Hindalco Industries Ltd Auditors Report.

TO THE MEMBERS OF HINDALCO INDUSTRIES LIMITED

Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements.

We have audited the Standalone Ind AS fi nancial statements of HINDALCO INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profi t and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the signifi cant 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 Ind AS fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance (including other comprehensive income), cash fl ows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specifi ed in the Companies (Indian accounting Standard ) Rules, 2015 (as amended) 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 fi nancial 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 fi nancial 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 fi nancial statements based on our audit. We have taken into account the provisions of the Act and the Rules made thereunder including 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 of the Standalone Ind AS fi nancial Statements in accordance with the Standards on Auditing specifi ed under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone Ind AS fi nancial statements is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Standalone Ind AS fi nancial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal fi nancial control relevant to the Companys preparation of the Standalone Ind AS fi nancial 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 fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS fi nancial 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 fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2017, and its profi t (including other comprehensive income), its cash fl ows and the changes in equity for the year ended on that date.

Other Matter

The corresponding fi nancial information of the Company as at and for the year ended March 31, 2016 and the transition date opening balance sheet as at April 1, 2015 included in these Standalone Ind AS fi nancial statements, are based on the previously issued fi nancial statements for the years ended March 31, 2016 and March 31, 2015, prepared in accordance with the Companies (Accounting Standards) Rules, 2006 (as amended) which were audited by us, on which we expressed an unmodifi ed opinion read with our observation on which attention drawn under emphasis of matter paragraph of our audit report dated May 28, 2016 and May 28, 2015 respectively which is also explained in Note no. 43 to the attached fi nancial statements. These fi nancial statements have been adjusted for differences in accounting principles to comply with Ind AS and such adjustments on transition to Ind AS which has been approved by the Companys Board of Directors have been audited by us. Our opinion is not modifi ed in respect of this matter.

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 ("the Order"), and on the basis of examination 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 ‘A statement on the matters specifi ed in the paragraph 3 and 4 of the 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 Balance Sheet, the Statement of Profi t and Loss (including other comprehensive income) , the cash fl ow statement and the 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 fi nancial statements comply with the Indian Accounting Standards specifi ed under Section 133 of the Act. e) On the basis of the written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualifi ed as on 31st March, 2017 from being appointed as a director in terms of Section 164 (2) of the Act. f) With respect to the adequacy of the internal fi nancial controls over fi nancial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure ‘B, 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, (as amended), in our opinion and to the best of our information and according to the explanations given to us: i. the Company has disclosed the impact of pending litigation as at March 31, 2017 on its fi nancial position in its Standalone Ind AS fi nancial statements – Refer Note 47 (a) and 47(b)(iv) to (vi). ii. the Company has long-term contracts including derivative contracts as at 31st March, 2017 for which there were no material foreseeable losses. iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except 0.02 crore which are held in abeyance due to pending legal cases. iv. The Company has provided requisite disclosures in the Standalone Ind AS fi nancial statements as to holdings as well as dealings in Specifi ed Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on the audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the Company and produced to us by the Management. Refer Note No 55(C).

For SINGHI & CO.
Chartered Accountants
Firm Registration No. 302049E
(RAJIV SINGHI)
Place : Mumbai Partner
Date : 30th May, 2017 Membership No. 53518

Annexure A referred to in paragraph 1 of the Independent Auditors Report of the even date to the members of Hindalco Industries Limited in the Standalone Ind AS fi nancial statements as of and for the year ended March 31, 2017 under the heading "Report on other legal and regulatory requirements"

Re: Hindalco Industries Limited (the Company)

I. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fi xed assets. (b) Physical verifi cation of fi xed assets have been carried out in terms of the phased program designed to cover all items over a period of 3 years, which in our opinion is reasonable having regard to size of the Company and nature of its assets. Pursuant to the program, a portion of fi xed assets have been physically verifi ed by the management during the year and no material discrepancies between books record and physical inventory has been noticed.

(c) According to the information and explanations given to us and on the basis of the examination of the records of the company, the title deeds of the immovable properties included in fi xed assets are held in the name of the company, except in the following cases.

Particulars Total number of cases Nature of Assets Gross block (as at March 31, 2017)
Amount
Unit:- Birla Copper 6.13 acre, Unit:- Muri 9 Freehold Land 4.09 crore
1.22 acre, Unit:- Mahan 37.79 acre
Unit:- Delhi Branch Residential Property 3 Residential 0.35 crore
of Area 1808 sq Built up, Area 2,690 sq ft Property
Built up and Area 3644 sq ft Built up

II. As per the information and explanations given to us, the inventories (excluding inventories in transit) have been physically verifi ed at reasonable intervals during the year by the management except materials lying with third parties, where confi rmations are obtained. The discrepancies noticed on the physical verifi cation of inventory as compared to book stock were not material. III. The Company has not granted any loans, secured or unsecured to Companies, Firms, Limited Liability Partnership or other parties listed in the register maintained under Section 189 of the Companies Act, 2013. Accordingly the provisions of paragraph 3(III), 3(III)(a) to 3(III)(c) of the said order are not applicable to the Company.

IV. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Companies Act 2013, with respect to Loans and Advances made, guarantee given and investments made.

V. The Company has not accepted any deposit from the public within the meaning of section 73, 74, 75 and 76 of the Act and Rules framed thereunder to the extent notifi ed.

VI. We have broadly reviewed the books of accounts maintained by Company in respect of product, where pursuant to the rule made by the Central Government of India the maintenance of cost records has been prescribed under section 148 (1) of the Companies Act 2013 and are of the opinion that, prima facie ,the prescribed records have been maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete. VII. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, 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, Cess and other statutory dues with the appropriate authorities. According to the information and explanations given to us and the records of the Company examined by us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other material statutory dues were in arrears as at March 31, 2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the dues of Sales Tax, Income Tax, Duty of Customs , Duty of Excise, Service Tax and Cess which have not been deposited on account of any dispute and the forum where the dispute is pending as on 31st March, 2017 are as under :-

Name of the Statue Nature of Dues Amount Period to which the amount relates Forum where the disputes are pending
( in Crore)
Central Sales Tax Act Sales Tax 3.57 2003-2004, 2012-2013 to 2015- The Supreme Court
and Local Sales Tax Act 2016
8.97 1986-1987, 1989-1990, The High Court
1991-1992 , 1992-1993,
1999-2000 to 2003-2004,
2005-2006, 2006-2007
1.33 2002-2003, 2005-2006 Tribunal
43.42 1991-1992, 1996-1997 to Asst Commissioner/
2002-2003, 2005-2006 Commissioner/ Revisionary
to 2012-2013 Authorities Level
The Central Excise Act,
1944
Excise Duty
1.14 1989-1990 to 1995-1996, 2000- The High Court
2001, 2009-2010, 2011-2012
236.64 1998-1999 to 2014-2015 Customs, Excise and Service Tax
Appellate Tribunal ( CESTAT)
186.82 2001-2002 to 2013-2014 Asst Commissioner/
Commissioner/ Revisionary
Authorities Level
The Service Tax under Service Tax 0.35 2009-2010 The High Court
the Finance Act ,1994
148.90 2002- 2003 to 2015-2016 Customs, Excise and Service Tax
Appellate Tribunal ( CESTAT)
93.09 2004-2005 to 2015-2016 Asst Commissioner/
Commissioner/ Revisionary
Authorities Level
The Customs Act , Customs Act
1962
22.78 2009-10 and 2010-11 Customs, Excise and Service Tax
Appellate Tribunal ( CESTAT)
5.34 2006-07 Asst Commissioner/
Commissioner/ Revisionary
Authorities Level
The Income Tax Act , 1961 Income Tax 912.30 2008-2009 to 2011-2012 CIT ( Appeals)
Adhosanrachna Vikas Chhattisgarh 0.38 2005- 2006 to 2011-2012 The Supreme Court
Evam Parayavaran Development
Upkar Adhiniyam, 2005 and
Environment
Cess
Shakti Nagar Special Cess on Coal 3.98 1997- 1998 to 2011-2012 The Supreme Court
Area Development
Authority
The Building and Cess 123.60 2011-12 The Supreme Court
Other Construction
Workers (Regulation
of Employment and
Conditions of Service)
Act & Rules ("BOCW
Act")
Green Cess Cess 7.56 2012-2013 to 2015-2016 The Supreme Court

VIII. According to the records of the Company examined by us and the information and explanations provided to us, the Company has not defaulted in repayment of loans or borrowings to any Financial Institutions or Banks or dues to debenture holders as at the Balance Sheet date. The Company does not have any loans or borrowing from the Government as at the balance sheet date.

IX. In our opinion, and according to the information and explanations given to us, the money raised by way of term loans have been applied for the purpose for which they were obtained. The company has not raised any money by way of initial public offer or further public offer including debt instruments during the year.

X. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practice in India, and according to the information and explanations given to us, we have neither come across any instances of material fraud by the Company or on the Company by its offi cers or employees, noticed or reported during year nor have been informed of any such case by the Management.

XI. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act. XII. The company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, accordingly, the provisions of clause 3(XII) of the Order are not applicable.

XIII. The Company has entered into transactions with related parties in compliance with sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the Standalone Ind AS fi nancial statements as required under Ind AS 24, Related Party Disclosures specifi ed under section 133 of the Act , read with Rule 7 of the Companies ( Accounts) Rules, 2014. XIV. The Company has not made any preferential allotment of shares or fully or partly converted debentures during the year. However, the Company has raised 3,350 crore through Qualifi ed Institutions Placement ("QIP") by allotting 17,68,27,659 Equity Shares at a price of 189.45 per share. The QIP placement is in compliance with section 42 of the Companies Act, 2013. Further the Company has disclosed the end use of money received from QIP in Note No. 16(d) of notes to the Standalone Ind AS fi nancial statements and the same has been verifi ed by us. XV. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with them. Accordingly, paragraph 3(xv) of the Order is not applicable.

XVI. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) of the Order is not applicable to the Company.

For SINGHI & CO.
Chartered Accountants
Firm Registration No. 302049E
(RAJIV SINGHI)
Place : Mumbai Partner
Date : 30th May, 2017 Membership No. 53518

ANNEXURE - B TO THE INDEPENDENT AUDITORS REPORT

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 fi nancial controls over fi nancial reporting of HINDALCO INDUSTRIES LIMITED ("the Company") as of March 31, 2017 in conjunction with our audit of the Standalone Ind AS fi nancial 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 fi nancial controls based on the internal control over fi nancial 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 fi nancial controls that were operating effectively for ensuring the orderly and effi cient 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 fi nancial information, as required under the Act.

AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on the Companys internal fi nancial controls over fi nancial 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, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal fi nancial 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 fi nancial controls over fi nancial 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 fi nancial controls system over fi nancial reporting and their operating effectiveness. Our audit of internal fi nancial controls over fi nancial reporting included obtaining an understanding of internal fi nancial controls over fi nancial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS fi nancial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion on the Companys internal fi nancial controls system over fi nancial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A companys internal fi nancial control over fi nancial reporting is a process designed to provide reasonable assurance regarding the reliability of fi nancial reporting and the preparation of Standalone Ind AS fi nancial statements for external purposes in accordance with generally accepted accounting principles. A companys internal fi nancial control over fi nancial 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 Standalone Ind AS fi nancial 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 Standalone Ind AS fi nancial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

Because of the inherent limitations of internal fi nancial controls over fi nancial 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 fi nancial controls over fi nancial reporting to future periods are subject to the risk that the internal fi nancial control over fi nancial reporting 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 fi nancial controls system over fi nancial reporting and such internal fi nancial controls over fi nancial reporting were operating effectively as at March 31, 2017, based on the internal control over fi nancial 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.

For SINGHI & CO.
Chartered Accountants
Firm Registration No. 302049E
(RAJIV SINGHI)
Place : Mumbai Partner
Date : 30th May, 2017 Membership No. 53518