Aluminium Industries Ltd Auditors Report.

To

The Members of ALUMINIUM INDUSTRIES LTD

Report on Financial Statements

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

Management’s Responsibilities for the 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 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 of 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.

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 the 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.

An audit also includes evaluating the appropriateness of the 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 financial statements. .

Basis for Qualified Opinion:

(i) Attention is invited to Note No. 3 read with Note 2 (a) (iii) of Notes to Accounts regarding non conversion of Preference Share Capital to Equity Share Capital at Par contrary to order of HON’BLE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR) dated 12.02.2014

(ii) Attention is invited to Note No. 3C regarding nonredemption of redeemable preference shares which is in contravention to the provisions of Act;

Qualified Opinion: -

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the Basis for Qualified Opinion paragraph, the 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, ofihe state of affairs of ALUMINIUM INDUSTRIES LTD as at 31" March 2016;

and

(b) in the case of the Statement of Profit & Loss Account, of the loss for the year ended on that date.

(c) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

(i) The accumulated losses of the Company have exceeded its entire net worth and it became a Sick

Industrial Company within the meaning of the Sick Industrial Companies [Special Provisions] Act, 1985. The accounts have, however, been prepared by the management on a ‘Going Concern’ basis, as the Hon’ble BIFR has approved the scheme (SS - 14) on 12.02.2014. [Refer Note No. 26 read with Note 2 of Notes to Accounts]

(ii) Attention is invited to Note No. 29 regarding compilation of accounting details / information on the basis of records available at the suspended manufacturing units on best efforts basis.

(iii) Attention is invited to Notes No. 32 regarding pending reconciliation and / or confirmations of accounts of sundry debtors, sundry creditors, secured loans, unsecured loans, banks and loans and advances given;

(iv) Attention is invited to Note No. 33 regarding non provisioning of interest/ penalties as well as Liquidated damages on delay in repayment of installments of Secured debts due to banks, financial institutions and ARC during the reporting period;

(v) Attention is invited to Note No. 34 regarding non provisioning of interest/ penalties in respect of Deferred & Arrear Sales Tax, Work Contract Tax, Excise & Customs Duty demands during the reporting period in view of the Scheme sanctioned by the Hon’ble BIFR on 12.02.2014

Our opinion is not qualified in respect of this matter.

Report on Other Legal & Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 ["The Order’’] issued by the Central Government of India in terms of sub-section (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.

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

a) We have sought & obtained all the information and explanations to the extent available, which to the best of our knowledge and belief were necessary for the purpose 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 [and proper returns adequate for the purpose of our audit have been received from branches not visited by us.];

c) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report are in agreement with books of account [and with the returns received from branches not visited by us.];

d) Except for the effects of the matter described in Para (iv) of Basis of Qualified Opinion and, the Balance Sheet and Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Section 133 read with Rule 7 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014;

e) On the basis of written representations received from the Directors as on 31st March 2016 and taken on record by the Board of Directors, none of the directors of the Company are disqualified as on 31st March, 2016 from being appointed as a director as 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 financial statements disclose the impact of pending litigations on the financial position of the Company-Refer Note No. 25 to the Financial Statements.

ii) The company does not have any long-term contracts requiring a provision for material foreseeable losses.

iii) The company does not have any amounts required to be transferred to the Investor Education and Protection Fund.

Place: Kochi For BALAKRISHNAN & CO
Date: 31st August, 2016 Chartered Accountants
FRN. 011890S
CArBALAKRISHNAN M
(Partner) M.No.218798

ANNEXURE A’ TO THE INDEPENDENT AUDITOR’S

REPORT

The Annexure refers to in Independent Auditor’s Report to the members of the Company on the Financial Statements for the year ended 31 st March 2016, we report that

1. a) The Company is in the process of updating its fixed assets records to show full particulars including quantitative details and situation of fixed assets.

b) As informed to us, no physical verification of assets was carried out by the management except at Switchgear Division, Mannar, Relays Division, Trivandrum, and Machinery Division, Hyderabad and the differences noticed on physical verification carried out has been properly dealt with in the books of accounts. We are unable to express an opinion with regard to discrepancies, if any, which may arise on physical verification of the assets at remaining units.

c) According to the information and explanations given to us and on the basis of the examination of the records of the company, The title deeds of the immovable properties of the Company are held in its name of the company,.

2. In our opinion and according to the information & explanations provided to us, the inventory has been physically verified by the management at reasonable intervals. The discrepancies noticed on such verification (wherever carried out) as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

3. The Company has not granted any loan, secured / unsecured to Companies, Firms, Limited Liability Partnerships or other parties covered in the register maintained u/s. 189 of the Companies Act, 2013. In view of this, sub clause (a) & (b) of clause 3 are not applicable

4. In our opinion and according to the information and explanations given to us, the Company has not granted any loan, investments, guarantees and securities to the parties covered u/s. 185 and 186 of the Act.

5. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from the public during the year to which the directives issued by the Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provision of the Act and Rules framed there under are applicable.

6. The Central Government, vide Sec. 148 (1) of the Companies Act, 2013, prescribed maintenance of cost

records for all listed companies engaged in manufacturing. In our opinion, the Company is in the process of maintaining the cost records for the products of the Company as prescribed in the said rules.

7. a) The Company is generally regular in depositing with the appropriate authorities the undisputed statutory dues viz Provident Fund, Employees State Insurance, Professional Tax, Service Tax, Excise & Customs Duty, Value Added Tax and other statutory dues with appropriate authorities during the year except in some cases, there have been delays ranging up to 180 days in payment of statutory dues.

b) According to the information and records of the Company made available to us, the dues outstanding in respect of Sales Tax / Custom Duty / Excise Duty / Cess which have not been deposited on account of various disputes of the Company are as under:

Name of Statute Nature of Dues Amount Rs. in Lakhs Period to which amount relates Forum where Dispute is Pending
Kerala Value added tax Act, 2003 Kerala Value added tax 2.61 FY

2007-08

Commissi

oner

(Appeal)

Kerala Value added tax Act, 2003 Central Sales Tax 160.94 From FY 2007-08 to FY 2013-14 Commissi

oner

(Appeal)

Custom Act 1962 Custom

Duty

745.79 From FY 1991-92 to FY 1994-95 Customs,

Excise

and

Service

Tax

Appellate

Tribunal

8) In our opinion and according to the information and explanations given to us, the repayment of dues to financial institutions, banks or debenture holders are governed by the Scheme Sanctioned by BIFR on 12.02.2014. There were delay in payment of installment to Secured lenders as per the Schedule of SS-14, and for the same, the company has informed that it has requested the respective secured lenders for waiver of liquidated damages on such delayed payment of installment.

9) The Company did not raise any money by way of Initial Public Offer or Further Public Offer and Term Loans

during the year. Accordingly Paragraph 3 (ix) of The Order is not applicable.

10) In our opinion and according to the information and explanations given to us, no material fraud by the company or on the Company by its officers or employees has been noticed or reported during the year.

11) In our opinion and according to the information and explanations given to us, the Company has paid/ provided for managerial remuneration in accordance with the requisite approval mandated by the provisions of Section 197 read with Schedule V to the Act.

12) 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.

13) In our opinion and according to the information and explanations given to us, transactions with the related parties are in compliance with Section 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Financial Statements as required by the applicable Accounting Standards.

14) In our opinion and according to the information and explanations given to us, the Company has raised money by way of Private Placement of Equity Shares to the extent of ? 3,898 Lakhs as per the Scheme Sanctioned by BIFR as on 12.02.2014 in accordance with Section 42 of the Act and were utilized for the purpose for which the fund were raised.

15) In our opinion and according to the information and explanations given to us, the company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly Paragraph 3 (xv) of the Order is not applicable.

16) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly Paragraph 3 (xvi) of the Order is not applicable.

Place: Kochi For BALAKRISHNAN & CO
Date: 31st August, 2016 Chartered Accountants
FRN.011890S
CA. BALAKRISHNAN M
(Partner) M.No.218798

ANNEXURE B’ TO THE INDEPENDENT AUDITOR’S REPORT .

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

We have audited the internal financial controls over financial reporting of the Company as of March 31,2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s 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 Financial Reporting stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India [ICAI]. 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 company’s 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") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidanae 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 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system overfinancial 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 authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized 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.

Opinion

In our opinion and best of our information and according to the explanations given to us, the Company is in the process of developing an adequate internal financial controls system over financial reporting and therefore we are unable to comment on the effectiveness of such internal financial controls over financial reporting were operating as at March 31,2016 based on the internal control over financial reporting criteria established by the Company considering the essential components of Internal Financial Reporting stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the ICAI.

Place: Kochi For BALAKRISHNAN & CO
Date: 31" August, 2016 Chartered Accountants
FRN. 011890S
CA. BALAKRISHNAN M
(Partner) M.No.218798