IL&FS Transportation Networks Ltd Auditors Report.

To the Members of

IL&FS Transportation Networks Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of IL&FS Transportation Networks Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss, including the Statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information

Managements Responsibility for the 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 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 control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the 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 of the standalone Ind AS financial statements 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. 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.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 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 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 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, of the state of affairs of the Company as at March 31, 2017, its profit including other comprehensive loss, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

In respect of the matter explained in Note 4(ii)(f) of the

Standalone IndAS Financial Statements, in respect of suspension of toll collection of an associate company pursuant to the order of Honble High Court of Allahabad and the matter is pending with Honble Supreme Court of India.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As r equired by the Companies (Auditors Report) 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 r equired 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 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 it appears from our examination of those books;

(c) The Balance Sheet, 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) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) On the basis of written representations received from the directors as on March 31, 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 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 financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(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 Order, 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 Ind AS financial statements – Refer Note 33 to the standalone Ind AS financial statements;

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts – Refer Note 15 and 30.6.2 to the standalone Ind AS financial statements;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;

iv. The Company has provided requisite disclosures in Note 12(d) to these standalone Ind AS financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management.

Other Matter

The comparative financial information of the Company for the year ended March 31, 2016 and the transition date opening balance sheet as at April 01, 2015 included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 audited by one of us whose report for the year ended March 31, 2016 and March 31, 2015 dated May 13, 2016 and May 15, 2015 respectively expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been jointly audited by us.

For DELOITTE HASKINS & SELLS LLP For S R B C & CO LLP
Chartered Accountants Chartered Accountants
ICAI Firm Registration Number: 117366W/W100018 ICAI Firm Registration Number: 324982E/E300003
per Shrenik Baid per Ravi Bansal
Partner Partner
Membership Number: 103884 Membership Number: 49365
Place of Signature: Mumbai Place of Signature: Mumbai
Date: May 29, 2017 Date: May 29, 2017

ANNEXURE 1

Referred to in paragraph 1 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

(i) (a) The Company has maintained proper showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered Conveyance deed provided to us, we report that, the title deed of immovable property of building is freehold and is held in the name of the Company as at the balance sheet date. The Company does not have immovable properties of leasehold land and buildings and disclosed as fixed assets in the financial statements.

(ii) As e xplained to us, the inventories were physically verified by the management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) Accor ding to the information and explanations to us, 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, in respect of which :

(a) The terms and conditions of the grant of such loans are, in our opinion, prima facie, not prejudicial to the Companys interest.

(b) The Schedule of repayment of principal and payment of interest has been stipulated, wherever applicable, and the repayments or receipts of principal amounts and contractual interest have been generally regular as per stipulations

(c) There is no amount overdue for more than 90 days as at March 31, 2017

(iv) The Company has not granted any loans covered under Section 185 of the Companies Act, 2013. The Company is in the business of providing infrastructural facilities and hence provisions of Section 186 of the Companies Act, 2013 do not apply to the Company, however, the Company is in compliance of Section 186(1).

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable. There are no unclaimed deposits with the Company any time during the year.

(vi) W e have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) Accor ding to the information and explanations given to us, in respect of statutory dues:

(a) Undisputed statutory dues including provident fund, employees state insurance, income-tax, given sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a delays in a few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income-tax, service tax, sales-tax, value added tax, 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) According to the records of the Company, the dues outstanding of income-tax, service tax, value added tax, entry tax, CST on account of any dispute, are as follows:

Name of Statue Nature of dues Forum where dispute is pending Period to which the amount relates Amount Involved (Rs in Crore) Unpaid Amount
(Rs in Crore)
Finance Act, 1994 Service Tax CESTAT 2012-13 1.20 0.60
Madhya Pradesh VAT Act Value Added Tax MP Commercial Tax Appellate Board 2012-13 0.68 0.09
Madhya Pradesh VAT Act Value Added Tax MP Commercial Tax Appellate Board 2013-14 1.43 0.03
Madhya Pradesh VAT Act Value Added Tax, Entry Tax and CST Dy. Commissioner of Commercial Tax 2014-15 0.09 0.07
Punjab VAT Act Value Added Tax Deputy Commissioner Appeal 2013-14 0.37 0.18
Punjab VAT Act Value Added Tax Deputy Commissioner Appeal 2014-15 0.43 -
Rajasthan VAT Act Value Added Tax Deputy Commissioner Appeals, Commercial Tax Department, Jaipur 2011-12 0.08 0.08
Uttar Pradesh VAT Act Value Added Tax Additional Commissioner (Appeal), Commercial Tax Additional 2012-13 7.37 3.69
Uttar Pradesh VAT Act Value Added Tax, CST & Entry Tax Commissioner (Appeal), Commercial Tax 2013-14 38.76 38.76
West Bengal VAT Act Value Added Tax Senior Joint Commissioner of Sales Tax Appeal 2013-14 0.59 -
Income Tax Act, 1961 Income Tax Income Tax Appellate Tribunal- Mumbai 2008-2009 4.39 -
Income Tax Act, 1961 Income Tax Commissioner of Income Tax (Appeals)- Mumbai 2009-2010 6.97 -
Income Tax Act, 1961 Income Tax Commissioner of Income Tax (Appeals)- Mumbai 2010-2011 12.56 -
Income Tax Act, 1961 Income Tax Commissioner of Income Tax (Appeals)- Mumbai 2011-2012 3.70 -
Income Tax Act, 1961 Income Tax Commissioner of Income Tax (Appeals)- Mumbai 2012-2013 12.10 -

(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or government or dues to debenture holders.

(ix) In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by term loans for the purposes for which they were raised, other than temporary deployment pending application of proceeds. The Company has not raised any money by way of initial public offer/further public offer (including debt instruments) during the year.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the company material fraud on the company by the officers and employees of the Company has been noticed or reported during the year.

(xi) Accor ding to the information and explanations given by the management, 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) Accor ding to the information and explanations the management, 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, etc. as required by the applicable accounting standards.

(xiv) Accor ding to the information and explanations 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.

given (xv)by Accor ding to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in Section 192 of Companies Act, 2013.

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

For DELOITTE HASKINS & SELLS LLP For S R B C & CO LLP
Chartered Accountants Chartered Accountants
ICAI Firm Registration Number: 117366W/W100018 ICAI Firm Registration Number: 324982E/E300003
per Shrenik Baid per Ravi Bansal
Partner Partner
Membership Number: 103884 Membership Number: 49365
Place of Signature: Mumbai Place of Signature: Mumbai
Date: May 29, 2017 Date: May 29, 2017

ANNEXURE 2

To the Independent Auditors Report of even date on the Standalone Financial Statements of IL&FS Transportation Networks Limited

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 IL&FS Transportation Networks Limited ("the Company") as of March 31, 2017 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. 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 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. 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 auditors judgement, 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 internal financial controls system over financial reporting.

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 companys 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.

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.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, 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.

For DELOITTE HASKINS & SELLS LLP For S R B C & CO LLP
Chartered Accountants Chartered Accountants
ICAI Firm Registration Number: 117366W/W100018 ICAI Firm Registration Number: 324982E/E300003
per Shrenik Baid per Ravi Bansal
Partner Partner
Membership Number: 103884 Membership Number: 49365
Place of Signature: Mumbai Place of Signature: Mumbai
Date: May 29, 2017 Date: May 29, 2017