Apt Packaging Ltd Auditors Report.

To the Member of APT Packaging Limited

Report on the standalone Financial Statements

We have audited accompanying standalone financial statements of APT Packaging Limited ("the Company"), which comprise the Balance Sheet as at 31at March 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year ended and a summary of the significant accounting policies and other explanatory information(herein after referred to ‘as standalone financial statement).

Managements Responsibility for the Standalone Financial Statements

The Companys 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 relevant rule issued their under.

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 irtemal 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 fhancial 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 provision 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 thereunder.

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 statement are free from materiel misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosure in the standalone financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risk of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Companys preparation of the standalone 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 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 estimate made by the Companys directors, as well as evaluating the overall presentation of the standalone 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.

Opinion

In our opinion subject to stated above and to the best of our information and according to the explanations give to us, the aforesaid standalone financial statements give the information required the Act in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India, including AS of the state of affairs of the company as at March 31, 2017 and its Profit and its Cash Flow, for the year ended on that date.

Emphasis of Matter

We draw attention to the following matters in the notes to the financial statement.

a. The financial statements which indicate that the company has financial losses and its net worth has been substantially eroded i.e. 72.16% (Loss Rs. 418.83 Lakhs and share capital Rs. 580.40 Lakhs). The Companys current liabilities of Rs. 1,48639 Lakhs exceeded the current asset of Rs. 1104.68 Lakhs as at the balance sheet date. These conditions indicate the existence of material uncertainty that may cast significant doubt about the companys ability to continue as a Going Concern.

However the financial statements of the company have been prepared on going concern basis, as the company has once again (Previously deschargedon 16.06.2011) declared as a "Sick Industrial Company" by the Board for Industrial and Financial Reconstruction (BIFR) as per hearing held on 10.10.2013 vide their order dated 20.11.2013. By virtue of repeallment of the said Act, the company had to register itself to National Company Law Tribunal (NCLT) within six month, but as asked the relief from the banks are already granted by the Punjab National Bank, therefore the management of the company decided not registered with the NCLT. Further the company is having profit in financial year 2015-2016 at Rs. 240.76 Lakhs and 2016-2017at Rs. 154.80 Lakhs and there is no threat of insolvency in near future, therefore the management is of the opinion of that the accounts of the company is prepared on going concern basis. (Refer Note No. 35).

b. There is certain unimplemented portion of sanction scheme (SS07) to be implemented specifically recovery of special capital incentives and interest thereon by Government of Maharashtra, extension of Sales tax deferral period for further eight years while discharging the company as SICK Industrial Company which was declared as a "Sick Industrial Company" by the Honble BIFR vide its order dated 16-06-2011 and accordingly, while preparing and presenting the financial statement for the year under consideration the company has followed by the said order of BIFR. (Refer Note No. 36)

c. The outstanding balances of debtors, creditors, loans and advances including inter corporate deposit (taken and given), balance with statutory/fiscal liabilities (Assets & Liabilities) i.e. Sale Tax (VAT & CST), Excise & Service Tax deposits/balance, income tax, subject to confirmations, reconciliation and consequent adjustment, if any. (Refer Note No. 39).

Report on Other Legal and Regulatory Requirements

1) As required by the Companies {Auditors Report) Order, 2016 ("the Order") issued by the Centra! Government of India in terms of sub-section (11) of Section 143 of the Act, based on the comments in the auditors reports of the company, we give in the Annexures (A and B), a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2) As required by Section 143(3) of the Act, we report, to the extent applicable, that:

(A) We have sought and obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid financial statements except as reported at Sr. No. 1 c under the Emphasis of Matter paragraph.

(B) In our opinion, proper books of accounts as required by law relating to preparation of the aforesaid financial statements have been kept so far as it appears from our examination of those books.

(C) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in Agreement with the relevant books of account maintained for the purpose of preparation of the financial statements.

(D) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rules framed there under.

(E) The going concern matter described in sub paragraph 1.a. under the Emphasis of matter 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 of the Company as on 31 March, 2017 taken on record by the Board of Directors of the Company none of the directors of the company is disqualified as on 31 March, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.

(G) 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, in our opinion and to the best of our information and according to the explanation given to us:

(H) The financial statements disclose the impact of pending litigations on the financial position of the company Refer Note 32 (a) & 33 to the financial statements.

(I) The company did not have any material foreseeable losses on long-term contracts including derivate contracts.

(J) There has been no amount required to be transferred to the Investor Education and Protection Fund by the Company as the companys net worth is negative and no dividend has been declared since long.

For Rathi & Bangad
Chartered Accountants
[Firm Reg. No. 1 0 8 7 0 2W)
Dilip D. Jain
Date : 10/08/2017 Proprietor
Place : Aurangabad M. No. 044301

ANNEXURE - A TO THE AUDITORS REPORT

The Annexure referred to in Independent Auditors Report to the members of the Company on the standdone financial statements for the year ended 31 March 2017, we report that:

1) Fixed Assets:

a. The company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b. A major portion of the fixed assets has been physically verified by the management in accordance with a phased programme of verification adopted by the company. In our opinion, the frequency of verification is reasonable having regard to the size of the company and the nature of its assets. According to the information and explanations given to us, no material discrepancies have been noticed on such verification.

c. As per the information and records made available, the title deeds of immovable properties are held in the name of the company except for Plot no. J.17, Maharashtra Industrial Development Corporation (MIDC), Chikalthana, Aurangabad for which Lease deed with MIDC is under process.

d. As per the information and records made available to us all movable properties are held in the name of the company on 31.03.2017 except some of the vehicle which are held in the name of the director/ex-director as mentioned below.

Owner Cost Acc. Dep WDV
Director 79.91 62.75 17.17
Ex-Director 4.83 1.38 3.45
Total 84.74 64.12 20.62

2) Inventory:

a. As informed to us, Jhe stock of finished goods, work-in-process and raw materials at all the units of the Company have been physically verified by the Management at regular intervals.

b. in our opinion and according to the information and explanations given to us, the procedures of physical verification of stock followed by the management are reasonable and adequate in relation the size of Company and the nature of its business.

c. On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on physical verification of stocks as compared to book records were not material and have been properly dealt with in the books of account.

3) Loans and Advances Given:

According to the information and explanations given by the management, the company has not granted any loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the Register maintained under section 189 of the Act. Accordingly, the provisions of clause iii (a) to (C) of the Order are not applicable to the Company.

4) Loans, Investments, and Guarantees:

In our opinion and according to the information and explanations given to us, the company has not made any loans, investments, guarantee and security according to the provisions of Sec 185 & 186 of the Companies Act, 2013. However, In view of the sanctioned scheme of Demerger and the order of Honorable BIFR, for resulting company, the company has given Guarantees to banks and other creditors for their respective outstanding balances as on cutoff date i.e. 01.04.2007 if the resulting company fails to pay or shortfall to pay the same. As this is stipulated as per the Sanctioned Scheme ordered by the BIFR, the same is not treated as prejudicial to the interest of the company. According to information and explanations given to us by the management there is outstanding balance of Rs. 287.03 Lakhs as on 31.03.2017 on account of Sales tax deferral in the books of resitting company.

5) Deposits:

According to the information and explanations given by the management, the Company has not accepted any deposits from tfte public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Rules framed thereunder with regard to the deposits accepted from the public are not applicable to the company.

As per information and explanations given by the management to us, the company has accepted Inter Corporate Deposit (ICD) from Non- Group Companies and Group Companies as well as from directors / promoters to maintain any shortfall in the means of finance according to the terms and conditiohs stipulated by the banker and information related to these deposits / Loan and advances are as mentioned below;

a. During the year under consideration, the company has not accepted any amount as Inter Corporate Deposit (ICD) from Non Group Companies. The company has repaid Rs.77.67 Lakhs to Non Group Companies which includes Rs. 4.71 Lakhs as interest. The Outstanding balance as on 31.03.2017 is Rs.387.90 Lakhs out of which Rs. 365.72 Lakhs is interest free for the year.

b. During the year under consideration, the company has not accepted any Inter Corporate Deposit (ICD) from Group Companies. The company repaid Rs. 4.77 Lakhs including certain portion of interest on said deposits. Total interest provided for the year is Rs. 11.43 Lakhs. The outstanding balance as on 31.03.2017 is Rs.133.89 Lakhs.

c. The company has accepted Rs. 110.00 Lakhs from the Directors / Promoters and also repaid Rs. 263.28 Lakhs. Total interest credited for the year is Rs. 93.51 Lakhs. The outstanding balance as on 31.03.2017 is Rs.789.93 Lakhs.

d. According to the information and explanations given to us all deposits are interest bearing except Rs. 365.72 Lakhs ICD from non group Companies. Total interest on deposits of Rs.109.70 Lakhs (Rs. 16.18 Lakhs to ICD and Rs.93.51 Lakhs to Director / Promoters) is provided during the year under consideration.

There is no stipulation period for repayment of these deposits and the terms and conditions of these deposits are not prejudicial to the interest of the company.

6) Cost Records

In our opinion and according to information and explanation given by the management, the maintenance of cost records under Sec 148 (1) of the Companies Act, 2013 is not applicable to the company as on overall turnover from all its product and services is below than rupees thirty five crore during the immediate preceding financial year.

7) Statutory dues

a. According to the records of the company, the company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident fund, Employees State Insurance, customs, excise duty, income tax, sales tax, investors education and protection fund, Service Tax, Custom Duty Cess, value added tax, Cess and other statutory dues applicable except Rs. 72.36 Lakhs. The statements of Arrears of Statutory dues outstanding for more than six months are as follows;

Type of Taxes Amount in Lakhs
Property T ax 2.33
Sale Tax Deferment Dues 70.03

b. As at 31st March 2017 according to the records of the company, the following are the particulars of dispute d dues have not been deposited

Name of Statute Disputed Liability in Rs. Forum where dispute is pending
Sales Tax Govt, of Maharashtra - Setoff Disallowance for 2008-2007 and interest thereon (2.25 Lakhs + 2.22Lakhs). 04.47 Lakhs Sales Tax Authority, Aurangabad (Appeal Dt. 01.10.2014)
Tax Deducted at Source 8.00 Lakhs and Interest thereon. Before Assessing officer TDS, Income Tax Department.
Income Tax — Bad Debts disallowed of Rs. 111.43 Lakhs for A.Y. 2010-2011 00.00 (Being Loss Return) Income Tax Appellant Tribunal- Pune Bench

8) Based on our Audit procedures and on the information and explanations given by the management in our opinion, the company has not defaulted except delay in depositing upto 29 days in repayment of loans or borrowing to a financial institution, bank, government or dues to debenture holders as at balance sheet date.

9) According to the records of the Company, information and explanation given to us, there was no public offer or further public offer for the year under consideration. The company has obtained term loans during the year under audit and the same were applied for the purpose for which they are raised. As far as inter-corporate loans / deposits are concerned, the terms did not specify the tenure of the loans / deposits hence unable to comments about tong term advances / short term advances. The company has shown the same as long term loans / deposits.

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

11) According to cur information and explanation the company has paid or provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Sec197 read with Schedule V to the Companies Act and accordingly it has been disclosed in the financial statements.

12) In our opinion and according to the information and explanation given to us by the management, the Company is not a Nidhi company and hence the requirements under the Nidhi Rules, 2014 are not applicable.

13) In our opinion and according to the information and explanation given to us by the management, all transactions wifri the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

14) In our opinion and according to the information and explanation given to us by the management, Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under consideration.

15) In our opinion and according to the information and explanation given to us by the management, the company has not entered into any non-cash transactions with directors or persons connected with him during the year.

16) In our opinion and according to the information and explanation given to us by the management, the oompany is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and hence no registration is obtained.

ANNEXURE B TO THE AUDITORS 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 APT Packaging Limited (‘the Company1) as of 31 March 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that data

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 (‘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 the 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) 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 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 depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone 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 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 authorizations of the 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 overfinancial 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, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reposing vyere operating effectively as at 31 March 2017, 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.

For Rathl & Bangad
Chartered Accountants
[Firm Reg.No. 108702W]
Dilip D. Jain
Date: 10/08/2017 Proprietor
Place: Aurangabad M. No. 044301