Indowind Energy Ltd Directors Report.

TO THE MEMBERS OF INDOWIND ENERGY LIMITED

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the standalone financial statements of Indowind Energy Limited ("the Company"), which comprise the balance sheet as at 31 March 2019, and the statement of Profit and Loss (including other comprehensive income), statement of changes in equity and statement of cash flows for the year then ended , and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").

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 Basis for Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, of the state of affairs of the Company as at March 31,2019, and loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

i) We draw attention regarding impact on the Profit for the year ended March 31,2019 Where the Company has not provided for Penal Interest, Additional Interest charged against the loan sanctioned of $ 12.89 Million by EXIM Bank on account of revocation of rephasement due to default in repayment of principal, interest and other amounts with effect from 31.05.2014.Also the Company has provided for Interest against the loan @4.4% as against the rate of interest @LIBOR(6M)+400 Bps for $ 10 million and LIBOR(6M)+450 bps for the balance release of $2.89 million as per the bank sanction letter. The Company has filed a case against the EXIM bank on non-release of the balance loan of $12.11 million as per the initial agreed terms and the matter is pending before Honourable High Court of Bombay. As the outcome of the case is uncertain, the recognition of Contingencies in financial statements is not in accordance with recognition and measurement principles laid down in the applicable Indian Accounting Standards prescribed under section 133 of the Companies Act 2013. Had the interest, penal and additional interest been provided in line with the bank, the net profit for the quarter and year ended March 31,2019 would have been lower by Rs.573.18 lakhs.

ii) The EXIM bank has recalled the loan vide letter reference No: EXIM: ChRO: 408:2018-19 dt: Jan 23,2019 for total of USD 12.12 million towards Principal outstanding, Interest overdue and liquidated damages as on December 31,2018. In the event of the Company not able to repay the loan recalled then the bank can recover from the 8 MW WEGs movable fixed assets on which the bank is having first charge by way of hypothecation against the loan sanctioned. These assets are the one which generate the income to service the loan and accordingly will have effect on the generation and future income to the company.

iii) The EXIM bank has converted the Loan outstanding in to INR as on 12.02.2019 with interest rate payable @ 16% pa with monthly rests as against the earlier rate of interest @LIBOR(6M) + 4/4.5 with quarterly rests as applicable on USD loan. The Company has continued to maintain the loan in USD even after the bank has converted into INR. The upward revision in the interest rate charged by the bank will increase the interest liability to the company in future years. However, the company is litigating the action of the bank in converting Dollar loan into rupee loan & Interest rates before the Honourable High Court of Bombay.

iv) Fixed deposits charged against the Loan from EXIM bank has been adjusted by the bank of Rs.365.35 lakhs on February 22,2019 against the interest overdue. However, the company has reflected the same under Current Assets in Note No. 12 bank balances showing closing balance of Rs.401.24 lakhs which is notin accordance with recognition and measurement principles laid down in the applicable Indian Accounting Standards. In our opinion, the management has to recognize the provision to adjust the carrying amount of the Fixed Deposit. Had the provision been made, the net profit for the quarter and year ended March 31,2019 would have been lower by Rs.35.89 lakhs.

v) We refer to Note No.4 to the financial statements in respect of Capital advance shown under Property, Plant & Equipment under Non-Current Asset of Rs. 2828.11 lakhs which is related to the compensation claim from Suzlon Energy Ltd for non-performance of the machines purchased. The company has won arbitration in its favour against the claim made. However, Suzlon Energy Ltd has filed an appeal before the Honourable High Court of Madras. Hence recoverability of the claim is based on the outcome of the case.

vi) We refer to Note No. 8 to the financial statements in respect of other non-current assets of Rs.1002 lakhs relating to 2.50 MW consisting of 7 Machines which are not in working condition. Hence provision is required. However, the management is hopeful of repowering these machineries in working condition.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Emphasis of Matters:

We draw attention to Note 16 to the financial statements, wherein the company is the defendant in a legal case filed by the Trustees of the Foreign Currency Bond Holders (FCCB) for liquidation before the High court of Madras. The impact of the matter cannot be ascertained at this stage Our report is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report

Key Audit Matters How our audit addressed the key audit matter
Evaluation of uncertain tax positions Our audit procedures include the following substantive procedures:
The Company has material uncertain tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes. • Obtained understanding of key uncertain tax positions; and
• We along with our internal tax experts -
Refer Note.39 to the standalone financial statements. > Read and analysed select key correspondences, consultations by management for key uncertain tax positions;
> Discussed with appropriate senior management and evaluated managements underlying key assumptions in estimating the tax provisions; and
> Assessed managements estimate of the possible outcome of the disputed cases.
Recoverability of Indirect tax receivables
As at March 31,2019, other non-current financial assets in respect of Cenvat recoverable amounting to Rs.13.17 lakhs which are pending adjudication. We have involved our internal experts to review the nature of the amounts recoverable, the sustainability and the likelihood of recoverability upon final resolution.
Refer Note.7 to the Standalone financial statements.

Other Information

The Companys management and Board of directors are responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those charged with Governance for the Standalone Financial Statements

The Companys management and Board of Directors are responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs, (including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian accounting Standards (Ind AS) specified 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management and Board of directors are responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities forthe Audit of the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaiuatetheoverallpresentation.structureandcontentofthefinancialstatements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by Section 197(16) of the Act, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act.

2) As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of Section 143(11) of section 143 of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

3) As required by Section 143(3) of the Act, based on our audit, we report, to the extent applicable 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 Profit and Loss (including other comprehensive income),the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

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

(e) On the basis of the written representations received from the directors as on 31 March

2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure 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 ouropinion 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 standalone financial statements - Refer Note 39 to the financial statements.

ii. The Company did not have any material foreseeable losses on long term contracts including derivative contracts

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

For Sanjiv Shah and Associates
Chartered Accountants
Firm Regn.No-003572S
CA G Ramakrishnan
Place: Chennai Partner
Date: 30-05-2019 M. No.209035

Annexure A to Independent Auditors Report

The Annexure referred to in Independent Auditors Report to the members of company on the standalone Ind AS financial statements for the year ended March 31,2019, we report that:

i. a. The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant & equipment.

b. The Company has a regular programme of physical verification of its property, plant & equipment under which property, plant & equipment are verified in a phased manner over a period of three years. In accordance with this programme, certain property, plant & equipment 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 there in formation 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.

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 have been no material discrepancies noticed during such verification.

iii. According to the information and explanation given to us, the Company has not granted any loans to Companies, Firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013 (the Act).Accordingly, the provisions of Clause 3(iii)(a),(b) and (c) of the 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 Act, 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 section 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of deposits) Rules,2015 with regard to the deposits accepted from the public are not applicable.

vi. The Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the services rendered by the Company.

vii. 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 books of accounting in respect of undisputed statutory dues including Provident fund, Employees State Insurance, Income-tax, Goods and Service tax, duty of customs, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, Employees State Insurance, Income-tax, Goods and Service tax, duty of customs, cess and other material statutory dues were in arrears as at 31 March2019for a period of more than six months from the date they became 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 or goods or service 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
01. Income Tax Act 27.00 A.Y. 1998 -1999 First appellate authority -Commissioner of income tax appeals
02. Income Tax Act 75.11 A.Y. 2004-2005 Third appellate authority - High Court of Madras
03. Income Tax Act 22.39 A.Y. 2005 -2006 Third appellate authority - High Court of Madras
04. Service Tax 218.00 F.Y. 2005-2006, 2006 - 2007,2007 - 2008, 2008-2009, 2009-2010 Central Excise and Service Tax Appellate Tribunal [CESTAT]
05. Income Tax Act 310.89* (Tax effect-NIL) AY 2013-14 Second appellate authority -Income Tax Appellate tribunal
06. Income Tax Act 617.50** (Tax Effect-NIL) AY 2014-15 First appellate authority -Commissioner of income tax appeals

* Additions amount made in the assessment

**Depreciation amount disallowed

viii. In our Opinion and according to the information and explanations given to us, the details of defaults as claimed by the EXIM bank in the repayment of borrowings as at 31 st March, 2019 are given below.

Particulars Amount of default as at the balance sheet date as claimed by the EXIM bank Period of default as claimed by the EXIM bank Remarks
Exim Bank 83,71,45,662 crores(INR) On account of recall by bank vide letter dated reference No: EXIM: ChRO: 408:2018-19 dt: Jan 23,2019 June 2018 to March 2019 As claimed by the company the entire income from the project funded by the bank is remitted towards the loan account as per TRA. The company has also filed an application vide suit No.COMSL 118/2019 before the Honourable High Court of Bombay with prayers which include release of balance undisbursed sanctioned loan amount of USD 12.3 million, to declare the bank letter dated 19.11.2018 categorizing the plaintiff loan account as NPA as illegal and bad in law, to direct that the terms relating to repayment of part disbursal amounting to USD 12.7 million contained in the loan agreement dated 18.01.2011 are to be restructured /rescheduled/brought in line with receivables being credited in the TRA account created under TRA dated 15.10.2013, to restrain the bank by an Order from recalling the loan and proceeding pursuant to banks letter dated 19.11.2018 and 23.01.2019.
The matter being sub-judice we are unable to offer any comments.

The company has not availed any loans/borrowings from financial institutions, government and has not issued any debentures during the year.

xiv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

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 in to non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv)of the Order is not applicable.

xvi. The company is not required to be registered under section 45-IAof the Reserve Bankof India Act1934.

For Sanjiv Shah and Associates
Chartered Accountants
Firm Registration No.003572S
CA G Ramakrishnan
Place: Chennai. Partner
Date: 30th May 2019 Membership No.:209035

Annexure B to Independent Auditors Report for Indowind Energy Limited

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Subsection 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 March 31, 2019 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 (the "Guidance Note") issued by the Institute of Chartered Accountants of India ("the ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 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 and the Standards on Auditing, issued by the 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 Standalone 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 overfinancial 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 unauthorized 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 aand such internal financial controls over financial reporting were operating effectively as at March 31, 2019, 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 the Institute of Chartered Accountants of India (ICAI).

For Sanjiv Shah and Associates
Chartered Accountants
Firm Registration No.003572S
CA G Ramakrishnan
Place: Chennai. Partner
Date: 30th May, 2019 Membership No.: 209035