neo corp international ltd Auditors report

To

The Members,

M/s NEO CORP INTERNATIONAL LIMTED

Report on the Standalone financial Statements

1. We have audited the accompanying standalone financial statements of M/s. NEO CORP INTERNATIONAL LIMITED ("the Company"), which comprises the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounng policies and other explanatory informaon.

Managements Responsibility for the financial Statements

2 . The companys Board of Directors are responsible for the ma ers stated in Secon 134(5) of the Companies Act, 2013 (‘the Act) with respect to the preparaon and presentaon of these standalone financial statements that give a true and fair view of the financial posion, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounng Standards Specified under Secon 133 of the Act, read with Rule 7 of Companies (Accounts) Rules, 2014. This responsibility includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for prevenng and detecng frauds and other irregulari es; selec on and applica on of appropriate accounting policies; making judgments and es mates that are reasonable and prudent; design, implementa on and maintenance of adequate internal financial controls, that are operang effetively for ensuring the accuracy and completeness of the accounng records, relevant to the preparaon and presentaon 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. We have taken into account the provisions of the Act, the accounng and auding standards and ma ers which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the order under secon 143(11) of the Act.. We conducted our audit in accordance with the Standards on Auding Specified under Secon 143(11) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosure in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparaon of the financial statements, that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operang e ecv eness of such controls. An audit also includes evaluang the appropriateness of accounng policies used and the reasonableness of the accounng estimates made by the Companys management and Board of Directors, as well as evaluang the overall presentaon of the financial statements.

5. We believe that the audit evidence we have obtained is su cient and appropriate to provide a basis for our audit opinion on the standalone financial statements except reported by us in paragraph 8(a) of the report.

Emphasis of Ma er

We draw a enon to the:

6. a. The Note no. 9(f) regarding other current liabili es amounng to Rs. 4567.69 lacs includes 3110.92 lacs liability towards statutory dues and expenses having Rs.2364.54 lacs payable for more than one year indicated high liquidity problem in the company. The company has incurred cash losses of Rs. 8724.13 lacs which sizably e ecng the Net worth of the company. These condions, along with other ma ers set forth in the said note, indicates the existence of a material uncertainty creates doubt about the company ability to connue as a going concern. However, the financial statements of the company have been prepared on going concern basis for the reasons stated in the said note. b. The Note no. 12(b) regarding other investments in equity shares of subsidiary companies amounng to Rs.8776.51 lacs. There is no audited balance sheet of the concerned companies made available for the year ended 31.03.2016 hence the realizable value or status of companies as on date is being uncertain as they are also fall in same line of business where company incurred huge loss in current year and loan accounts are classi ed into NPA by the banks/ financial instuons. Therefore the carrying investment at cost price without any provision for diminuon in value is doubul and incorrect. c. The Note no. 14 regarding non current assets shown recoverable amount from insurance company of Rs. 4.88 Crore is under arbitraon sinc e long but considered good for the reason menoned therein.

Our opinion is not modified in respect of these ma ers.

Opinion

7. In our opinion and to the best of our informaon and according to the explanaons given to us and except comment given by us in point 8(a) to 8(k) below by us, the aforesaid standalone financial statements give the informaon 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 a airs of the Company as at 31 March 2016, its Profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

8. As required by secon 143(3) of the Act, we further report that:

a. The Company has maintained its account on a highly integrated computerized soware system namely "SAP" but the books of accounts generated through the soware system di ers from the Indian tradi onal formats of the books of accounts. However, on the basis of viewing the data and report generated in the computerized form, we conducted our audit. We are of the view that the appropriate feeding of the primary data from the corresponding source documents, their processing on SAP and resultant trial balance generated by the system provide a reasonable basis for us in expressing our opinion on the standalone financial statements under reference to this report.

b. The disclosure made by the company of Segment Informaon in note no. 31, is not fully in accordance with requirement of AS-17 of the ICAI issued on Segment Reporng.

c. It is observed that the company is receiving regular noc es in compliance of Statutory and Regulatory requirements but there is no register or transparent system is adopted to ensure the correct posion hence, we are unable to comment on the effect of the same in the financial statement.

d. The company is not complied of furnished Tax Audit Report to Income Tax Department for the financial year 14-15 as per provision of sec on 44AB of Income Tax Act, 1961 and consequently not led Income Tax Return for the said year. In absence of informaon we are unable to determine the effect of the same in financial statement.

e. The company is failed in compliance of furnished report of pricing policy, to the Income Tax Department in accordance with the provision of secon 92E of the Income Tax Act, 1961 for the year 2014-15. In absence of informaon we are unable to determine the effect of the same in financial statement.

f. As per our veri ca on and the explana on given by the management, we are of the opinion that TUFF Subsidy Receivable for amounng to Rs 5,33,35,441/- as on 31.03.2016 grouped under note no. 19 "Other Current Assets" of the Balance sheet is doubt full. Hence the loss of the company is understated and Current Assets is overstated by Rs.5,33,35,441/-.

g. The company is unable to give any evidence for FDR receivables of Rs 32,27,366/- as on 31.03.2016 shown under note 17 "Cash and Bank Balance" of balance sheet, hence in our view Cash and Bank balances is over stated and loss is understated by Rs. 32,27,366/-.

h. The company has not paid/provide for any interest liability towards unsecured loan taken from directors, their relaves and body corporate for the year. In absence of informaon we are unable to quanf y the amount of interest expenses, liability of unsecured loan and consequently the losses of the company are under stated as on date of Balance Sheet.

i. The company has wri en back Capital Reserve of Rs.26,07,829/-in Profit & Loss Account but it should be required to be wri en back in proporon of depreciaon charged to Profit & Loss Account of respecve assets but same has not been done. In absence of informaon we are unable to determine the effect of the same in financial statement.

j. Company has shown exchange di erence income of Rs. 12,00,95,398/- in note no. 21 of Other Income. But as per our veri ca on and explana on given by the company, it is excep onal in nature therefore should be classi ed in

Exceponal and Extraordinary Items instead of grouped in other income. Hence Other Income is overstated and Exceponal and Extraordinary Item understated by Rs. 12,00,95,398/-.

k. The disclosure given by the company in note 32 ( financial and Derivave Instruments) regarding un-hedged poron of foreign exposure by derivaves instruments is not in accordance with the provision and rules of the Companies Act, 2013.

l. Subject to our comments in 8 (a) to 8 (k) above, we have sought and obtained all the informaon and explanaons which to the best of our knowledge and belief were necessary for the purpose of our audit;

m. In our opinion proper books of accounts as required by the law have been kept by the company except reported by us in point 8(a) above, so far as it appears from our examinaon of the reports generated by the Computerized So ware System namely ‘SAP;

n. Subject to our comments in 8(a) above, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of accounts.

o. Subject to our comments in 8(b) above, in our opinion, the aforesaid standalone financial statements comply with the applicable Accounng Standards Specified under Secon 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.

p. On the basis of wri en representaons received from the directors as on March 31, 2016, and taken on record by the Board of Directors, none of the directors is disquali ed as on March 31, 2016, from being appointed as a director in terms of Secon 164(2) of the Act.

q. With respect to adequacy of the internal financial controls over financial reporting of the company and the opera ng e ecv eness of such controls, refer to our separate report in

"Annexure A".

r. In our opinion and to the best of our informaon and according to the explanaons given to us, we report as under with respect to other ma ers to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 :

i. The Company has disclosed the impact of pending lig aons on its financial posion in its financial statements.

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

iii.The company has failed to comply the provision in regards to the transfer of unpaid dividend to the Investor Educaon and Protecon Fund and did not transferred sum of Rs.3,33,104/- to aforesaid fund relang to financial year 2006-07.

9. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-secon (11) of secon 143 of the Act, we give in the "Annexure B" a statement on the ma ers Specified in paragraphs 3 and 4 of the Order.

	For: A.P. GARG & CO.
	CHARTERED ACCOUNTANTS
PLACE: INDORE	FIRM REGISTRATION NO: 002143C
DATE : 30 MAY, 2016
	(ANUP GARG)
	PARTNER
	(M.NO. 071283)

ANNNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT (Annexure referred to in paragraph 7 (q) under "Report on Other Legal and Regulatory Requirements" of our Independent Auditors

Report to the members of M/s. Neo Corp Interna onal Limited on the stand alone financial statement for the year ended 31 March, 2016) Report on the Internal financial Controls under Clause (i) of Sub-secon 3 of Secon 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporng of M/s. Neo Corp International Ltd. ("the Company") as of March 31, 2016 in conjuncon with our audit of the standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essenal components of internal control stated in the Guidance Note on Audit of Internal financial Controls over financial Reporng issued by the Institute of Chartered Accountants of India. These responsibilies include the design, implementaon and maintenance of adequate internal financial controls that were operang effetively for ensuring the orderly and e cient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detecon of frauds and errors, the accuracy and completeness of the accounng records, and the mely preparaon of reliable financial informaon, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporng 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 Auding , 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 reporng was established and maintained and if such controls operated effetively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporng and their operang e ecv eness. Our audit of internal financial controls over financial reporng included obtaining an understanding of internal financial controls over financial reporng , assessing the risk that a material weakness exists, and tesng and evaluang the design and operang e ecv eness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence, we have obtained is su cient and appropriate to provide a basis for my / our quali ed / adverse audit opinion on the Companys internal financial controls system over financial reporng.

Meaning of Internal financial Controls Over financial Reporng

A companys internal financial control over financial reporng is a process designed to provide reasonable assurance regarding the reliability of financial reporng and the preparaon of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reffect the transactions and disposions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparaon of financial statements in accordance with generally accepted accounng principles, and that receipts and expenditures of the company are being made only in accordance with authorisaons of management and directors of the company; and (3) provide reasonable assurance regarding preven on or mely detecon of unauthorised acquision, use, or disposion of the companys assets that could have a material effect on the financial statements.

Inherent Limitaons of Internal financial Controls Over Fi financial Reporng

Because of the inherent limitaons of internal financial controls over financial reporng , 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, projecons of any evaluaon of the internal financial controls over financial reporng to future periods are subject to the risk that the internal financial control over financial reporng may become inadequate because of changes in condions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

According to the informaon and explanaon given to us, the Company has established its internal financial control over financial reporting on criteria based on or considering the essen al components of internal control stated in the Guidance Note on Audit of Internal financial Controls Over financial Reporng issued by the Institute of Chartered Accountants of India in except the following area: a. There is no proper system exist in the company for iden c aon of common and specific expenses incurred unit wise. However there is no overall impact on the pro tability of the company. b. There is no well defined scope of work designed for internal audit as per the size and nature of company. There should have been proper guidelines and scope under which internal auditor should perform their work and shall serve the purpose of e ecve use of same. c. There is no system exist in the company for con rmaon once in the year or other basis from Debtors / Creditors / Loans & Advances or any balances appearing either in debit or credit of any party. Hence our opinion on the financial statement is subject to con rmaon from caponed pares. d. There are weaknesses in internal control system of the company in paying the statutory dues like Income Tax, TDS, PF, ESIC etc. This causes either delay or none payment on due dates. The company has not established proper mechanism or control system for checking of transactions f or deducng TDS and there are many transactions during the year where TDS has not been deducted. e. There is weakness in the authorisaon and control system of the company resulng into large number of entries with material amount entered and reversed on subsequent dates. This pracc e is going on in the books friendly in di erent dates mostly at the end of month/quarter and corrected entries are also missing. There are entries inter debtors / creditors observed without proper authority le er/communicaon but no sasf actory reason given by the company in these respect. because of above these reasons, we are unable to obtain su cient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporng and whether such internal financial controls were operang effetively as at March 31, 2016. We have considered the disclaimer reported above in determining the nature, ming , and extent of audit tests applied in our audit of the standalone financial statements of the Company, and the disclaimer does not affect our opinion on the standalone financial statements of the Company.

	For: A.P. GARG & CO.
	CHARTERED ACCOUNTANTS
PLACE: INDORE	(FIRM REG. No.002143C)
DATE: 30 MAY, 2016
	(ANUP GARG)
	PARTNER
	(M.NO. 071283)

ANNNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT (Annexure referred to in paragraph 9 under "Report on Other Legal and Regulatory Requirements" of our Independent Auditors Report to the members of M/s. Neo Corp International Limited on the stand alone financial statement for the year ended 31 March,

2016)

1) a. The Company has maintained proper records showing full Particulars , including quant av e details. However the Fixed Assets register shown to us for our verification is not shflows complete details of the respective asset as required by law.

b. The fixed assets of the company were physically veri ed by the management during the year in a phased periodical manner, which in our opinion is reasonable having regard to the size of the company and the nature of its assets. According to the informaon and explanaon given to us no material discrepancies were noced on such physical veri caon.

c. According to the informaon and explanaons given to us and records examined by us and based on the examinaon of the registered sale deeds, transfer deeds etc. of the immovable property provided to us for verification are held in the name of the company as at the balance sheet date.

In respect of immovable properes of land and buildings that have been taken on lease and disclosed as fixed assets in the financial statement, the lease agreements are in the name of the company where the company is the lessee in the agreement.

2) a. As per informaon and explanaon given to us, inventories (except stocks in transit and stock lying with third pares, con rma on for which has been obtained) have been physically veri ed by the management at reasonable intervals during the year. In our opinion the procedures of physical verification of inventories followed by the management were reasonable and adequate in rela on to the size of the company and the nature of its business.

b. As per informaon and explanaon given and verification made by us, the discrepancies noced on physical verification of the inventory as compared to books records which has been properly dealt with in the books of account were not material.

3) As per the informaon and explanaon given to us, the company has granted loans, secured or unsecured to Companies, Firms, Limited Liability Partnerships or other pares covered in the register maintained u/s 189 of the Companies Act 2013 and the year end hence this clause not applicable.

4) In our opinion and according to the informaon and explanaons given to us, the company has complied with the provisions of secon 185 and I86 of the Companies Act, 2013 In respect of grants of loans, making investments, and providing guarantees, and securies.

5) According to the informaon and explanaon given to us, the Company has not accepted any deposit during the year from the public within the meaning of the provision of Secon 73 to 76 of the Companies Act, 2013 or any other relevant provisions of the Act and the rule made there under.

6) The maintenance of cost records as Specified by the Central Government under sub sec on (1) of sec on 148 of the Companies Act, 2013 is applicable to the Company and as per informa on and explana on given to us, the company has maintained proper cost records in accordance with such rules. However, the cost records and the compliance reports, as contemplated under these rule have not been produced for our veri caon.

7) a. According to the informaon and explanaons given to us and records examined by us, in our opinion the Company is not regular in deposing undisputed statutory dues in respect of Provident Fund, Investor Educaon and Protecon Fund, Dividend, Employees State Insurance, Income Tax, VAT/Sales Tax, Wealth Tax, Customs duty, Excise duty, Service Tax, Cess and other material statutory dues as applicable with appropriate authories. There are outstanding of Rs. 2982.57 lacs (including interest there on) pertains to undisputed arrears of statutory dues as on 31.03.2016 and out of which Rs.2428.24 Lacs (including interest there on) pertaining to undisputed arrears of statutory dues which have remained outstanding as at 31st March 2016 for a period of more than six months from the date of its payable.

The Company has also not deposited the unpaid dividend declared for the year 2013-14 amounng t o Rs. 7541450/- in the separate bank account as per the provision of secon 124 of the Companies Act 2013 and transferred amounng t o Rs. 333104/- to Investor Educaon and Prot econ F und within me in ac cordance with the relevant provisions of secon 125 of the Companies Act, 2013 and rules made there under related to financial year 2006-07.

More over the company has paid dividend amount to Rs.

1,52,541/- out of Rs. 76,04,440/- declared for the year 2013-

14. It is also observed that this dividend has been paid directly to its Specified shareholders instead of all shareholders and rou ng through separate account as required by the Companies Act 2013 and norms of SEBI. b. According to the informaon and explanaon given to us, the following statutory dues which have not been deposited on account of dispute pending before appropriate authories are reported as under:

Name of Statute	Nature of the Disputed Dues	Amount (in Lacs)	Period to which Amount relates	Forum where pending	Remarks
Central Excise Act 1944	CENVAT Credit on Inputs	1.86	1995-1996	Asst. Commissioner of Central Excise, Pithampur	Provided in the Books
Central Excise Act 1944	CENVAT Credit on Thread	0.22	1996-1997	Asst. Commissioner of Central Excise, Pithampur	Provided in the Books
Customs Act 1962	Customs Duty on Capital Goods Imported Under EPCG Scheme	18.11	1996-1997	High Court of M.P. Bench Indore	Provided in the Books
Central Excise Act 1944	Excise Duty	1.27	2000-2001	Addional Commissioner of Central Excise & Customs (Appeal), Indore	(Part of DBK case)
Central Excise Act 1944	Duty free input under annexure 45	53.77	2006-2007	Customs, Excise & Service Tax Appellete Tribunal, New Delhi	WP with H.C. Annex 45 case
Income Tax Act, 1961	Income Tax	21.16	2001-2002	ITAT, Indore	Provided in the Books
Custom Act, 1962	Custom Duty	3.20	1997-1998	High Court of M. P. Bench, Indore	Drawback on sacks with Liner
MP Entry Tax Act	Entry Tax on expansion	52.47	2008-09	MP Commercial Tax Appellate Board, Bhopal	--
MP VAT Act	Credit of Input Rebate	4.55	2008-09	MP Commercial Tax Appellate Board, Bhopal	--
MP Entry Tax Act	Entry Tax on Expansion	23.02	2009-10	MP Commercial Tax Appellate Board, Bhopal
MP VAT Act	Classi caon of Goods	5.87	2009-10	MP Commercial Tax Appellate Board, Bhopal
Central Sales Tax Act	Classi caon of Goods	7.39	2009-10	MP Commercial Tax Appellate Board, Bhopal
MP Entry Tax Act	Entry tax on new unit	41.88	2009-10	MP Commercial Tax Appellate Board, Bhopal
MP VAT Act	Classi caon of Goods	21.45	2010-11	High Court of M. P. Bench, Indore	--
Central Sales Tax Act	Classi caon of Goods	12.60	2010-11	High Court of M. P. Bench, Indore	--
MP VAT Act	Classi caon of Goods	29.26	2011-12	High Court of M. P. Bench, Indore	--
Central Sales Tax Act	Classi caon of Goods	30.52	2011-12	High Court of M. P. Bench, Indore	--
MP VAT Act	Classi caon of Goods	4.59	2012-13	High Court of M. P. Bench, Indore	--
Central Sales Tax Act	Classi caon of Goods	42.15	2012-13	High Court of M. P. Bench, Indore	--
M. P. Entry Tax Act, 1976	Entry Tax on Expansion	16.27	2012-13	Appeal before Appellate Add.
				Comm. Of Commercial Tax	--
M. P. Vat Act, 2006	Classi caon of Goods	9.28	2013-14	Write Peon with High Court
				of M. P. Bench, Indore	--
Central Sales Tax Act, 1956	Classi caon of Goods	44.45	2013-14	Write Peon with High Court
				of M. P. Bench, Indore	--
M. P. Entry Tax Act, 1976	Entry Tax on Expansion	49.94	2013-14	Appeal before Appellate Add.
				Comm. Of Commercial Tax	--

8) In our opinion and according to the informaon and explanaon given to us, the company has defaulted in the repayment of principal and interest on loans and borrowings to the financial instuons and banks. Resulng which they classi ed under NPA category due to failure of the company to meet interest and principal repayment obligaons in due me except the IDBI Bank and Punjab Naonal Bank as on the date of signing the report.

9) In our opinion and according to the informaon and explanaon given to us, the company has not taken any Term Loan during the year hence reporng under this clause not applicable. 10) In our opinion and to the best of our knowledge and according to the informaon and explanaons given to us, no fraud by the Company and no material fraud on the Company by its employees has been noced or reported during the year. 11) In our opinion and according to the informa on and explanaons given to us, the company has paid / provided managerial remuneraon in accordance with the requisite approvals mandated by the provision of secon 197 r ead with schedule V of the Companies Act, 2013.

12) The company is not a Nidhi Company as per the meaning of Companies Act, 2013 hence this clause not applicable.

13) In our opinion and according to the informa on and explanaons given to us the company is in compliance with secon 177 and secon 188 of the Companies Act, 2013 where applicable, for all transactions with the related pares and the detail of related part transactions have been disclosed in the financial statements as required by the applicable accounng standards.

14) During the year the company has not made any preferenal allotment or private placement of shares or fully or partly converble debentures and hence reporng under this clause not applicable. 15) In our opinion and according to the informa on and explanaons given to us, the company has not entered in to any non-cash transactions with its directors or relav e of directors or its holding, subsidiary or associate company or person connected with them and hence provision of secon 192 of the Companies Act, 2013 are not applicable.

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

	For: A.P. GARG & CO.
	CHARTERED ACCOUNTANTS
PLACE: INDORE	(FIRM REG. No.002143C)
th
DATE : 30 MAY, 2016
	(ANUP GARG)
	PARTNER
	(M.NO. 071283)