We have audited the attached Balance Sheet of Jagjanani Textiles
 Limited as at 31st March, 2011 and the Profit & Loss Account and Cash
 Flow Statement for the year ended on that date annexed thereto and
 report that:
 
 1.  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 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 test basis, evidence supporting the amounts and
 disclosures in the financial statement presentation. An audit also
 includes assessing the accounting principles used and signification
 estimates made by management, as well as evaluating the overall
 financial statements. We believe that our audit provided a reasonable
 basis for our opinion
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 as
 amended by the Companies (Auditor''s Report) Order, (Amendment) 2004
 issued by the Government of India in terms of Section 227(4A) of the
 Companies Act, 1956, we annex hereto a statement on the matters
 specified in the paragraphs 4 & 5 of the said Order.
 
 4.  Further to our comments 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 purpose of our
 audit.
 
 b) In our opinion, proper books of accounts as required by law have
 been kept by the Company so far as appears from our examination of
 these 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 and the Profit and Loss Account
 dealt with by this report are in compliance with the accounting
 standards referred to in Section 211 (3C) of the Companies Act, 1956
 and are in agreement with the books of account.
 
 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, we
 report that none of the directors is disqualified as on March 31st,
 2011 from being appointed as 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 accounts read with the notes thereon,
 give the information required by the Companies Act, 1956, in the manner
 so required and give a true and fair view:
 
 i) In 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 Loss for the
 year ended on that date.
 
 iii) In the case of Cash Flow Statement, of 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:
 
 1.  The Company has maintained proper records showing full particulars
 including quantitative details and situation of the fixed assets. All
 the fixed assets have been physically verified during the year by the
 Management. Further, we are informed that no material discrepancies
 were noted during such verification.
 
 2.  None of the fixed assets of the Company have been re-valued during
 the year.
 
 3.  (a) The Company has maintained records pertaining to finished
 goods, stores, spares, raw materials, purchases, sale of goods,
 by-products, scrap and book debts.
 
 (b) Inventories have been physically verified by the management during
 the year and in our opinion the frequency of verification is reasonable
 to the extent clarified to us.
 
 (c) The procedures of physical verification of inventories followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (d) The discrepancies noticed on physical verification of stocks as
 compared to book records which were not material, have been properly
 dealt with in the books of account.
 
 4.  In our opinion the valuation of stocks is fair and proper and in
 accordance with generally accepted accounting principles.
 
 5.  The Company has not taken any loan from companies, firms or other
 parties listed in the register maintained under section 301 of the
 Companies Act,1956 and / or Companies under the same management as
 defined under sub-section (1B) of section 370 of the Companies Act,
 1956.
 
 6.  The Company has not granted any loan to companies, firms or other
 parties listed in the register maintained under section 301 of the
 Companies Act, 1956 and / or Companies under the same management as
 defined under sub- section (1B) of section 370 of the Companies Act,
 1956.
 
 7.  According to the information and explanations given to us, no loans
 and advances in the nature of loans have been given to parties
 including the employees.
 
 8.  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 purchases of stores, raw materials including
 components, plant and machinery, equipment and other assets and for the
 sale of goods.
 
 9.  We are informed that there are no transactions with any party for
 the purchase of goods and materials and sale of goods, materials and
 services made in pursuance of contracts or arrangements entered in the
 Register maintained under Section 301 of the Companies Act, 1956 during
 the year under review.
 
 10.  The Company has not accepted any deposits from the public during
 the year. Accordingly the clause 4 (vi) of the order is not applicable.
 
 11.  In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 12.  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, the maintenance of cost records has been prescribed
 under Section 209(1) (d) of the Companies Act, 1956. We are of the
 opinion that prima facie the prescribed accounts and records have been
 maintained and are being made up. We have not, however, made a detailed
 examination of the records with a view to determining whether they are
 accurate or complete.
 
 13.  The company has been regular paying dues under the E.S.I. Act with
 the appropriate authorities.  However, Rs. 3,93,627/- under the
 Employees Provident Fund Act remain unpaid.
 
 14.  According to the books and records examined by us and the
 information and explanations given to us, no undisputed amount payable
 in respect of income tax, wealth tax, sales tax, VAT, custom duty,
 service tax, excise duty cess & other material statutory dues
 applicable to it were in arrears as at 31st March, 2011 for a period of
 more than six months from the date they become payable.  However, Rs.
 4,25,342/- relating to TDS remain unpaid for a period of more than six
 months from the date they become payable
 
 15.  The company has Rs. 2324.32 Lacs accumulated losses as at 31st
 March 2011. The company has incurred cash loss of Rs. 875.20 Lacs in
 the financial year 2010-11 under report and Rs. 1107.87 Lacs in the
 immediately preceding financial year 2009-10.
 
 16.  The Company has defaulted in repayment of dues to Banks during the
 year. It has been explained to us that the Company has approached bank
 for rescheduling the repayment of loans under Corporate Debt
 Restructuring Scheme. The proposal is awaiting approval.
 
 17.  According to the information and explanations given to us and
 based on the documents and records produced to us, Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities. Accordingly the clause 4(xii)
 of the order is not applicable.
 
 18.  In our opinion, the Company is not a chit fund or a Nidhi / mutual
 benefit fund/ society.  Accordingly the clause 4(xiii) of the order is
 not applicable.
 
 19.  In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly the
 clause 4(xiv) of the order is not applicable.
 
 20.  According to information and explanation given to us, the Company
 has not given any guarantee for loans taken by others from banks or
 financial institutions. Accordingly the clause 4(xv) of the order is
 not applicable.
 
 21.  On the basis of information and explanation given to us, no term
 loan raised during the year have been applied for the purpose for which
 they were raised.
 
 22.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the company, we report
 that no funds raised on short term basis have used for long term
 investment by the Company or vice versa.
 
 23.  During the year, the company has not made any preferential
 allotment of share. Accordingly clause 4(xviii) of the order is not
 applicable.
 
 24.  The Company has not issued any debentures so far. Accordingly
 clause 4(xix) of the order is not applicable.
 
 25.  The Company has not raised any money through public issue during
 the year. Accordingly clause 4(xx) of the order is not applicable.
 
 26.  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 that causes the financial
 statements to be materially misstated.
 
 
                                            For G.Dutta & Co.  
                                            Firm Regin. No. – 002136C 
                                            Chartered Accountants 
 
                                            Sd/-
                                            (Gopal Dutta) 
                                            Sr. Partner 
                                            M. No. 071312
 
 Place : Jaipur 
 Date  : 27.08.2011