8K Miles Software Services Ltd Directors Report.

To The Members of 8K Miles Software Services Limited Report on the Audit of the Standalone Financial Statements

Disclaimer of Opinion

We were engaged to audit the accompanying standalone financial statements of 8K Miles Software Services Limited

("the Company"), which comprise the Balance Sheet as at 31 March 2019, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

We do not express an opinion on the accompanying standalone financial statements of the Company. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these standalone financial statements.

Basis for Disclaimer of Opinion

1. Report under Section 143 (12) of the Companies Act, 2013 ("the Act")

During the course of our audit of the standalone and consolidated financial statements of the Company for the year ended 31 March 2019, we came across certain transactions that gave us reason to believe that suspected offences involving fraud have been committed in the Company. Such transactions with regard to the standalone financial statements, inter alia, pertained to:

(a) Several instances of inconsistencies between declarations provided by Directors and information available in the public forum which demonstrated existence of probable related parties which were not disclosed previously, including certain transactions with such parties which were not disclosed or approved by the Audit Committee/Board of Directors. Also see paragraph 5.1(a) below.

(b) Several instances of transactions with certain customers, wherein the Company was not able to provide us with the particulars of the services rendered and acknowledged by the customer, the details of employees actually rendering such service, the appropriateness and source of the monies received from such customers. Also see paragraph 2 below.

(c) Several instances of multiple addresses being considered in various communications with certain customers in the invoices, website of the customer, on cheques received from customers, including instances wherein some of the communication addresses coincided with the residential address of certain employees of the Company or its subsidiaries, which impacted our ability to establish the authenticity of the customer. Also see paragraph 2 below.

(d) Several instances of communications with a vendor, wherein there were multiple communications using different email ids, documents with varying signatures and differences in the spelling of the common signatory of the vendor, etc. which impacted our ability to establish the authenticity of the vendor. Also see paragraph 4 below.

(e) Appropriate approvals and concerns over recovery of advances made to a related party, by a subsidiary of the Company. Refer paragraph 3 for more details.

Several instances of various inconsistencies were also noted during our audit of the books of account of certain foreign subsidiaries in association with our audit of the consolidated financial statements of the Company.

Pursuant, inter alia, to the above observations, we requested the Audit Committee of the Company to provide us with their replies or observations to the aforesaid matters for us to consider the same as part of our audit.

Subsequent to our reporting of such matters to the Audit Committee vide our letter dated 15 July 2019, the Audit Committee in its meeting held on 18 July 2019 appointed an external firm of Chartered Accountants to carry out an investigation. We are informed that as on the date of this report, the investigation report of the external firm of Chartered Accountants has not yet been received by the Company and, hence, the same has not been made available to us.

Further, we also included the aforesaid matters in our report dated 13 September 2019 to the Central Government in accordance with the requirements of section 143(12) of the Act. The matters so reported also included observations relating to certain transactions pertaining to some subsidiaries, which are included in our report on the consolidated financial statements of the Company.

Pending receipt of the report on the findings of such investigation from the external firm of Chartered Accountants and pending receipt of information and explanations and evidences relating to the aforesaid matters from the management of the Company, we have been unable to obtain sufficient and appropriate audit evidence in respect of the above matters/transactions that gave us reason to believe that suspected offences involving fraud may have been committed in the Company and/or its subsidiaries.

In view of the above, we are unable to comment on the consequential adjustments, if any, that may be required to these standalone financial statements in this regard.

2. Revenue from Contracts with Customers and related outstanding receivables

During the year ended 31 March 2019, the Company recognised revenue aggregating to Rs. 2,428.69 Lakhs from the customers referred to in paragraphs 1(b) and 1(c) above, wherein such customers have an outstanding balance aggregating Rs. 3,464.01 Lakhs as at 31 March 2019 (includes balances of Rs. 1,022.36 Lakhs outstanding even as at 31 March 2018).

In the absence of complete information regarding the proof of services rendered, efforts expended, and in view of our observations in paragraphs 1(b) and 1(c) above in respect of these customers, we are unable to conclude on the appropriateness / correctness / completeness / validity of the revenue recognised, compliance with the recognition and measurement of revenue required under the Indian Accounting Standard (Ind AS) 115 Revenue from Contracts with Customers and the corresponding receivables in these standalone financial statements.

The Company has also not carried out an evaluation of the expected credit loss required under Indian Accounting Standard (Ind AS) 109 - Financial Instruments for the outstanding trade receivables as at 31 March 2019 and therefore we are unable to comment on the adequacy and appropriateness of the provision made against the trade receivable balances as at 31 March 2019.

3. 8K Miles Media Private Limited ("8K Miles Media")

3.1. Around the last week of September 2018, we were made aware of the resignation of the statutory auditor of 8K Miles Media, a company promoted by the promoter directors of the Company, vide their resignation letter dated 30 April 2018. As per the said letter, the resignation was due to the misuse of that Audit Firms Letter Head and signature of their Partner through forgery in certain ODI Certificates submitted by 8K Miles Media to its bankers for transfer of funds of USD 71.51 Lakhs (Rs. 4,612.91 Lakhs) to 8K Miles Media Holdings Inc. USA, a subsidiary of 8K Miles Media. 8K Miles Media and its subsidiaries (together "8K Miles Media Group") were identified as a related party in the consolidated financial statements of the Company for the year ended 31 March 2018.

During the period ended 31 December 2018, the management of 8K Miles Media initiated an independent forensic review to evaluate the authenticity of the signatures in the ODI Certificates referred above. 8K Miles Media has submitted a copy of the forensic report to the Company. We understand that the aforesaid forensic report states that the writer of the signature in the ODI certificates is the same as that of the specimen signatures of the audit partner as provided to the forensic auditor thereby concluding that there was no forgery in the ODI certificates.

Since this matter relates to a company where another firm is the statutory auditor and since the financial statements of that company are not included in the consolidated financial statements of the Company, we have not been able to perform any procedures related to the allegation or the forensic report.

3.2. Further, during the last week of September 2018,

(a) the CEO and Managing Director of the Company, who was also a promoter director in 8K Miles Media, resigned as a director in 8K Miles Media.

(b) the CFO and Executive Director of the Company, who was the other promoter director in 8K Miles Media, resigned from his role as CFO of the Company stating that his resignation was to have the necessary time to clear all the baseless allegations and unsubstantiated allegations relating to 8K Miles Media. However, he continues to be a director in both the Company as well as 8K Miles Media.

3.3. The Company has trade and other receivables aggregating Rs. 3,309.10 Lakhs as at 31 March 2019 receivable from 8K Miles Software Services Inc., a subsidiary. It may be noted that this subsidiary had loans receivable from entities of 8K Miles Media Group in the USA aggregating USD 89.61 Lakhs (Rs. 5,808.44 Lakhs) as at 31 March 2018.

We are informed by the management of the Company that such amounts due, including interest as accrued, have been fully recovered as at 31 March 2019 by that subsidiary. However, in the absence of appropriate workings for the interest, documentation regarding loan agreements and due to inconsistencies noted between the transactions as per the Bank Statements of the subsidiary with the transactions as recorded in the books of account of the subsidiary, we were unable to confirm the managements assertion on the said collections made by the subsidiary.

3.4. We are unable to conclude if the above events in 8K Miles Media have any effect on:

(a) the Company and its operations, in view of the allegations in the aforesaid resignation letter of the statutory auditor of that company and the nature of the Companys relationship with 8K Miles Media, as described in paragraphs 3.1 and 3.2 above, respectively;

(b) the ability of the Companys subsidiary to transfer funds back to the Company, in view of the loans receivable by it from the entities of 8K Miles Media Group in the USA as described in paragraph 3.3 above, which could result in a possible impairment in the investment of Rs. 9,816.65 Lakhs held in that subsidiary, trade receivables of Rs. 2,819.92 Lakhs and interest recoverable of Rs. 489.18 Lakhs from such subsidiary; and

(c) the consequential impact, if any, of the same on the operations of the Company.

4. Procurement of services and trade payables

4.1. Based on the master service agreement with the external service provider, referred to in paragraph 1(d) above, for technical and referral services to be rendered towards certain customers, referred to in paragraphs 1 (b) and 1(c) above, the Company has recorded consultancy charges of Rs. 1,706.40 Lakhs, for the year ended 31 March 2019 with an outstanding liability of Rs. 1,709.16 Lakhs.

In the absence of complete information regarding proof of the services rendered by the vendor, and in view of our observations in paragraph 1(d) above in respect of this vendor, we are unable to conclude on the appropriateness / correctness / completeness / validity of the expense and the corresponding liability recorded in these standalone financial statements.

4.2. Further, the Company has not evaluated the applicability or coverage of such services under the Goods and Service Tax Regulations and has not accrued / paid the same. However, in our opinion, such tax is payable on those services. The management has not determined the amount of Goods and Service Tax payable and any interest thereon. We are unable to conclude on the consequential impact of the same on these standalone financial statements.

5. Regulatory compliances

5.1. We are unable to conclude on the consequential impact, if any, on the operations and the financial performance of the Company arising out of the following matters pertaining to non-compliance with the provisions of the Companies Act, 2013 and notifications issued by the Securities and Exchange Board of India (SEBI), as applicable:

(a) In the absence of appropriate processes for identifying related parties in view of the matters reported in paragraph 1 (a) above, we are unable to comment on the accuracy and completeness of the related parties identified and disclosed by the Company including compliance with obtaining necessary approvals, as required, from those charged with governance.

(b) It was noted that in the case of two of the Directors who were re-appointed at the Annual General Meeting (AGM) held on 18 September 2015 and designated as independent directors (One was also the Chairman of the Audit Committee and the other a member of the Nomination and Remuneration Committee and also the Chairman of the Stakeholder Relationship Committee), they may have ceased to be independent directors under the Act with effect from 17 November 2015 and 12 August 2015, respectively, being the date from when their relatives were employed either with the Company or its subsidiary. These directors have been designated as non-independent directors by the Company from 06 September 2019 and 13 February 2019, respectively.

Considering the above, we are unable to opine on the validity of the meetings of the Board of Directors, Audit Committee, Stakeholder Relationship Committee and Nomination and Remuneration Committee, in regards to the quorum in such meetings and the resolutions approved in those meetings from the aforesaid AGM date until the dates when the Company designated them as non-independent directors.

5.2. We are unable to conclude on the consequential impact, if any, on the standalone financial statements arising out of the matters pertaining to noncompliance with the applicable master directions/ notifications issued by the Reserve Bank of India ("RBI") and provisions of The Foreign Exchange Management Act, 1999, as amended, in respect of the following:

(a) The Company has export trade receivables and foreign currency interest receivable aggregating Rs. 3,037.28 Lakhs and Rs. 336.13 Lakhs, respectively, which are outstanding for more than nine months, from the invoice date, as at 31 March 2019, which is beyond the time limit stipulated under the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, for repatriation of foreign currency receivables.

(b) As at 31 March 2019, the Company had not made the necessary intimations to the Authorised Dealer/ RBI as required under the Master Directions provided by the RBI on Foreign Investment in India for loan/ collaterals/ pledge received from the promoter of the Company, being a resident outside India, amounting to Rs. 1,395.02 Lakhs during the year ended 31 March 2019.

However, subsequent to the year-end, the Company has made an intimation to the Authorised dealer on 12 July 2019 and is yet to make an application for condonation of delay.

(c) It appears that the Company has provided a corporate guarantee to Columbia Bank for a line of credit availed by 8K Miles Software Services Inc., a subsidiary of the Company, and Nexage Technologies Inc., a step down subsidiary of the Company, aggregating USD 5,000,000 on 12 September 2018. As per the loan sanction document issued by Columbia Bank, the line of credit was approved by Columbia Bank based on a representation by the Managing Director of the Company that the corporate guarantee was approved by the shareholders of the Company. We have not been provided with minutes of the meeting of the shareholders referred above approving such corporate guarantee. Further, the Company has also not intimated the Authorised Dealer for providing such corporate guarantee as required under the Master Directions provided by the RBI on Direct Investment by Residents in Joint Venture (JV) / Wholly Owned Subsidiary (WOS) Abroad.

5.3. Further, the Company has not carried out a comprehensive review of compliance with laws and regulations and therefore we are unable to comment if there are any other instances of non-compliance with laws and regulations and any consequential impact thereof.

6. Information / clarifications requested but not provided

During the course of our audit, we have requested from the management various information and clarifications that were required for the purposes of our audit. In addition to the information and clarifications pending in respect of the matters described in paragraphs 1 to 5 above, information, inter alia, relating to assessment of how the revenue recognised by the Company was in compliance with the provisions of Ind AS 115, documentation supporting evaluation of the expected credit losses as at 31 March 2019, documentation on services received against certain consultancy expenses, confirmation of balances from customers, vendors and other parties, etc., are also pending to be provided to / received by us. In view of such pending information, we have not been able to obtain sufficient appropriate evidence to conclude on those matters to express an opinion on the standalone financial statements.

7. Use of going concern assumption

In view of the matters reported in paragraphs 1 to 6 above, and in the absence of reliable cash flow projections by the management, and any consequential impact of those matters on the standalone financial statements and operations of the Company, we are unable to comment on the appropriateness of the going concern assumption adopted by the management in the preparation of these standalone financial statements.

8. Information on subsidiaries

Based on information in the public domain 8K Miles Cloud Solutions Pte. Limited, Singapore has stated itself to be a subsidiary of the Company. This entity appears to have been incorporated on 08 May 2017. Further, 8K Miles Software Services Pte. Ltd, Singapore and 8K Miles Software Services UK Limited, United Kingdom exist with the promoter directors appearing as shareholders/ directors. The incorporation of wholly owned subsidiaries in these countries were approved by the Board of Directors of the Company on 30 May 2018.

However, all these three entities have not been considered by the management of the Company as subsidiaries in these standalone financial statements. We are informed by the management that these entities are not subsidiaries of the Company and the information in the public domain, including with the regulatory authorities in those geographies are not correct.

We have not been provided with the audited financial statements of these entities and/or any other verifiable evidence to ascertain the relationship of these entities with the Company. Hence, we are unable to comment on the relationship of these entities and the consequential impact these entities may have on the standalone financial statements.

Managements Responsibility for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of 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 including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (‘Ind AS) and other accounting principles generally accepted in India. 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 standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibility for the Audit of the Standalone Financial Statements

Our responsibility is to conduct an audit of the standalone financial statements of the Company in accordance with Standards on Auditing specified under section 143(10) of the Act and to issue an auditors report. However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these standalone financial statements.

We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics.

Report on Other Legal and Regulatory Requirements

1. In view of the matters described in paragraphs 1, 2,

3.3, 4 and 6 of the Basis for Disclaimer of Opinion section of our report, we are unable to state if any of the transactions referred to in those paragraphs were represented by mere book entries.

2. Subject to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above and in paragraph 1 above, as required by Section 143(3) of the Act, based on our engagement to audit, we report that:

a) We have sought and considering the matters described in the Basis for Disclaimer of Opinion section above and in paragraph 1 above, were not able to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid standalone financial statements.

b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above and in paragraph 1 above, we are unable to comment if 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 Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.

d) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above and in paragraph 1 above, we are unable to comment if the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.

e) The matters described in the Basis for Disclaimer of Opinion section above and in paragraph 1 above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31 March 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164 (2) of the Act.

g) The adverse remarks relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Disclaimer of Opinion section above and in paragraph 1 above.

h) 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 A". Our report expresses an adverse opinion on the Companys internal financial controls over financial reporting for the reasons stated therein.

i) With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16)[1] of the Act, as amended, in our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

j) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion, except for the possible effect of the matters described in the Basis for Disclaimer of Opinion section above, 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 standalone financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

3. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order subject to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above and in paragraph 1 above.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

Firms Registration No. 117366W/W-100018

V. Balaji

Partner

Membership No. 203685

2 November 2019 VB/JT/RB/2019

Unique Identification Number: 19203685AAAABD8282

ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 2(h) under ‘Report on Other Legal and Regulatory Requirements of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

In conjunction with our engagement to audit the standalone financial statements of the Company as of and for the year ended 31 March 2019, we have audited the internal financial controls over financial reporting of 8K Miles Software Services Limited ("the Company") as of that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected dep end on the auditors j udgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Basis for Adverse Opinion

According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified in the Companys internal financial controls over financial reporting as at 31 March 2019. Inadequacies were noted in:

(a) entity level controls to prevent and detect fraud as more fully described in paragraph 1 of the Basis for Disclaimer of Opinion section of the Independent Auditors Report.

(b) evaluating the appropriateness of the customer contracts, compliance with the accounting standards for the purpose of revenue recognition, and the appropriateness of assessment of expected credit losses. Also see paragraph 2 of the Basis for Disclaimer of Opinion section of the Independent Auditors Report.

(c) evaluation of services being provided by key vendors, examination and review of terms of contracts / purchase orders / SOWs, as applicable to assess the authenticity of the documents and assessment of appropriateness of the liability being accrued. Also see paragraph 4 of the Basis for Disclaimer of Opinion section of the Independent Auditors Report.

(d) identification of related parties of the Company, which may result in transactions not authorized by audit committee/ board of directors (where applicable), inadequate disclosure of the related party transactions in the financial statements and identification of conflicts and designation of directors as independent or otherwise. Also see paragraphs 1(a), 5 and 8 of the Basis for Disclaimer of Opinion section of the Independent Auditors Report.

(e) ensuring compliance with applicable laws and regulations. Also see paragraph 5 of the Basis for Disclaimer of Opinion section of the Independent Auditors Report.

(f) ensuring compliance with the applicable accounting standards and generally accepted accounting principles. Also see paragraphs 1(a), 2, 3.4 and 8 of the Basis for Disclaimer of Opinion section of the Independent Auditors Report.

(g) financial book closing procedures to ensure preparation of timely, reliable and appropriate financial statements. Also see paragraphs 3, 5, 6, 7 and 8 of the Basis for Disclaimer of Opinion section of the Independent Auditors Report.

A ‘material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.

Adverse Opinion

In our opinion, to the best of our information and according to the explanations given to us, because of the effect of the material weaknesses described in Basis for Adverse Opinion paragraph above on the achievement of the objectives of the control criteria, the Company has not maintained adequate and effective internal financial controls over financial reporting as of 31 March 2019, based on the criteria for internal control over financial reporting established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India, and the Companys internal financial controls over financial reporting were not operating effectively as of 31 March 2019.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company for the year ended 31 March 2019, and these material weaknesses have affected our opinion on the said standalone financial statements of the Company and we have issued a disclaimer of opinion on the standalone financial statements of the Company.

For DELOITTE HASKINS & SELLS LLP Chartered Accountants Firms Registration No. 117366W/W-100018

V. Balaji Partner

Membership No. 203685

2 November 2019 VB/JT/RB/2019

Unique Identification Number: 19203685AAAABD8282

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 3 under ‘Report on Other Legal and Regulatory Requirements section of our report of even date)

(i) In respect of its property, plant and equipment:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.

(b) The property, plant and equipment were physically verified during the year by the management in accordance with a regular programme of verification, which, in our opinion provides for physical verification of all the property, plant and equipment at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) The Company does not have any immovable properties of freehold land or building which are reported under Property, Plant and Equipment and hence reporting under clause (i)(c) of the Order is not applicable.

(ii) The Company does not have any inventory and, hence, reporting under clause (ii) of the Order is not applicable.

(iii) According to the information and explanation given to us, the Company has granted unsecured loans to companies covered in the register maintained under Section 189 of the Companies Act, 2013, in respect of which:

(a) The terms and conditions of the grant of such loans as applicable are, in our opinion, prima facie, not prejudicial to the Companys interest.

(b) The schedule of repayment of principal and payment of interest has been stipulated and there were no principal repayment due during the year as per such stipulations. However, receipts of interest have not been regular as per stipulations.

(c) There is an overdue interest receivable amount of Rs. 287.29 Lakhs as at the year end. Out of the above, an amount of Rs. 287.29 Lakhs is outstanding as overdue for more than 90 days as at the balance sheet date. The management is in the process of initiating reasonable steps to recover the overdue balances. Also refer paragraph 3.4 in the Basis for Disclaimer of Opinion section in the Independent Auditors Report.

(iv) In our opinion and according to the information and explanations given to us, except for the matters described in paragraph 5.2(c) in the Basis for Disclaimer of Opinion section in the Independent Auditors Report, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year and hence reporting under clause (v) of the Order is not applicable.

(vi) Having regard to the nature of the Companys business/ activities, reporting under clause (vi) of the Order with regard to maintenance of cost records is not applicable.

(vii) According to the information and explanations given to us, in respect of statutory dues:

(a) Except for delays ranging from 1 day to 66 days for remittance of Goods and Services Tax, Provident Fund, Tax deducted at Source and Income Tax, subject to our comments on non-payment of Goods and Services Tax on certain vendor invoices referred to in paragraph 4.2 of the Basis for Disclaimer of Opinion section in the Independent Auditors Report, which amount has not been determined, and in case of Employees State Insurance for the year which was remitted subsequent to the year end, the Company has generally been regular in depositing undisputed statutory dues, including Customs Duty, Cess and other material statutory dues applicable to it with the appropriate authorities.

(b) Subject to our comments on the non-payment of Goods and Services Tax on certain vendor invoices referred to in paragraph 4.2 of the Basis for Disclaimer of Opinion section in the Independent Auditors Report, which amount has not been determined, there were no undisputed amounts payable in respect of Provident Fund, Tax deducted at Source, Customs Duty, Cess and other material statutory dues in arrears as at 31 March 2019 for a period of more than six months from the date they became payable except for Employees State Insurance and Income tax amounting to Rs. 2.43 Lakhs and Rs. 34.55 Lakhs, respectively.

(c) Details of dues of Income-tax, sales tax, service tax, goods and service tax, customs duty, excise duty, and value added tax which have not been deposited as on 31 March 2019 on account of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the amount relates (Financial Year) Amount involved (Rs. in Lakhs) Amount unpaid (Rs. in Lakhs)
Income Tax Act, 1961 Income Tax Assistant Commissioner of Income Tax 2007-08 9.51 9.51
2009-10 56.76 56.76
2010-11 1.39 1.39
2011-12 11.91 11.91
2012-13 0.25 0.25
2014-15 15.16 15.16

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions and banks, except as under:

Particulars Amount of default of repayment as at 31 March 2019 (Rs. in Lakhs) Period of default upto 31 March 2019
Due to Banks: Principal Interest
Indian Bank - Term Loan 4.11 4.67 Principal: Represents amounts due on 1 March 2019. Hence, period of default is one month.
Interest: Represents amounts of Rs. 2.04 lakhs and Rs. 2.63 lakhs due on 28 February 2019 (period of delay is one month) and 31 March 2019 (period of delay is one day), respectively.
Indian Bank - Open Cash Credit (‘OCC) 300 3.1 Period of default for Principal and Interest is one day.

Further, the Company has not taken any loans or borrowings from government and has not issued any debentures.

(ix) In our opinion and according to the information and explanations given to us, money raised by way of term loans from banks and financial institutions have been applied by the Company during the year for the purposes for which they were raised, other than temporary deployment pending application of proceeds. Further, the Company has not raised moneys by way of Initial public offer or further public offer (including debt instruments).

(x) We refer to the matters stated in the Basis for Disclaimer of Opinion section of the Independent Auditors Report where suspected offences involving fraud that have been committed on and by the Company have been reported. Since the report of the investigation initiated by the Company through an external firm of Chartered Accountants has not yet been received, we are unable to quantify the amount involved.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and, hence, reporting under clause (xii) of the Order is not applicable.

(xiii) Subject to the matters highlighted in the Basis for Disclaimer of Opinion section in the Independent Auditors Report, including the following transactions, where approvals have not been obtained at the time of entering into the transaction and which are relating to the matter reported in paragraph 5.1(b) of the Basis for Disclaimer of Opinion section in the Independent Auditors Report, in our opinion and according to the information and explanations given to us, the Company is in compliance with the Section 177 and 188 of the Companies Act, 2013, where applicable, for transactions with the related parties:

Particulars Amount of default of repayment as at 31 March 2019 (Rs. in Lakhs) Period of default upto 31 March 2019
Due to Banks: Principal Interest
Principal: Represents amounts due on 1 March 2019. Hence, period of default is one month.
Indian Bank - Term Loan 4.11 4.67 Interest: Represents amounts of Rs. 2.04 lakhs and Rs. 2.63 lakhs due on 28 February 2019 (period of delay is one month) and 31 March 2019 (period of delay is one day), respectively.
Indian Bank - Open Cash Credit (‘OCC) 300 3.1 Period of default for Principal and Interest is one day.
Name of the Related Party and relationship Underlying Transaction Amount Involved (Rs. in Lakhs)
S. Ravichandran (Spouse of a Director) Office or Place of Profit in the Company 43.7
Sustainable Certification India Private Limited (Company in which the above Spouse is a Director) Professional and Consultancy Charges 3.64
Gautam Gurumurthi (Son of a Director) Office or Place of Profit in the subsidiary of the Company 85.75

In our opinion and according to the information and explanations given to us, except for the matter described in paragraphs 1(a), 5.1 (a) and 8 under Basis for Disclaimer of Opinion section in the Independent Auditors Report, the Company has disclosed the details of related party transactions in the standalone financial statements etc. as required by the applicable accounting standards

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and, hence, reporting under clause (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions during the current year with any of the directors of the Company or its holding or subsidiary company or a person connected with him that are covered under the provisions of Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

Firms Registration No. 117366W/W-100018

2 November 2019 VB/JT/RB/2019

Unique Identification Number: 19203685AAAABD8282

V. Balaji

Partner

Membership No. 203685