CIFCO Finance Ltd Auditors Report.

To the Members of Cifco Finance Limited. Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of CIFCO FINANCE LIMITED which comprisesofBalance Sheet as at 31st March, 2017 and the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

2. The Company’s Board of Directors is responsible for the matters in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and detecting the 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 internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

5. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company’s Directors, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified opinion

8 Preparation of accounts of the Company on the basis of the assumption of going concern without making any adjustment for recoverability/classification of assets and its amounts and classification of liabilities and its amounts, inspite of the following indicators:

i The application of the Company to carry on business of a Non-Banking Financial Institution has been rejected by the Reserve Bank of India (Department of Non Banking Supervision) by its order of November 25, 1998; nevertheless, as the Company has been legally adviced, it carries on activities of a non-banking financial company for the benefit of deposit holders; (Refer Note 15(2) to the Accounts)

ii . Attention is invited to Note 15(5) to the Accounts relating to the Order of Special Court for repayment of principal amount Rs 2,88,00,000 with interest. The Company has made payment of only Rs. 3,14,87,341/- against outstanding amount deposit and interest. Balance amounting to Rs. 13,55,36,591/- in the aggregate of principal and interest is still outstanding. Non provision of interest for the current year Rs. 57,60,000/-.

iii. a. Attention is invited to Note 15 (6) (a) to the Accounts relating to delay in repayment of outstanding principals of Public Deposits matured and interest thereon, for which the Company is to follow a Schedule of Repayment as per the directions issued by the Company Law Board. According to the said directions, the Company was expected to pay up to March 31, 2017 an aggregate sum of Rs 7,48,73,015/- to its deposit holders. Nevertheless, the Company has not been able to adhere to the said Schedule of Repayment. During the year, it has paid only Rs. 67,000/- and the balance of Rs. 7,48,06,015/- remains unpaid. The aggregate principal amount of Public Deposits matured and not paid as on March 31, 2017 is Rs. 5,37,19,656/-.

b. Attention is also invited to Note 6.b. to the Accounts relating to delay in payment of 19% Non convertible Debenture - 1997 series (NCDs), which have already become due for redemption; for the said Debentures, the Company is to follow a Schedule of Repayment on the same lines with the Order of CLB for Public Deposits. Accordingly, the Company was expected to pay upto March 31, 2017 an aggregate sum of Rs.92,52,835/-. Nevertheless, the Company has not been able to adhere to the said Schedule of Repayment. During the year company paid Rs. NIL . The aggregate overdue NCDs as on March 31, 2017 was Rs.92,52,835/-. iv. Our remarks in Para 1, 2 & 3 above - whether considering the said circumstances, the Company would be able to continue as a going concern and consequential effects and adjustments, if any, on the Accounts; and v. Non redemption of 10% cumulative preference shares of Rs. 1,20,00,000 due for redemption on 31st March, 2003 ( refer note 9 to the Accounts)

Qualified Opinion

9. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraphthe aforesaid standalone financial statements give the information required by the Act in the manner so required and give true and fair view in conformity with the accounting principles generally accepted in India of state of affairs of the Company as at 31st March, 2017 and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

10 As required by the Companies (Auditor’s Report) Order, 2017 issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act(hereinafter referred to as the "Order")and on basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

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

a) We have sought all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company, so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from branches not visited by us;

c) The Balance Sheet, Statement of Profit and Loss Account and Cash Flow statement dealt with by this report are in agreement with the books of account;

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended).

e) The matter described in the Basis for Qualified Opinion paragraph above, in ouropinion, may have an adverse effect on the functioning of the Company.

f) In our opinion and as per the information and according to explanation given to us, all of the Directors are prima facie, disqualified, as on 31st March, 2017,from being appointed as a director in terms 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, we refer to our separate Report in "Annexure A".

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements.

ii. The Companydid not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.

iii. There were no amounts which required to be transferred to the Investor Education and Protection Fund by the Company. iv. The Company has provided requisite disclosures in the financial statements as to the holdings aa well as dealings in Specified Bank Notes during the period 8th November, 2016 to 30th December, 2016. Based on the audit procedures and relying on the management representation we report that the disclosures are in accordance with the Books of Account maintained by the Company and as produced before us by the management. Refer note to the financial statements.

For M D PANDYA & ASSOCIATES

Chartered Accountants

A. D. PANDYA

Partner

Membership No.:033930

Mumbai,

Dated : 20th May, 2017

Annexure A to the Independent Auditors’ Report

Referred to in Para 11(g) of the Independent Auditors; Report of even date to the members of the Company on the Standalone Financial Statements for the year ended 31st March, 2017.

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

We have audited the internal financial controls over financial reporting of CIFCO FINANCE LIMITED ("the Company") as of March 31, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on 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. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing specified under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s 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 company’s 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 refl ect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s 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.

Disclaimer of Opinion

According to the information and explanation given to us as the Company is not carrying on any activities , it has not established internal financial controls system over financial reporting on criteria based on or 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. Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis of our opinion whether the Company had adequate internal financial controls over the financial reporting and whether such internal financial controls were operating effectively as at 31st March, 2017.

We have considered the disclaimer reported above in determining the nature, timing and extent of audit tests applied in our audit of the standalone financials statements of the Company, and disclaimer does not affect our opinion on the standalone financial statements of the Company.

For M D PANDYA & ASSOCIATES

Chartered Accountants

A. D. PANDYA

Partner

Membership No.:033930

Mumbai,

Dated : 20th May, 2017

Annexure B to the Independent Auditors’ Report

Referred to in Para 10 of the Independent Auditors; Report of even date to the members of the Company on the Standalone Financial Statements for the year ended 31st March, 2017. i a The records of Fixed Assets maintained by the Company have not been properly updated. i b The Fixed Assets have not been physically verified by the management during the year. i c The title deeds of immovable property is held in name of the Company ii. The provisions of clause 4 (ii) of the Companies (Auditors Report) Order 2017 are not applicable to the Company. iii a The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, provisions of subclause (b) & (c) are not applicable. iv The Company has not granted any loans or any investments or provided any guarantee or securities to the parties covered under Sections 185 & 186 of the Companies Act, 2013. Accordingly, the provision of Clause iv are not applicable.

v The Company was required to repay the deposits as per the Schedule of Repayment of Public Deposits approved by the Company Law Board. However, the Company has not been able to adhere to the said Schedule of Repayment (Refer Note 15(6). Further in our opinion and according to the information and explanation given to us, the Company has also not complied with the directives issued by the Reserve Bank of India in terms of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 and more particularly, the following:

a) Not obtaining credit rating.

b) Not regularizing public deposits held in excess of permissible limits

c) Non-payment of interest till date of repayment in respect of deposits matured but repaid later:

d) Non- submission of various returns to the Reserve Bank of India:

e) Not maintaining of minimum percentage of liquid assets. vi The provisions of Clause 4 (vi) of the Companies (Auditors Report) Order 2017 are not applicable to the Company.

vii a According to the records of the Company, the Company is generally regular in depositing with appropriate authorities undisputed statutory dues in respect of Provident Fund,, Employee’s State Insurance, Sales-tax, Wealth tax, Custom Duty, Excise Duty, value added tax,cess and any other statutory dues with appropriate authorities.except for nonpayment of Income tax amounting to Rs. 279.03 lacs (Previous year Rs. 279.03 lacs).

According to the information and explanations given to us , no undisputed amounts payable in respect Provident Fund, , Employee’s State Insurance, Sales-tax, Wealth tax, Custom Duty, Excise Duty, value added tax, cess and any other statutory dues were in arrears as at 31st March, 2017 for a period of more than six months from the date they became payableexcept for nonpayment of Income tax amounting to Rs. 279.03 lacs (Previous year Rs. 279.03 lacs).

vii b According to the information and explanations given to us, there were no dues in respect of wealth tax, sales tax, service tax, duty of custom and value added tax which have not been deposited on account of any dispute except for income tax as detailed below:

Name of statutory dues Amount Rs in crores Forum where dispute is pending
Income tax 3.00 ITAT

viii According to information and explanation given to us, the Company has defaulted in repayment of dues to the debenture holders:

Lender Amount due in- cluding interest Period of Default
Debentures 92.52lacs 16 years

ix According to information and explanation given to us, the Company has not raised any money by way of initial public offer, further public offer (including debt instruments) and term loansduring the year.

x According to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the year.

xi According to the information and explanations given to us the Company has not paid or provided for any managerial remuneration within the meaning of Section 197 of the Act.

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

xiii According to the information and explanations given to us and based on our examination of the records of the details of such transactions with the related parties are in compliance with section 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements are required by the applicable accounting standards.

xiv During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

xv According to the information and explanations given to us and the representation obtained from the management, the Company has not entered into any non cash transactions with Directors or persons connected with him.

xvi According to the information and explanations given to us, the Company was required to be registered under section 45I of the Reserve Bank of India . Act, 1934. The application for carrying on non banking finance business had been rejected. Refer note 15(2).

For M D PANDYA & ASSOCIATES

Chartered Accountants

Regno ; 107325W

A. D. PANDYA

Partner

Membership No.:033930

Mumbai,

Dated : 20th May, 2017