Indosolar Ltd Auditors Report.

To the Members of Indosolar Limited

1. Report on the Ind AS Financial Statements

We have audited the accompanying Ind as financial statements of Indosolar Limited ("the Company"), which comprise the balance sheet as at 31st March 2018, the statement of profit 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 significant accounting policies and other explanatory information.

2. Managements Responsibility for the 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 and presentation of these 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 Indian Accounting Standards specified in the Companies (Indian Accounting Standards) 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 financial controls 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.

3. Auditors Responsibility

Our responsibility is to express an opinion on these 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 and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the 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 Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the 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 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 Ind AS financial statements.

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

4. Basis for Qualification

4.1 Material Uncertainty Related to Going Concern

a) The Company has continued to incur significant losses in the current year resulting in further erosion of its net worth. The Company has a negative net worth amounting to Rs. 45,652.96 lakhs as on 31st March, 2018. The Companys current liabilities exceeds the current assets by Rs. 85,105.46 lakhs as on 31st March 2018. The Companys long term, short-term borrowings and other financial current liabilities as at 31st March 2018 includes the balances of term loan payable to various lender banks amounting to Rs. 33,408.44 lakhs and Rs.75,452.90 lakhs respectively on becoming non-performing assets. These lender banks have exited from Corporate Debt Restructuring (CDR) Cell vide its letter dated 4th November, 2016. However, in absence of requisite information from the banks, we are unable to comment upon the possible impact of such exit on the carrying value of aforesaid long term, short-term borrowings, other financial current liabilities as at 31st March 2018 and interest expense (including penal interest, if any) for year ended 31st March 2018 and the consequential impact on the accompanying statement.

b) In the matter of Companys claim for eligibility of capital subsidy under SIP scheme of Govt, of India, the Special Leave petition (SLP) filed by the Department of Information Technology (DIT), against the order of the Honble High Court of Delhi has been dismissed by the Honble Supreme court vide its order dated August 25, 2017. The uncertainty exists with regard to its quantum and receipt of claim pending its appraisal by Department of Information Technology. In the absence of the reasonable assurance, the management has not recognized the claim. (Refer Note No 44(A)(iii)

c) The Company (being an EOU) has not been able to meet its commitment under the Foreign Trade Policy on the basis of which the Company imported certain raw material, stores and spares and machineries without payment of custom duty. As on 31st March, 2018 the Companys NFE is positive by Rs. 23,913.25 lakhs without considering the import value of amortization of Line-C. In case, Company also amortizes the value of Line C (Commercial production yet to start) NFE as on 31st March, 2018 would be negative by Rs.5494.01 lakhs. In case positive NFE not achieved during the stipulated time, the company would be liable to duties and penalties payable in accordance with Notification No. 52/2003 Cus. Dated 31.03.2003. Presently we are unable to comment upon the possible impact if any on the accompanying statement. (Refer Note No 44(B)(ii).

d) The Company has plant and machinery under installation, disclosed under CWIP, aggregating to Rs. 56,447.97 lakhs in respect of which management has recognized an impairment loss of Rs. 30,700.00 lakhs during the year ended 31st March, 2018 based on recoverable value of the assets determined using value in use method and is therefore dependent on the various factors considered in making projections by the management. In the absence of sufficient and appropriate audit evidence with respect to the uncertainty underlying the assumptionsparticularly the timing of expected imposition of anti/safeguard duty and installation of Line -C and commencement of its commercial production,used in the long term projections, we are unable to comment on the carrying value of aforesaid Property, Plant and Equipment and adequacy of the impairment loss recognized during the year ended 31st March, 2018 and the consequential impact, if any, on the accompanying statement. ( Refer Note No 44(B)(iii).

e) During the year the Company has received the approval of One Time Settlement (OTS) Scheme from Union Bank of India (Bank). As per the OTS Scheme if the Company is unable to pay as per stipulations, the OTS proposal will stand cancelled automatically and the bank will take suitable legal steps for recovery of entire dues (Refer Note No 44(A)(i).

On the basis of overall evaluation of the above factors and considering the domestic content requirements under various Government schemes, proposed anti-dumping/safeguard duty on import of solar cell, Companys claim for certain capital incentive from Department of Information Technology (DIT), the Companys continuing efforts to settle with the remaining bankers and Asset Reconstruction Company (India) Limited, the management believes that it is appropriate to prepare the accounts on a going concern basis. Refer Note No 43.

On the basis of overall evaluation of the above factors, in our view, the full erosion of net worth, inability of the Company to meet the financial projections due to operating and cash losses, due to continuing down trend in the solar industry, inability of the Company to meet its certain material liabilities and commitments, the fact that the impact of the government decisions would be known only in future, the uncertainty of outcome of claims, uncertainty on the ability of the Company to meet its export obligations & to install line C acquired in the financial year 2011-12 (appearing in CWIP),due to non-fulfillment of its financial obligations towards the supplier of the plant & technology, indicate the existence of material uncertainties that may cast significant doubt about the Companys ability to continue as a going concern and therefore, the Company may not be able to realise its assets and discharge its liabilities in the normal course of business. Consequently, material uncertainties exist regarding the use of going concern assumption in preparing the financial statements.

In view of above uncertainties we are unable to comment on the ability of the Company to continue as a going concern and consequential classification and adjustment to the accompanying financial statements, if any, that might have been necessary had the financial statements being prepared under liquidation basis. The extent of the effect on the resultant adjustments to the accumulated losses, assets and liabilities as at the year-end is presently not ascertainable.

4.2 During the previous year two secured lenders have assigned their outstanding dues to Assets Reconstruction Company (India) Limited (ARCIL). i) Pending finalization of terms of assignment, the company has not provided interest Rs. 4934.74 lakhs for the year ended 31st March, 2018. As a consequence to this, interest of Rs. 4934.74 lakhs for the year ended 31st March, 2018 has been under provided, ii) On the basis of confirmation received from one of the lending bank namely Corporation Bank in the Non-Performing Assets (NPA) account, the Companys liability to the bank is more by Rs. 2323.88 lakhs as on 31.03.2018 which prima facie appears to be primarily penal interest. Pending receipts of requisite details, their verification and reconciliation of the claim and pending OTS proposal of the Company with the bank, the Company has not provided the same.

As a consequence to this, interest of Rs. 7258.62 lakhs for the year ended 31st March, 2018 has been under provided. Had the Company provided the interest on loans loss for the year ended 31st March, 2018 would have been higher by Rs.7258.62 lakhs and Current Liabilities and Reserve & Surplus have been under stated by the same.

5. Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph 4.1 which highlight material uncertainties, the impact of which is currently not ascertainable including the ability of the company to continue as a going concern and paragraph 4.2 regarding non provision of interest, the aforesaid Ind AS financial statements give the information required by the Act in the manner or equired and give a true and fair of view inconformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March 2018, its loss (including other comprehensive income) and other financial information for the year ended on that date.

6. Report on Other Legal and Regulatory Requirements

As required by the Companies(AuditorsReport) Order, 2016 (Order), issued by the Central Government of India in terms of sub section(11)of section 143 of the Act (here in after referred to as the "Order"), we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. We have sought and,except for the matters described in the Basis for Qualified Opinion paragraph,obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, 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 (including other comprehensive income), the Cash Flow Statement and the Changes in Equity 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 for Qualified Opinion paragraph, in our opinion, the Ind AS financial statements comply with the the Indian Accounting Standards specified under Section 133 of the Act;

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

f. On the basis of written representations received from the directors as on 31st March 2018, and 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;

g. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

h. With respect to the adequacy of the internal financial control sover financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure B;and.

i. 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 initslnd AS financial statements - Refer note 38 to the Ind AS financial statements;

(ii) The Company did not have any long term contracts including derivative contracts for which there were any foreseeable losses; and

(i) The Company did not have any dues on account of Investor Education and Protection Fund.

(iv) The reporting on disclosure relating to specified Bank Notes is not applicable to the company for the year ended March 31, 2018.

Annexure-A to the Auditors Report

The Annexure referred to in Independent Auditors Report to the members of the Company on the Ind AS financial statements for the year ended 31st March, 2018.We report that:

1. (a) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) According to the information and explanations given to us, the fixed assets have been physically verified by the management during the year in a phased manner and no material discrepancies have been noticed on such verification. In our opinion, the frequency of physical verification of fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of the immovable properties are held in the name of the Company.

2. According to the information and explanations given to us, the inventories have been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable and no material discrepancies were noticed.

3. According to the information and explanations given tous, the Company has not 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. Accordingly, Paragraph 3 (iii) (a), (b) and (c) of the Order are not applicable.

4. The Company has not given any loans, or made any investments, or provided any guarantee, or security asspecified under section 185 and 186 of the Companies Act 2013. Accordingly, Paragraph 3(iv) of the Order is not applicable.

5. According to the information and explanations given to us, the company has not accepted any deposits from the public during the year.

6. We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by Central government for maintenance of cost records under section 148(1)of the Companies Act 2013, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

7. a) According to the information and explanations given to us and on the basis of our examination of the records of the

Company, amounts deducted/accrued in the book sof account in respect of undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, service tax, duty of customs,duty of excise, valueadded tax, goods & service tax, cess and other material statutory dues have generally been regularly deposited during the year with the appropriate authorities.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees state insurance, income tax, sales tax, service, tax duty of excise, duty of custom, value added tax, goods & service tax, cess and other material statutory dues were in arrears as at 31 March 2018 for a period of more than six months from the date they became payable.

c) According to the information and explanations given to us, and on the basis of the records of the Company examined by us, there are no dues of income tax, sales tax, duty of customs, duty of excise, value added tax, goods & service tax, which have not been deposited with the appropriate authorities on account of any dispute except as mentioned below :

Name of the statute Nature of the dues Amount in Rupees (lakhs) Period to which the amount relates Forum where dispute is pending
Finance Act, 1994 Service tax 299.77 June 15 to March 16 Commissioner of Service tax
Finance, Act, 1994 Service tax 1193.42 April 16 to June 17 Commissioner Central Tax
Value Added Tax Act (UP) 2015 VAT Demand 4.35 2014-2015 The Additional Commissioner (Appeals), Noida

8 In our opinion and according to the information and explanations given to us, and based on our examination of the books of account and related records, the Company has defaulted in repayment of dues to its bankers as disclosed below. In view of default, long term borrowings become current liabilities and disclosed in Balance Sheet accordingly. The Company did not have any outstanding dues to financial institutions, government and debenture holders during the year.

Name of the lender Nature of dues Amount in rupees (lakhs) Period to which it relates
Andhra Bank Interest 5,875.24 July 2013- March 2018
Andhra Bank Principal 15,746.97 October 2013- March 2018
Bank of Baroda Interest 7,656.63 July 2013- March 2018
Bank of Baroda Principal 10,497.92 October 2013- March 2018
Corporation Bank Interest 10,178.89 April 2013- March 2018
Corporation Bank Principal 15,281.72 October 2013- March 2018
Indian Bank Interest 3,753.73 April 2013- March 2018
Indian Bank Principal 9,179.22 October 2013- March 2018

(B) During the year the Company has received the approval of One Time Settlement (OTS) Scheme from Union Bank of India (Bank) vide sanction letters dated 20.10.2017 which were duly approved by the Board of Directors in their meeting held on 20th December, 2017. The OTS proposal contains: (a) the waiver of interest till March 2018 which includes interest of Rs. 20,707.50 lakhs recognized in the books of account till September 2017, (b) restructuring of loan liability amounting to Rs. 20,866.44 lakhs, (c) conversion of part of the loan amounting to Rs. 20,700.00 lakhs into 1% Optionally Convertible Cumulative Redeemable Preference Shares (OCCRPS).

9. According to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and the term loans during the year. Accordingly, Paragraph 3(ix) is not applicable.

10. According to the information and explanations given to us, no material fraud by or on the Company by its officers or employees has been noticed or reported during the course of our audit.

11. According to the records of the Company examined by us and the information and explanation given to us, the Company has paid and provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V of the Companies Act 2013.

12. According to the information and explanations given to us, the Company is not a nidhi company. Accordingly, Paragraph 3(xii) of the Order is not applicable.

13. According to the information and explanations given to us and based on our examination of the records of the Company, there are no transactions with the related parties which are not incompliance with Section 177 and 188 of the Companies Act, 2013 and the details have been disclosed in the Ind AS financial statements as required by the applicable accounting standards.

14. The Company has made preferential allotment of fully paid up equity shares by way of conversion of the amount outstanding in loan account of the applicant during the year under review & the requirements of Section 42 of the Companies Act, 2013 have been complied with subject to the fact that no fresh money was received against the said allotment as stated herein above. Since preferential allotment has been made by conversion of existing loan and no fresh money has been received, the utilization of the same could not be commented upon. The Company has not made any preferential allotment of fully or partly convertible debentures during the year.

15. According to information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with them as referred to in section 192 of the Companies Act, 2013.Accordingly, Paragraph 3(xv) of the Order is not applicable.

16. According to the information and explanations given to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

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 financial control sover financial reporting of Indosolar Limited ("theCompany") as on 31st March 2018 in conjunction with our audit of the 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 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 a 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, issued by ICAI and deemed to be prescribed 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 judgment, 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 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 Ind AS 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 dis positions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS 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 Ind AS Financial Statements.

In herent Limitations of Internal Financial Controls over Financial Reporting

Because of the in herent limitations of internal financial control sover financial reporting, including the possibility of collusion or improper management over-ride 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 in adequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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 31 March 2018, 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 ARUN K GUPTA & ASSOCIATES
Firm Registration No. 000605N
Chartered Accountants
Place: Greater Noida (SACHIN KUMAR)
Date: 25-05-2018 PARTNER
M. No. 503204