurate with the size and nature of its business.
 
 8.  As per the explanation given to us, the company has not prepared
 the Cost records pursuant to the Rules made by the Central Government
 for maintenance of cost records under Section 209(l)(d) of the
 Companies Act, 1956 for the year 2010-11.
 
 9.  In respect of statutory dues:
 
 a.  According to the information and explanations given to us,
 undisputed statutory dues including Provident Fund, E.S.I.C.,
 Profession Tax, Investor Education and Protection Fund, Income Tax,
 TDS, Wealth Tax, Custom Duty, Cess and other material statutory dues
 applicable to it have not been regularly deposited with the appropriate
 authorities.
 
 b.  According to the information and explanation given to us,
 undisputed amounts payable in respect of income tax, wealth tax,
 customs duty, excise duty and cess and various other authorities were
 in arrears as at 31.03.2012 for a period of more than six months from
 the date they became payable is Rs.223.67 lakhs.
 
 c.  According to the information and explanation given to us, there are
 no dues to sales tax, income tax, customs duty, wealth tax, excise duty
 and cess which have not been deposited on account of any dispute,
 except the cases give below :
 
 Sr. Name of
     the           Nature of    Amount of    Forum where dispute is
 No  Statute       dues         Dispute 
                               (Net)         pending
                               (In Lakhs) 
 
 1.  Sales Tax     Sales Tax      4.21       Deputy Commissioner 
                                             of Sales Tax
 
 Sr                Bombay Sales 
                   Tax           Central 
                                 Sales Tax      Forum where
 No  Year         (bst)         (CST)           Dispute is
                                                pending
 
 
                                                Deputy 
                                                Commissioner
 1   2001 - 02     34,80,294     7,70,246       of Sales Tax
 
                                                Deputy
                                                Commissioner
 2   2002-03       33,16,840    11,15,852       of Sales Tax
 
                                                Deputy 
                                                Commissioner
 3   2003-04       62,22,840    50,98,890       of Sales Tax
 
                                                Deputy 
                                                Commissioner
 4   2004-05       19,48,300     9,46,532       of Sales Tax
 
 10 in our opinion, the accumulated losses are more than fifty percent
 of its net worth, the company has incurred cash losses during the
 financial year covered in the audit and also in the immediately
 preceding
 
 financial year.
 
 11.  -me Company has not defaulted in repayment of dues to a financial
 institutions and bank. The Company , has not issued any Debentures.
 
 12.  The Company has not granted any loans or 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 / nidhi / mutual
 benefit fund / society therefore the provision of clause 4 (xiii) of
 the Companies (Auditor''s Report) Order, 2003 are not applicable to the
 company.
 
 14.  The Company has not dealt or traded in shares, securities,
 debentures or other investments during the year.
 
 15.  As per the information and explanation given to us the Company has
 given guarantees for loan taken from im, the terms and conditions
 whereof are prima facie prejudicial to the interest of the company.
 However, the said loan is defaulted.
 
 16. The Company has not raised any new term loan during the year.  -
 
 17 According to the information and 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 long term basis have been used for
 short term investment and funds raised on short term basis have been
 used for short term purposes except to the extent of accumulated
 losses.
 
 18.  According to the information and explanations given to us, the
 Company has not made preferential allotment of equity and preference
 shares to companies covered in the register maintained under Section
 301 of the Companies Act 1956.
 
 19.  The Company has not issued any debenture during the year.
 
 20.  The Company has not raised any money by public issue during the
 year.
 
 21.  As per the information and explanations given to us and on the
 basis of examination of records, no material fraud on or by the company
 was noticed or reported during the year.
 
 For B.V. Shah & Associates 
 
 Chartered Accountants
 
 Sd/-
 
 Bharat V. Shah
 
 Proprietor
 
 M No. 040210
 
 Place : Mumbai
 
 Date : 24th August, 2012