INDEPENDENT AUDITORS' REPORT

1. REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial statements of Supreme Tex Mart Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Profit and Loss Statement, the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

2. MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements

4. Emphasis on matter

The Company has incurred a net loss of Rs, 17884.09 lacs during the year ended 31st March, 2016, which exceeds the net worth of the company, and as on that date, the companyRs,s current liabilities exceeded its current assets by Rs, 15297.67 lacs and its total liabilities exceeded its total assets by Rs, 18653.78 lacs. The lead bank (SBI) and member banks i.e. Central Bank of India, Union Bank of India, SBER Bank, Allahabad Bank & IDBI Bank have classified the accounts of the company as non performing assets. These events cast significant doubt on the Company's ability to continue as a going concern. The appropriateness of the going concern assumption is dependent on the company® ability to establish consistent profitable operations and generate positive cash flows as well as raising adequate finance to meet its short term and long term obligations.

5. BASIS FOR QUALIFIED OPINION Further we report that

i. The Company has not provided for the Interest on borrowings from banks which have not charged interest on account of accounts classified as non-performing assets. This notional amount of interest as calculated by taking last rate of interest charged by the banks comes to Rs,3525.28 lacs.

ii. The earnings (loss) per share for the year ended March 31,2016 would have been Rs, (31.38) against reported earnings (loss) per share of Rs, (26.21)

iii. Provision for Gratuity and leave encashment is made on an estimated basis, without Actuarial valuation, which is not in accordance with Accounting Standard -15 on Employee Benefits.

6. QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us subject to our comments in paragraph 5 above, the aforesaid standalone 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, of the state of affairs of the Company as at March 31, 2016, and its loss and its cash flows for the year ended on that date.

7. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

As required by the Companies (Auditor's Report) Order, 2016 issued by the Central Government of India in terms of subsection (11) of Section 143 of the Act, we give in the Annexure A, a statement on the matters specified in Paragraphs 3 and 4 of the order, to the extent applicable.

8. As required by Section 143(3) of the Act, we report that:

a) We have sought and 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 it appears from our examination of those books.

c) The Balance Sheet, the Profit and Loss Statement, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 except with the requirement of Accounting Standard (AS)-15 on "Employee Benefits notified by the Companies (Accounts) Rules, 2014;

e) On the basis of the written representations received from the directors as on March 31, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B"; and

g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note 26 to the financial statements.

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, and as required on long-term contracts including derivative contracts.

The company is not required to transfer any amount to the Investor Education and Protection Fund.

The Annexure referred to in our independent Auditors Report to the members of the company on the financial statements for the year ended 31^st March 2016, we report that

(i) (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were indentified on such verification. In our opinion company does not have any reasonable program having regard to the size of the company and the nature of its fixed assets.

(c) According to the information and explanations given to us and based on our examination of the records of the company, title deeds of immovable properties are held in the name of the company.

(ii) (a) The Management has conducted physical verification of inventory at reasonable intervals during the year. However the Scope and coverage of physical verification needs to enhanced to make it commensurate with the size and nature of the business of the company.

(b) The procedures of physical verification of inventory followed by the management needs to be strengthened to make it reasonable and adequate in relation to the size of the company.

(c) The company is maintaining proper records of inventory and material discrepancies were noticed on physical verification which have been properly dealt with in the books of account;

(iii) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) In our opinion and according to information & explanation given to us, the Company has complied with the provisions of section 185 & 186 of the Act, with respect to the loans & investments made.

(v) In our opinion and according to information & explanation given to us, the company has not accepted any deposits for which directives issued by Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and rules framed there under are applicable for compliance.

(vi) According to the information and explanation given to us, maintenance of cost records has been specified by the Central Government under sub section (1) of section 148 of the Companies Act, 2013.

(vii) (a) The company has not been regular in depositing undisputed statutory dues including provident fund, employees^ state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities.

In our opinion and according to the information and explanation given to us, undisputed dues in respect of provident fund, employees state insurance and income tax which were outstanding at the yearend for a period of more than six months from the date they become payable are as follow:

a) According to the information and explanation given to us, the disputed statutory dues aggregating to Rs,4.15 lacs that has not been deposited on account on matters pending before the appropriate authority in respect of Service tax and central Sales Tax are given below: -

(viii) According to information and explanation given to us, the company has default in repayment of dues to banks and financial institutions. The detail of default are as under:

a) Interest includes interest accrued on long term and short term borrowing not provided in the statement of profit and loss.

(ix) The company did not raise any money by way of initial public offer or further public offer (including debt instruments). Company has raised vehicles loans amounting to Rs, 49.84 lacs & they were applied for the purposed for which they are raised.

(x) According to the information and explanations given to us, no fraud by the company or any fraud on the company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) According to the information and explanations given to us and based on our examination of the records of the company, the company has paid or provided the managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule ? V to the Companies Act.

(xii) In our opinion and according to the information and explanations given to us, the company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the company, all transactions with the related parties are in compliance with section 177 & 188 of Companies Act, 2013 and the details of such transactions have been disclosed in the Financial Statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the company, company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the company, company has not entered into any non-cash transactions with directors or persons connected with them. Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For NANDA & BHATIA

Chartered Accountants

F.R.N. : 004342N

Sd/-

Place: Ludhiana P.C.S. VIRDI

Dated: 30^th May, 2016 Partner

M. No.017056