Bafna Pharmaceuticals Ltd Auditors Report.

TO THE MEMBERS OF BAFNA PHARMACEUTICALS LIMITED

REPORT ON THE STANDALONE INDIAN ACCOUNTING STANDARDS (Ind AS) FINANCIAL STATEMENTS

We have audited the accompanying Standalone Ind AS financial statements of BAFNA PHARMACEUTICALS LIMITED ("the Company"), which comprise the standalone Balance Sheet as at March 31, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Llow Statement and the Statement of change in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Ind AS financial statements").

MANAGEMENTS RESPONSIBILITY FOR THE Ind AS 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 Ind AS financial statements that give a true and fair view ofthe financial position, financial performance including other comprehensive income, cash flows & changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards Ind AS)prescribed under Section 133 oftheAct, read with rule 7 ofthe Companies (Accounts) Rules, 2014.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities, selection and application of the appropriate accounting policies, making judgements and estimates that are reasonable and prudent, and the 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In presenting the 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 intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on these standalone Ind AS 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 thereunder.

We conducted our audit of the Ind AS financial statements 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 Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments; the auditor considers internal control relevant to the Companys preparation and fair presentation of the Ind AS financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the Ind AS financial statements.

We are also responsible to conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained upto the date of auditors report. However, future events or conditions may cause an entity to cease as a going concern.

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

OPINION

In our opinion and to the best of our information and according to the explanations given to us, subject to the opinion expressed in Annexure "B", the aforesaid Standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31s* March, 2018 and its Loss, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.

OTHER MATTERS

The Standalone Ind AS financial statements of the Company for the year ended March 31,2017, were audited by another auditor who expressed an unmodified opinion on those statements on27th May 2017.Our opinion is not modified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. 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 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 to the extent applicable 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 account as required by law have been kept by the Company so far as appears from our examination ofthose 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 books of account.

d) In our opinion, the aforesaid Standalone Ind As financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act.

e) On the basis of the written representations received from the directors as on March 31, 2018, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018, from being appointed as a director in terms of Section 164(2) ofthe 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". We have expressed our opinion as mentioned under clauses (a) and (b) in the said Annexure under the head "Opinion" on the adequacy and operating effectiveness ofthe Companys internal financial controls over financial reporting.

g) With respect to the other matters included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rule, 2014, as amended, in our opinion and to the best of our information and according to the explanation given to us:

i) The company has disclosed the impact of pending litigation on its financial position in its Standalone Ind AS 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 has been no delay in transferring amounts, required to be transferred, to the Investors Education and Protection Fund by the company.

iv) The disclosures in the Ind AS financial statements regarding holdings as well as dealings in specified bank notes during the period from November 8, 2016 to December 30, 2016 have not been made since they do not pertain to the financial year ended march 31, 2018.

For R.SATHYANARAYANAN&CO.,
Chartered Accountants
Place: Chennai (R.SATHYANARAYAN)
Date: 28.05.2018 PARTNER
M.NO.028377

Annexure "A" to the Independent Auditors Report on the Ind AS Financial Statements of

BAFNA PHARMACEUTICALS LIMITED

To the members of BAFNA PHARMACEUTICALS LIMITED, on Standalone IND AS Financial statements of the Company for the year ended 31st March, 2018.

On the basis of such checks as we considered appropriate and according to the information and explanation given to us during the course of our audit, we report that:

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

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification. In our opinion the frequency of verification is reasonable

(c) The title deeds of immovable properties are held in the name of the Company.

(d) In the Financial statements as of 31st March 2018, the Management has realigned and reclassified the presentation in the note on PPE (Property, Plant and Equipment).

2. (a) As explained to us, inventories have been 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 are reasonable and adequate in relation to the size of the company and the nature of its business. The Company is generally maintaining proper records of its inventories. No material discrepancy was noticed on physical verification of stocks by the management as compared to book records.

3. According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has granted loans to its subsidiary company listed in the register maintained under Section 189 of the Companies Act, 2013.

a. The applicable Terms and Conditions of the grant of such loans are, in our opinion prima facie, not prejudicial to the interest of the company.

b. The schedule of repayment has been stipulated as per the terms. However there are no repayments or receipts of principal during the year. Also refer note 35 (e) to the financial statements.

4. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of grant of loan, guarantees and securities as applicable.

5. The Company has not accepted any Deposits from the public within the meaning of section 73, 74, 75 and 76 of the Act and the rules framed there under to the extent notified.

6. We have broadly reviewed the cost records maintained by the Company pursuant to the Rules prescribed by the Central Government under Section 148(1) of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company has not been regular in depositing the undisputed statutory dues, including Provident Fund, Employees State Insurance, Income Tax, TDS and Service Tax. However,the Company has has been regular in remittance of Goods & Service Tax, Custom Duty, Excise Duty, Value Added Tax, cess and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of undisputed dues of income tax, sales tax, service tax, duty of customs and duty of excise duty, value added tax as at 31s* March 2018which have not been deposited are as follows:

Name of the statue Nature of dues Amount (Rs.in Lakhs) Payment to which the amount relates Due date Date of payment
EPF & MP Act 1952 PF Contribution 147.22 Jan 2016 to March 2018 15th Day of the following month Not paid
ESI Act 1948 ESI Contribution 22.99 June 2016 to March 2018 21st Day of the following month Not paid
Service Tax Service Tax 19.02 June 2016 to March 2018 05th Day of the following month Not paid
Income Tax Act 1961 TDS 16.17 Financial year 2017-18 07th Day of the following month Not paid
Income Tax Act 1961 Income Tax Dues 720 AY 2015-16 31st March 2015 Not paid

8. According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of loans or borrowings to State Bank of India, and was classified as Non-performing asset as of March 31, 2017 itself, and the same position continues as at the date of Balance sheet under audit. The Company has also availed facilities from other banks namely, IDBI Bank Ltd and Development Credit Bank, Bank of Ceylon and DBS Bank Limited for working capital purposes. The Company has not taken loans or borrowing from Government and has not issued debentures during the year.

9. The Company has not raised any moneys by way of initial public offer and accordingly, the provisions of Clause 3(9) of the Order are not applicable to the Company.

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

11. According to the information and explanations given to us and on the basis of our examination of the records of the company, the Company has complied with provisions of the Companies Act, 2013 with regard to the re-appointment and remuneration of Managing Director and Whole time Director for the year ended 31st March 2018, except for obtaining approval from the Financial Institutions as prescribed under Schedule V of the Companies Act, 2013.

12. In our opinion and according to the information and explanations provided to us, the Company is nota Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable.

13. In our opinion and according to the information and explanations given to us, the company is in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the Ind AS financial statements etc. as required by the applicable accounting standards.

14. According to the information and explanations provided to us and as per records examined by us, the Company has made preferential allotment of 50,00,000 equity shares during the year under review, and all the requirements of section 42 of Companies Act, 2013 have been complied with. As per Utilisation certificate provided by the Company, the funds have been utilised for working capital purposes, part of old statutory dues as well as towards settling dues to lenders.

Accordingly, the provisions of Clause 3(xiv) of the Order are applicable. According to the information and explanations provided to us, the Company Already obtained in principal approval and the Company has made application for getting approval for listing of 50,00,000 equity shares which were allotted on preferential basis from Bombay Stock Exchange Ltd and National Stock Exchange of India Limited and the same is pending.

15. According to the informations and explanations provided to us, the Company has not entered into any noncash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

16. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For R.SATHYANARAYANAN&CO.,
Chartered Accountants
Place: Chennai (R.SATHYANARAYAN)
Date: 28.05.2018 PARTNER
M.NO.028377

Annexure - B to the Independent Auditors Report on the Financial Statements of

BAFNA PHARMACEUTICALS LIMITED

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")

We have audited the internal financial controls over financial reporting of M/s. Bafna Pharmaceuticals Limited ("the Company") as of 31s* March 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on 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 (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 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 Ind AS 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 Ind AS 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 Ind AS 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 Ind AS 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, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2018, except for the following areas:

a. Certain Balances of Debtors, Creditors and Deposits with Corporate bodies are subject to confirmation.

b. Closing Balances pertaining to Advances given to suppliers for supply of materials and others remain unconfirmed.

However, the company has an established set of "internal control over financial reporting criteria" duly taking into consideration 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 R.SATHYANARAYANAN&CO.,
Chartered Accountants
Place: Chennai (R.SATHYANARAYAN)
Date: 28.05.2018 PARTNER
M.NO.028377