Indowind Energy Ltd Auditors Report.

TO THE MEMBERS OF INDOWIND ENERGY LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of INDOWIND ENERGY LIMITED ("the Company"), which comprise the Balance Sheet as at 31" March, 2017, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the Standalone Financial Statements

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

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements.

The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the 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 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 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 financial statements.

Basis of Qualified Opinion

(i) There are amounts receivable from various parties, amounting to Rs. 14.14 Crores which have been shown under the heads Current Asset - Inventory, Long Term Trade Advance, Trade Debtors and Other Non Currents Asset. There is an absence of regular repayments, reconciliation and confirmation from the parties. In our opinion the management has to recognize a provision for adjusting the carrying amount of these assets.

Based on the above we are not in a position to ascertain and comment on the correctness of the outstanding balances and resultant impact of the same on the financial statements of the company.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the paragraphs "Basis of Qualified Opinion" and "Emphasis of Matter", the aforesaid standalone 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 31st March, 2017, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the financial statements:

1. Note 5 of schedule to the financial statements. The company is the defendant in a legal case filed by the Foreign Currency Bond Holders for winding up. The entity has filed a counter action, hearing and proceedings on both actions are in progress. The impact of the matter cannot be ascertained at this stage.

2. Note No. 9 of financial statements under fixed assets regarding capitalisation of Plant & Machinery by way of addition amounting to Rs. 17.01 Crores.

The above Capitalisation includes additions to plant and Machinery of Rs. 11 Crores which was done by way of a Transfer agreement with suppliers towards settlement of project advances made in the past.

3. In accordance with Accounting Standard -11 (Standard on The Effects of Changes in Foreign Exchange Rates), the Company is required to value its monetary assets and liabilities viz., Long Term Provisions at the foreign exchange rate prevailing on the date of the balance sheet. The company has not re-instated the foreign currency term loan disclosed under Note No 4 & 7 amounting to Rs. 55.99 Crores representing a part of the loan amount taken from EXIM Bank at the year endforex rates. Had the same been re-instated, the liability to Exim Bank would be Rs 79.42 crores and the profit for the financial year ended 31 st March 2017 would have been increased by Rs. 1.83 Crores. The entity has not re-instated the loan from the time of availment which would result in decrease in reserve and Surplus upto Previous Year by Rs. 24.99 Crore.

4. Note No. 17 in respect of Misc Expenditure shown under Other Current Assets of Rs. 2.56 Crores (which also includes Rs. 30 Lakhs grouped under Cash & Cash Equivalent last year for which we had expressed a qualified opinion). In our opinion Rs 2.56 Crores is to be written off during the year. If written off the Profit would have decreased by 2.56 Crores.

Our opinion is not modified in respect of the matters mentioned above.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 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 A", a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable

2. Further to the comments in the annexure, 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 ouraudit.

(b) In ouropinion, 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 and proper returns adequate for the purposes of ouraudit have been received from the branches not visited by us.

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from the branches not visited by us.

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 except to the matters mentioned under our "basis of qualified opinion" and "emphasis of matters" and their effect on Profit & Loss of the company on account of non- compliance of Accounting Standards.

(e) On the basis of the written representations received from the directors as on 31 st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as onSI81 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 financial controls overfinancial 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, 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 - Refer Note 5 and 26 to the financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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

For V. Ramaratnam & Co
Chartered Accountants
Firm Registration No.002956S
R. Sundar
Place: Chennai. Partner
Date: 23rd May, 2017 Membership No.: 012339

"Annexure A" to the Independent Auditors Report

Referred to in paragraph 1 under the heading Report on Other Legal & Regulatory Requirement of our report of even date to the financial statements of the Company for the year ended March 31, 2017:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification 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 immovable properties are held in the name of the company except for seven cases of freehold land having aggregate gross block of Rs. 1,80,72,120/-.

(ii) According to the information and explanation given to us, the physical verification of the inventory has been conducted at the reasonable intervals by the management and there has been no material discrepancies noticed during such verification.

(iii) The Company has granted loans, both secured and unsecured to companies, firms, limited liability partnerships and other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

(a) "In our opinion, the terms and conditions of loans granted by the company to the parties covered in the register maintained under section 189 of the Companies Act, 2013 are not prejudicial to the companys interest.

(b) According to the information and explanation given to us, the schedule of repayment of principal and payment of interest has been stipulated and the repayments are regular.

(c) According to the information and explanations given to us, there are no over dues for more than 90 days from the parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) ln 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 the loans and investments made.

(v) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

(vi) According to information and explanations given to us, the Central Government has not prescribed the maintenance of Cost Records under sub-section (1) of section 148 of the Companies Act, 2013 for the Company. Thus, paragraph 3(vi) of the Order is not applicable to the Company.

(vii) (a) According to information and explanations given to us and on the basis of our examination of the books of account, and records, the 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 any other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in few cases which is not material. According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March 31, 2017 for a period of more than six months from the date on when they become payable.

(b) According to the information and explanations given to us, there are no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax which have not been deposited on account of any dispute, except for the following:

S.No. Particulars Amount (Rs.) in lakhs Period to which the amount relates Forum where dispute is pending
1 Income Tax Act 27.00 AY 1998-1999 First appellate authority - Commissioner of Income tax appeals
2. Service Tax 218.00 FY 2005-2006, 2006 - 2007, 2007 - 2008, 2008 - 2009 and 2009-2010 Central Excise and service tax appellate tribunal [CESTAT]
3. Value Added Tax 16.80 FY 2007-2008 High Court of madras
4. Value Added Tax 29.60 FY 2008-2009 High Court of madras

(viii) In our opinion and according to the information and explanations given to us, the Company has not issued any debentures and not defaulted in the repayment of dues to banks and financial institution except the following:

Name of institution - Export-Import Bank of India (Exim) Amount of overdue as on balance sheet date - Rs. 143,16,269/- (USD 220,798,55) Period of overdue - Quarter IV of FY 2016-17 Exim bank had sanctioned a facility of USD 25 million and disbursed USD 12.70 million only. Exim Bank is holding a Fixed deposit of Rs. 370 Lakhs which is due to the company as on the balance sheet date.

(ix) The company did not raise money by way of initial public offer or further public offer including debt instruments and term Loans. Thus, paragraph 3(ix) of the Order is not applicable to the Company.

(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of ouraudit.

(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 managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

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

(xlil) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with section 177 and section 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

(xiv) According to the information and explanation given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, paragraph 3(xiv) of the Order is not applicable.

(xv) According to the information and explanation 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 him

(xvi) According to the information and explanation given to us and in our opinion, the company is not required to be registered under section 45 lAof the Reserve Bankof India Act, 1934.

For V. Ramaratnam & Co
Chartered Accountants
Firm Registration No.002956S
R. Sundar
Place: Chennai. Partner
Date: 23rd May, 2017 Membership No.: 012339

"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 controls over financial reporting of Indowind Energy Limited ("the Company") as of 31st March, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required underthe 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, both 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 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 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 31 March 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 issued by Institute of Chartered Accountants of India.

Emphasis of Matter

We would draw attention to the matters disclosed in the paragraph 3(iii) of the Annexure A referred in paragraph 1 under the heading "Basis of Qualified Opinion" and "Emphasis of Matters" which could indicate possible lapses in internal financial control system at various points in time.

Ouropinion under clause (i) of sub-section 3 of the section 143 of the Act is not qualified in respect of this matter.

For V. Ramaratnam & Co
Chartered Accountants
Firm Registration No.002956S
R. Sundar
Place: Chennai. Partner
Date: 23rd May, 2017 Membership No.: 012339