Ballarpur Industries Ltd Directors Report.

TO THE MEMBERS OF BALLARPUR INDUSTRIES LIMITED

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the standalone financial statements of Ballarpur Industries Limited

(the Company), which comprise the Balance Sheet as at 31 March 2019, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of the matters described in Basis for Qualified Opinion section of our report, the aforesaid standalone 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 31 March 2019, and its loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

1. We draw reference to Note 45 accompanying the standalone financial statements, wherein the Company has not accrued the liability towards outstanding Put Options which forms the basis for our qualified opinion. As explained in the note, the management is unable to quantify the liability with respect to the outstanding Put Options. Accordingly, we are unable to quantify the impact.

2. (a) As of the year end, the Company while comparing the balances of borrowings with the confirmations received from the lenders identified differences in interest expense accrued to the tune of 583 Lakhs. The interest expense accrued in the books of accounts were lower when compared with the interest confirmed by the lenders.

(b) In respect of borrowings not confirmed by banks, the interest accrued by the Company in the books as compared to the interest payable by the Company in terms of the loan agreement with the lenders is lower by 12,401 Lakhs which includes penal interest of 6,270 Lakhs.

(c) We have not received direct confirmation from certain lenders for the balance outstanding in borrowings aggregating to 82,031 Lakhs.

These form the basis for our qualified opinion. Had the Company accrued the differences in the books, the finance cost and loss for the year would have increased by 12,984 Lakhs, total comprehensive income and shareholders fund would have reduced by 12,984 Lakhs. The impact on borrowings and finance cost, if any, on account of nonreceipt of direct confirmation from lenders could not be quantified.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty relating to Going Concern

We draw attention to Note 43 accompanying the standalone financial statements, which contains conditions along with other matters which indicate that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the outcome of the debt restructuring steps taken by the Company and the optimal utilization of the operational units. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Impairment of assets

Refer Note 4(f) on impairment of assets and Note 2.9 accounting policy on impairment of assets. We have considered impairment of assets as a Key Audit Matter due to the following reasons

a. The impairment loss assessed by the management is 34,697 Lakhs which is a significant item of cost accounted in Statement of Profit and Loss.

b. The impairment loss is computed based on managements estimates and assumptions regarding future operating cash flows, weighted average cost of capital to be used for discounting future cash flows and / net realisable value of assets for the Cash Generating Units identified.

Our procedures included the following

• Compared the performance of operating units with budgets and considered the recent trends to identify impairment indicators

• Assessed the methodology adopted by the management in identifying Cash Generating Units (CGU) to be tested for impairment taking into consideration the operating structure and applicable Accounting Standard.

• Verified the assumptions and estimates used by the management in arriving at the value in use for the respective CGUs.

• Independently checked the underlying calculation of net present value.

• Discussed the audit observations with the management and discussed significant details with respect to the approach, assumptions & estimates by management and our observations with the Audit Committee.

2. Valuation of assets held for sale

Refer Note 40 on assets held for sale - land located at Choudwar, Odisha. We have considered assets held for sale as a Key Audit Matter due to the following reasons

a. The value of assets held for sale constitutes 11 % of the total assets of the Company which is a significant item in the Balance Sheet.

b. Assets held for sale are measured at the lower of carrying amount or fair value less costs to sell.

The fair value of the assets held for sale has been estimated using valuation techniques (including income and market approach) which includes unobservable inputs.

Our procedures included the following

• Checked the minutes of the Board meetings held during 2018-19 to evaluate the status of the assets held for sale and the proposed steps taken by the management in realising those assets.

• Examined the external valuation report provided by the Company supporting the carrying amount of assets held for sale.

• Discussed with the management and assessed the appropriateness of the methodology adopted for the valuation.

• Evaluated the objectivity, independence and competency of the experts used by the management by reference to their qualification and experience.

3. License Agreement for right to use BILT logo and trademark.

Refer to Note 47(d)(xxiii) on license fees towards transfer of right to use BILT Logo and other trademarks. We have considered the supplemental agreement entered into by the Company for granting the right to use BILT Logo and other trademarks to Bilt Graphic Paper Products Limited (BGPPL), a step-down subsidiary, as a Key Audit Matter due to the following reasons

a. The license fees of 26,400 Lakhs towards transfer of right to use BILT Logo and other trademarks for the period of 25 years is a significant related party transaction during the year.

b. The valuation of the consideration involves estimates and judgements which may significantly affect the valuation. Accordingly, this is considered as a Key Audit Matter.

Our procedures included the following

• Examined the Companys external experts reports supporting the valuation of right to use BILT logo.

• Assessed the appropriateness of the valuation methodologies adopted.

• Discussed with the management on the assumptions and the reasonableness of such assumptions considered in valuation such as discount rate, weighted average cost of capital, etc.

• Checked, on a sample basis, the accuracy of the input data given to managements expert for determining the fair value of the right to use of BILT Logo and other trademarks.

• Evaluated the objectivity, independence and competency of the experts used by the management.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the other information. The other information comprises Boards Report including its annexures but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. Except for the mattter started in the Basis for Qualified Opinon section above, we have nothing to report in this regard.

Responsibilities of management and those charged with Governance 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 financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended. 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.

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 cease operations, or has no realistic alternative but to do so.

The Board of Directors of the Company is also responsible for overseeing the Companys financial reporting process.

Auditors responsibility for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order

to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the standalone financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other Legal and Regulatory requirements

1) As required by the Companies (Auditors Report) Order, 2016 (the Order) issued by the Central Government of India in terms of sub-section (11) of the Act, we give in Annexure A to this Report, a statement on the matters specified in paragraph 3 and 4 of the said Order, to the extent applicable.

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

(a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion, exceptfor the possible effects of matters described in Basis for Qualified Opinion section of our report, 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) in our opinion, proper returns adequate for the purposes of our audit have been received from Unit Kamalapuram which has not been visited by us;

(d) the Balance Sheet, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement

of Cash Flows dealt with by this Report are in agreement with the books of account;

(e) in our opinion, except for the possible effects of matters described in Basis for Qualified Opinion section of our report, the aforesaid financial statements comply with the Indian Accounting Standards notified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(f) in our opinion, the matter described in the Basis for Qualified Opinion paragraph above, may have an adverse effect on the functioning of the Company.

(g) on the basis of the written representations received from the Directors of the Company 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; however we observed that the Company has defaulted in payment of interest to the debenture holders and such default continues

for more than a year as at 31 March 2019;

(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 B;

(i) with respect to the other matters to be included in the auditors report in accordance with the requirements of Section 197(16) of the Act (as amended);

In our opinion and to the best of our information and according to the explanations given to us, the Company has not paid any remuneration to its directors during the year; and

(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, in our opinion and to the best of our information and according to the explanations given to us:

i. the Company has disclosed the impact of pending litigation on its financial position - Refer Note 44 to the financial statement.;

ii. the Company did not have any longterm 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 Investor Education and Protection Fund by the Company during the year except unclaimed dividend of 3 Lakhs pertaining to financial year 2009-10 which has not been transferred to Investor Education and Protection Fund by the Company as at 31 March 2019 (Refer Note 16).

for SHARP & TANNAN
Chartered Accountants
Firms Registration No. 003792S
V. Viswanathan
Partner
Membership No. 215565
Place: Gurugram
Date: 16 May 2019

"ANNEXURE A" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirements" section of our report to the members of Ballarpur Industries Limited ("the Company") of even date)

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

(b) As informed to us, property, plant and equipment have been physically verified by the Management during the year. According to the

information and explanations given to us, no discrepancies were noticed on such verification.

(c) According to the information and explanation given to us and the records examined by us and based on the examination of the scanned copies of the title deeds of all the immovable properties pledged

with the bankers as security against borrowings, we report that the title deeds of all the immovable properties that have been pledged as security against borrowings and other facilities availed by the Company, are held in the name of the Company as at the balance sheet date, except the following:

Type of asset Total no. of instances Cost as at 31 March 2019 ( in Lakhs) Book value as at 31 march 2019 ( in Lakhs) Remarks
Leasehold Land 1 9 6 Refer Note below

Note: In respect of immovable property of land that have been taken on lease and disclosed as property, plant and equipment in the financial statements, the lease arrangement is yet to be registered in the name of the Company.

(ii) Inventories have been physically verified by the Management at reasonable intervals during the year. In our opinion, the frequency of such verification is reasonable. As explained to us, the discrepancies noticed on verification between the physical stock and the book records were not material.

(iii) According to the information and explanations given to us, 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 Companies Act, 2013. Accordingly, reporting under paragraph 3(iii) of the Order does not arise.

(iv) In our opinion and according to the information and explanations given to us, the Company has not advanced any loan, made any investment, given any guarantee or provided any security to

which the provisions of Section 185 and 186 of the Companies Act, 2013 are applicable. Accordingly reporting under paragraph 3(iv) of the Order does not arise.

(v) According to the information and explanations given to us, the Company has not accepted any deposits during the year and does not have any unclaimed deposits as at 31 March 2019. Accordingly, reporting under paragraph 3(v) of the Order does not arise.

(vi) The Central Government has specified maintenance of cost records under Section 148(1) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended) for the operations of the Company. We have broadly reviewed the cost records maintained by the Company in respect of manufacture of paper and are of the opinion that prima facie, the prescribed cost records have been made

and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii)(a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, except for dues in respect of employees state insurance, goods and service tax, the Company is generally not regular in depositing undisputed statutory dues of provident fund, income-tax, sales tax, value added tax, cess and professional tax during the year with appropriate authorities and there have been serious delays in a large number of cases. According to the information and explanations given to us, statutory dues outstanding as at 31 March 2019 for a period of more than six months from the date they became payable is given below:

Nature of disputed dues Period to which the amount relates Amount in Lakhs
Provident fund May 2017 to August 2018 1,101
Income-tax deducted at source March 2017 to August 2018 13
Professional tax June 2016 to August 2018 29
Grama panchayath tax 2015-16 to 2018-19 109
Pension fund May 2016 to August 2018 242
Value added tax 2002-03 to 2007-08 1,424
Central sales tax 2016-18 39

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax as at 31 March 2019 which have not been deposited with statutory authorities on account of a dispute pending are given in Appendix 1 to this report.

(viii) In our opinion and according to the explanations and information given to us and records of the Company examined by us, the Company has defaulted in repayment of loans or borrowing to banks, financial institutions and debenture-holders, for which the lender- wise details are as follows. The Company did not have any loans or borrowing from government.

Lender

Repayment of principal

payment of interest

Period of default (days) Amount of default ( in Lakhs) period of default (Days) Amount of default ( in Lakhs)
EXIM Bank 60-517 days 3,966 1-609 days 1,183
Finquest Financial Solutions Private Limited 9-920 days 1,562 1-943 days 1,768
IDBI Bank 1-731 days 1,875 182-790 days 2,128
Phoenix Arc Pvt. Ltd. 6-93 days 912 1-609 days 1,573
Life Insurance Corporation of India - - 63-793 days 3,178
8,315 9,830

(ix) In our opinion and according to the information and explanations given to us, the Company has neither taken any term loans during the year nor has raised any money by way of initial public offer or further public offer (including debt instruments). Accordingly reporting on paragraph 3(ix) of the Order does not arise.

(x) To the best of our knowledge and according to the information and explanations given to us, no material fraud by the Company, and no material frauds on the Company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not paid or provided for, managerial remuneration during the year. Accordingly, reporting under paragraph 3(xi) of the Order does not arise.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company.

Accordingly, reporting under paragraph 3(xii) of the Order does not arise.

(xiii) In our opinion and according to the information and explanations given to us and the records of the Company examined by us, all transactions with the related parties are in compliance with Section 177 of Companies Act, 2013 where applicable and the details have been disclosed in the Ind AS financial statements as required by the applicable Indian Accounting Standards.

We are informed by the Management that the transactions entered into by the Company with the related parties are in its ordinary course of business and are on arms length basis. Accordingly, reporting on compliance of Section 188 of Companies Act, 2013 does not arise.

(xiv) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, reporting under paragraph 3(xiv) of the Order does not

arise.

(xv) 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 during the year. Accordingly, reporting under paragraph 3(xv) of the Order does not arise.

(xvi) The Company is not engaged in the business of non-banking financial institution and is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, reporting under paragraph 3(xvi) of the Order does not arise.

for SHARp & TANNAN
Chartered Accountants
(Firms Registration No. 003792S)
V. Viswanathan
Partner
Membership No. 215565
Place: Gurugram
Date: 16 May 2019

Appendix 1 to Annexure A: The particulars of income tax, sales tax, duty of customs, duty of excise, value added tax as at 31 March 2019 which have not been deposited with statutory authorities on account of a dispute

Name of the statute Period to which the amount relates Forum where disputes are pending Amount involved ( In Lakhs) Amount disputed and not paid ( In Lakhs)
AP Revenue Recovery Act, 1864 1986-1988 District Collector, Warangal 476 476
AP Tax on Entry of goods, 2001 2013-2015 Appellate Deputy Commissioner, Secunderabad 134 120
Electricity Act, 2003 Since 2002 Supreme Court of India 3,004 2,746
1991-92 Supreme Court of India 1,063 1,063
1993-94 Supreme Court of India 325 325
1994-95 ITAT 1,364 1,364
2008-09 Supreme Court of India 17,453 17,453
2009-10 ITAT 2,833 2,833
2011-12 ITAT 2,269 2,269
2012-13 ITAT 242 242
2013-14 ITAT 755 755
2005-2009 CESTAT, Chandigarh 91 91
2012-13 CESTAT, Hyderabad 724 724
2013-14 Commissioner, Panchkula 6 6
The Central Excise Act, 1944 2017-18 Assistant Commissioner, Yamuna nagar 12 12
Apr-Dec 2009 Commissioner, Panchkula 20 20
Apr-May 2011 Assistant Commissioner, Yamuna nagar 5 5
Nov 2010 - Mar 2011 CESTAT, Delhi 15 15
1996-97 Assistant Commissioner, Yamuna nagar 17 17
The Central Excise Tariff Act, 1996-97 Joint Commissioner, Panchkula 11 11
2004-2010 CESTAT, Chandigarh 70 62
1994-1995 High Court, Nainital 12 12
1997-98 Trade Tax Tribunal, Saharanpur 2 2
2001-02 Appellate Deputy Commissioner, Secunderabad 29 15
2002-03 Trade Tax Tribunal, Saharanpur 1 1
2014-15 CTO, Samarangam Chowk Circle, Vijayawada 80 80
The Central Sales Tax Act, 1956 2014-15 DCCT, Kerala Commercial Taxes Department 3 3
2014-15(*) DCCT, Saharanpur 8 8
2014-15 Deputy Commissioner (ST) (Large Taxpayer Unit), Secunderabad 75 66
2015-16(*) DCCT, Saharanpur 2 2
2015-16 Deputy Commissioner (CT) (Large Taxpayer Unit), Secunderabad 4 4
The Customs Act, 1962 2012-13 Commissioner Custom (Appeals), Jam Nagar 33 29
2012-13 Commissioner Custom (Appeals), Kandla 38 31
UP VAT Act, 2008 2001-02 Trade Tax Tribunal, Saharanpur 2 2
2016-17 DCCT, Saharanpur 5 5

Note 1: The above amounts do not include penalty and interest.

(*): With respect to the dues stated above, the Company is in the process of filing appeal with Deputy Commissioner Commercial Tax.

for SHARp & TANNAN
Chartered Accountants
(Firms Registration No. 003792S)
V. Viswanathan Partner
Membership No. 215565
Place: Gurugram
Date: 16 May 2019

ANNEXURE BTO THE INDEPENDENT AUDITORS REPORT

[Referred to in paragraph 2(h) 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

We have audited the internal financial controls over financial reporting of Ballarpur Industries Limited ("the Company") as at 31 March 2019 in conjunction with our audit of the standalone Ind AS financial statements of the Company as of and for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Board of Directors of the Company 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 ("the Guidance Note") 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 ("the Act").

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 and the Standards on Auditing prescribed under Section 143(10) of the Act, 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 depend on the auditors judgement, 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 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weakness has been identified as at 31 March 2019:

a) The Companys internal financial control over periodic reconciliation of amount due to lenders were not operating effectively which needs to be strengthened.

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.

In our opinion, except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of 31 March 2019, 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.

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 31 March 2019 standalone financial statements of the Company, and these material weaknesses have affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements.

for SHARp & TANNAN
Chartered Accountants
(Firms Registration No. 003792S)
v. viswanathan
Partner
Membership No. 215565
Place: Gurugram
Date : 16 May 2019