Marg Ltd Auditors Report.

To

The Members of MARG LIMITED

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of MARG LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement, and a summary of the significant accounting policies and other explanatory information for the year then ended.

Managements Responsibility for the Standalone 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 of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance, cash flows and changes in Equity 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 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.

Auditors Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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 standalone 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 Standalone Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the Standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of 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 Standalone 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 standalone Ind AS financial statements.

Basis for Qualified Opinion

1) Attention is invited to note 28; the company has not provided for interest for the year ended 31st March, 2018 on certain loans that are assigned to Asset Reconstruction Companies (ARCs), which in our opinion, the Company has not followed accrual system of accounting and Disclosure of accounting policy is not in accordance with Ind AS 1-Presentation of Financial Statement to this extent. The Company has signed a settlement plan with Edelweiss Asset Reconstruction Company Ltd (EARC) for loans assigned to EARC and the same will be finalised only on signing of definitive agreement and fulfilment of conditions precedent in the settlement plan. We are unable to comment upon the settlement of finance cost on the aforesaid loans and carrying value of the aforesaid loans and the consequential impact, if any that may arise on the above said matters.

2 Attention is invited to note 34(c); The Company has not provided for Rs. 9.71 Crores relating to work in progress for EPC work done which remain unbilled as on 31st March, 2018 and Management fee of Rs. 4.80 Crores not acknowledged by one of its subsidiaries. Consequently, the loss for the year ended 31st March, 2018 are understated by Rs. 14.51 Crores Accumulated Reserves and Current assets as on 31st March, 2018 are overstated by the same amount.

3 Attention is invited to note 35 regarding invocation of shares held in M/s Karaikal Port Private Limited amounting to Rs. 202.39 Crores as on 31st March, 2018 by the lending banker. Edelweiss ARC has restructured KPPL loan and signed a settlement plan, whereby shares held by Marg Limited in KPPL will be reinstated thereupon will be pledged back to EARC. As per the EARC terms of settlement plan, they have to be allotted equity shares in KPPL for their partial debt outstanding. KPPL will not be a subsidiary of Marg Limited on post conversion of debt in to equity shares. We are unable to comment upon the consequential impact, if any that may arise on the above said matters.

4 Attention is invited to note 36; Regarding confirmation/reconciliation of some of the equipment loans availed by the company, which was not obtained/carried out for the balances as on 31st March, 2018. The differences arising out of the reconciliation, if any, together with the unreconciled amount of Rs. 6.52 Cr relating to the same loan accounts as on 31st March, 2016 continues to be unascertained for the year ended 31st March, 2018.Such differences, if any, will impact the losses for the year ended 31st March 2018, accumulated revenue reserves and balances of such loan accounts as on 31st March 2018.

5 Attention is invited to note 37; The Company did not obtain / receive statements, balance confirmation for most of the current and other accounts maintained with various banks. The companys bank accounts were attached by Income Tax Investigation Wing during search conducted at the various premises/sites of the company during the year under review. The company has taken steps to lift the bank attachment. However, debit release approval is obtained from the Income Tax Department for staff salary and other related payments.

6 The company did not obtain/ receive balance confirmation from Banks/ARCs, most of the customers/creditors and other parties including loans and advances other than related parties for the balances as on 31st March, 2018. Hence, we could not obtain external confirmations as required in SA- 505, Standards on Auditing and are unable to comment on adjustments or disclosures, if any, that may arise.

7 The company has considered M/s Future Parking Private Limited as its subsidiary and accordingly made disclosures in the Standalone Ind AS financial statements for the year ended 31st March, 2018.Due to change in control and management of M/s Future Parking Private Limited the said company ceased to be a subsidiary of the company; further as per the unaudited financial statements of M/s Future Parking Private Limited, it has not recognised the company as its Holding Company as on 31st March, 2018. Hence, in our opinion the disclosures made in Note 55 of the standalone Ind AS financial statements are not in accordance with Accounting Standard 18-"Related Party Disclosures" and Schedule III of the Act.

Qualified 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 Basis for Qualified Opinion paragraph above, the afore said standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Standalone Ind AS financial position of the Company as at

31st March, 2018, and its loss (financial performance including other Comprehensive Income), Changes in Equity and its cash flows for the year ended on that date.

Emphasis of Matter

Without qualifying our opinion, we draw attention to the following notes to Standalone Ind AS financial statements:

1) Note 30, regarding preparing Standalone Ind AS financial statements on ‘Going concern basis. The accompanying Standalone Ind AS financial statements have been prepared on a going concern basis, after giving due considerations to all matters more fully explained in the said note.

2) Note 31-33, regarding investments in and advances and receivables due from its subsidiaries aggregating to Rs.1131.90 Crores (PY Rs.1096.29 Crores) as on 31st March, 2018. No provision for diminution/recoverability is considered necessary for reasons stated therein.

3) Note 34, regarding deductions made/amount withheld by some customers aggregating to Rs.1.06 Crores (PY Rs.1.06 Crores) which are being carried as trade receivables. The company is also carrying work-in-progress/inventory of Rs.16.67 Crores (PY Rs.16.67 Crores) and assets withheld at site of Rs.1.51 Crores (PY Rs.1.51 Crores) relating to these customers. These balances are subject matter of Arbitration and ultimate outcome of the above matters cannot presently be determined. However, the Company is of the view that such amounts are recoverable and hence no provision is required there against.

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, 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, except for the matters described in the Basis of qualified opinion paragraph, which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, except for the matters described in the Basis of qualified opinion paragraph, 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, the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) In our opinion, except for the effect of the matters described in Basis of qualified opinion paragraph above, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) The Going Concern matter described in the paragraph (1), under the Emphasis of matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on 31st March, 2018 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 controls over financial reporting of the company and operating effectiveness of such controls as on 31st March, 2018, refer to our separate report in Annexure B.

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 in its financial statements - Refer Note 27 (e) and (f), Note 34 and Note 35 to the standalone Ind AS financial statements;

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

iii. Rs.3,85,486/- is required to be transferred, to the Investor Education and Protection Fund by the Company and the same is yet to be transferred at the Balance Sheet date.

For A.R.KRISHNAN & ASSOCIATES

hartered Accountants

Firms Reg No:009805S

A SENTHIL KUMAR Partner

Membership No: 214611

Place :Chennai

Date :30 th May, 2018

ANNEXURE-A TO AUDITORS REPORT REFERRED TO IN OUR REPORT OF EVEN DATE TO THE MEMBERS OF MARG LIMITED:

1) a) The fixed assets register of the company needs to be updated as on the date of our audit report.

b) The fixed assets were physically verified during the year by the management, as per the programme of physical verification of fixed assets over a period of three years which is, in our opinion, reasonable having regard to the size of the company and the nature of its assets. According to the information and explanation given to us, no serious discrepancies have been noticed on such verification.

c) According to the information and explanations given to us and on the basis of our examination of records of the company, the title deeds of the immovable properties are held in the name of the company. However, the same was offered as collateral for the loan taken by the Company.

2) As explained to us, physical verification of inventory has been conducted by the management, at the end of the year. In our opinion, the frequency of physical verification is reasonable. The material discrepancies noticed on verification have been properly dealt with the books of account.

3) a) The Company has granted unsecured loans to parties covered in the register maintained under section 189 of the Companies Act, 2013. According to the information and explanations given to us, the terms and conditions of the grant of such loans are not prejudicial to the interests of the company.

b) According to the information and explanations given to us, the principal amount of the loan along with interest in respect of loan granted to the Subsidiary Companies, except three subsidiaries, is repayable on call. The Subsidiaries have made repayments during the year as and when calls were made by the Company. In respect of three subsidiaries, the loan given by the company is subordinated to the secured loans from Banks and Financial Institutions availed by such subsidiaries and accordingly the obligation to repay does not arise during the pendency of said secured loans.

c) There is no overdue amount in respect of such loans granted to such companies.

4) According to the information and explanations given to us, the company has complied with the provisions of section 185 and section 186 of the Companies Act, 2013 in respect of loans, investments, guarantees and security.

5) In our opinion and according to the information and explanations given to us, the company has not accepted deposits during the year and doesnt have any unclaimed deposits. Therefore, provisions of clause 3 (v) of the Order are not applicable to the company.

6) On the basis of records produced to us, we are of the opinion that, prima facie, the cost records prescribed by the Central Government under section 148 (1) of the Companies Act, 2013 have been maintained. We have not carried out a detailed examination of such accounts and records, as we are required to conduct only a general review of the cost records.

7) a) According to the information and explanations given to us and as per the records produced by the company, the company is not regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Value added Tax, Service Tax, and other material statutory dues applicable to it.

b) According to the information and explanations given to us and as per the records produced by the company, undisputed amounts payable in respect of Tax deducted at source, Service Tax, Value added Tax and Works Contract Tax, Provident fund & State Insurance and Professional Tax to the extent of Rs.4.11Crores (PY Rs.2.91 crores), Rs.12.14 Crores (PY Rs.7.31 Crores), Rs.1.24 Crores (PY Rs.1.21 Crores), Rs.0.50Crores (PY Rs.0.81 Crores) and Rs.0.18 Crores (PY Rs.0.16 Crores)

respectively, were in arrears as at 31st March 2018, for a period of more than six months from the date they became payable.

c) According to the records of the Company and the information and explanation given to us, the dues of Income Tax/Tax deducted at source, which are in dispute, are as follows:- INCOME TAX:

Asst. Year

Details of Demand

Forum Where Dispute is Pending

Demand Raised By Dept.

Amount Paid under Protest

Till 31st March 2017 During 201718 Total
2002-03 86,89,565 96,59,367

-

96,59,367 IT AT - Che nnai
2009-10 36,00,000

-

-

-

IT AT -Che nnai
2008-09 52,76,990 52,76,990 52,76,990 Madras High Court
2009-10 38,96,457 38,96,457 38,96,457 Madras High Court
2010-11 1,99,19,645 1,12,52,732

-

1,12,52,732 Madras High Court
2011-12 1,76,92,108 1,76,89,798

-

1,76,89,798 Madras High Court
Total 5,90,74,765 4,77,75,344

-

4,77,75,344

TAX DEDUCTED AT SOURCE

Asst. Year Demand Amount paid under Protest Forum where Dispute is pending
1996- 97 21,503 4,931 ITO - TDS - 1 (4)
1997- 98 23,68,619 23,17,682 ITO - TDS - 1 (4)
1998- 99 16,28,830 8,42,934 ITO - TDS - 1 (4)
1999- 00 18,57,640 5,81,282 ITO - TDS - 1 (4)
2000- 01 4,42,820 65,440 ITO - TDS - 1 (4)
Total 63,19,412 38,12,269

8) According to the information and explanations given to us and as per the records produced by the company, the outstanding defaults as on 31st March, 2018 in respect of loans taken from Banks/FIs are as follows:

Bank Name

(Amount in Rs. In Crore)

Period of default

Less than 90 days More than 90 days
ICICI Bank - 45.09
Allahabad Bank - 6.07
Standard Chartered Bank - 65.07
IFCI Venture Capital Funds Ltd - 16.76
L&T Finance Ltd - 0.62
SREI - 91.26
SICOM - 29.48
Loans transferred to ARC* - 989.38
Total - 1,243.73

*includes Cash Credit facilities, FITL, WCTL and other Term loans transferred to Asset Reconstruction Companies (ARCs) Refer note 29 to Standalone Ind AS financial statements.

9) The company has not raised money by way of public offer during the year under review. In our opinion and according to information and explanations given to us, the term loans have been applied for the purpose for which they were raised.

10) According to the information and explanations given to us and to the best of our knowledge and belief, no material fraud on or by the company has been noticed or reported during the course of

11) The company has not paid or provided for managerial remuneration. Hence clause 3 (xi) of the Order is not applicable to the company.

12) The company is not a Nidhi Company. Hence, clause 3 (xii) of the order is not applicable.

13) All transactions with related parties are in compliance with section 177 and section 188 of the Companies Act, 2013 where applicable and the details have been disclosed in the financial statements as required by the applicable accounting standards.

14) The company hasnt made preferential allotment or private placement of shares or fully/partly convertible debentures during the year under review. Hence clause 3 (xiv) of the Order is not applicable to the company.

15) The company has not entered into non-cash transactions with the directors or persons connected with them during the year under review.

16) The company is not required to register under section 45-IA of the Reserve Bank of India Act, 1934. Hence clause 3(xvi) is not applicable to the company.

For A.R.KRISHNAN & ASSOCIATES

Chartered Accountants

Firms Reg. No:009805S

A SENTHIL KUMAR Partner

Membership No: 214611

Place :Chennai

Date :30th May, 2018

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE IND AS FINANCIAL STATEMENTS OF MARG LIMITED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of MARG Limited ("the Company") as of March 31, 2018 in conjunction with our audit of the standalone 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. 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 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, deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the standalone 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 qualified 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 Standalone Ind AS financial statements for external purposes in accordance with generally

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 Standalone 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 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 standalone Ind AS 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified as at March 31, 2018:

There were delays in a) recording of transactions relating to sale of fixed assets and b) recording of expenses transactions met out of staff Imprest Advances. The Internal Financial Controls were not operating effectively to this extent.

A ‘material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion, except for the effects/possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of March 31, 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.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2018 standalone Ind AS financial statements of the Company, and these material weaknesses do not affect our opinion on the standalone Ind AS financial statements of the Company.

For A.R.KRISHNAN & ASSOCIATES

Chartered Accountants Firms Reg. No:009805S

A SENTHIL KUMAR Partner

Membership No: 214611

Place :Chennai

Date :30 th Mav. 2018