1.  We have audited the attached Balance Sheet of SIYARAM SILK MILLS
 LIMITED, as at 31st March, 2012, 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 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 (the
 Order ) 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.
 
 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, Statement of Profit & Loss and Cash Flow
 Statement dealt with by this Report are in agreement with the books of
 account.
 
 d) Balance Sheet, Statement of Profit & Loss and Cash Flow Statement
 dealt with by this report comply with the accounting standards referred
 to in Section 211 (3C) of the Companies Act, 1956.
 
 e) On the basis of information and explanations given to us and written
 representations received from the Directors of the Company as at 31st
 March, 2012 and taken on record by the Board of Directors, we report
 that no Director is disqualified from being appointed as Director of
 the Company under 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 said accounts, read together with the
 Accounting Policies and 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 :
 
 i) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2012;
 
 ii) In the case of the Statement of Profit and Loss of the profit for
 the year ended on that date; and
 
 iii) In the case of the Cash Flow Statement, of the cash flows for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 (Referred to in Paragraph 3 of our report of even date)
 
 i) a] The Company has maintained proper records showing full
 particulars, including quantitative details and the situation of its
 fixed assets.
 
 b] Fixed Assets have been physically verified by the management during
 the year. In our opinion, the frequency of verification of the fixed
 assets by the management is reasonable having regard to the size of the
 Company and the nature of its assets. No material discrepancies have
 been noticed on such physical verification.
 
 c] The fixed assets disposed off during the year, in our opinion, do
 not constitute substantial part of the fixed assets of the Company and
 such disposal has, in our opinion, not affected the going concern
 status of the Company.
 
 ii) a] The inventories have been physically verified by the management
 at reasonable intervals. In case of inventories lying with third
 parties, certificate confirming the stocks held by them have been
 received.
 
 b] In our opinion and according to the information and explanations
 given to us, the procedures for physical verification
 of inventory followed by the management were reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 c] In our opinion, the Company has maintained proper records of its
 inventory and no material discrepanies were noticed on physical
 verification.
 
 iii) a] The Company has granted unsecured loan to five companies
 covered in the register maintained under Section 301 of the Companies
 Act, 1956. The maximum amount involved during the year was Rs. 945 Lakhs
 and the year-end balance of the said loans was Rs. 360 Lakhs.
 
 b] In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions of
 unsecured loan given by the Company are not prima facie, prejudicial to
 the interest of the Company.
 
 c] The Borrowing Companies are regular in repaying the principal amount
 as stipulated and have been regular in payment of interest.
 
 d] There is no overdue amount of loans given.
 
 e] The Company has not taken any loan during the year.
 
 iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems 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 and
 services. During the course of our audit, we have not observed any
 continuing failure to correct major weaknesses in internal control
 systems.
 
 v) a] According to the information and explanations given to us, the
 particulars of contracts or arrangements that need to be entered into
 the register maintained under Section 301 of the Companies Act, 1956
 have been so entered, b] According to the information and explanations
 given to us, transactions made in pursuance of contracts or
 arrangements entered into the register maintained under Section 301 of
 the Companies Act, 1956 and exceeding the value of rupees five lakhs in
 respect of each party have been made at prices which are reasonable
 having regard to the prevailing market prices at the relevant time.
 
 vi) In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 58A and 58AA or any other applicable provisions of the Companies Act,
 1956 and the rules framed thereunder in respect of deposits accepted
 from the public. No order has been passed by the Company Law Board or
 National Company Law Tribunal or Reserve Bank of India or any Court or
 any Tribunal.
 
 vii) In our opinion, the Company has an internal audit system
 commensurate with the size of the Company and nature of its business.
 
 viii) We have broadly reviewed, without carrying out a detailed
 examination, the books of account maintained by the Company pursuant to
 the rules made by the Central Government for the 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 maintained.  We have not however, made detailed examination of the
 records with a view to determining whether they are accurate or
 complete.
 
 ix) a] According to the records of the Company, the Company is regular
 in depositing with appropriate authorities undisputed amount of
 Provident Fund, Investor Education Protection Fund, Employees State
 Insurance, Income-tax, Sales-tax, Service-tax, Custom Duty, Excise
 Duty, Cess and other statutory dues applicable to it and according to
 the information and explanations given to us, no undisputed amounts
 payable were outstanding as at 31st March, 2012 for a period of more
 than six months from the date they became payable, b] According to the
 information and explanations given to us, the particulars of statutory
 dues as at 31st March, 2012 which have not been deposited on account of
 and dispute are as follows
 
 Name of the    Nature of     Forum where     Period to          Amount
 Statute        Dues          dispute is      which the          Rs in 
                                                                 lacs 
                              pending         amount relates
 
 Central        Cenvat        Appellate       1997-98              0.23
 Excise Act,                  Tribunal
 1944
 
 Central        Penalty       Commissioner    1997-98              0.25
 Excise Act,                  Appeal
 1944
 
 Central        Levy of       Additional      1990-92             14.68
 Excise Act,    Duty          Commissioner
 1944
 
 Central        Levy of       Commissioner    2003-04              2.72
 Excise Act,    Duty and      Appeal
 1944           Penalty
 
 Sales Tax      Sales Tax     Joint Commis-   2003-04             41.64 
               (BST &         sioner of Sales
                CST)          Tax Appeals 
 
 Sales Tax      Sales Tax     Joint Commis-   2004-05             69.34 
               (BST &         sioner of Sales 
                CST)          Tax Appeals 
 
 Income Tax     Income        Commissioner    2008-09             69.93 
                Tax           Appeal
 
 x) The Company has no accumulated losses and has not incurred any cash
 losses during the financial year covered by our audit and in the
 immediately preceding financial year.
 
 xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 financial institutions or banks.
 
 xii) In our opinion and according to the information and explanations
 given to us, no loans and advances have been granted by the Company on
 the basis of security by way of pledge of shares, debentures and other
 securities.
 
 xiii) The Company is not a chit/nidhi/mutual benefit fund/ society and
 clause 4 (xiii) of the Order is not applicable.
 
 xiv) The Company is not dealing or trading in shares, securities,
 debentures and other investments and clause 4 (xiv) of the Order is not
 applicable.
 
 xv) On the basis of the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 xvi) In our opinion and according to the information and explanations
 given to us, the term loans have been applied for the purpose for which
 they were raised.
 
 xvii) According to the information and explanations given to us and on
 an overall examination of the balance sheet and other records of the
 Company, we are of the opinion that, funds raised on short-term basis
 have not, prima facie, been used for long-term investment.
 
 xviii) During the year, the Company has not made any preferential
 allotment of shares to parties and companies covered in the Register
 maintained under Section 301 of the Companies Act, 1956.
 
 xix) The Company did not have any outstanding debentures during the
 year.
 
 xx) The Company has not raised any money by public issues during the
 year.
 
 xxi) Based on the audit procedures performed and according to the
 information and explanations given to us by the management, we report
 that no fraud on or by the Company have been noticed or reported during
 course of our audit.
 
                                            For Jayantilal Thakkar & Co.
 
                                                  Chartered Accountants 
 
                                                 (Firm Reg. No. 104133W)
 
                                                         C.  V. Thakker
 
                                                                Partner
 
 Mumbai, 18th May, 2012                           Membership No. 006205