Kilburn Chemicals Ltd Auditors Report.

To the Members of Kilburn Chemicals Limited Report on theAudit of the Financial Statements Opinion

We have audited the accompanying Financial Statements of Kilburn Chemicals Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), theStatement of Changes in Equity andthe Statement of Cash Flows for the year ended on that date, and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (herein after referred to as "Financial Statements"). In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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, of the state of affairs of the Company as at 31stMarch, 2019, its losses (including Other Comprehensive Income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the 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 ("ICAI") together with the ethical requirements that are relevant to our audit of theFinancial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained appropriate to provide a basis for is our opinion on the Financial Statements.

Material Uncertainty Related to Going Concern

We draw attention tothe Statement of Profit and Loss, which indicates that the Company incurred a net loss of Rs. 5029.54 Lakhs during the year ended 31st March, 2019 and, as of that date, the Companys current liabilities exceeded its current assets by Rs. 4020.15 Lakhs. As stated above these events or conditions, along with other matters as set forth in Note 46, indicate that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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 Response to Key Audit Matters
Property, Plant and Equipment • We assessed the controls in place over the fixed assets, evaluated capitalisation process, performed tests of details on costs capitalised, the timeliness of the capitalisation of the assets and the de-recognition criteria for asset retired from active use.
There are areas where management judgement impacts the carrying value of property, plant and equipment, intangible assets and their respective depreciation rates. These include the decision to
capitalise or expense costs; the annual asset life review; the timeliness of the capitalisation of assets and the measurement and recognition criteria for assets retired from active use. We do not consider this management judgement to be of high risk of significant misstatement or to be subject to significant level of judgment. However due to their materiality in the context of the Balance Sheet of the Company, this is considered to be an area which had the significant effect on the overall audit strategy and allocation of resources in planning and completing our audit. • In performing these procedures, we reviewed the judgements made by management including the nature of underlying costs capitalised; determination of realizable value of the assets retired from active use; the appropriateness of assets lives applied in the calculation of depreciation; the useful lives of assets prescribed in Schedule II to the Act and the useful lives of certain assets as per the technical assessment. We observed that the management has regularly reviewed the aforesaid judgments and there are no material changes.
Capital Work-in-Progress • Our audit process included a review of the progress of the project and the intention and ability of the management to carry forward and bring the asset to its state of intended use.
The Company is in the process of setting up of a plant for Rutile grade production which is a value addition of Anatese grade Titanium Dioxide.
Provisions and Contingent Liabilities Our audit procedure in response to this Key Audit Matter included, among others,
The Company is involved in various taxes and other disputes for which final outcomes cannot be easily predicted and which could potentially result in significant liabilities. The assessment of the risks associated with the litigations is based on complex assumptions, which require the use of judgement and such judgement relates , primarily , to the assessment of the uncertainties connected to the prediction of the outcome of the proceedings and to the adequacy of the disclosures in the standalone financial statements. Because of the judgements required, the materiality of such litigations and the complexity of the assessment process, the area was a key matter for our audit. • Assessment of the process and relevant controls implemented to identify legal and tax litigations, and pending administrative proceedings.
• Assessment of assumptions used in the evaluation of potential legal and tax risks performed by the legal and tax department of the Company considering the legal precedence and other rulings in similar cases.
• Inquiry with the legal and tax departments regarding the status of the most significant disputes and inspection of the key relevant documentation.
• Analysis of opinion received from the experts where available.
• Review of the adequacy of the disclosures in the notes to the Financial Statements.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and analysis, Boards Report including Annexures to Boards Report, Corporate Governance and Shareholders Information but does not include the Financial Statements and our Auditors Report thereon.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance or conclusion thereon. In connection with our audit of theFinancial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained during the course of our audit, or otherwise appears to be materially misstated.

If, we conclude, based on the work we have performed, on the other information obtained prior to the date of this Auditors Report, 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 Financial

Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of theseFinancial Statements that give a true and fair view of the financial position, financial performance including total comprehensive income, cash flows and changes in equity of the Company in accordance with Ind ASand other accounting principles generally accepted in India. 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 operating effectively for ensuring the accuracy completeness of the accounting records, to the preparation and presentation of Statements that give a true and fair view free from material misstatement, whether due fraud or error.

In preparing the Financial Statements, management is responsible for Companys ability to continue as a disclosing, as applicable, matters related concern and using the going accounting unless the management to liquidate the Company or to or has no realistic alternative but The Board of Directors are also overseeing the Companys financial process.

Auditors Responsibilities for the Audit of

Financial Statements

Our objectives are to obtain reasonable assurance about whether theFinancial 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 Financial Statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism 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 were than for one resulting from error, as fraud may and involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

• Evaluate intends the appropriateness of accounting policies operations, used and the reasonableness of accounting estimates and related disclosures do so. responsible made by management. for reporting 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.

• Evaluate the overall presentation, structure and content of the Financial Statements, 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.

Emphasis of Matter Paragraph

• Reference is invited to Note 46(j) of the Financial Statements that due to liquidity crunch and losses faced by the Company, it could not continue its operation from October 2018.

• We further draw attention to Note 35 in the Financial Statements thatduring the year ended on 31st March, 2019 the Company could not repay two quarterly installments aggregating to Rs. 664 Lakhs besides interest amounting to Rs. 1116.15 Lakhs to the Bankers against the credit facilities availed under consortium arrangement. As a result, the loan has been classified as NPA and Bank of Baroda, the lead banker under the consortium arrangement has issued notice under Section 13(2) of the SARFAESI Act, 2002 dated 13th March, 2019 to repay the entire borrowings of Rs. 17,736.28 Lakhs (including interest upto 31st December, 2018) within 60 days from the date of issuance of such notice. The Company has responded to the notice vide its letter dated 22nd March, 2019 informing that proposals for fresh funding is under consideration by Banks/ Investors and a positive outcome is expected by the Companys management. Pending outcome the Company has disclosed, amount of outstanding loans of Rs. 13,612.00 lakhs from Banks under "Long Term Borrowings".

• Note No. 46 (b) regarding non provision against Trade Receivables and other receivables of Rs. 110.93 Lakhs.

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

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 ofsub-section (11) of section 143 of the Act and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanations given to us, we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; b. in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. the Balance Sheet, the Statement of Profit and Loss (including Comprehensive Income), the of Changes in Equity and the of Cash Flows dealt with by this are in agreement with the account;

d. in our opinion, the aforesaid Statements comply with the Standards specified under Section the Act read with the Companies Accounting Standards) Rules, 2015, amended;

e. on the basis of the written received from the directors as March,2019 and taken on record Board of Directors, none of the is disqualified as on 31stMarch, from being appointed as a terms of Section 164(2) of the

f. with respect to the adequacy internal financial controls over reporting of the Company and operating effectiveness of such refer to our separate report in B"; and

g. with respect to the other matters be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act. The Company has complied with the provisions of Section 197 read with Schedule V to Actrelating to managerial remuneration. h. with respect to the other matters 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 our information and according to the explanations given to us: Other

i. the Company has disclosed the impact of pending litigations on its Statement financial position in its Financial Report Statements;Refer Note 35(A)(i) to of the Financial Statements

ii. the Company did not have any long-Financial term contracts including derivative contracts for which there were any of material foreseeable losses; and (Indian as iii. there has been no delay in transferring the amounts required to be transferred to the Investor Education and Protection Fund by 31st the Company in accordance with by the the relevant provisions of the Act directors and the Rules made thereunder.

2019

in For V. SINGHI & ASSOCIATES

. Chartered Accountants

Firm Registration No.:311017E

(V.K.SINGHI)

Membership No. 050051

Place: Kolkata

Date: 30th May, 2019

Annexure - A to the Independent Auditors Report

Referred to in paragraph-1 on other Legal and Regulatory Requirements of our Report of even date to the members of Kilburn Chemicals Limited on the Financial Statements for the year ended 31st March, 2019,

i. a) the Company has maintained proper records showing full particulars including quantitative details and situation of its Fixed Assets.

b) As explained to us, Fixed Assets have been physically verified by the management regular intervals which, in our opinion is reasonable having regard to the size of the Company and the nature of the assets. As informed to us, no material discrepancies were noticed on such verification.

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.

ii. According to the information and explanations given to us, the Inventories have been physically verified during the year at reasonable intervals by the management. The discrepancies noticed on verification between the physical inventories and book records were not material in relation to the operations of the company and the same have been property dealt with in the books of account. iii. According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured, during the year(excluding unsecured loan of Rs. 276.57 Lakhs given to a Company in earlier years) to companies, Firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the

Act. a) No interest is being charged on the above loan as per terms of the agreement between the parties.

b) There isno schedule as regards to repayment of principal amount and therefore we are not in a position to make any comments as to whether or not the Company was regular in receipt of principal amount.

c) In view of our comments in Para (b) above, we are not in a position to make any comments as to whether or not there were any overdue amounts of more than ninety days and whether any reasonable steps have been taken by the Company for recovery of the principal amount. iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of sections 185 and 186 of the Actwith respect to the loans given, investments made and guarantees given. v. According to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of sections 73 to 76 of the Act and the rules framed thereunder to the extent notified.Accordingly clause3(v) of the Order is not applicable. vi. According to the information and explanations given to usby the management, the Central Government has prescribed the maintenance of cost records under Sub section 1 of Section 148 of the Act but since the criteria for minimum turnover is not complied with,clauses3(vi) of the order is not applicable. vii. According to the information and explanations given to us and on the basis of our examination of the records, the Company is generally regular in depositing undisputed applicable statutory dues including Provident Fund, Employees State Insurance, Income Tax, Goods and Services Tax, Cess and any other statutory dues to the appropriate authorities and there are no undisputed amount payable in respect of the same which were in arrears as on 31st March, 2019 for a period of more than six months from the date the same became payable.

(a) According to the information and explanations given to us, the Company has not deposited the following dues on account of disputes with the appropriate authorities:

Name of the Statue Nature of the dues Amount (Rs. in Lakhs) Period to which the amount pertains Forum where dispute is pending
Income Tax Act, 1961 Income Tax 1705.20/- A.Y. 2012-13 Commissioner of Income Tax (Appeals), Kolkata
Income Tax Act, 1961 Income Tax 53.43/- A.Y. 2013-14 Commissioner of Income Tax (Appeals), Kolkata
Income Tax Act, 1961 Income Tax 8.52/- A.Y. 2014-15 Commissioner of Income Tax (Appeals), Kolkata

viii. According to the information and explanations given to us, the Company has defaulted in repayment of two quarterly instalments of Rs 664 lakhs to get herewith interest of Rs 1116.15 lakhs to two banks during the year.

ix. According to the information and explanations given to us and based on our examination of the books and records, we report that the Company has not raised any money by way of initial public offer or further public offer (including debt instruments).and term loan during the year. Accordingly, clause 3(ix) of the order is not applicable.

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 reportedduring the course of our audit.

xi. According to the information and explanations given to us and based on our examination of the books and records, we report that the Company has paid /provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act. xii. According to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, clause 3 (xii) of the Order is not applicable.

xiii. According to the information and explanations given to us and based on our examination of the books and records, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the Financial Statements as required by the applicable Indian Accounting Standards.

xiv. According to the information and explanations given to us and based on our examination of the books and records, we report that the Company has issued 20,52,377 Equity Shares of Rs. 10/-each on preferential basis to promoters against conversion of unsecured loans in view of current financial situation and liquidity position of the company. xv. According to the information and explanations given to us and based on our examination of the books and records, the Company has not entered into any non-cash transactions with directors or persons connected with him during the year. Accordingly, Clause 3 (xv) of the Order is not applicable. xvi. The Company is not required to be registered under section 45 IA of the Reserve Bank of

India Act, 1934.

For V. SINGHI & ASSOCIATES
Chartered Accountants
Firm Registration No.:311017E
(V.K.SINGHI)
Partner
Membership No. 050051
Place: Kolkata
Date: 30th May, 2019
www.kilburnchemicals.com

Annexure - B to the Independent Auditors Report

(Referred to in paragraph-2(f) on Other Legal and Regulatory Requirements of our Report of even date to the members of Kilburn Chemicals Limited on the Financial Statements for the year ended

31st March, 2019)

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 Kilburn Chemicals Limited ("the Company") as of 31stMarch, 2019 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 managementis 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 on Audit of Internal Financial Controls over Financial Reporting issued by the Institute 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 including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, 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 were 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 sufficient and appropriate to provide is 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 offinancial statements for external purposes in accordance with Indian Accounting Standard prescribed under section 133 of the Act. 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, including the Ind AS, 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 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 31st March, 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 on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For V. SINGHI & ASSOCIATES
Chartered Accountants
Firm Registration No.:311017E
(V.K.SINGHI)
Partner
Membership No. 050051
Place: Kolkata
Date: 30th May, 2019