Everonn Education Ltd Auditors Report.

TO THE MEMBERS OF EVERONN EDUCATION LIMITED

Report on the Financial Statements

We have audited the accompanying standalone financial statements of Everonn Education Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

We were engaged to audit the accompanying standalone financial statements of Everonn Education Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

Managements Responsibility for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act,read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls and ensuring their operating effectiveness and 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.

Auditors Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit 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 standalone financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the standalone financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, as well as evaluating the overall presentation of the standalone financial statements.

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

Basis for Qualified Opinion

1) Reference is invited to Note No 1.2 (c) regarding preparation of financial statements without the underlying "Going Concern" assumption but on Realization basis. Though provisions have been made by charge to Profit and Loss account of Rs. 6,95,16,64,467 grouped under "Exceptional items" in this regard, the company has not made provisions in connection with the following a) In respect of Guarantees of Rs.4,64,67,00,000 given on behalf of group entities who have prepared their financial statements on realization basis. However the company had provided for the underlying loans in the subsidiaries and has no impact on consolidation. Refer Note No 2.25 (c) b) Lease rental claims amounting to 54,68,27,315 against the company for which company is contemplating counter claims. Refer Note No 2.30

2) We draw attention to Note No 2.29. The company has filed complaints with certain regulatory authorities with regard to various transactions done by erstwhile promoters and their associates with various third parties under which advances were paid by the company and/or its associated, affiliated entities/ subsidiaries. We are unable to comment on the possible financial impact of the outcome of such legal proceedings.

3) We draw attention to Note No 2.34 regarding non ascertainment of complete particulars of dues to Micro, small and medium enterprises, if any under MSMED Act,2006, and provision towards interest, if any,is not ascertained at this stage which is not in conformity with para 14 of Accounting standard 29 Provision, contingent Liabilities and contingent Assets.

4) We draw attention to Note No 2.36of financial statements with regard to non receipt of confirmation of balances from debtors including dues from government companies, loans and advances, investments, banks, sundry creditors and other liabilities. Pending receipt of confirmation of these balances and consequential reconciliations / adjustments, if any,the resultant impact on the statement is not ascertainable. However, the company has made provisions under exceptional items for all doubtful debts/liabilities as stated above.

5) We draw attention to Note No 2.39 (b) towards non provision for leave encashment as specified under accounting standard 15 issued by ICAI. In absence of Actuarial valuation, we are unable to ascertain the effect of such non provisioning.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects/possible effects of the matter described in the Basis for Qualified Opinion paragraph, the aforesaid standalone financial statements give the information required by theAct in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016, its loss and its cash flows for the year ended on that date.

Other Matter

The financial statements of the Company for the year ended March 31, 2015 were audited by another auditor who expressed a modified opinion on those financial statements on May 30, 2015.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditors Report) Order, 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act,we give in "Annexure 1", a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(2) As required by Section 143(3) of the Act, we report that: a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; b. In our opinion, 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. The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account d. Except for the possible effects of the matter described in the basis of qualified opinion para above, 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.

The matter described in sub-paragraphs under the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company; On the basis of written representations received from the directors as on March 31, 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016from being appointed as a director in terms of Section 164 (2) of the Act; With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our separate Report in "Annexure 2". With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 2.25 on Contingent Liabilities; (ii) The Company did not have any long-term contracts including derivative contracts. Hence, the question of any material foreseeable losses does not arise; (Hi) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No.103523W

G.N. Ramaswami Partner

Membership No.0202363

Place : Chennai

Date : May 29, 2016

ANNEXURE 1 TO THE INDEPENDENT AUDITORS REPORT

[Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements in the Independent Auditors Report of even date to the members of Everonn Education Limited on the standalone financial statements for the year ended 31st March 2016]

Based on the audit procedures performed for the purpose of reporting, true and fair view of the financial statements of the company and taking into consideration, the informations and explanations given to us, and the books of accounts and other records examined by us, in the normal course of audit, we report that; i. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) During the year, the fixed assets of the Company have been physically verified by the management and as informed, material discrepancies identified on such verification have been properly dealt with in the books of account. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) The immovable property of the company is hypothecated with the lenders and hence we could not verify whether the title deeds of immovable properties recorded as fixed assets in the books of account of the Company are held in the name of the Company. ii. The company did not hold any inventory during the year, accordingly matters specified in paragraph 3 (ii) of the order is not applicable to the company. iii. The Company has granted unsecured loans, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act.

(a) According to the information and explanations given to us and based on the audit procedures conducted by us, we are of the opinion that, in the absence of stipulations about principal and interest and other terms and conditions, these loans are prejudicial to the interest of the company which have been provided for.

(b) In view of (a) above we are unable to comment on Para 3 (iii) (b), (c) & (d) of the Order. iv. Based on information and explanation given to us the company has not given any loans, guarantees and securities, during the year attracting the provisions of Section 185 and 186 of the Act. v. In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and the rules framed there under. vi. The Central Government has not prescribed the maintenance of cost records for any of the products of the Company under sub-section (1) of Section 148 of the Act and the rules framed there under. vii. (a) The Company is generally regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, however, there have been slight delay in few cases / delays in deposit have not been serious.

AND

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees state insurance, income tax, sales tax, service tax, value added tax, customs duty, excise duty, cess and any other material statutory dues applicable to it, which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows:

Name of the Statute Nature of Dues Amount Rs. Period to which the amount relates Date of Payment
Tamil Nadu Panchayats Act, 1994 Professional tax 19,62,005 Upto 2014-2015 March 31, 2015 Outstanding as on Date of audit report
Tamil Nadu Panchayats Act, 1994 Professional tax 1,03,869 FY 15-16 March 31, 2016 Outstanding as on Date of audit report
20,65,874

(b) According to the information and explanation given to us, there are no dues with respect to income tax, sales tax, service tax,value added tax, customs duty, excise duty, which have not been deposited on account of any dispute.

(viii) According to the information and explanations given to us, the Company has defaulted in repayment of loans or borrowings to financial institutions or banks as mentioned below:

Particulars Amount of default as at March 31, 2016 (along with interest) (Rs.) Period of Default
) Name of the Lenders: i
I n case of:
Financial Institution
CISCO Finance Limited Rs. 60,00,000
HP Financial Services Rs. 19,02,54,733
Reliance Capital Rs. 32,19,40,830
Bank
Standard Chartered Bank
ICICI Bank Rs. 25,11,78,422*
State Bank of India Rs. 72,34,408#
Axis bank Rs. 3,78,44,292#
Rs. 3,33,51,604#

* Includes Principal and interest

# Since principal repayment begins only in FY 2016-17 interest defaults have been disclosed.

In our opinion and according to the information and explanations given to us, the Company has not reported any unutilized amount in respect of money raised by way of initial public offer and has not raised any money through initial public offer during the year. There were no fresh term loans during the year.

(x) We draw reference to Note No.2.29 to the financial statements regarding complaints with regulatory authorities with reference to certain transactions for the period upto 2011. Other than the above, during the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such instance by the management.

(xi) According to the information and explanations given to us, 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 Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Therefore, paragraph 3(xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanation given to us, all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 ofAct, where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards. (xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Therefore, paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him during the year.

(xvi) According to the information and explanation given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For Haribhakti & Co. LLP

Chartered Accountants ICAI

Firm Registration No.103523W

G.N. Ramaswami

Partner

Membership No.0202363

Place : Chennai

Date : May 29, 2016

ANNEXURE 2 TO THE INDEPENDENT AUDITORS REPORT

[Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements in the Independent Auditors Report of even date to the members of Everonn Education Limited on the standalone financial statements for the year ended March 31, 2016] Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act,2013 ("the Act")

We were engaged to audit the internal financial controls over financial reporting of Everonn Education Limited ("the Company") as of March 31, 2016 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 Companies Act,2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the ICAI.

Because of the matter described in Disclaimer of Opinion paragraph below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on internal financial controls system over financial

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A compacts internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Disclaimer of Opinion

According to the information and explanation given to us, the Company started the process of establishing its formal internal financial control over financial reporting on criteria based on or considering the essential components of internal control stated in the Guidance Note issued by ICAI and the same were not completed before the year end.

Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2016.

We have considered the disclaimer reported above and the existing compensatory controls and procedures of the management in the internal financial control over financial reporting in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company, and the disclaimer does not affect our opinion on the standalone financial statements of the Company.

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No.103523W

G.N. Ramaswami

Partner

Membership No.0202363

Membership No.0202363

Place Chennai

Date : May 29, 2016