Pearl Engineering Polymers Ltd Auditor Reports

To

THE MEMBERS OF

M/s PEARL ENGINEERING POLYMERS LTD.

703, ROHIT HOUSE, 3 TOLSTOY MARG

NEW DELHI-110001

Dear Sir,

We have audited the accompanying financial statements of M/S PEARL ENGINEERING POLYMERS LTD. ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss, Cash Flow Statement, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

The Company’s 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 and presentation of these 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 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 Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these 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 financial statements are free from material misstatement.

An Audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 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 control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statement.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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: i) In the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2017. ii) In the case of Profit & Loss Account, of the loss of the Company for the year ended on that date. iii) In the case of Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s 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, a statement on the matters specified in the paragraph 3 and 4 of the order.

2. As required by section 143(3) of the Act, we report that: a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; b) In our opinion proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books; c) The Balance Sheet, Statement of Profit and Loss, and cash flow statement dealt with by this Report are in agreement with the books of account;

d) Provision has not been made for interest after September 3rd, 2009, in respect of foreign currency loan of Rs. 161924 thousands, on the basis of legal advice obtained by the company that the loan has become barred by limitation. In the absence of the evidence as to confirmation and /or settlement of the liability, we are unable to form an opinion on the claim of the company, that the above loan of Rs. 161924 thousands from a foreign financial institution cannot be enforced. Further the effect on Profit/Loss of the Company cannot be quantified in view of the uncertainties about repayment obligation of the Company.

e) Foreign Currency Loan and Interest Liability provided in the books have not been reinstated as at March 31st, 2013 as provided by Accounting Standards (AS) - 11, "The effects on the Changes in Foreign Exchange Rates", on the basis of legal advice obtained by the company that the loan has become barred by limitation. In the absence of the evidence as to confirmation and/or settlement of the liability, we are unable to form an opinion on the claim of the company that the loan cannot be enforced. Further, the effect on Profit/Loss of the Company cannot be quantified in view of the uncertainties about repayment obligation of the Company.

f) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act which continue to be applicable in respect of Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. g) On the basis of written representations received from the directors as on March 31, 2017 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. h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in

"Annexure B"; and i) With respect to the other matters to be included in the Auditor’s 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 24 to the financial statements; 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 amount required to be transferred to the

Investor Education and Protection Fund by the company. iv. The Company has provided requisite disclosures in its standalone financial statement as to holdings as well as dealings in Specified Bank Notes during the period from 8^th November, 2016 to 30^th December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer Note 28 to the financial statements.

Place: New Delhi	For Sehgal Mehta & Co.
Date: 30.05.2017	Chartered Accountants
	FRN-003330N
	(CA Naresh Khanna)
	Partner
	M.No. 081482

Annexure - A to the Auditors’ Report

The Annexure referred to in Independent Auditors’ Report to the members of the Company on the financial statements for the year ended 31 March 2017, we report that:

i) (a) The Company has dismantled the main plant and has disposed off the entire Plant and Machinery (including stores and spares). The Company has maintained proper records of other fixed assets showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us, all the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

ii) There are no inventories in the company.

iii) As explained to us, the company had not granted any loans, secured or unsecured, to any companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. iv) The company has not granted any loan, made any investments, provided any guarantee and security within the meaning of section 185 and 186 of the Companies Act, 2013.

v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits in contravention of Directives issued by Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Act and the rules framed there under, where applicable. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal.

vi) As explained to us, The Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the activities such as engaged in the production of goods or providing services by the Company.

vii) (a) According to the records of the company the company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees’ state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, Cess and other material statutory dues applicable to it. According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, wealth tax, Service Tax, sales tax, custom duty, excise duty and Cess were in arrears, as at 31^st March, 2017 for a period of more than six months from the date they became payable except the cases as listed below:-

S.No.	Particulars	Amount(Rs.)
1.	CST Payable	57,454.00
2.	VAT Payable	10,07,291.00
	Total	10,64,745.00

(b) According to the information and explanations given to us, the dues of sales tax, income tax, excise duty and Cess that have not been deposited with appropriate authorities on account of any dispute and the forum where the disputes are pending are given below:-

Name of the Statute	Nature of the Dues	Amount	Period to which the amount relates	Forum where the dispute is pending
		(In’Lakhs)
The Central Excise Act, 1944	Custom Duty Demand on Technical Know- how Fee	36,812	1993-1994	CESTAT
The Central Excise Act, 1944	Custom Duty	3,103	1994-1995	CESTAT

viii) According to the information and explanations given to us, and the records of the companies examined by us, the Company has not defaulted in repayment of loans or borrowings to a financial institution and banks.

ix) The Company has not raised any money by way of initial public offer or further public offer Order is not applicable. x) Based upon our audit procedures performed and according to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

xi) No Managerial Remuneration has been paid or provided.

xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

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

xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him.

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

Place: New Delhi	For Sehgal Mehta & Co.
Date: 30.05.2017	Chartered Accountants
	FRN-003330N
	Sd/-
	(CA Naresh Khanna)
	Partner
	M.No. 081482