1.  We have audited the attached Balance Sheet of S. Kumars Nationwide
 Limited (''the Company'') as at 31st March, 2011 and the Profit and Loss
 Account and also 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, as
 amended by the Companies (Auditor''s Report) (Amendment) Order, 2004,
 issued by the Central Government of India in terms of sub-section (4A)
 of Section 227 of the Companies Act, 1956 and on the basis of such
 checks of the books and records of the Company as we considered
 appropriate and according to the information and explanations given to
 us, we give 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 paragraph 3 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, 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 (AS) referred to in sub-section (3C) of Section 211 of the
 Act, to the extent applicable, except that the accumulated interest and
 financial charges amounting to Rs. 13,454 lacs and future differential
 interest on restructured debts on Net Present Value (NPV) basis
 amounting to Rs. 856 lacs pertaining to earlier years (after amortising
 Rs. 1,596 lacs during the year) have been carried forward under the
 head ''Restructured Financial Cost (RFC) grouped/presented under
 Schedule ''F'' of financial statement i.e. Loans and Advances, which is
 not in compliance with AS 5 Net Profit or Loss for the Period, Prior
 Period Items and Change in Accounting Policies and has resulted into
 overstatement of Profit for the year by Rs. 14,310 lacs and
 overstatement of loans & advances by same amount (Refer Note No. 3(b)
 of Schedule ''P-II'');
 
 v. On the basis of the 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
 31st March, 2011 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
 
 vi. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and
 subject to paragraph 4(iv) above, 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 31st March, 2011;
 
 b) in the case of the Profit and Loss Account, of the Profit 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 AUDITORS'' REPORT
 
 [Referred to in paragraph 3 of the Auditors'' Report of even date to the
 members of S. Kumars Nationwide Limited on the financial statements for
 the year ended 31st March, 2011]
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) All the fixed assets have not been physically verified by the
 management during the year, but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As informed, no
 material discrepancies were noticed on such verification.
 
 (c) In our opinion and according to the information and explanations
 given to us, a substantial part of fixed assets has not been disposed
 off by the Company during the year.
 
 (ii) (a) As explained to us, inventory lying with the Company have been
 physically verified by the management at regular intervals during the
 year. In respect of inventories lying with third parties, certificates
 confrming substantial portion of the inventories have been received. In
 our opinion, the frequency of verification is reasonable.
 
 (b) The procedures of physical verification of inventory followed by the
 management are reasonable and adequate in relation to the size of the
 Company and the nature of its business.
 
 (c) On the basis of our examination of records of inventory, we are of
 the opinion that the Company is maintaining proper records of
 inventory. The discrepancies noticed on verification between physical
 stocks and book stocks were not material and the same have been
 properly dealt with in the books of accounts.
 
 (iii) (a) As informed, the Company has granted interest free loan to a
 company covered in the register maintained under section 301 of the
 Companies Act, 1956 amounting to Rs. 5 crores.
 
 (b) In our opinion and according to the information and explanations
 given to us, terms and conditions of above said interest free loan are
 not, prima facie, prejudicial to the interest of the Company.
 
 (c) The above said company has repaid the principal amount as
 stipulated and there is no overdue amount with regard to said loan.
 
 (d) The Company has taken loan or advances in the nature of loan of Rs.
 11,861 lacs from two Companies listed in the register maintained under
 Section 301 of the Act, besides interest bearing secured loan of Rs.
 44,000 lacs and unsecured interest free loan of Rs. 4,000 lacs from one
 of the above said company taken in earlier year. The maximum amount
 involved during the year was Rs. 69,669 lacs (including interest
 bearing loan of Rs. 38,500 lacs) and the year- end balance of all loans
 and advances in the nature of such loans taken from the said party was
 Rs. 40,050 lacs.
 
 (e) In our opinion and according to the information and explanations
 given to us, the rate of interest and other terms and conditions for
 such loans and advances in the nature of loans are, prima facie, not
 prejudicial to the interest of the Company.
 
 (f) In respect of the aforesaid loans and advances in the nature of
 loans, the Company is regular in repaying the principal amounts as
 stipulated and in payment of interest, wherever applicable.
 
 (iv) In our opinion and according to the information and explanations
 provided to us, there exists an adequate internal control system
 commensurate with the size of the Company and nature of its business
 with regard to purchase of inventories, fixed assets and sale of goods
 and services. During the course of our audit, we have not observed nor
 have been informed of any continuing failure to correct major
 weaknesses in internal control systems of the Company.
 
 (v) (a) 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 Companies Act, 1956 that need to be
 entered into the register maintained under section 301 have been so
 entered.
 
 (b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lacs have been entered into
 during the financial year at prices which are reasonable having regard
 to the prevailing market prices at the relevant time.
 
 (vi) The Company has not accepted any deposits from the public within
 the meaning of Sections 58A and 58AA of the Act and the rules framed
 there under.
 
 (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 with
 regard to fabrics by the Company 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. We have, however,
 not made a detailed examination of the records with a view to determine
 whether they are accurate or complete.
 
 (ix) (a) 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 have
 generally been regularly deposited with the appropriate authorities,
 except at a unit where there have been delays in depositing certain
 statutory dues.  Further, since the Central Government has till date
 not prescribed the amount of cess payable under section 441 A of the
 Companies Act,1956, we are not in a position to comment upon the
 regularity or otherwise of the Company in depositing the same.
 
 (b) According to the information and explanations given to us,
 undisputed dues in respect of provident fund, investor education and
 protection fund, employees'' state insurance, income-tax, wealth-tax,
 service tax, sales-tax, customs duty, excise duty, cess and other
 statutory dues which were outstanding, at the year end for a period of
 more than six months from the date they became payable are as follows:
 
 Name of the 
 statute           Nature of the 
                   dues            Amount ( Rs. )  period to which the
                                                   amount relates
 
 Property Tax Act  Property tax    48.38 lacs      Earlier years
 
 Wealth Tax Act, 
 1957              Wealth Tax      32.26 lacs      Earlier years
 
 (c) According to the information and explanation given to us, there are
 no dues of income tax, sales-tax, wealth tax, service tax, customs
 duty, excise duty and cess which have not been deposited on account of
 dispute, except the following:
 
 Name of the 
 statute       Nature of  Amount ( Rs. ) period to which 
                                         the              Forum at which
                                                          appeal is
               the dues                  amount relates   pending
 
 Income Tax 
 Act, 1961     TDS         513.83 lacs   F.Y.2007-08, 
                                         08-09            Commissioner of
                                                          Income Tax,
                                         and 09-10        Appeals (TDS),
                                                          Mumbai
 
 (x) The Company has neither accumulated losses as at March 31, 2011 nor
 has it incurred cash losses during the financial year covered by our
 audit. However, considering the effect of our audit qualification as
 stated in para 4(iv) in the Auditors'' Report, the Company has incurred
 cash losses in the immediately preceding financial year.
 
 (xi) The Company has delayed on some occasions, the details of which
 are being compiled, in repayment of dues to banks, financial
 institutions and debenture holders.
 
 (xii) As explained to us, the Company has not granted any loans or
 advances on the basis of security by way of pledge of shares,
 debentures or any other securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(xiii) of the Companies (Auditor''s Report) Order, 2003 (as amended)
 are not applicable to the Company.
 
 (xiv) The Company has not dealt or traded in shares, securities or
 debentures. In respect of investments made by it, the Company has
 maintained proper records and all the investments are held by the
 Company in its own name.
 
 (xv) According to the information and explanations given to us and the
 representations made by the management, the Company has given guarantee
 for loans taken by others from banks or financial institutions, the
 terms & condition whereof are prima facie, not prejudicial to the
 interest of the Company.
 
 (xvi) According to the information and explanation given to us and
 based on the records of the Company examined by us, the Company has
 applied the term loan for the purpose for which it was obtained.
 
 (xvii) 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 has been used for long-term
 investment.
 
 (xviii) According to the information and explanation given to us, the
 Company has made preferential allotment of shares to a Company covered
 in the register maintained under Section 301 of the Act. In our
 opinion, the prices at which shares have been issued is not prejudicial
 to the interest of the Company.
 
 (xix) According to the information and explanations given to us, the
 Company had issued debentures in the earlier years for which security
 has been created.
 
 (xx) The Company has not raised any money by issue of any
 shares/securities to public 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
 
                                                      FRN 103523W
 
                                                     Rakesh Rathi
 
 Place: Mumbai                                            Partner
 
 Date: 30th May, 2011                         Membership No.45228