Birla Transasia Carpets Ltd Auditor Reports

to the Members of Birla Trans Asia Carpets Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Birla TranAsia Carpets Limited ("the Company"), which comprises the Balance Sheet as at 31^st March 2015, the Statement of Profit and Loss and Cash Flow Statement for the year ended and a summary of significant accounting policies and other explanatory information.

Managements Responsibility for the financial statements

The Companys Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flow 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 the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, 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.

Auditors Responsibility

Our responsibility is to express an opinion on these 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 misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors 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 Companys preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Companys 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 financial statements.

Basis of Qualified Opinion

1. Attention is invited to Note 6 on Long Term Provisions. Accounting Standard (AS) 15 - Employee Benefits (Revised 2005) requires the provisioning of retirement benefits based on actuarial valuation of retirement benefits and additional disclosures as required in terms of AS-15. The management has made the provisions based on their own estimates.

2. Note No. 5 and 7 of Notes to Financial Statements with regard to non-provision of interest on Inter Corporate Loans, (amount unascertained) and PICUP loans (amounting to Rs 2,67,34,127/- up to 31^st March, 2013 and interest amount uncertain from 1^st April 2013 to 31^st March 2015) resulting into understatement of loss for the year. Similarly non-accounting of interest liability resulting in to understatement of current liabilities as on 31-03-2015 to the same extent.

3. Sundry Debtors/Creditors, unsecured loan and advances have been considered as good for recovery/payable by the management. Also are subject to confirmation and reconciliation. A detailed analysis of actual recoverability/payable which is overdue according to normal operating cycle of the company should be quantified and necessary provision need to be made. The non creation of provision for debts and interest are resulted into under/over statement of balances and loss. (Also Refer Notes on 5, 7, 8, 9, 11, 14, 16 and 28 to Financial Statements).

4. No provision has been made for contingent liabilities as defined under AS 29 are summarized in Note No. 25 to Notes to Financial Statements.

Qualified Opinion

In our opinion and to the best of our knowledge and according to the information and explanations given to us, except for the effects of the matters described in paragraphs 1 to 4 of the Basis for Qualified Opinion paragraph, 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.

a. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2015,

b. In the case of Statement of Profit and Loss, of the loss 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

Emphasis of Matter:

Attention is invited to regarding the financial statements being prepared on a going concern basis, notwithstanding the fact that the Companys net worth is eroded. Net worth as at March 31, 2015 is negative Rs.39,89,08,950. The company has referred to BIFR on 04/11/1991. Although the final order has not been passed by the BIFR and it is pending since long. The latest communication was dated 21/11/2013. These facts cast a significant doubt on the ability of the Company to continue as a going concern as rescheduling of debt, Loans, other liabilities and resuming normal operations. Our opinion is not modified in this respect.

Report on other legal and regulatory requirements

1. As required by the Companies (Audit Report) Order, 2015 (the Order) issued by the Central Government of India in terms of sub-section (11) of section 143 of Act, we give in the Annexure a statement on the matters specified in the paragraph 3 & 4 of the order, to the extent applicable.

2. 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 purpose of our audit.

b. In our opinion, proper books of accounts 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, Statement of Profit & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d. In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report comply with the accounting standards specified under section 133 of the Act; except for the effects of matters described in the Basis for Qualified Opinion paragraph

e. On the basis of written representations received from the directors, we report that none of the directors is disqualified as on 31^st March 2015, from being appointed as a director in terms of section 164(2) Act.

f. With respect to the other matters included in the Auditors Report and to our best of our information and according to the explanations given to us -

i. As mentioned in the Basis for Qualified Opinion paragraph, The Company has disclosed the pending litigations on its financial position in its financial statements as contingent liability. However, no provision has been made for contingent liabilities as defined under AS 29 are summarized in Note No. 25 to Notes to Financial Statements pertaining to disputed liabilities.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts except for pending litigation as mentioned in Point (i) above.

iii. There was no liability towards amount required to be transferred, to the Investor Education and Protection Fund by the Company

For LKM & Co.
Firm Registration Number - 126823W
Chartered Accountants
Laxmikant Malpani (Proprietor)	Place: Mumbai
Membership Number - 106989	Date: 29th May, 2015

Annexure to Audit Report

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, 2015, we report that:

i. FIXED ASSETS

a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets;

b) As explained to us, the assets have been physically verified by the management in accordance with a phased program of verification of its fixed assets adopted by the Company which, in our opinion, is reasonable, considering the size and the nature of its business. No material discrepancies have been noticed on such physical verification;

ii. INVENTORY

a) As explained to us, inventories were physically verified during the year by the management at reasonable intervals;

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were generally reasonable and adequate in relation to the size of the company and the nature of its business;

c) In our opinion and according to the information and explanations given to us and records produced before us, the company is maintaining proper records of its inventories and no material discrepancy has been observed by the management during the course of verification;

iii. LOANS AND ADVANCES GRANTED

The Company has not granted any Loans, Secured or Unsecured to Companies, Firms or other parties covered under register maintained under section 189 of the Act. Accordingly this clause is not applicable to the Company

iv. INTERNAL CONTROL SYSTEM

In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services.

However, in our opinion the company does not have an Internal Audit System commensurate with the size & nature of the business resulting in non compliance of Sec 138 of the Act.

v. ACCEPTANCE OF DEPOSITS

In our opinion and according to information and explanations given to us, the company has not accepted any deposits from public during the year. Hence the provisions of section 73 to 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 1975 are not applicable to the company.

vi. COST RECORDS

The Central Government has not prescribed maintenance of cost records under section 148 of the Companies Act, 2013 for any of the products of the Company;

vii. STATUTORY DUES

a) According to the information and explanations given to us following are the undisputed amounts of Provident Fund, Excise Duty and Sales tax etc. payable as on 31^st March, 2015 and due for a period of more than six months from the date they become payable and provided for in the books of accounts:

Name of the Statute	Nature of the dues	Amount (Rs.)*	Period for which the amount relates	Due Date	Date of Payment
	Excise Duty	13,32,900	2003- 04 & 2004- 05	31.03.2005	Not Paid
Central Excise Act,	Interest	7,06,000	2003-04	Up to 31.03.04	Not Paid
1944	Interest	7,70,000	2004-05	Up to 31.03.05	Not Paid
	Interest	4,56,718	2005-06	Up to 31.03.06	Not Paid
	Interest	2,08,293	2006-07	Up to 31.03.07	Not Paid
Delhi Sales Tax Act,1975	Sales Tax	14,67,631	2004-05	31.03.2005	Not Paid
Fringe	FBT	53,005	2006-07	31.03.200	Not Paid
Benefit Tax	FBT	1,31,438	2008-09	15.12.2008	Not Paid
The Income Tax Act,	TDS u/s 194J	1,59,932	2014-15	30.04.2015	Not Paid
1961	TDS u/s 192	61,700	2014-15	30.04.2015	Not Paid

* Above amounts are subject to interest on overdue and penalty.

b) According to the information and explanations given to us and as per our verification of records of the company, the following disputed amounts of tax not provided for in the accounts of the company has not been deposited with appropriate authority as at 31^st March, 2015:

Name of the Statute	Nature of the Dues	Amount (Rs.)	Period to which the amount relates	Forum where dispute is pending
		28,75,017	1998-99	Joint Commissioner of Trade tax (Appeal), Uttar Pradesh.
		9,545	2001-02	Deputy Commissioner, Uttar Pradesh
		75,196	2004-05	—Do---
UP Sales Tax	Sales Tax	14,53,367	2005-06	—Do---
		8,59,396	2006-07	—Do---
		5,04,180	2007-08	—Do---
		12,890	2009-10	—Do---
		71,419	2010-11	—Do---
		90,903	2011-12	—Do---
		1,14,038	1985-86	Deputy Commissioner of Sales tax (Appeal), Delhi
		68,956	1990-91	—Do---
		1,09,656	1993-94	—Do---
		1,73,753	1994-95	—Do---
		39,004	1995-96	—Do---
		1,18,144	1996-97	—Do---
Delhi Sales Tax Act, 1975	Sales Tax	87,794	1997-98	—Do---
		16,02,224	1998-99	—Do---
		25,66,329	1999-00	—Do---
		7,38,160	2000-01	—Do---
		1,22,840	2001-02	—Do---
		1,53,361	2002-03	—Do---
		4,40,128	2003-04	—Do---
		12,536	2003-04	—Do---
		1,28,158	2004-05	—Do---

Central Excise Act, 1944

i) One appeal filed at Appellate Tribunal, New Delhi on 06/10/2009 for Rs. 17,25,392/- with interest from the date of payment till the refund being granted. It is still pending before the adjusting authority.

ii) Contempt Petition filed against Excise Department at Allahabad High Court against our refund of Rs. 17,25,392/- against the order of Supreme Court in our favor. Summons issued to concerned authority.

PROVIDENT FUND

In the matter of the proceedings under section 14-B & 7-Q of the Employees Provident Fund & Misc. Provisions Act, 1952 and imposed the damages & interest for the period from 12/1997 to 11/2001 amounting Rs. 21,73,215/- and Rs. 7,43,883/- respectively for which Stay was taken Before the Honble Employees Provident Fund Appellate Tribunal, New Delhi. After several hearings the case was dismissed in favor of P.F. Commissioner however the final order was kept under ambiance.

1) Notice for interest payment from 10.06.2007 to 31.12.2014 (7Q) for M/ s. Gayatri Allied & Security Services of Panel Interest of Rs. 4, 08,964/- to be paid immediately. Hearing is in progress.

2) Pending deposit of P.F. for M/ s. Gayatri Allied & Security Services from October 13 to December 14 Rs.2,68,553/- to be Paid.

INCOME TAX

Income Tax Act.	Demand	4,867,100/-	1997-98	Joint Commissioner of Income Tax, New Delhi.
Income Tax Act.	Demand	200,887/-	2001-02	Deputy Commissioner of Income Tax, New Delhi.
Income Tax Act.	Demand	171,201/-	2005-06	Assistant Commissioner of Income Tax, New Delhi.
Income Tax Act.	Demand	10,533,346/-	2007-08	Deputy Commissioner of Income Tax, New Delhi.

1) A demand of Rs. One Crore five Lacs raised by Income Tax department (for AY 2008-2009) and approached to BIFR for recovery last hearing was on 21.11.2013 case pending with BIFR. Documents submitted by BTCL and case was remanded and referred to Ward for their comments.

2) Case for scrutiny AY - 2012 - 13 required documents submitted to department some documents to be received from Mumbai Office. Next date of hearing is on 17/12/2014. Required details submitted on 19.02.2015 final Hearing was conducted on 24/02/2015. The final ruling is awaited.

E.S.I.C

Particular	Amount
Employees State Insurance Corporation Dues	23,51,993/-

Speaking Order no. K/INSP/II/67 - 7713 - 11 dated 20.04.11 in the form of C - 18 for the period from May 2006 to March 2011 in the tune of Rs. 23,51,993/- Appeal submitted to Joint Director Sub- Reginal Office Noida. Recd Notice from department dated 17.02.15 regarding per person hearing on 24.02.2015.

Trade Tax

Particular	Year	Amount
Appeal pending before Jt. Commissioner of Trade Tax, Uttarakhand	2000-01	43,29,922

viii. ACCUMULATED LOSSES

The accumulated losses/Reserves of the company are more than fifty percent of its Equity Capital amounting to Rs. 42,72,59,240/-. The company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year. Company has referred to BIFR on 04/11/1991. The final order is yet to be passed.

ix. DUES TO FINANCIAL INSTITUTIONS, BANKS AND DEBENTURE HOLDERS

The Company had procured loan from The Pradeshiya Industrial and Investment Corporation of U.P. Ltd. (PICUP) which is having a Balance Outstanding as on year end of Rs. 1,47,00,125 towards principal which is overdue. Also, the interest payable thereon has not been accounted which is resulting in understatement of liability.

x. GUARANTEES GIVEN

As per the information and explanation given to us and records produced before us, Company has not given any guarantee for loans taken by others from Bank or Financial Institution and accordingly, this clause is not applicable to the Company;

xi. TERM LOANS

The Company has not taken any term loan during the year.

xii. FRAUD NOTICED

During the course of our examination of the books and records of the Company, carried out in accordance with generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instances of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by management.

For LKM & Co.
Firm Registration Number - 126823W
Chartered Accountants
Laxmikant Malpani (Proprietor)	Place: Mumbai
Membership Number - 106989	Date: 29th May, 2015