We have audited the attached Balance Sheet of HYTONE TEXSTYLES LIMITED,
 as at 31st March, 2009 and the Profit and Loss Account of the Company
 for the year ended on that date annexed thereto. 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.
 
 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 (Auditors Report) Order, 2003, as
 amended by the Companies (Auditors Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of Section 227(4A)
 of the Companies Act, 1956, based upon such checks of the books and
 records as we considered appropriate and according to the information
 and explanations given to us, we annex hereto a statement on the
 matters specified in paragraphs 4 and 5 of the said Order to the extent
 applicable to the Company.
 
 2.  Further to our comments in the Annexure referred to in Paragraph-1
 above, we report that:
 
 (i) 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;
 
 (ii) In our opinion, proper books of accounts as required by the law
 have been kept by the Company so far as appears from our examination of
 those books;
 
 (iii) The Balance Sheet and Profit and Loss Account dealt with by this
 report are in agreement with the books of account;
 
 (iv) In our opinion, the Balance Sheet and Profit and Loss Account
 dealt with by this report comply with the Accounting Standards referred
 to sub-section 3(C) of Section 211 of the Companies Act, 1956;
 
 (v) In our opinion and as informed to us by the Board of Directors, we
 report that all directors are disqualified as on 31st March, 2009 from
 being appointed as a director in terms of clause (g) of sub-section (1)
 of section 274 of the Companies Act, 1956.  (Refer Note 4 of Notes to
 Accounts in Schedule 17).
 
 (vi) (a) The accounts have been prepared on the assumption that the
 company will continue as a going concern (Refer Note 5 of Notes to
 Accounts in Schedule 17).
 
 (b) No provision has been made for interest, penal interest and
 liquidated damages on loans, borrowings and working capital facilities
 from financial institutions and banks, amounts unascertainable.fRefer
 Note 9 of Notes to Accounts in Schedule 17).
 
 (c) The remuneration paid to the manage- rial persons is in excess of
 the limits laid down under section 198 and Schedule XIII of the
 Companies Act, 1956 and is subject to the approval of the Department of
 Corpo- rate Affairs, New Delhi. (Refer Note 18 of Notes to Accounts in
 Schedule 17)
 
 (vii) Subject to the foregoing, and read with the other notes, in our
 opinion and to the best of our information and according to the
 explanation given to us, the said Balance Sheet and the Profit and Loss
 Account read together with the Schedules and the 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 :
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at
 
 31st March, 2009; and
 
 b) in the case of the Profit and Loss Account, of the Company of the
 loss for the period ended on that date.
 
 c) in the case of the Cash Flow Statement, of the cash flows for the
 period ended on that date
    
 
 ANNEXURE
 
 Re: HYTONE TEXSTYLES LIMITED
 
 (Referred to in Paragraph-3 of our report of even date of HYTONE
 TEXSTYLES LIMITED on the financial statements for the year ended 31st
 March, 2009)
 
 1.  Fixed Assets.
 
 (a) The Company has maintained proper records showing full particulars,
 including quantitative details and situation of fixed asset.
 
 (b) We are informed that these fixed assets are physically verified by
 the management during the year and no material discrepancies between
 book records and physical inventory were noticed on such verification.
 In our opinion, the frequency of verification is reasonable.
 
 (c) There has not been any substantial disposal of Fixed Assets during
 the year and hence its does not affect the going concern status of the
 Company.
 
 2.  Inventories
 
 During the year under review there is no closing stock. Accordingly,
 sub paragraph (a), (b) and (c) of this clause are not applicable.
 
 3.  Loans and Advances either granted or taken
 
 a) According to the verification of books and records and the
 information and explanation given tous, no loans have been granted to
 companies, firms or other parties listed in
 
 the register maintained under section 301 of the Companies Act, 1956.
 Accordingly, sub- paragraphs (a), (b), (c) and (d) are not applicable.
 
 b) As per the records verified by us, the Company has not taken loan
 from any party covered in the register maintained under section 301 of
 the Companies Act, 1956. The maximum amount involved during the year is
 Rs. Nil and the balance of loan taken from such party at the end of the
 year was Rs. Nil.
 
 During the year under review, the Company has not taken loan from any
 party covered in the register maintained under section 301 of the
 Companies Act, 1956 and hence there is no interest paid or repayment of
 loan made.  Accordingly, sub paragraph (c) and (d) of this clause are
 not applicable.
 
 4.  Internal Controls
 
 In our opinion and according to the information and explanations given
 to us, the internal control procedures prevailing in the company need
 to be strengthened further to make them fairly commensurate with its
 size and the nature of the business with regard to purchase of
 inventories and fixed assets and for the sale of goods. During the
 course of our audit, we have observed no continuing failure to correct
 major weaknesses in the internal controls.
 
 5.  Transactions covered by Section 301
 
 a) During the year, the transactions that need to be entered into a
 register in pursuance of Section 301 of the Act have been so entered by
 the company.
 
 b) Based on information and explanations given to us, the transactions
 of purchase of goods and materials exceeding the value of Rs. 5 lacs in
 respect of each party pursuant to such contracts or arrangements have
 been made at prices which are reasonable having regard to the
 prevailing market prices and other conditions at the relevant time.
 
 6.  Public Deposits
 
 The company has not invited any deposits from the public with the
 purview of Reserve Bank of India and the provisions of Section 58A and
 58AA of the Companies Act, 1956 and the Companies (Acceptance of
 Deposit) Rules, 1975.
 
 7.  Internal Audit
 
 The company has no formal internal audit system.  However, its internal
 control procedures and the system of internal checking of financial and
 other records are, in our opinion commensurate with the size of the
 company and the nature of its business.
 
 8.  Cost Records
 
 During the year under review, since there is no manufacturing activity
 carried on by the company no cost records as prescribed by the Central
 Government under section 209(1)(d) of the Companies Act, 1956 need to
 be maintained.
 
 9.  Statutory Dues
 
 a) According to the information and explanation given to us and based
 on the records verified by us, the company is regular in depositing
 undisputed statutory. ()ues in respect of Provident Fund, Employees
 state Insurance, Income Tax, Sale Tax, Wealth Tax and any other
 statutory dues with appropriate authorities and no dues remain
 outstanding for a period of more than six months except in respect of
 the following:
 
 Name of the   Nature of        Amount     Period to which 
 Statue        Dues             (Rs.)      the  amount relates
 
 Navi Mumbai
 Muncipal     Property Tax      93,15,433/-      2005-2009
 Corporation
 MIDC         WaterTax            25,863/-       2005-2009
 MSEDCo.Ltd.  Electricity          34,48/-       2005-2009
 
 b) According to information and explanation given to us and on the
 basis of the books and records examined by us, following is the
 statement of dues, which have been disputed:
 
 Nameofthe    Nature of Amount    Period to         Forum Where
 Statue       the Dues (Rs.)      which amount      dispute
                                  relates           is pending
 
 Income
 TaxAct,      Assessed 32,490/-   AY. 1993-94       I.TAT.
 1961            Tax                     
 
 10.  Accumulated Losses
 
 In our opinion, the accumulated losses of the company are not less than
 fifty percent of its net worth. The company has not incurred cash
 losses during the current financial year covered by our audit however
 it had incurred the same in the immediately preceeding financial year.
 
 11.  Dues to Financial Institutions/Banks According to the information
 and explanations given to us and on the basis of our examination of the
 books of accounts, the company has defaulted in repayment of dues to
 Financial Institutions. Following is the statement showing year and
 amount involved:
 
 Parties         Amount         Year From
                                Term Loan
                                   
 FromlDBI    12,36,09,149/-     Liability accounted
                                till 2003
 
 Secured
 Debentures  5,13,78,399/-      Liability accounted
 -IDBI                          till 2003
 
 Total      17,49,87,548/
 
 No provision has been made on the above from the year ended 2003 for
 interest, penal interest and liquidated damages on loans, borrowings
 and working capital facilities from financial institutions and banks
 amounts of which are unascertainable.
 
 12.  Loans against Pledge of Securities
 
 According to the information and explanations given to us the company
 has not granted loans and advance on the basis of security by way of
 pledge of shares, debentures and other securities during the period of
 review.
 
 13.  Application of Special Statute
 
 The provisions of any special statute applicable to Chit Fund, Nidhi
 and Mutual Benefit Society are not applicable to the Company during the
 year under review.
 
 14.  Dealing/Trading in Shares/Securities
 
 As per the records verified, the company has not dealt with or traded
 in shares, securities, debentures and other investments during the year
 under review. Therefore, the provisions of clause 4(xiv) of the
 Companies (Auditors Report) Order, 2003 are not applicable to the
 company.
 
 15.  Guarantees Given
 
 According to the information and explanations given to us, the company
 has not given any guarantees for loans taken by others from banks and
 financial institutions.
 
 16.  Application of Funds Raised
 
 According to the information and explanations given to us, as also on
 the basis of books and records examined by us, the company has not
 obtained any fresh term loans during the audit year.
 
 17.  Financial Management
 
 According to the information and explanation given to us and on the
 overall examination of balance sheet of the company, we report that no
 short term funds have been used for long term investments
 
 18.  Preferential Allotment
 
 During the year under review, the company has not made any preferential
 allotment of equity shares to any party/concern listed in the register
 maintained under section 301 of the Companies Act, 1956.
 
 19.  Security against Debentures
 
 According to the verification of books and records and the information
 and explanations given to us, the company has not issued any debentures
 during the year. Accordingly, the provisions of clasue 4(xix) of the
 Companies (Auditors Report) Order. 2003 are not applicable to the
 company.
 
 20.  End use of Public Issue Money
 
 As per information and explanations given to us, the Company during the
 year has not raised funds by way of public issue. Thus, the provisions
 of clause 4(xx) of the Companies (Auditors Report) Order. 2003 are not
 applicable to the company.
 
 21.  Frauds
 
 Based on our verification of the books of account and other relevant
 records and based on the information and explanations given to us, we
 have not noticed or reported any fraud on or by the Company during the
 year under review.
 
 
 
                                                Mulraj D. Gala
 Place : Mumbai                          Chartered Accountants.
 Date : 25th August, 2009                          M.No: 41206