GFL Ltd Auditors Report.

to the members of Gujarat Fluorochemicals Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Gujarat Fluorochemicals Limited ("the Company"), which comprise the Standalone Balance Sheet as at 31st March, 2018, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information ("the standalone Ind AS financial statements").

Managements Responsibility for the Standalone Ind AS Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view 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 Accounting Standards (Ind AS) prescribed under Section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS 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 Ind AS financial statements based on our audit.

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the standalone Ind AS 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 the 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 Ind AS financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the financial position of the Company as at 31st March, 2018, and its financial performance including other comprehensive income, its cash flows and changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016 issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure I a statement on the matters specified in paragraph 3 and 4 of the said Order.

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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss including Other Comprehensive Income, the Standalone Statement of Cash Flows and the Standalone Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act.

(e) On the basis of the written representations received from the Directors as on 31st March, 2018 taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2018 from being appointed as a Director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure II. (g) 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 financial statements – see Note 38 to the standalone Ind AS financial statements; ii. The Company has made provision, as required under the applicable law or accounting standards including the Ind AS, for material foreseeable losses on long-term contracts including derivative contracts see Note 44. iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Other Matters

The standalone Ind AS financial statements of the Company for the year ended 31st March, 2017 were audited by another auditor who expressed an unmodified opinion on those financial statements on 29th May, 2017.

For Kulkarni and Company,

Chartered Accountants Firms Registration No. 140959W

A D Talavlikar

Partner Membership No. 130432

Place : Noida

Dated: 25th May, 2018

ANNEXURE I TO INDEPENDENT AUDITORS REPORT

to the Members of Gujarat Fluorochemicals Limited on the standalone Ind AS financial statements for the year ended 31st March, 2018 – referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

In term of the Companies (Auditors Report) Order, 2016 ("the Order"), on the basis of information and explanation given to us and the books and records examined by us in the normal course of audit and such checks as we considered appropriate, to the best of our knowledge and belief, we state as under:

1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. The fixed assets have been physically verified by the management at reasonable intervals and no material discrepancies have been noticed on such verification. The title deeds of all immovable properties are held in the name of the Company.

2. The inventories were physically verified by the management at reasonable intervals during the year and no material discrepancies were noticed on physical verification of inventories as compared to book records.

3. The Company has granted unsecured loans to two companies covered in the register maintained under section 189 of the Companies Act, 2013. The terms and conditions of the said loans are not, prima facie, prejudicial to the interest of the Company. The said parties are regular in repayment of principal and payment of interest, as stipulated, and there are no overdue amounts.

4. The Company has complied with the provisions of section 185 and section 186 of the Act in respect of investments made or loans given or guarantee or security provided.

5. The Company has not accepted any deposits within the meaning of sections 73 to 76 of the Companies Act, 2013 and the Rules framed thereunder and hence the provisions of clause 3(v) of the Order are not applicable to the Company.

6. We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records under section 148(1) of the Companies Act, 2013 for activities of the Company to which the said Rules are made applicable, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained.

7. The Company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, goods and service tax, cess and any other statutory dues with the appropriate authorities and no amounts in respect of such statutory dues were in arrears, as at the end of the year, for a period of more than six months from the date they became payable.

Particulars of dues of income-tax, sales-tax, service tax, duty of customs, duty of excise and value added tax which have not been deposited on account of disputes are as under:

Name of the Statute Nature of dues and the period to which the amount relates Amount Forum where dispute is pending
( in Lakhs)
Income Tax Disallowance under section 14A, 80IA, Employees Contribution to PF, Transfer Pricing adjustment & Slump Sale transaction treated as short term capital gain – F.Y. 2012-13 18,494.19 Income Tax Appellate Tribunal, Ahmedabad
Income Tax Disallowance under section 14A and Employees Contribution to PF, Transfer Pricing adjustment & Slump Sale transaction treated as short term capital gain – F.Y. 2014-15 110.83 Commissioner of Income Tax (Appeals)-1, Vadodara
Income Tax Reopening of the assessment in respect of deduction claimed under section 80IA for F.Y. 2009- 10 and F.Y. 2010-11 537.10 Commissioner of Income Tax (Appeals)-1, Vadodara

ANNEXURE I TO INDEPENDENT AUDITORS REPORT

to the Members of Gujarat Fluorochemicals Limited on the standalone Ind AS financial statements for the year ended 31st March, 2018 – referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

Central Excise Act, 1944 Excise Duty on freight recovered from customers – a) April 2007 to November 2007 b) April 2012 to December 2012 c) January 2013 to August 2013 d) September 2013 to May 2014 e) June 2014 to March 2015 f) February 2016 to March 2017 363.34 154.88 57.72 124.38 70.42 44.15 Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad
Central Excise Act, 1944 Cenvat Credit availed on Services for setting up of plant – November 2013 to October 2014 15.89 Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad
Central Excise Act, 1944 Cenvat Credit availed on Insurance auxiliary services in relation to exports and staff – June 2015 to May 2016 45.38 Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad
Central Excise Act, 1944 Cenvat Credit availed on execution of works contract of civil construction – a) April 2011 to December 2015 b) September 2015 to March 2017 141.44 3.52 Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad
Central Excise Act, 1944 Cenvat Credit availed on Insurance service for staff and for export of goods a) February 2012 to December 2012 b) December 2013 to August 2014 2.12 0.52 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Surat
Central Excise Act, 1944 Excise Duty on freight recovered from customers - April 2015 to January 2016 78.87 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Surat
Central Excise Act, 1944 Cenvat Credit availed on Service tax paid on outward GTA services - May 2010 and June 2010, August 2010 and September 2010 , October 2010 and November 2010 and December 2010 to September 2011 32.29 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Vadodara
Central Excise Act, 1944 Cenvat Credit availed on Air Travel Agent & Garden Services - June 2015 to May 2016 4.44 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Vadodara
Central Excise Act, 1944 Cenvat Credit availed on Civil Construction services - January 2016 to March 2017 26.42 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Vadodara
Central Excise Act, 1944 Interest and Penalty on reversal of Common services availed 13.85 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Vadodara.

ANNEXURE I TO INDEPENDENT AUDITORS REPORT

to the Members of Gujarat Fluorochemicals Limited on the standalone Ind AS financial statements for the year ended 31st March, 2018 – referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

Name of the Statute Nature of dues and the period to which the amount relates Amount Forum where dispute is pending
( in Lakhs)
Central Excise Act, 1944 Cenvat Credit availed on Travel agent service, CHA, GTA, Insurance etc. - January 2013 to September 2014 6.39 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Vadodara
Central Excise Act, 1944 Cenvat Credit availed on Setting up of new plant- July 2015 to March 2016 2.10 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Vadodara
Service Tax (Finance Act,1994) Service tax not paid on Collection of rent on Cylinders 5.73 Commissioner (Appeals-II), Central Excise, Customs and Service Tax, Vadodara
Service Tax (Finance Act, 1994) Non-payment of Service tax on Import of services relating to supply of tangible goods, online information database access or retrieval services– May 2008 to March 2015 & April 2015 to March 2016 218.60 Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad
Custom Act,1962 Differential duty on Import of Coal on high seas – a) 17th March, 2012 to 28th March, 2013 b) April 2013 to May 2013 860.53 113.04 Customs, Excise and Service Tax Appellate Tribunal, Ahmedabad
Commercial tax Gujarat, VAT Proportionate ITC reduced on Capital goods at the rate of 2%. In respect of Ratio of OGS sales to Gross turnover of sales. F.Y. 2011-2012 14.00 Gujarat Value Added Tax Tribunal, Ahmedabad
Commercial tax Gujarat, CST Proportionate ITC reduced on Capital goods at the rate of 2%. In respect of Ratio of OGS sales to Gross turnover of sales and Sales to SEZ (Gujarat) at Zero rated tax assessed at full rate of tax at 5% F.Y. 2011-2012 38.33 Gujarat Value Added Tax Tribunal, Ahmedabad
Commercial tax Gujarat, VAT Proportionate ITC reduced on Capital goods at the rate of 2%. In respect of Ratio of OGS sales to Gross turnover of sales – a) F.Y. 2012-2013 b) F.Y. 2013-2014 35.88 38.76 Joint Commissioner of Commercial Tax (Appeal)
Commercial tax Gujarat, CST Proportionate ITC reduced on Capital goods at the rate of 2%. In respect of Ratio of OGS sales to Gross turnover of sales – F.Y. 2013-2014 20.21 Joint Commissioner of Commercial Tax (Appeal)

ANNEXURE I TO INDEPENDENT AUDITORS REPORT

to the Members of Gujarat Fluorochemicals Limited on the standalone Ind AS financial statements for the year ended 31st March, 2018 – referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

8. The Company has not defaulted in repayment of dues to banks or financial institutions and the Company did not have any borrowings from Government or by way of debentures.

9. The Company has applied the moneys raised by way of term loans for the purposes for which the moneys were raised. The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments).

10. No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

11. The Company has complied with the provisions of section 197 of the Companies Act, 2013 regarding payment of managerial remuneration.

12. The Company is not a Nidhi Company and hence the provisions of clause 3(xii) of the Order are not applicable to the Company.

13. All transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 and the details have been disclosed in the standalone financial statements etc., as required by the applicable accounting standards.

14. 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 the provisions of clause 3(xiv) of the Order are not applicable to the Company.

15. The Company has not entered into any non-cash transactions with directors or persons connected with them and hence the provisions of clause 3(xv) of the Order are not applicable to the Company.

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

For Kulkarni and Company,

Chartered Accountants Firms Registration No. 140959W

A D Talavlikar

Partner Membership No. 130432

Place : Noida

Dated: 25th May, 2018

ANNEXURE II TO INDEPENDENT AUDITORS REPORT

to the members of Gujarat Fluorochemicals Limited on the standalone Ind AS financial statements for the year ended 31st March, 2018 – referred to in paragraph 2(f) under the heading "Report on Other Legal and Regulatory Requirements" 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 have audited the internal financial controls with reference to financial statements of Gujarat Fluorochemicals Limited ("the Company") as of 31st March, 2018 in conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control with reference to financial statements criteria established by the Company considering the essential components of internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India ("the 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.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. 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 with reference to 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 system with reference to financial statements and their operating effectiveness.

Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to 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 Ind AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system with reference to financial statements.

Meaning of Internal Financial Controls with reference to Financial Statements

A companys internal financial control with reference to 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 controls with reference to 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 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 companys assets that could have a material effect on the financial statements.

ANNEXURE II TO INDEPENDENT AUDITORS REPORT

to the members of Gujarat Fluorochemicals Limited on the standalone Ind AS financial statements for the year ended 31st March, 2018 – referred to in paragraph 2(f) under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date.

Inherent Limitations of Internal Financial Controls with reference to Financial Statements

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

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at 31st March, 2018, based on the internal controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.

For Kulkarni and Company,

Chartered Accountants Firms Registration No. 140959W

A D Talavlikar

Partner Membership No. 130432

Place : Noida

Dated: 25th May, 2018