We have audited the attached Balance Sheet of SURYAVANSHI SPINNING
 MILLS LIMITED, SECUNDERABAD (A.P) 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.
 
 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.
 
 We report as follows:
 
 1.  As required by the Companies (Auditors'' Report) Order, 2003, issued
 by the 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:
 
 2.  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, 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 Companies Act, 1956;
 
 v) On the basis of the written 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 is disqualified as on
 31st March, 2012 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 read in conjunction
 with the Schedules annexed therewith, 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:
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2012;
 
 b) in the case of the Statement of Profit and Loss, of the Loss of the
 Company 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
 
 Referred to in paragraph 1 of our report of even date,
 
 1.  a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) As explained to us, the management has physically verified most of
 the fixed assets during the year and 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 the assets.  No material
 discrepancies were noticed on such verification.
 
 c) The fixed assets disposed off during the year are not substantial
 and hence it has not affected the going concern status of the Company.
 
 2.  a) The inventory has been physically verified during the year by
 the management. In our opinion, the frequency of verification is
 reasonable.
 
 b) In our opinion, the procedures of physical 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.
 
 c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on physical verification between the physical
 stocks and book records were not material.
 
 3.  The Company has not taken/granted any loans, secured or unsecured
 to Companies, firms or other parties covered in the Register maintained
 under Section 301 of the Act. Hence, provisions of clause (iii), (b),
 (c), (d), (f) and (g) of paragraph 4 are not applicable to the Company.
 
 4.  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 with regard
 to purchase of inventory and fixed assets and with regard to 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 system.
 
 5.  a) In our opinion 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 Companies Act, 1956 have
 been entered in the register to be maintained under that section.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of contracts or
 arrangements entered in the register maintained under section 301 of
 the Companies Act,1956 have been made at prices which are reasonable
 having regard to prevailing market prices at the relevant time.
 
 6.  The Company has not accepted deposits from the public. Hence the
 provisions of Section 58A, 58AA and other relevant provisions of the
 Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,
 1975 are not applicable to the Company for the time being.
 
 7.  In our opinion, the Company has an internal audit system
 commensurate with its size and nature of its business.
 
 8.  We have broadly reviewed the books of account relating to
 materials, labour and other items of cost 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 in respect of yarn and are of the opinion that prima facie
 the prescribed accounts and records have been made and maintained.
 
 9.  a) According to the records the Company is regular in depositing
 with appropriate authorities 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 other material statutory dues applicable to
 it.
 
 b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income-Tax/Sales Tax, Wealth
 Tax, Service Tax, Custom Duty, Excise Duty and Cess were in arrears, as
 at 31st March, 2012.
 
 c) According to the records of the Company and the information and
 explanations given to us, the dues of sales tax, Income Tax, Customs
 Duty, Wealth Tax, Service Tax, Excise Duty and Cess which have not been
 deposited on account of any dispute are as follows :
 
 Sl.   Nature
       of the     Nature of     Amount     Period to
                                           which       Forum where
 No    Statute    the Dues     (Rs.)       the amount
                                           relates     dispute is
                                          (Financial 
                                           Year)       pending
 
 1     M.P Sales
       Tax Act    Sales Tax 
                  dues          3,39,773/-  2003-2004  Deputy 
                                                       Commissioner
                                                      (Appeal) Sales
                                                       Tax, Bhopal,
                                                       Madhya Pradesh.
 
 2     M.P Sales 
       Tax Act    Sales Tax 
                  dues          7,25,736/-  2004-2005  Deputy 
                                                       Commissioner
                                                      (Appeal) Sales
                                                       Tax, Bhopal,
                                                       Madhya Pradesh.
 
 3     Andhra 
       Pradesh    Sales Tax 
                  dues         27,98,569/-  2001-2002  Hon''ble A.P
       General 
       Sales Tax                                       High Court,
                                                       Hyderabad
      (APGST)Act,
       1957
 
 4     Andhra 
       Pradesh 
       General    Sales Tax 
                  dues         40,27,678/-  1997-1998  Addl.Chief
                                                       Judge, City
       Sales Tax 
      (APGST)
       Act, 1957.                                      Civil Court,
      (Case filed 
       by Bharat
       Petroleum                                       Secunderabad.
       Corporation 
       Ltd
 
 5     Customs 
       Act, 1962  Interest on  20,32,054/-  2003-2004  Hon''ble
                  Customs Duty                         High Court,
                                                       Jabalpur,
                                                       Madhya Pradesh
 
 10.  The Company has no accumulated losses at the end of the financial
 year. The Company has incurred cash losses during the financial year
 covered by our audit and the Company has not incurred any cash losses
 during preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to any
 financial institutions and banks.
 
 12.  The Company has not granted any loans and advances on the basis of
 security by way of pledge of shares, debentures and other securities.
 
 13.  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 are not applicable to the
 Company.
 
 14.  The Company is not dealing or trading in shares, securities,
 debentures and other investments.  Therefore, the provisions of clause
 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not
 applicable to the Company.
 
 15.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from
 banks or financial institutions.
 
 16.  In our opinion and according to the information and explanations
 given to us the term loans were applied for the purpose for which the
 loans were raised.
 
 17.  In our opinion and according to the information and explanations
 given to us the funds raised on short- term basis have not been used
 for long-term investment.
 
 18.  During the year, the Company has not made any preferential
 allotment of Shares to parties or companies covered in the register
 maintained u/ s.301 of the Companies Act, 1956. Accordingly, the
 provisions of Clause 4(xviii) of the Order are not applicable to the
 Company.
 
 19.  During the year, the Company has not issued any debentures and
 therefore the question of creating security or charge in respect
 thereof does not arise.
 
 20.  During the year, the Company has not made any public issue and
 therefore the question of disclosing the end use of money raised by
 public issue does not arise.
 
 21.  Based upon the audit procedures performed and according to the
 information and explanations given to us, we report that no fraud on or
 by the Company has been noticed or reported during the year.
 
                                           For BRAHMAYYA & CO.,
 
                                        Chartered Accountants 
 
                                        Firm Regn. No.000513S
 
                                                      K S RAO
 
 Place: Hyderabad                                     Partner
 
 Date : 30th May, 2012                   Membership No. 15850