1.  We have audited the attached Balance Sheet of KAMADGIRI FASHION
 LIMITED (the company) as at 31st March 2012, and also the
 Statement of Profit and Loss 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 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 statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 (''the
 order''), as amended, issued by the Central Government of India in terms
 of section 227(4A) of the Companies Act, 1956, (''the Act'') we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said order.
 
 4.  Further to our comments in the Annexure referred to 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 account as required by law, have
 been kept by the company so far as appears from our examination of
 those books;
 
 (iii) the Balance Sheet, Statement of Profit and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 (iv) in our opinion, the Balance Sheet, Statement of Profit and Loss
 and Cash Flow Statement dealt with by this report comply with the
 Accounting Standards referred to in sub-section (3C) of section 211 of
 the Act;
 
 (v) on the basis of the representations received from the directors as
 on 31st March 2012 and taken on record by the Board of Directors, we
 report that none of the directors are disqualified as on 31st March
 2012 from being appointed as a director in terms of Section 274 clause
 (g) of sub-section (1) of the Act;
 
 (vi) in our opinion and to the best of our information and according to
 the explanations given to us, they said accounts, read together with the
 significant accounting policies and other notes thereon, give the
 information required by the Act, 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 31 st March 2012;
 
 b) in the case of the Statement of Profit and Loss, of the Profit for
 the year ended on that date; and
 
 c) in the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 
 ANNEXURE REFERRED TO IN PARAGRAPH (3) OF AUDITORS'' REPORT OF EVEN DATE
 ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2012 OF
 KAMADGIRI FASHION LIMITED
 
 
 (I) a) The company has generally maintained proper records showing
 particulars, including quantitative details and situation of fixed
 assets, which is in the process of updation forthe current financial
 year;
 
 b) as explained to us, major portion of the fixed assets have been
 physically verified by the management during the year, and no material
 differences were observed on verification;
 
 c) the company, during the year, has not disposed off substantial part
 of its fixed assets;
 
 (ii) a) as explained to us, the inventories have been physically
 verified during the year by the management at reasonable intervals and
 frequency of verification is reasonable;
 
 b) in our opinion, the procedures of physicaj 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; and
 
 c) on the basis of our examination of the inventory records of the
 company, we are of the opinion that, the company is maintaining proper
 records of inventory. No material discrepancies have been noticed on
 physical verification of inventory as compared to the book records;
 
 (iii) the company has not granted/taken any loan, secured or unsecured,
 during the year to/from companies, firms or other parties covered in
 the register maintained under section 301 of the Companies Act, 1956;
 
 (iv) in our opinion, there is internal control system for the purchase
 of inventory and fixed assets and for the sale of goods and services
 which needs to be further strengthened to be commensurate with the size
 of the company and the nature of its business. As informed to us, the
 company has initiated process of strengthening the internal control
 procedures. During the course of our audit, we have not observed any
 continuing failure to correct major weakness in the internal control
 system;
 
 (v) a) on the basis of the audit procedures performed, we are of the
 opinion that the particulars of all contract and arrangement which were
 required to be entered in the registers maintained under section 301 of
 the Act, have been so entered; and
 
 b) in our opinion, transactions made in pursuance of contracts or
 arrangements referred to in clause (v) (a) above and exceeding the
 value of Rs. 5 lacs in respect of any party during the year have been
 made at prices which are reasonable having regard to prevailing market
 prices at relevant time where such market prices are available;
 
 (vi) in our opinion, the company has not accepted any deposit from the
 public;
 
 (vii) the Company has an internal audit system, the scope and coverage
 of which, in our opinion requires to be further enlarged so as to be
 commensurate with the size and nature of its business.
 
 (viii) 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 of India, the maintenance of cost records has been
 prescribed under clause (d) of sub-section (1) of Section 209 of the
 Act and we are of the opinion that prima facie, the prescribed accounts
 and records have been made and maintained;
 
 (ix) a) the company has generally been regular in depositing with the
 appropriate authorities undisputed statutory dues including Provident
 Fund, Investor Education and Protection Fund, Employees'' State
 Insurance, Income-tax, Service-tax, Sales-tax, Wealth Tax, Custom Duty,
 Excise Duty, Cess and any other material statutory dues applicable to
 it. There were no arrears of statutory dues as at 31st March 2012 for a
 period of more than six months from the date they became payable.
 
 b) According to the records of the Company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute, are as follows: .
 
 Name of the     Nature of     Amount                    Forum where 
                                                         dispute
 statute         the dues    (Rs. in lacs)    Period       is pencting
 
 Income Tax 
 Act 1961       Income Tax      34.92       1993-94      High Court
 
 Income Tax     Income Tax      31.68       1994-95*     High Court
 Act,1961     
 
 Income Tax     Income Tax      23.70       1995-96*     High Court
 Act,1961 
 
 Income Tax     Income Tax      10.00       1996-97*     High Court
 Act,1961
 
 Income Tax     Income Tax       8.32       1998-99*     High Court
 Act,1961       
 
 Income Tax     Income Tax     229.89       2009-10*     CIT (Appeals)
 Act,1961
 
 Gujarat Sales                                           Commissioner
 Tax Act, 1969  Sales Tax        5 99       2001-02      (Appeals)
 
 Gujarat Sales  Sales Tax       25.05       2002-03      Commissioner
 Tax Act, 1969                                           (Appeals)
 
 Gujarat Sales                                           Commissioner
 Tax Act, 1969  Sales Tax        5.29       2006-07      (Appeals)
 
 *Assessment Year
 
 (x) The company has neither accumulated losses at the end of the
 financial year nor it has incurred cash losses, both in the financial
 year under report and in the immediately preceding financial year;
 
 (xi) according to the records examined by us, the company has not
 defaulted, during the year, in repayment of dues to a financial
 institution or bank. The company has not borrowed any sums through
 debentures during the year;
 
 (xii) the company has not granted any loans and advances on the basis
 of security by way of pledge of shares, debentures and other
 securities;
 
 (xiii) the company is not a chit fund or a nidhi mutual benefit fund/
 society. Therefore, the provisions of clause 4(xiii) of the order, are
 not applicable to the company;
 
 (xiv) the company is not dealing or trading (except for investments
 purposes) in shares, securities, debentures and other investments.
 Accordingly, the provisions of clause 4(xiv) of the order, are not
 applicable to the company. The company in its own name holds all the
 investments;
 
 (xv) the guarantee given by the company, for loans taken by a group
 company from a bank, the terms and conditions whereof, as informed to
 us, were not prejudicial to the interest of the company, has since been
 released;
 
 (xvi) in our opinion and according to the information and explanations
 given to us, the term loans taken by the company have been applied
 for the purpose for which they were raised.
 
 (xvii) on an overall examination of the financial statements of the
 company, we are of the opinion that no funds raised on short-term basis
 have, prima facie, been used for long-term purposes;
 
 (xviii) the company, during the year, has not made preferential
 allotment of shares to parties and companies covered in the register
 maintained under section 301 of the Act, except that it has allotted
 shares on conversion of warrants issued on preferential basis in
 previous year;
 
 (xix) the company has not issued any debentures during the year and
 therefore the provisions of clause 4 (xix) of the order are not
 applicable to the company;
 
 (xx) the company has not raised any money through a public issue during
 the year;
 
 (xxi) during the course of our examination of the books and records of
 the company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the company, noticed or reported during the year, nor
 have we been informed of such case by the management.
 
 
                                                 For Haribhakti & Co.
 
                                               Chartered Accountants 
 
                                  Firm Registration Number - 103523W
 
                                                  Sumant Sakhardande
 
 Place: Mumbai                                               Partner
 
 Date: 29th May 2012                            Membership No. 34828