1.  We have audited the attached Balance Sheet of Simplex Mills Company
 Limited (''the Company'') as at March 31,2011 and also the Profit and
 Loss Account and the Cash Flow Statement of the Company for the year
 ended on that date, annexed thereto (all together referred to as
 ''financial statements''). These financial statements are the
 responsibility of the Company''s management. Our responsibility is to
 express an opinion on these financial statements based on ouv 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 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.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 issued
 by the Central Government of India in terms of Section 227(4A) of the
 Companies Act, 1956 (''the Act''), and on the basis of such checks of the
 books and records as we considered necessary and appropriate and
 according to the information and explanations given to us during the
 course of the audit, 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:
 
 a.  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;
 
 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
 those books;
 
 c.  the Balance Sheet, the Profit and Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account;
 
 d.  in our opinion'', the Balance Sheet, the Profit and Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to Section 211 (3C) of the Act;
 
 e.  on the basis of written representations received by the Company
 from its directors and taken on record by the Board of Directors, we
 report that none of the directors is disqualified as at March 31, 2011
 from being appointed as a director in terms of clause (g) of subsection
 (1) of Section 274 of the Act;
 
 f.  in our opinion and to the best of our information and according to
 the explanations given to us, the said financial statements 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:
 
 i.  in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31,2011;
 
 ii.  in the case of the Profit and Loss Account, of the loss of the
 Company for the year ended on that date;
 
 and
 
 iii.  in the case of the Cash Flow Statement, of the cash flows of- the
 Company for the year ended on that date.
 
 ANNEXURE TO AUDITORS'' REPORT
 
 [Referred to in paragraph 3 of our report of even date to the members
 of Simplex Mills Company Limited on the financial statements for the
 year ended March 31,2011 ]
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) According to information and explanation given to us, during the
 year, the management conducted physical verification of certain fixed
 assets in accordance with its policy of physical verification in a
 phased manner. In our opinion, such frequency is reasonable having
 regard to the size of the Company and the nature of its fixed assets.
 As explained to us, the discrepancies noticed on physical verification
 as compared to book records maintained, were not material and have been
 properly dealt with in the books of account.
 
 (c) In our opinion, a substantial part of fixed assets has not been
 disposed off by the company during the year.
 
 (ii) (a) As explained to us, management conducted physical verification
 of stocks of raw materials, finished goods and stores and spares at
 reasonable intervals during the year, as also as at the balance sheet
 date.
 
 (b) In our opinion, and according to the information and explanations
 given to us, the procedures followed by the management for physical
 verification of inventory during the year, are reasonable and adequate
 in relation to the size of the Company and nature of its business.
 
 (c) On the basis of our examination of inventory records, we are of the
 opinion that the Company has maintained proper records of inventory.
 Discrepancies noticed on physical verification of inventory as compared
 to the book records were not material and have been properly dealt with
 in the books of account.
 
 (iii) (a) The Company has granted interest free advance to one company
 which is covered in the register maintained under section 301 of the
 Companies Act, 1956. The maximum amount involved during the year
 amounted to Rs. 0.19 lacs.
 
 (b) In our opinion, other terms and conditions on which the Company has
 given loans are not, prima facie, prejudicial to the interest of the
 Company.
 
 (c) The Company is recovering the principal amounts as stipulated and
 is also regular in recovery of interest, where applicable.
 
 (d) There are no overdue amounts of more than Rupees one lakh in
 respect of loan given.
 
 (e) The Company has not taken any loan from any Company covered in the
 Register maintained under section 301 of the Companies Act,1956. Hence
 Clause (iii) (f) and (iii) (g) of Paragraph 4 of the Order are not
 applicable to the Company.
 
 (iv) In our opinion and according to information and explanation given
 to us, during the year under report, there are adequate internal
 control procedures commensurate with the size of the Company and the
 nature of its business for the purchase of inventory and fixed assets,
 and for the sale of goods. Further, on the basis of our examination of
 books and records of the Company, and according to the information and
 explanations given to us, we have neither come across nor have been
 informed of any continuing failure to correct major weaknesses in the
 aforesaid internal control procedures.
 
 (v) (a) To the best of our knowledge and belief and according to the
 information and explanations given to us, we are of the opinion that
 the particulars of contracts or arrangements referred to in Section 301
 of the Act that are required to be entered in the register maintained
 under that section, have been so entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, transactions (other than those already dealt with in
 paragraph (iii) above) made pursuant to contracts or arrangements
 referred to in (v) (a) above and exceeding the value of Rupees five
 hundred thousand in respect of each party during the year, have been
 made at prices which are reasonable having regard to the market prices
 prevailing at that time, where available.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public,
 to which the directives issued by the Reserve Bank of India and the
 provisions of Section 58A, 58AAor any other provisions of the Companies
 Act, 1956 or the rules framed there under apply.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company relating to the manufacture of cotton textile products,
 pursuant to the order made by the Central Government for the
 maintenance of cost records under Section 209(1 )(d) of the Act, and
 are of the opinion that, prima facie, the prescribed accounts and
 records have been made and maintained. We have not, however, made a
 detailed examination of the records with a view to determining whether
 they are accurate and complete.
 
 (ix) (a) According to the information and explanations given to us, the
 Company was regular during the year in depositing undisputed statutory
 dues including Provident Fund, Income tax, Sales tax, Customs duty and
 Excise duty with the appropriate authorities. According to the
 information and explanation given to us, as at the balance sheet date,
 the Company has no undisputed statutory dues of a material nature which
 remained unpaid for a period exceeding six months from the date on
 which they were payable.
 
 (b) According to the information and explanation given to us, as at the
 balance sheet date, the Company has not deposited dues of excise duty
 aggregating to Rs. 551.43 lacs, on account of the following disputes
 pending before authorities:
 
 Period to which dues relate       Pending before         Rs. In lacs.
 
 1984-85 and 1995-96              Assistant Commissioner     49.13
 
 1994 to 1996                     Commissioner (Appeals)    248.39
 
 1981-84,1981-95, and 2004        CESTAT                    159.13
 
 1981 to 1984                     High Court                 53.27
 
 2002-03                          Supreme Court              41.51
 
 Total                                                      551.43
 
 (x) As at the balance sheet date, the Company''s accumulated losses does
 not exceed fifty percent of its net worth within the meaning of Section
 2(29A) of the Companies Act, 1956. The Company has not incurred any
 cash losses during the year under report.
 
 (xi) According to the information and explanations given to us, the
 Company has not committed default in repayment of dues in respect of
 its bank borrowings. The Company did not have any borrowings from
 financial institutions.
 
 (xii) In our opinion, and according to the information and explanations
 given to us, during the year under report, the Company has not granted
 any loans or advances against security by way of pledge of shares and
 securities; accordingly, the provisions of clause (xii) of paragraph 4
 of the said Order are not applicable.
 
 (xiii) The Company is not a chit fund/nidhi/mutual benefit fund/society
 and accordingly, the provisions of clause (xiii) of paragraph 4 of the
 said Order are not applicable.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities and other
 investments as its principal business, and accordingly the provisions
 of clause (xiv) of paragraph 4 of the said Order are not applicable to
 the Company.
 
 (xv) According to the information and explanations given to us, as at
 the balance sheet date, the Company has not given any guarantees for
 loans taken by others from banks or financial institutions.
 
 (xvii)ln our opinion and according to the information and explanations
 given to us, the Company did not avail any term loans during the year
 under report. Accordingly, the provisions of clause (xvi) of paragraph
 4 of the said Order are not applicable.
 
 (xvii) In our opinion, and according to the information and
 explanations given to us, and on an overall examination of the balance
 sheet of the Company, prima facie, funds raised on a short-term basis
 have not been used for long- term investments
 
 (xviii)According to the information and explanations given to us,
 during the year under report, the Company did not make any preferential
 allotment of shares to parties listed in the register maintained under
 section 301 of the Act.
 
 (xix) The Company has not issued any debentures during the year under
 report.
 
 (xx) During the year under report, the company did not raise any money
 through a public issue; consequently, the provisions of clause (xx) of
 paragraph 4 of the Order are not applicable.
 
 (xxi) To the best of our knowledge and belief and according to the
 information and explanations given to us, there have been no cases of
 fraud on or by the Company noticed or reported during the year under
 report.
 
                                           For Vijay Rungta & Co.
 
                                            Chartered Accountants
 
                                  (Firm Registration No. 111427W)
 
                                                      Ajay Rungta
 
                                                          Partner
 
                                          Membership No: F- 40333
 
                                             Mumbai, May 14, 2011