Moser Baer India Ltd Liquidated Auditor Reports

To the Members of Moser Baer India Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of Moser Baer India Limited(‘the Company), which comprise the Balance Sheet as at March 31, 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

2. 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 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 prescribed under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014 (as amended). 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

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

4. 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.

5. 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 these standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. 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. In making those risk assessments, the auditor considers internal financial controls relevant to the Companys preparation of the standalone 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 financial statements.

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

Basis for Qualified Opinion

8. As explained in note 45 to the standalone financial statements, the Companys short term borrowings and other current liabilities as at March 31, 2017 include balance payable to various lender banks amounting to Rs.7,586,441,082 and Rs.15,700,359,440 respectively. These lender banks have taken an exit from Corporate Debt Restructuring Cell on October 10, 2016. As a result, the accounting for these balances should be as per the original agreements entered with such lender banks. However, in absence of definitive agreement with the banks with respect to calculation of interest and loan liability and reconciliation of outstanding debt with the lender banks, we are unable to comment upon the possible impact of such exit in carrying value of aforesaid short term borrowings, other current liabilities as on March 31, 2017 and interest expense (including penal interest, if any) for the year ended March 31, 2017 and the consequential impact on the accompanying standalone financial statements.

9. As explained in note 13(b) to the standalone financial statements, the Company has fixed assets aggregating to Rs.4,170,872,372 in respect of which management recorded an impairment loss of Rs.610,000,000 in year ended March 31, 2017. In the absence of sufficient and appropriate audit evidence with respect to the uncertainty underlying the assumptions used in the long term projections referred to in note 13(b), we are unable to comment on the carrying value of aforesaid fixed assets as at March 31, 2017 and the consequential impact, if any, on the accompanying standalone financial statements.

10. As explained in note 47(a) to the standalone financial statements, the Company has an investment of Rs.166,865,334, trade receivables amounting Rs.344,190,858 and short term loans and advances (net of payables of Rs.14,409,834) amounting to Rs.4,270,919 in a wholly owned subsidiary as at March 31, 2017, being considered good and recoverable by the management. These balances are after netting off provision for diminution in value of investment and provision for doubtful trade receivables of Rs.247,643,000 and Rs.574,834,277 respectively already recorded by the Company during the year ended March 31, 2017. However, in the absence of sufficient appropriate audit evidence in respect of uncertainty underlying the assumptions used in the long term projections as referred to in the said note, we are unable to comment on the carrying value of these investments, trade receivables and short term loans and advances as at March 31, 2017, and provision for diminution in value of investment and doubtful trade receivable for the year ended March 31, 2017 and the consequential impact on the accompanying standalone financial statements.

Qualified Opinion

11. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph,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 March 31, 2017, its loss and its cash flows for the year ended on that date.

Emphasis of Matter

12. We draw attention to note 48 of the standalone financial statement which indicates that the Company has incurred a net loss of Rs.11,139,560,016 during the year ended March 31, 2017 and, as of that date, the Companys accumulated losses amounted to Rs.34,744,579,031 resulting in complete erosion of its net worth. Further, as of that date, the Companys current liabilities exceeded its current assets by Rs.33,984,160,899. These conditions, along with other matters as set forth in note 48 indicate the existence of material uncertainty that may cast significant doubt about the Companys ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

13. 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 the Act, we give in the Annexure I, a statement on the matters specified in paragraphs 3 and 4 of the Order. 14. Further to our comments in Annexure I, as required by Section 143(3) of the Act, we report that: a. we have sought and except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; b. except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph,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 standalone financial statements dealt with by this report are in agreement with the books of account; d. except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph,in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended); e. the matters described in paragraph 8,9,10 and 12 under the Basis for Qualified Opinion/ Emphasis of Matters paragraph, 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 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164(2) of the Act; g. we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as on March 31, 2017 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated May 23, 2017 as per Annexure II expressing a qualified opinion; and h. 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us: i. the Company, as detailed in note 32 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position; ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; iv. the Company, as detailed in note 19 to the standalone financial statements, has made requisite disclosures in these standalone financial statements as to holdings as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on the audit procedures performed and taking into consideration the information and explanations given to us, in our opinion, these are in accordance with the books of account maintained by the Company.

For Walker Chandiok & Co LLP

Chartered Accountants

Firms Registration No.: 001076N/N500013

per Neeraj Goel

Partner

Membership No.:099514

Place: New Delhi

Date: May 23, 2017

Annexure I to the Independent Auditors Report of even date to the members of Moser Baer India Limited, on the standalone financial statements for the year ended March 31, 2017

Based on the audit procedures performed for the purpose of reporting a true and fair view on the standalone financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that: (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 program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three financial years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.

(c) According to information and explanations given by the management, the title deeds of immovable properties included in fixed assets are held in the name of Company. It has been explained to us that the originals of title deeds and possession letters of the leasehold land and building has been given as security (mortgage and charge) against the term loans and working capital facilities taken from banks and that original title deeds are kept with the security Trustee i.e Centbank Financial Services Limited as security for the benefit of the lenders and therefore the same could not be made available to us for our verification. (ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii) (c) of the Order are not applicable.

(iv) In our opinion,the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees and security.

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable. (vi) The Central Government has not specified maintenance of cost records under sub-section (1) of Section 148 of the Act, in respect of Companys products. Accordingly, the provisions of clause 3(vi) of the Order are not applicable.

(vii) (a) 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 other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been a slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

(b) The dues outstanding in respect of income-tax, sales-tax, service tax, duty of customs, duty of exciseand value added tax on account of any dispute, are as follows:

Name of the statute	Nature of dues	Amount (Rs.)	Amount paid under protest (Rs.)	Period to which the amount relates	Forum where dispute is pending
Custom Duty	Custom duty	13,924,896	-	FY 2007-08	CESTAT, Chennai
Act, 1962	Custom duty	9,749,862	-	FY 2008-09	High Court of Allahabad
	Custom duty	4,823,292	4,823,292	FY 2009-10 to 2011-12	CESTAT, New Delhi
Excise Duty	Excise duty	34,008,269	94,307	FY 2008-09	CESTAT, New Delhi
Act, 1948				FY 2009-10
				FY 2011-12
				FY 2012-13
				FY 2013-14
	Excise duty	1,111,795	7,220	FY 2011-12 to 2013-14	Assistant Commissioner Custom and Central Excise, Noida
	Excise duty	150,621,689	24,470	FY 2007-08	Commissioner Custom and Central
				FY 2010-11	Excise, Noida
				FY 2011-12
				FY 2012-13
				FY 2013-14
				FY 2014-15
	Excise duty	7,773,736	356,530	FY 2010-11	Additional Commissioner Custom and Central Excise, Noida
				FY 2011-12
				FY 2012-13
	Excise duty	744,493,187	-	FY 2005-06	Supreme Court
				FY 2006-07
				FY 2007-08
Finance Act, 1994	Service tax	10,749,267	2,953,470	FY 2008-09	Commissioner Custom and Central Excise, Noida
	Service tax	851,450	-	FY 2012-13 to FY 2013-16	Commissioner Customs and Central Excise, Ghaziabad
	Service tax	10,316,085	-	FY 2008-09 to 2010-11	Additional Commissioner Custom and Central Excise, Noida
	Service tax	7,039,640	-	2011-12	Commissioner Service Tax, Delhi.
				2012-13
	Service tax	16,855	-	FY 2008-09	Supreme Court of India
				FY 2009-10 to 2010-11
Entry Tax Act, 2009	Entry tax	120,161,327	7,050,841	FY 1999-00 to 2001-02	High Court, Allahabad
	Entry tax	2,930,424	1,465,308	FY 2003-04 to 2007-08	Commercial Tax Tribunal, Noida
	Entry tax	4,241,834	1,838,272	FY 2004-05	Joint Commissioner, Noida
				FY 2005-06
				FY 2008-09
	Entry Tax	1,207,223	-	FY 2012-13	Deputy Commissioner, Raipur
					(Appeals)
	Entry Tax	276,135	27,650	FY 2007-08	Deputy Commissioner, Raipur
					(Appeals)
Central Sales Tax Act, 1956	Sales tax	19,329,340	7,408,830	FY 2006-07	Commercial Tax Tribunal, Noida
				FY 2008-09
	Sales tax	5,168,782	4,572,177	FY 2007-08	Additional Commissioner, (Appeals)
				FY 2011-12
				FY 2012-13
	Sales tax	21,279,392	-	FY 2013-14	Joint Commissioner, Noida
	Sales tax	247,572	-	FY 2015-16	Assistant Commissioner, Chennai
U.P. Trade Tax Act, 1948	Value added tax	5,364,113	3,094,774	FY 2006-07 to 2007-08	Commercial Tax Tribunal, Noida
Rajasthan Value Added Tax Act, 2003	Value added tax	1,229,714	77,200	FY 2011-12	Appellate Authority
				FY 2012-13
U.P. Value Added Tax Act,	Value added tax	8,774,504	6,327,068	FY 2000-08 to 2008-09 FY 2012-13	Additional Commissioner, (Appeals)
2008	Value added tax	6,411,838	800,000	FY 2008-09	Commercial Tax Tribunal, Noida
	Value added	2,562,413	-	FY 2013-14	Joint Commissioner, Noida
	tax
Kerala VAT Act, 2005	Value added tax	2,608,271	1,372,789	FY 2007-08	Commercial Tax Assistant
				FY 2008-09	Commissioner, Ernakulam
Chhattisgarh VAT Act, 2005	Value added tax	32,697	3,300	FY 2007-08	Deputy Commissioner Raipur
					(Appeals)
West Bengal VAT Act 2003	Value added tax	1,038,907	-	FY 2009-10	Joint Commissioner, West Bengal
Income Tax	Income tax	215,297,686	121,478,650	AY 2004-05 to	Income Tax Appellate Tribunal
Act, 1961				AY 2010-11

Notes:

(i) FY - Financial year (ii) AY - Assessment year

(iii) CESTAT - The Customs, Excise and Service Tax Appellate Tribunal

(viii) The Company has defaulted in repayment of dues (including interest) to the banks and financial institutions during the current year as well as in earlier years. As detailed in note 45 of the standalone financial statements, the lender banks have taken an exit from Corporate Debt Restructuring Cell on October 10, 2016 and in absence of definitive agreement with the banks with respect to calculation of interest and loan liability and reconciliation of outstanding debt with the lender banks, the information in respect of amount and period of delays for default in repayment of loan and interest cannot be ascertained.

Further, the Company has no loans or borrowings payable government and debenture-holders during the year.

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable. (xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the standalone financial statements etc., as required by the applicable accounting standards. (xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

(xv) In our opinion,the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For Walker Chandiok & Co LLP

Chartered Accountants

Firms Registration No.: 001076N/N500013

per Neeraj Goel

Partner

Membership No.:099514

Place: New Delhi

Date: May 23, 2017

Annexure II to the Independent Auditors Report of even date to the members of Moser Baer India Limited, on the standalone financial statements for the year ended March 31, 2017

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

1. In conjunction with our audit of the standalone financial statements of Moser Baer India Limited ("the Company") as of and for the year ended March 31, 2017, we have audited the internal financial controls over financial reporting (IFCoFR) of the Company of as of that date.

Managements Responsibility for Internal Financial Controls

2. The Companys Board of Directors 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 the Companys 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 Act.

Auditors Responsibility

3. Our responsibility is to express an opinion on the Companys IFCoFR based on our audit. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India (ICAI) and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the ICAI. 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 IFCoFR were established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR included obtaining an understanding of IFCoFR, 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 financial statements, whether due to fraud or error.

5. 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 IFCoFR

Meaning of Internal Financial Controls over Financial Reporting

6. A Companys IFCoFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone financial statements for external purposes in accordance with generally accepted accounting principles. A Companys IFCoFR 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisa-tions 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 financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

7. Because of the inherent limitations of IFCoFR, 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 IFCoFR to future periods are subject to the risk that IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

8. According to the information and explanations given to us and based on our audit, the following material weaknesses has been identified in the operating effectiveness of the Companys IFCoFR as at March 31, 2017: (a) The Company has been unable to determine the impact of exit from CDR scheme on interest expense and carrying value of short term borrowings and other current liabilities in the absence of definitive agreement with the banks with respect to calculation of interest and loan liability and reconciliation of outstanding debt with lender banks. In the absence of sufficient and appropriate audit evidence, we are unable to comment on the operating effectiveness of controls over the carrying value of short term borrowings, other current liabilities as at March 31, 2017 and interest expense.

(b) We have not been provided sufficient and appropriate audit evidence with respect to uncertainty underlying the assumptions used in the long term projections for assessing the recoverable value of fixed assets. In the absence of such sufficient and appropriate audit evidence, we are unable to comment on the operating effectiveness of controls over completeness and accuracy of assumptions used in the long term projections and its potential impact on value of fixed assets as March 31, 2017 and depreciation, amortisation and impairment expense for the year.

(c) We have not been provided sufficient and appropriate audit evidence with respect to uncertainty underlying the assumptions used in the long term projections for assessing the carrying value of investment, trade receivables and short term loan and advances in a wholly owned subsidiary. In the absence of such sufficient and appropriate audit evidence, we are unable to comment on the operating effectiveness of controls over completeness and accuracy of assumptions used in the long term projections and its potential impact on carrying value of investment and provision for other than temporary diminution in the value of investment.

9. A ‘material weakness is a deficiency, or a combination of deficiencies, in IFCoFR, 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.

10. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting, 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, and except for the possible effects of the material wea knesses described above in paragraph 8 on the achievement of the objectives of the control criteria, the Companys internal financial controls over financial reporting were operating effectively as at March 31, 2017. 11. 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 financial statements of the Company as at and for the year ended March 31, 2017, and these material weaknesses have affected our opinion on the financial statements of the Company and we have issued a modified opinion on the financial statements.

For Walker Chandiok & Co LLP

Chartered Accountants

Firms Registration No.: 001076N/N500013

per Neeraj Goel

Partner

Membership No.:099514

Place: New Delhi

Date: May 23, 2017

Statement on Impact of Audit Qualifications (for audit report with modified opinion) submitted along-with Annual Audited Financial Results - (Standalone Financials)

I. Statement on Impact of Audit Qualifications for the Financial Year ended 31 March 2017 [See Regulation 33 / 52 of the SEBI (LODR) (Amendment) Regulations, 2016] (Rs. in Lakhs)

Sl. Particulars No.	Audited Figures (as reported before adjusting for qualifications)	Adjusted Figures (audited figures after adjusting for qualifications)
1 Turnover / Total Income	56,098	56,098
2 Total Expenditure	87,152	87,152
3 Net Profit / (Loss)	(1,11,396)	(1,11,396)
4 Earnings Per Share	(50.23)	(50.23)
5 Total Assets	1,26,587	1,26,587
6 Total Liabilities	417,142	417,142
7 Net Worth	(290,555)	(290,555)
8 Any other financial item(s) (As felt appropriate by the management)	-	-

II. Audit qualification (each audit qualification separately) a. Details of Audit Qualification

The audit report of Statutory Auditors contains the following qualifications on the standalone audited financial statement (the "statement"): (a) As explained in note 2 of the statement, the Companys short term borrowings and other current liabilities as at 31 March 2017 include balances payable to various lender banks amounting to Rs. 75,864 lakhs and Rs. 1,57,004 respectively. These lender banks have taken an exit from Corporate Debt Restructuring Cell on 10 October 2016. As a result the accounting for these balances should be as per the original agreements entered with such lenders banks. However, in absence of definitive agreement with the banks with respect to calculation of interest and loan liability and reconciliation of outstanding debt with the lender banks, we are unable to comment upon the possible impact of such exit on the carrying value of aforesaid short term borrowings, other current liabilities as at 31 March 2017 and interest expense (including penal interest, if any) for the year ended 31 March 2017 and the consequential impact on the accompanying statement. (b) As explained in note 3 of the statement, the Company has fixed assets aggregating to Rs. 41,709 lakhs in respect of which management recorded an impairment loss of Rs. 6,100 lakhs in quarter ended 30 September 2016. In the absence of sufficient and appropriate audit evidence with respect to the uncertainty underlying the assumptions used in the long term projections referred to in note 3, we are unable to comment on the carrying value of aforesaid fixed assets as at 31 March 2017 and the consequential impact, if any, on the accompanying statement.

(c) As explained in note 4 of the statement, the Company has an investment of Rs. 1,668 lakhs, trade receivables amounting to Rs. 3,442 lakhs and short term loans and advances (net of payables of Rs.144 lakhs) amounting to Rs. 43 lakhs in a wholly owned subsidiary as at 31 March 2017, being considered good and recoverable by the management. These balances are after netting off provision for diminution in value of investment and provision for doubtful trade receivables of Rs. 2,476 lakhs and Rs. 5,748 lakhs respectively already recorded by the Company during the year ended 31 March 2017 (during the quarter ended 31 March 2017: Rs. 1,927 lakhs and Rs. 1,900 lakhs respectively). However, in the absence of sufficient appropriate audit evidence in respect of uncertainty underlying the assumptions used in the long term projections as referred to in the said note, we are unable to comment on the carrying value of these investments, trade receivables and short term loans and advances as at 31 March 2017, and provision for diminution in value of investment and doubtful trade receivables for the year ended 31 March 2017 and the consequential impact on the accompanying statement. b. Type of Audit Qualification: Qualified Opinion c. Frequency of Qualification:

(a) has appeared in the current year ended 31 March 2017. (b) has appeared in the current year ended 31 March 2017. (c) has been appearing since period ended 31 December 2013.

In audit report on the financial statements for the nine months period ended 31 December 2013, year ended 31 December 2014 and fifteen months ended 31 March 2016 the auditors had given emphasis of matter on recoverability of investments and advances from Moser Baer Entertainment Limited.

d. For Audit Qualification(s) where the impact is quantified by the Auditor, Managements Views:

Managements Views:Not applicable e. For Audit Qualification(s) where the impact is not quantified by the auditor:

(i) Managements estimation on the impact of audit qualification: - Unable to estimate.

(ii) If management is unable to estimate the impact, reasons for the same: a) In absence of definitive agreement with the banks with respect to calculation of interest and loan liability, management is unable to comment upon the impact of such exit on the carrying value of aforesaid short term borrowings, other current liabilities and interest expense for the financial year ended 31 March 2017 and the consequential impact on the accompanying consolidated financial results. b) As of 31 March 2017, management performed detailed assessment of impairment (using an independent valuation expert) of carrying value of fixed assets based on business valuation. Such assessment is based on the ability of the company to continue to operate its business over the foreseeable future and is therefore, impacted by the future outcome of certain matters such as negotiation with lenders banks for debt restructuring and revival of business operations. As per such assessment, Impairment of fixed assets for Rs. 6,100 lakhs has been made during the year. No further impairment in the carrying value of fixed assets is required. c) As on 31 March 2017, management performed an assessment of impairment for its investments (using an independent valuation expert) in and advances/other receivables from one of the subsidiary company, Moser Baer Entertainment Limited as of 31 March 2017 to determine if there is any "other than temporary" diminution in the values of the investment and if outstanding receivables are recoverable. The future cash flows used in such assessment are dependent on the assumption of acceptance of debt resolution plan by lender banks of the Company and ability of this subsidiary company to continue to operate its business over the foreseeable future with the Company. Basis aforementioned assessment management has recorded an other than temporary provision for diminution in value of investment amounting to Rs. 2,476 lakhs and Rs. 5,748 lakhs towards provision for doubtful debts during the year ended 31 March 2017.

(iii) Auditors Comments on (i) or (ii) above:

Since management could not ascertain the consequential impact, the auditors have given qualification in their standalone auditors report.

III. Signatories

CEO / Managing Director

CFO

Audit Committee Chairman

Statutory Auditor

Place: New Delhi

Date: May 23, 2017