RSWM

We have audited the attached Balance Sheet of RSWM Limited as at 31st
 March, 2009, 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 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.
 
 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, we enclose in the Annexure a statement
 on the matters specified in paragraphs 4 and 5 of the said Order.
 
 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 purposes 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, Profit and Loss Account and Cash Flow
 Statement dealt with by this Report are in agreement with the Books of
 Account;
 
 (iv) In our opinion, the Balance Sheet, Profit and Loss Account 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 Companies Act, 1956;
 
 (v) On the basis of written representations received from the
 Directors, as on 31st March, 2009, and taken on record by the Board of
 Directors, we report that none of the Directors is 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;
 
 (vi) The Company has provided depreciation on Plant and Machinery of
 Integrated Denim Unit considering the same as Continuous Process
 Plant based on technical experts advice (Refer Note No.6 of Notes on
 Accounts, Schedule 16). This being a technical matter, no opinion is
 expressed thereon.
 
 Subject to para (vi) above, in our opinion and to the best of our
 information and according to the explanations given to us, the said
 accounts read together with 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 jn India:
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2009.
 
 (b) in the case of the Profit and Loss Account, of the loss for the
 year ended on that date; and
 
 (c) In the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 Annexure referred to in paragraph 3 of our report of even date to the
 Shareholders of RSWM Limited on accounts for the year ended 31st March,
 2009.
 
 (i) (a) The Fixed Assets registers showing full particulars including
 quantitative details and situation of the assets are being maintained
 at respective units, up-dation of which are under completion.
 
 (b) The Fixed Assets are physically verified by the Management in a
 phased programme designed to cover all the Assets over a period of
 three years, which in our opinion, is reasonable having regards to the
 size of the Company and the nature of its assets.  Pursuant to the said
 programme, a portion of Fixed Assets has been physically verified by
 the Management during the year and no serious discrepancies were
 noticed on such verification between the book records and physical
 inventory.
 
 (c) The Company had not sold any substantial part of Plant & Machinery
 during the year.
 
 (ii) (a) The Inventories have been physically verified during the year
 by the Management. In our opinion, the frequency of verification is
 reasonable.
 
 (b) In our opinion and according to information and explanations given
 to us, the procedure of physical verification of inventory 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 is maintaining proper records of inventory and the
 discrepancies noticed on physical verification have been dealt
 adequately in the Books of Accounts except where the reconciliation is
 pending on the findings of the reports of the external agencies.
 
 (iii) (a) The Company has granted unsecured loan to 5 parties covered
 in the register maintained under Section 301 of the Companies Act,
 1956. The amount outstanding at the end of the year is Rs.1,923 lac and
 the maximum amount outstanding during the year was Rs. 1,999 lac.
 
 (b) All the above Loans are repayable on demand. Loan to 100 percent
 subsidiary is interest free. In respect of the other Loans granted, the
 rate of interest and other terms and conditions are prima-facie not
 prejudicial to the interest of the Company.
 
 (c) The payment of interest on such loans is regular, wherever
 applicable. The payments of principal amount are also regular, wherever
 demanded during the year.
 
 (d) There is no overdue amount outstanding at the Balance Sheet date.
 
 (e) The Company had not taken any loan from any party covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 
 (iv) On the basis of selective checks carried out during the course of
 audit and explanations given to us, adequate Internal Control Systems
 commensurate with the size of the Company and nature of its business,
 for purchase of inventory and fixed assets and for sale of goods and
 services have been devised by the Management and is being generally
 followed. Further on the basis of our examination of the books and
 records of the Company, and according to information and explanations
 given to us, we have neither come across nor have been informed of any
 continuing failure to correct major weakness in the aforesaid Internal
 Control System.
 
 (v) (a) On the basis of our examination and as per information given to
 us, all the contracts or arrangements that are needed to be entered
 into the register maintained in pursuance of Section 301 of the
 Companies Act, have been recorded in the register.
 
 (b) On the basis of our examination and as per information and
 explanations given by the Management, the price of the goods and
 materials purchased and / of sale of goods, materials and services made
 pursuant to contracts entered in register maintained under Section 301
 of the Companies Act, 1956, in respect of each party is reasonable
 having regard to the prevailing market price at the relevant time.
 
 (vi) We are explained that during the year, the Company has not
 accepted deposits from public to which the provisions of Section 58A of
 the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules,
 1975 apply.
 
 (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 including the Books of
 Accounts made and maintained by the Company pursuant to the Rules made
 by the Central Government for maintenance of cost records under Section
 209 (1) (d) of the Companies Act, 1956, and are of the opinion that
 prima-facie the prescribed accounts and records have been made and
 maintained.
 
 (ix) (a) According to the information and explanations given to us and
 the records examined by us, the Company is 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, Custom Duty, Excise Duty, Cess and any other
 statutory dues with the appropriate authorities. Further, there were no
 undisputed arrears of statutory dues outstanding as at 31st March,
 2009, for a period of more than six months from the date they became
 payable.
 
 (b) According to the records of the Company and information given to
 us, the particulars of statutory dues of the Sales Tax, Income Tax,
 Customs Duty, Wealth Tax, Excise Duty and Cess which have not been
 deposited on account of disputes and the forum where the dispute is
 pending are given hereunder:
 
                                              (Rs. in lac)
 
 I)  EXCISE DUTY
 
 CESTAT, New Delhi                                14.24
 
 II)     SERVICE TAX
 Commissioner                                     99.21
 (Appeals), Jaipur
 
 III)   T.C. CESS Appellate
 Tribunal, Mumbai                                 24.67
 
 (x) There are no accumulated losses in the Company as on 31st March,
 2009 Further, the Company has incurred cash losses during the financial
 year covered by our audit to the tune of Rs.2,305.74 lac. There was no
 cash loss in the immediately preceding financial year.
 
 xi) Based on our examination of books and records of the Company and on
 the basis of information and explanations given by the Management, the
 Company has been regular in repayment of its dues to the financial
 institutions or banks.
 
 (xii) On the basis of examination of records of the Company and
 information and explanations given to us, 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) In our opinion, the Company is not a chitfund or nidhi / mutual
 benefit fund / society.  Therefore, the provisions of clauses 4 (xiii)
 of the Companies (Auditors Report) Order, 2003 are not applicable to
 the Company.
 
 (xiv)On the basis of examination of books and records of the Company
 and information and explanations given by the Management, the Company
 is not dealing or trading in shares, securities, debentures and other
 investment.
 
 (xv) As per information and explanations given by the Management, the
 terms & conditions on which the Company has given Guarantee for loans
 taken by others from banks or financial institutions are prima-facie
 not prejudicial to the interest of the Company.
 
 xvi) As per information and explanations given by the Management, the
 term loans have been applied for the purposes they were raised.
 
 (xvii)According to the information and explanations given to us and on
 an overall examination of the Cash Flow Statement of the Company for
 the year, we report that no funds raised on short-term basis have been
 used for long term investment.
 
 (xviii)The Company has not made any preferential allotment of shares to
 parties or Companies covered in the register maintained under section
 301 of the Act.
 
 (xix)The Company has not issued any debentures whether secured or
 unsecured during the year.
 
 (xx) The Company has not raised any money through public issue during
 the year covered by our report.
 
 (xxi)As per the information and explanation given to us, no fraud on or
 by the Company has been noticed or reported during the year covered by
 our report.
 
 
 
 For S. Bhargava Associates           For A. L. Chechani & Co.
      Chartered Accountants             Chartered Accountants
 
             Sunil Bhargava                      Sunil Surana
                     Partner                          Partner
     Membership No. : 70964            Membership No. : 36093
 
 Place   : Noida
 Dated : 29th April, 2009