CG Power & Industrial Solutions Ltd Directors Report.

to the members of cg power and industrial solutions limited

Report on the Audit of Standalone Financial Statements

Opinion

We were engaged to audit the accompanying standalone financial statements of the CG Power and Industrial Solutions Limited which comprise the Balance sheet as at March 31,2019, the Statement of Profit and Loss, including Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the standalone financial statements).

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

Basis for Disclaimer of Opinion

As given in Note 2.1 of the Standalone Financial Statement in relation to the Basis of Preparation, the Board of Directors of the Company have stated that the financial statements of earlier years ended March 31,2018 and Opening Balance Sheet as at April 1,2017 (hereinafter referred to as prior years) have been adjusted for various transactions following an independent investigation carried out on the directions of the Board of Directors. The Board of Directors have communicated to us that pending outcome of the investigation, the financial statements of prior years and consequentially for the year ended March 31,2019 could be revised / restated.

In view of the proposed voluntary revision / restatement of the financial statements of prior years, which may result in revision / restatement of financial statements for the year ended March 31,2019 and also considering the significance of certain transactions / specific matters described herein below, we are unable to determine the consequential impact of the proposed revisions / restatements and the impact of certain transactions / specific matters on the Standalone Financial Statements as at March 31,2019. Such specific matters / transactions include:

1. We draw your attention to the transactions identified in Note 3A (a) and Note 3A (b) of the Standalone Financial Statements which were not recorded by the Company for the financial year ended March 31,2017 and with consequent effect on the balances of March 31,2018.

The Board of Directors have initiated independent investigation in respect of these unauthorized transactions in the nature of loans. As explained to us such transactions were misrepresented and were not approved by the Board of Directors of the Company.

Pending outcome of such investigation, we were unable to obtain sufficient and appropriate audit evidence to verify basis and rationale of such unauthorized transactions. Further, these Standalone Financial Statements for the year ended March 31, 2019 along with the reinstated financial statements for the years ended March 31, 2018 and April 1, 2017 were recently provided to us for audit and hence we were unable to obtain independent balance confirmations and we were not provided with reconciliation of balances in respect of such unauthorized transactions/loans. Accordingly, we are unable to comment on the completeness, and appropriateness, of the prior year balances in relation to these unauthorized transactions and the consequential impact of such reinstatement on the Statement of Profit and Loss and related disclosures in the notes to the Standalone Financial Statements.

2. We draw your attention to Note 3A of the Standalone Financial Statements which describes the nature of certain transactions entered into by the Company with the related and unrelated parties and Note 3A (q) of the Standalone Financial Statements which states that the Company has various amounts of loans receivables and advances recoverable including interest accrued on such balances from related and unrelated companies as reinstated on March 31,2019 aggregating to INR 2,439.94 crores, for which further interest income aggregating to INR 337.61 crores is currently not recorded in the Standalone Financial Statements.

The management is in the process of investigating and confirming various related party transactions and has not concluded its investigation and determination of related party balances. On the outcome of the investigation and confirmation and reconciliation process of such transactions, these balances may be restated by the Company.

Pending outcome of the investigation and inability of the management to provide the underlying contractual agreements, business rationale, and requisite approvals by the Board of Directors to extend such balances to the related and unrelated companies, we were unable to obtain sufficient and appropriate audit evidence regarding the accuracy and completeness of the balances, existence and recoverability of the outstanding balances. Further we are unable to determine the consequential impact on the Companys Statement of Profit and Loss and Net-worth arising from such related and unrelated companies transactions, balances and the completeness of disclosures in the notes to the Standalone Financial Statements of the Company.

3. We draw your attention to Note 3A (k) and Note 3A (n) of the Standalone Financial Statements wherein the Company has written back certain amounts which were written off in year ended March 31, 2018 towards inventories/trade advances/unbilled dues from customers/loans given to subsidiaries aggregating to INR 634.40 crores.

During the current year, on the basis of Independent investigation carried out by the Board of Directors of the Company, it has come to light that facts were misrepresented to us in relation to these balances during our audit for financial year ended March 31, 2018.

a. The total inventory valued at INR 257.69 crores as on March 31,2017 were in reality advances to related and unrelated parties, which were misrepresented as inventory lying with third parties in the previous year. Out of this total inventory, inventory costing INR 102.02 crores was sold for INR 120 crores to specific customers during the year ended March 31, 2018. These debtors were written off during quarter ended December 31,2018.

b. The remaining balance of INR 478.73 crores written off during financial year ended March 31,2018 was on account of long outstanding trade advances. Subsequently, in the current year, we have been informed by the management that these were misrepresented in the previous year and that these amounts were actually advances to related and unrelated parties.

As informed by the management, these balances written off in the previous year, were also misrepresented to the Board of Directors and wrongly stated in the financial statements under various heads of financial statements instead of Group Company receivables for the financial year ended March 31,2017. Further, such advances extended and recoverable from related and unrelated companies were not approved by the Board of Directors. The Company has initiated independent investigation to assess the underlying basis and nature of such transactions and we are informed that such investigation is in process.

Pending outcome of investigation, and in the absence of sufficient and appropriate audit evidence about the appropriateness of reinstatement of such transactions and the recoverability of such balances, we are unable to comment on the appropriateness and completeness of the opening balances and related disclosures in the Standalone Financial Statements.

4. We draw your attention to Note 3A (m) of the Standalone Financial Statements which describes certain financing transactions entered into by the related parties of the Company with the bank (lender bank) wherein certain identified senior personnel of the management, had provided post-dated cheques and a comfort letter in relation to certain borrowings availed by the related parties in the prior years.

Following a default in terms of such borrowings availed by the related party, the lender bank attempted to encash the PDCs of INR 210 crores which were dishonoured by the Companys bank upon presentation. The lender bank has issued a notice to the Company to accept the liabilities in relation to such borrowings and have claimed the repayment of the outstanding amount INR 391.88 crores as at March 31,2019.

As explained by the Board of Directors of the Company, issuance of such PDCs, comfort letters and entering into put option were not informed and were done in violation of Rules of Procedure (RoP) established by the Board of Directors of the Company. These transactions do not appear to be in normal course of business and are subjected to further investigation to ascertain the legality of these claims on the Company. Pending such investigation, the said claim is disclosed as a contingent liability by the Company.

Pending outcome of the investigation, we are unable to obtain sufficient and appropriate audit evidence to verify the basis, rationale and completeness of such transactions and the subsequent disclosure by the Company of such liability.

5. We draw your attention to Note 3A [(c) i] of the Standalone Financial Statements, wherein the Company states that it has not charged and accrued contractual royalty expense payable to the promoter company for six months ending March 31, 2019. Further management has put the royalty agreement in abeyance pending determination of legal obligation of royalty agreement and the conclusion of settlement with the promoter company.

Pending management evaluation, we are unable to comment upon the completeness of royalty expense in the Statement of Profit and Loss and consequential impact on the related party balances as at March 31, 2019. Further we are unable to comment on appropriateness of managements action to hold the agreement in abeyance and the proposed settlement with the promoter company, pending legal assessment by the management.

6. We draw your attention to Note 3A (g) and Note 3A (j) of the Standalone Financial Statements, wherein the Company has stated that it had inappropriately continued to classify advances to a related party as current advance as on March 31,2018.

As we are unable to obtain sufficient and appropriate audit evidence in relation to these reclassifications, we are unable to verify the appropriateness of this reclassification and restatement of previous year balance by the management.

7. We draw your attention to Note 48 of the Standalone Financial Statements, the Company has performed impairment testing in relation to its investment and advances given to its subsidiaries. The Company has accounted for the impairment allowances of INR 1,325 crores during the current year.

The management is in the process of investigating various related party transactions and has not concluded its investigation and determination of related party balances. Pending the outcome of the investigation, the management has not determined the impact of impairment in the respective prior years.

Pending completion of investigation by the Company in relation to above stated related party transactions and advances to be recovered from group companies, we are unable to comment on the completeness and appropriateness of impairment charge in the Standalone Financial Statements for the year ended March 31,2019 and possible impact on the opening balances as at April 1,2018, if any.

8. Balances with respect to borrowings, trade receivables, loans & advances, tax balances, group companies and connected parties are subject to confirmations. Further we have not received sufficient appropriate audit evidence or explanations from the management in relation to the reconciliations and balance confirmation process, followed by the management. Hence we are unable to comment on the completeness and valuation of these balances in respect of the year ended March 31,2019 and restated March 31,2018.

9. As stated in Note 3A (a) and Note 3A (b) of the Standalone Financial Statements, the Company has entered into various transactions with companies (termed as Connected parties) wherein certain employees of the Company owned beneficial ownerships and some senior management personnel of the Company are directors of these connected parties. The Company has not completed its assessment to determine the nature of its relationship with these connected parties and consequently has not identified these parties as related parties.

Pending outcome of managements assessment, we are unable to obtain sufficient and appropriate audit evidence with respect to completeness of the list of related parties and the completeness of disclosure of related party transactions for the prior years and current year in the Standalone Financial Statements.

10. Further, pending outcome of independent investigation and the managements assessments thereof, we are unable to comment on the appropriateness and completeness of the reinstated financial statements for the financial years ended March 31,2018 and April 1,2017.

11. We draw your attention to Note 3A (p) of the Standalone Financial Statements, the Company is undertaking a detailed investigation in relation to the matters of possible non compliances with respect to provisions of Section 185 and Section 186 and certain other applicable sections of the Companies Act 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; the Income tax 1961, and other statutes and regulations applicable to the Company. The Company is in the process of evaluating the implications of the potential non-compliances.

Pending outcome of the investigation, we are unable to determine the potential impact of non-compliances and to comment on any further adjustment that would be required as a result of the investigation on these Standalone Financial Statements and disclosures thereon.

12. We draw your attention to Note 59 of the Standalone Financial Statements which, indicate that (a) the Company has incurred a net loss during the current and previous years; (b) the Companys current liabilities exceeded its current assets as at the Balance Sheet date; (c) the Company has short term outstanding borrowings repayable over next 12 month aggregating to INR 1400 crores approximately; and (d) pending outcome of investigation initiated, the management has not concluded on the recoverability of loans and advances from related and unrelated parties.

With reference to above, pending completion of investigation of matter stated in (1) to (12) above and determination of recoverability of loans and advances from related and unrelated parties, we are unable to obtain sufficient and appropriate audit evidence as to whether the Company will be able to service its debt, realize its asset and discharge its liabilities as and when they become due over the period of next 12 months. Accordingly, we are unable to comment on whether the Company will be able to continue as Going Concern over the period of next 12 months.

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 including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the 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 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 standalone financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

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

However, the Board of Directors taking into consideration the matters stated in Note 3A & Note 60 of the Standalone Financial Statements, intends to revise these Standalone Financial Statements after making necessary adjustments to give a true and fair view of Standalone Financial Statements of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our responsibility is to conduct an audit of the Companys Standalone Financial Statements in accordance with Standards on Auditing and to issue an auditors report. However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these Standalone Financial Statements.

We are independent of the Company in accordance with the ethical requirements in accordance with the requirements of the Code of Ethics issued by ICAI and the ethical requirements as prescribed under the laws and regulations applicable to the Company.

Other Matter

1. We have been appointed as Joint Auditors of the Company along with M/s S R B C & Co. LLP Chartered Accountants (Joint Statutory Auditor). We are issuing separate audit report in accordance with the requirement of SA 299 Responsibility of Joint Auditors in view of the difference in the Basis for Disclaimer of Opinion provided by the Joint Statutory Auditor regarding matter reported in paragraph (3) under the Basis for Disclaimer of Opinion. Our audit report issued on these Standalone Financial Statements is separate and independent from the opinion issued by the Joint Statutory Auditor and we did not share any joint responsibilities in relation to the statutory audit of the Company, the year ended March 31,2019.

2. The comparative Standalone Financial Statements for the year ended March 31, 2018 have been restated. These restated financial statements represents managements estimates and its assessment of the investigation outcome so far. Considering that the investigation process is yet to be concluded, and considering the matters as stated above in Basis of Disclaimer of Opinion section of our report, we are unable to comment on the appropriateness and completeness of the restatements and reinstatements to comparative figures of year ended on March 31,2018 in the accompanying financial statements.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors Report) Order, 2016 (the Order), issued by the Central Government of India in terms of subsection (11) of section 143 of the Companies Act, 2013, we give in the Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a) Due to the possible effects of the matters stated in the Basis for Disclaimer of Opinion paragraph, we are unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the audit;

b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether proper books of accounts as required by law have been kept by the Company so far as it appears from our examination of those books;

c) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the Balance Sheet, the Statement of Profit and Loss including the Statement of 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) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

e) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether such matter have any adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors as on March 31,2019 and taken on record by the Board of Directors, none of the directors is disqualified as on March

31,2019 from being appointed as a director in terms of Section 164(2) of the Act;

g) 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 to this report;

h) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the managerial remuneration for the year ended March 31,2019 has been paid / provided by the Company to its directors in accordance with the provisions of Section 197 read with Schedule V to the Act and

i) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our knowledge and belief and according to explanations given to us:

i. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Note 39 to the Standalone Financial Statements;

ii. Pending the year-end balance confirmation process, as stated in point 8 of Basis for Disclaimer of Opinion section of this report, we are unable to comment on whether the

Company have any long-term contracts including derivative contracts as at March 31,2019; Further due to the possible effects of the matters described in the Basis for Disclaimer of Opinion we are unable to state whether adequate provisions have been made for material foreseeable losses in respect of long term contracts including derivative contracts.

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 ended March 31, 2019.

For K.K. Mankeshwar & Co.,

Chartered Accountants

ICAI Firm registration number: 106009W

Ashwin Mankeshwar

Partner

Membership No. 046219

Place: Mumbai

Date: August 30, 2019

UDIN: 19046219AAAAGG3078

ANNEXURE A REFERRED TO IN THE INDEPENDENT AUDITORS REPORT of even date on the standalone financial statements of cg power!

AND INDUSTRIAL SOLUTIONS LIMITED (REFERRED TO IN REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS PARAGRAPH OF OUR REPORT OF EVEN DATE) I

i. a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except for certain assets where quantitative details were not maintained.

b) Fixed assets have been physically verified by the management during the year and material discrepancies were identified on such verification. These have been properly dealt with in the books of accounts.

c) According to the information and explanations given by the management the title deeds of immovable properties included in property, plant and equipment were not available with the Company and hence we are unable to comment on the same.

ii. The inventory has been physically verified by the management during the year. In our opinion the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31, 2019 and no material discrepancies were noticed in respect of such confirmations.

iii. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has 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.

iv. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013.

v. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has accepted any deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended).

vi. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has maintained the specified accounts and records pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013.

vii. a) Undisputed statutory dues including provident fund, employee state insurance and goods and service tax have generally been regularly deposited with the appropriate authorities though there has been slight delay in a few cases. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company is regular in depositing with appropriate authorities undisputed statutory dues including income tax, duty of custom, cess and other statutory dues applicable to it.

b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether any undisputed amounts payable in respect of income-tax, duty of custom, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they become payable.

c) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether any dues of income-tax, duty of custom, cess and other statutory dues which have not been deposited on account of any dispute.

viii. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has not defaulted in repayment of loans or borrowing to a financial institution or bank.

ix. According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer / debt instruments. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has raised any money by way of term loans and whether the moneys so raised from the term loan has been utilized for the purposes for which it was obtained.

x. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report and the significance of amounts involved, it appears that material fraud has been perpetrated, however pending further investigation we are not able to quantify the amounts involved.

xi. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the managerial remuneration has been paid/ provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

xii. In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

xiii. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

xiv. According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirement under clause 3(xiv) are not applicable to the Company and, not commented upon.

xv. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has entered into any noncash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

xvi. According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

For K.K. Mankeshwar & Co.,

Chartered Accountants

ICAI Firm registration number: 106009W

Ashwin Mankeshwar

Partner

Membership No. 046219

Place: Mumbai

Date: August 30, 2019

UDIN: 19046219AAAAGG3078

ANNEXURE B REFERRED TO IN THE INDEPENDENT AUDITORS REPORT of even date on the standalone financial statements of cg power AND INDUSTRIAL SOLUTIONS LIMITED (REFERRED TO IN REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS PARAGRAPH OF OUR REPORT OF EVEN DATE)

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

We were engaged to audit the internal financial controls over financial reporting of CG Power and Industrial Solutions Limited (the Company) as of March 31,2019, in conjunction with our audit of the Standalone 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 Act. However due to nature of transactions described in Note 3A of the Standalone Financial Statements and with reference to Note 2.1 relating to the Basis of Preparation of Standalone Financial Statements, management recognizes that internal financial controls were not operating effectively and requires to be strengthened.

Auditors Responsibility

Our responsibility is to express an opinion on the companys internal financial controls over financial reporting with reference to these Standalone financial statements 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, both, issued by Institute of Chartered Accountants of India, and deemed to be 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 with reference to these Standalone financial statements 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 over financial reporting with reference to these Standalone financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these Standalone financial statements, 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.

Because of the matters prescribed in the Basis for Disclaimer of Opinion in the main audit report we were not able to obtain sufficient appropriate audit evidence to provide a basis for our opinion on whether the Company had adequate internal financial controls over financial reporting with reference to these Standalone financial statements and whether such internal financial controls were operating effectively.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to these Standalone Financial Statements

A companys internal financial control over financial reporting with reference to these Standalone financial statements 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 with reference to these Standalone financial statements 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 With Reference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to these Standalone financial statements, 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 with reference to these Standalone financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these Standalone financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Disclaimer of Opinion

Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in our main audit report, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion on whether the Company had adequate internal financial controls over financial reporting with reference to these Standalone Financial Statements as at March 31,2019 and whether such internal financial controls were operating effectively. Accordingly, we do not express an opinion on Internal Financial Controls Over Financial Reporting with reference to these Standalone Financial Statements.

For K.K. Mankeshwar & Co.,

Chartered Accountants

ICAI Firm registration number: 106009W

Ashwin Mankeshwar

Partner

Membership No. 046219

Place: Mumbai

Date: August 30, 2019

UDIN: 19046219AAAAGG3078

INDEPENDENT AUDITORS REPORT

to the members of cg power and industrial solutions limited

Report on the Audit of the Standalone Ind AS Financial Statements

Disclaimer of Opinion

We were engaged to audit the accompanying standalone Ind AS financial statements of CG Power and Industrial Solutions Limited (the Company), which comprise the Standalone Balance Sheet as at March 31,2019, the Standalone Statement of Profit and Loss, including the Standalone Statement of Other Comprehensive Income, the Standalone Cash Flow Statement, the Standalone Statement of Changes in Equity for the year then ended and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as Standalone Financial Statements).

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

Basis for Disclaimer of Opinion

As given in Note 2.1 of the Standalone Financial Statements the Board of Directors of the Company have stated that these financial statements would undergo a change consequent to the proposed revision of the financial statements of the Company for the year ended March 31, 2018 and prior (prior years), as per the provisions of Section 131 of the Companies Act, 2013 and Rules prescribed thereunder, based on their investigation of certain transactions relating to unrecorded liabilities and accounting of certain transactions in the periods prior to April 1, 2018, which are explained in detail below.

In view of the proposed voluntarily revision of the financial statements of prior years, which may result in revision of Standalone Financial Statements and also considering the significance of certain transactions / specific matters described herein below, we are unable to determine the consequential impact of the proposed revision and the impact of certain specific transactions / matters on the Standalone Financial Statements. Such specific transactions / matters include:

1. We draw your attention to notes 3A(a), 3A(b) and 3A(f) of the Standalone Financial Statements which describes the reinstatements of certain liabilities by the Company in relation to prior years. Certain unauthorized / unapproved banking transactions in the nature of loans (unauthorized transactions/ loans) taken from banks / financial institutions (lenders)/ a connected party (as termed in paragraph 9 below) aggregating to 635 crores were not disclosed in the Standalone Financial Statements of prior years by off-setting against certain related and unrelated party balances. Further, as explained by the management in note 3A(b), interest expenses of 90.93 crores which were serviced by the Company in relation to these unauthorized loans were accounted under different heads in the Standalone Statement of Profit and Loss and were mispresented in the financial statements.

The Board of Directors have initiated independent investigation in respect of theses unauthorized transactions in the nature of loans. As explained to us such transactions were misrepresented and were not approved by the Board of Directors of the Company.

The Company has now recorded these loans in earlier years and restated those interest expenses as finance expense with the consequential impact to different heads in the Standalone Statement of Profit and Loss for the year ended March 31,2018.

Pending outcome of such investigation, we were unable to obtain sufficient and appropriate audit evidence to verify basis and rational of such unauthorized transactions. We were also not provided with reconciliation of balances in respect of such unauthorized transactions / loans. Accordingly, we are unable to comment on the completeness, classification between current and non-current and appropriateness, of the prior year balances in relation to these unauthorized transactions and the consequential impact of such reinstatement on the Standalone Statement of Profit and Loss and related disclosures in the notes to the Standalone Financial Statements.

2. We draw your attention to notes 3A(a), 3A(b) and 3A(f) of the Standalone Financial Statements, which describes the nature of certain transactions entered into by the Company with the related and unrelated parties aggregating to 635 crores and which were not disclosed in the financial statements of prior years, by offsetting such transactions against certain undisclosed borrowings and have now been recorded and reinstated in the respective prior years.

As explained in note 3A(q) of the Standalone Financial Statements, the Company also has loans including interest receivables and advances recoverable from related and unrelated parties, as reinstated on March 31, 2019, aggregating to 2439.94 crores for which further interest income aggregating to 337.61 crores is currently not recorded as at March 31,2019.

As informed by the management of the Company, the Company is in the process to further investigate the commercial substance, nature and business rationale of said transactions. Further the Company is in the process to obtain the balance confirmations and complete reconciliation procedures with these related and unrelated parties as at March 31, 2019 and in respect of prior years. Accordingly, these balances may be restated by the Company upon completion of such investigation, reconciliation and confirmation process.

In the absence of underlying contractual agreements, business rationale, confirmation of balances, reconciliation with these related and unrelated parties and requisite approvals by the Board of Directors of the Company we were unable to obtain sufficient and appropriate audit evidence regarding the completeness of the said transactions, existence, classification between current and non-current balances and recoverability of outstanding amounts. Further we were unable to determine the consequential impact of such transactions, if any, on the Companys Standalone Statement of Profit and Loss for the year ended and Equity as at March 31,2019 and the completeness of disclosures in the notes to the Standalone Financial Statements of the Company.

3. We draw your attention to note 3A(e) of the Standalone Financial Statements which describes that bank balances were overstated and advances receivable from related parties were understated by 400 crores and 300 crores as at March 31, 2018 and April 1,2017, respectively, which have now been restated by the Company.

Pending outcome of investigation, we are unable to obtain sufficient and appropriate audit evidence whether all such balances which have been offset, have been restated and further we were not provided explanation about the underlying rationale to off-set these balances. Consequently, we are unable to comment on the appropriateness and completeness of opening balances as at April 1, 2018, the closing balances as at March 31, 2019 and related disclosures in the Standalone Financial Statements.

4. We draw your attention to notes 3A(k) and 3A(n) of the Standalone Financial Statements which describes that the Company has written back in the Standalone Statement of Profit and Loss certain amounts which were previously expensed off. These amounts were presented as amounts charged off in relation to inventories/ trade advances / unbilled dues from customers/ loans given to related, unrelated parties and connected parties aggregating to 634.40 crores.

As informed by management, these amounts written off in the prior years were misrepresented to the Board of Directors and were wrongly grouped in the financial statements of prior years under various heads, instead of related and unrelated party balances being written off. The amounts written off were extended to and are considered recoverable from related and unrelated parties. The Board of Directors of the Company has initiated independent investigation to assess the underlying basis, nature and amounts of such transactions.

Pending outcome of such investigation, we are unable to obtain sufficient and appropriate audit evidence about the underlying commercial purpose for such transactions relative to the size and scale of the business activities of the Company and the recoverability of such balances. Further we are unable to comment on the appropriateness and completeness of opening balances as at April 1, 2018, consequential impact on the Standalone Statement of Profit and Loss for the year ended March 31,2019 and disclosures in the Standalone Financial Statements.

5. We draw your attention to note 3A(m) of the Standalone Financial Statements which describes that Certain Identified Senior Personnel of the management had provided post-dated cheques (PDCs) and comfort letters to bank in relation to certain borrowings availed by the related parties in the prior years.

Following a default in the contractual and repayment terms of such borrowings availed by the related parties, one of the banks attempted to encash the PDCs of 210 crores which were dishonored upon presentation by another bank of the Company. The bank has issued a notice to the Company to accept the liabilities and have claimed repayment on those liabilities. The total outstanding amount of such borrowings as on March 31, 2019 is 392 crores.

As explained by the Board of Directors of the Company, issuance of such PDCs and comfort letter were not informed and were done in violation of Rules of Procedure (RoP) established by the Board of Directors of the Company. These transactions are subject to further investigation to ascertain the legality of these claims on the Company. Pending such investigation, the said claim is disclosed as contingent liability by the Company and not accounted in the books of accounts of the Company.

Pending outcome of the investigation, we were unable to obtain sufficient and appropriate audit evidence to verify the basis, rational and completeness of disclosing of such transactions/ balances as contingent liabilities in the Standalone Financial Statements.

6. We draw your attention to Note 3A(k) of the Standalone Financial Statements which describes that during our audit, we identified certain trade receivables balances amounting to 120 crores against which provision for doubtful trade receivable of 108 crores was made in the current year and 12 crores was made in the prior years. The underlying sale transactions and recording of provisions were found to be suspicious in nature and not in the normal course of business of the Company.

Based on the interim response received from the Board of Directors of the Company, we filed our preliminary response to the Central Government reporting the suspected fraudulent transactions and balances.

We were unable to satisfy ourselves as regards the commercial nature of the underlying transactions. On further independent investigation by the Board of Directors, we are informed, that these transactions appear to be fraudulently accounted as trade receivables instead of being accounted as advances to related parties. The Board of Directors have reinstated opening balances in prior years.

We are further informed by the Board of Directors that detailed investigation is in process to assess the underlying basis and rationale of such transactions. However, considering the significance of amounts and that these transactions were approved by certain Key Managerial Persons, company personnel and certain non-executive directors it appears that material fraud has been perpetrated. However, pending further investigation, identification and conclusion on the culpability of the personnel we are unable to comment on who were involved in the fraud and the amounts which could be involved.

7. As explained in Note 48 of the Standalone Financial Statements, the Company has performed impairment testing in relation to its investments and advances in its subsidiaries and has accounted for impairment allowances of 1325 crores during the year ended March 31,2019.

The management has initiated investigation into various related party transactions and is currently not concluded its assessment of amounts owed to / receivable from related parties. In the absence of the such assessment, the management has not determined the impact of impairment in the respective prior years.

Pending completion of investigation by the Company, we are unable to comment on the completeness and appropriateness of impairment charge in the Standalone Statement of Profit and Loss and related disclosures in the Standalone Financial Statements for the year ended March 31,2019 and possible impact on prior years.

8. We draw attention to Note 3A(c(i)) of the Standalone Financial Statements which states that management has not accounted contractual royalty expense amounting to 27.88 crores for the six months period ended March 31,2019. Further, management has put the royalty agreement in abeyance pending conclusion on the royalty settlement and determination of legality of royalty contract.

Pending management evaluation, we are unable to obtain sufficient and appropriate audit evidence and hence unable to comment upon completeness of royalty expense in the Standalone Statement of Profit and Loss and consequential impact on the related party balances as at March 31, 2019. Further, we are unable to comment upon the enforceability of Royalty Agreement along with proposed settlement, pending legal assessment by the management.

9. As explained in Notes 3A(a), 3A(b), 3A(i), 3A(n) and 3A(q) of the Standalone Financial Statements, the Company has entered into various transactions with certain identified group companies (termed as connected parties) wherein some of the Companys employees own beneficial ownership in such connected parties and further certain senior management personnel of the Company are directors of these connected parties. The Company has not identified these connected parties as related parties and has not yet completed its assessment to determine the nature of its relationship with these connected parties.

Pending completion of managements assessment, we were unable to obtain sufficient and appropriate evidence with respect of completeness of the list of related parties and the completeness of disclosure of related party transactions in these Standalone Financial Statements.

10. As at year end, we have sent independent balance confirmation to banks / financial institutions for borrowings, bank balances and certain trade receivables selected on sample basis. We have not received responses to our request for such balance confirmations towards borrowings of 263.09 crores, bank balances of 3.13 crores and trade receivables of 1035.43 crores and confirmation from banks / financial institutions in respect of the details of securities, lien, collaterals, guarantees etc.

In the absence of sufficient and appropriate evidence in relation to the unconfirmed balances and in view of proposed restatement of prior years, we are unable to determine whether any adjustments are required to the said balances as on March 31, 2019 and related disclosures in these Standalone Financial Statements.

11. As stated in note 3A(p) to the Standalone Financial Statements, the Board of Directors have instructed the management to undertake a detailed investigation in relation to the matters of possible non-compliance with respect to the Section 129, 134, 166, 180, 185, 186, 188, 197 and other related provision of the Companies Act 2013, the Income Tax 1961, the Foreign Exchange Management Act 1999, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended) and other regulations, as applicable to the Company (Applicable Laws). The Board of Directors of the Company has also instructed the management to engage external consultants and specialists as required for the investigation.

Pending outcome of the investigation, we are unable to determine the potential impact of non-compliances with Applicable Laws and determine any further adjustments that may be necessary to these Standalone Financial Statements.

12. We draw attention to note 59 in the Standalone Financial Statements which indicate that (a) the Company has incurred net losses during the current and previous years; (b) the Companys current liabilities exceeded its current assets as at the balance sheet date; (c) the Company has the short term outstanding borrowings repayable over next 12 months aggregates to 1411.55 crores; and (d) pending outcome of investigation initiated, the management has not concluded on the recoverability of loans and advances from related and unrelated parties.

With reference to above, pending completion of investigation of matter stated in paragraphs 1 to 11 above and determination of recoverability of loans and advances from related and unrelated parties and classification between current and noncurrent balances of the financial liabilities, we are unable to obtain sufficient and appropriate audit evidence as to whether the Company will be able to service its debts, realize its assets and discharge its liabilities as and when they become due over the period of next 12 months. Accordingly, we are unable to comment on whether the Company will be able to continue as Going Concern.

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 Act with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the 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 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 Standalone 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 to cease operations, or has no realistic alternative but to do so.

Those charged with governance are also responsible for overseeing the Companys financial reporting process.

However, the Board of Directors taking into consideration the matters stated under the heading Basis of Disclaimer of Opinion, intends to revise these Standalone Financial Statements after making necessary adjustments to give a true and fair view of Standalone Financial Statements of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our responsibility is to conduct an audit of the Companys Standalone Financial Statements in accordance with Standards on Auditing and to issue an auditors report. However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these Standalone Financial Statements.

We are independent of the Company in accordance with the ethical requirements in accordance with the requirements of the Code of Ethics issued by ICAI and the ethical requirements as prescribed under the laws and regulations applicable to the Company.

Other Matter

(i) The Standalone Financial Statements of the Company for the year ended March 31, 2018, included in these Standalone Financial statements as comparative financial information, had been solely audited by the joint statutory auditor who expressed an unmodified opinion on those statements, on May 30, 2018. Also refer our Basis for Disclaimer of Opinion paragraph 1 to 12 above with respect to effect of ongoing investigation on opening balances and re-opening of books of accounts by the management of the Company in respect of prior years.

(ii) We have been appointed as Joint Auditors of the Company along with M/s K K Mankeshwar & Co., Chartered Accountants (Joint Statutory Auditor). We are issuing separate audit report in accordance with the requirement of SA 299 Responsibility of Joint Auditors in view of the difference in the Basis for Disclaimer of Opinion against the Basis for Disclaimer of Opinion provided by the Joint Statutory Auditor. Further our audit report issued on these Standalone Financial Statements is separate and independent from the opinion issued by the Joint Statutory Auditor and we did not share any joint responsibilities in relation to the audit of the Standalone Financial Statements of the Company.

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 section 143 of the Act, we give in the Annexure 1 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) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the audit;

(b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether 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) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the Balance Sheet, the Statement of Profit and Loss including the Statement of 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) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the aforesaid Standalone Financial Statements comply with the Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether such matters have any adverse effect on the functioning of the Company;

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

(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these Standalone Financial Statements and the operating effectiveness of such controls, refer to our separate Report in Annexure 2 to this report;

(h) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the managerial remuneration for the year ended March 31, 2019 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;

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

i. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements;

ii. Pending the year-end balance confirmation process, as stated in paragraph 10 of this report, we are unable to comment on whether the Company have any long-term contracts including derivative contracts as at March 31,2019; Further due to the possible effect of matter described in Basis for Disclaimer of Opinion we are unable to state whether adequate provisions have been made for material foreseeable losses in respect of long term contracts including derivative contracts.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Shyamsundar Pachisia

Partner

Membership Number: 49237

UDIN:19049237AAAAAX9510

Place of Signature: Mumbai

Date: August 30, 2019

ANNEXURE A REFERRED TO IN THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF CG POWER AND INDUSTRIAL SOLUTIONS LIMITED (REFERRED TO IN REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS PARAGRAPH OF OUR REPORT OF EVEN DATE)

(i) a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets, except for certain items of plant and machinery situated at 3 units of the Company where quantitative details were not maintained.

b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

c) According to the information and explanations given by the management the title deeds of immovable properties included in property, plant and equipment were not available with the Company and hence we are unable to comment on the same.

(ii) The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. No material discrepancies were noticed on such physical verification. Inventories lying with third parties have been confirmed by them as at March 31,2019 and no material discrepancies were noticed in respect of such confirmations.

(iii) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has 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.

(iv) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has complied with the provisions of section 185 and 186 of the Companies Act 2013.

(v) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has accepted any deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended).

(vi) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has maintained the specified accounts and records pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013.

(vii) a) Undisputed statutory dues including provident fund, employees state insurance and goods and service tax have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company is regular in depositing with appropriate authorities undisputed statutory dues including income-tax, duty of custom, cess and other statutory dues applicable to it.

b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether any undisputed amounts payable in respect of income-tax, duty of custom, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

c) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether any dues of income tax, duty of customs and cess which have not been deposited on account of any dispute.

(viii) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has not defaulted in repayment of loans or borrowing to a financial institution or bank.

(ix) According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer / debt instruments. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has raised any money by way of term loans and whether the moneys raised from the term loan has been utilized for the purposes for which it was obtained.

(x) With respect to our reporting on whether any fraud on or by the Company has been noticed or reported during the year, we refer to notes 3A of the financial statements which states that the Company has, based on investigation performed for certain transactions entered into by or on behalf of the Company, noted that there are several unrecorded loans and transactions accounted incorrectly in the prior years which were approved by certain Key Managerial Persons, Company Personnel and certain non-executive directors. Based on the investigations completed till date and information and explanations provided by management, it appears that a material fraud was perpetrated on the Company by the officers and employees of the Company. The Companys detailed investigations are still in progress with respect to such transactions and the Company is yet to identify and conclude on the culpability of the personnel who were involved in the fraud and the amounts which could be involved.

(xi) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

(xv) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in main report, we are unable to comment whether the Company has entered into any noncash transactions with directors or persons connected with him as referred to in section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Shyamsundar Pachisia

Partner

Membership Number: 49237

UDIN:19049237AAAAAX9510

Place of Signature: Mumbai

Date: August 30, 2019

ANNEXURE 2 TO THE INDEPENDENT AUDITORS REPORT of even date on the standalone ind as financial statements of:

CG POWER AND INDUSTRIAL SOLUTIONS LIMITED I

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

We were engaged to audit the internal financial controls over financial reporting of CG Power and Industrial Solutions Limited (the Company) as of March 31,2019, 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 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 with reference to these Standalone Ind AS financial statements 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 as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India.

Because of the matters described in the Basis for Disclaimer of Opinion in the main audit report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for our opinion on whether the Company had adequate internal financial controls over financial reporting with reference to these Standalone Ind AS financial statements as at March 31, 2019 and whether such internal financial controls were operating effectively.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to these Standalone Ind AS Financial Statements

A Companys internal financial control over financial reporting with reference to these Standalone Ind AS financial statements 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 with reference to these Standalone Ind AS financial statements 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.

Disclaimer of Opinion

Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in our main audit report, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion on whether the Company had adequate internal financial controls over financial reporting with reference to these Standalone Ind AS financial statements as at March 31,2019 and whether such internal financial controls were operating effectively. Accordingly, we do not express an opinion on Internal Financial Controls Over Financial Reporting with reference to these Standalone Ind AS financial statements.

Explanatory Paragraph

We were engaged to audit, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under section 143(10) of the Act, the Standalone Ind AS financial statements of CG Power and Industrial Solutions Limited, which comprise the Balance Sheet as at March 31, 2019, and the related Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. We have considered the disclaimer of opinion reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31,2019 Standalone Ind AS financial statements of CG Power and Industrial Solutions Limited and this report affects our report dated August 30, 2019 which expressed an disclaimer of opinion on those Standalone Ind AS financial statements.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Shyamsundar Pachisia

Partner

Membership Number: 49237 UDIN:19049237AAAAAX9510

Place of Signature: Mumbai

Date: August 30, 2019