Ramky Infrastructure Ltd Auditors Report.

To

The Members of

Ramky Infrastructure Limited

Report on the Consolidated Ind AS Financial Statements

We have audited the accompanying consolidated Ind AS financial statements of Ramky Infrastructure Limited ("the Holding Company") and its subsidiaries (the Holding Company and its subsidiaries together referred to as " the Group"), its associates and jointly controlled entities, comprising of the Consolidated Balance Sheet as at 31st March 2018, the Consolidated Statement of Profit and Loss including Other Comprehensive Income, the Consolidated Cash Flow Statement and the Consolidated Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the consolidated Ind AS financial statements").

Managements Responsibility for the Consolidated Ind AS Financial Statements

The Holding Companys Board of Directors is responsible for the preparation of these consolidated Ind AS financial statements in terms of the requirements of the Companies Act, 2013 (hereinafter referred to as "the Act") that give a true and fair view of the consolidated financial position, consolidated financial performance including other comprehensive income, consolidated cash flows and consolidated statement of changes in equity of the Group including its associates and jointly controlled entities in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standard) Rules, 2015, as amended. The respective Board of Directors of the companies included in the Group, of its associates and of its jointly controlled entities are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group, its associates and jointly controlled entities and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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, which have been used for the purpose of preparation of the consolidated Ind AS financial statements by the Directors of the Holding Company, as aforesaid.

Auditors Responsibility

Our responsibility is to express an opinion on these consolidated Ind AS financial statements based on our audit. While conducting the 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 thereunder. 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 consolidated 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 consolidated Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Companys preparation of the consolidated 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 Holding Companys Board of Directors, as well as evaluating the overall presentation of the consolidated Ind AS financial statements.

Emphasis of Matters

1. Note 20 to the consolidated Ind AS financial statements in respect of existence of material uncertainties over the realisability of certain construction work in progress, inventories and trade receivables aggregating to Rs. 3,607.42 mn, which are subject matters of arbitration proceedings / negotiations with the customers and contractors due to foreclosure of contracts and other disputes. The management of the Company, keeping in view the status of negotiations and the outcome of arbitration proceedings on the basis of which steps to recover these amounts are currently in process, is confident of recovering the aforesaid dues. In view of pending billing of project WIP / slow progress / termination of these projects, and lack of other alternate audit evidence to corroborate managements assessment of recoverability of these balances, we are unable to comment on the extent to which these balances are recoverable.

2. Note 21 to the consolidated Ind AS financial statements with regard to insurance claim due to floods on one of the Holding Companys project in Srinagar, Jammu and Kashmir, the Holding Company has recognized the insurance claim income aggregating to Rs. 350.46 mn to the extent measured reliably and accounted / charged off related additional costs incurred towards damage by floods.

3. Note 22 to the consolidated Ind AS financial statements in respect of write back of the liabilities no longer required outstanding for a long period aggregating to Rs. 2,388.04 mn. The management of the Holding Company is confident that the liabilities no longer required and no material adjustment will be required.

4. Note 23 to the consolidated Ind AS financial statements in respect of write off of the unrealisable receivables no longer required outstanding for a long period aggregating to Rs. 1,437.82 mn. The management of the Holding Company is confident that not to carry the unrealisable receivables and no material adjustment will be required.

5. Note 24 (1) to the consolidated Ind AS financial statements in respect of Ramky Pharma City (India) Limited ("RPCIL"), a subsidiary, whereby the auditors have reported that the uncertainty in connection with the charge sheet filed by Central Bureau of Investigation (CBI) and attachment order of the Enforcement Directorate in respect of certain assets of the Company. The management believes that it has complied with the provisions of the concession agreement. Accordingly, any consequential financial impact of the said regulatory action will be known only when the matter is resolved.

6. Note 24 (2) to the consolidated Ind AS financial statements in respect of Hospet Chitradurga Tollways Limited, a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention in respect of the termination of the project by the company and National Highways Authority of India (NHAI) " the Concessioning Authority". Since the company is a project specific company, termination of project affects the Going concern nature of the company. However, the Financial impact of the same has been provided in the Financial Statements

Note 24 (4) to the consolidated Ind AS financial statements in respect of Ramky Elsamex Hyderabad Ring Road Limited, a Subsidiary Company whereby the Statutory Auditors of the said subsidiary have drawn attention that regarding certain aged receivables / retentions, the realizations are not in line with terms of the Concession agreement with Hyderabad Metropolitan Development Authority (HMDA). Now the matter is pending before the Arbitral Tribunal. The Management believes that these amounts are recoverable in full.

Our opinion on the consolidated Ind AS financial statements is not qualified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.

Other Matters

7. We did not audit the financial statements and other financial information, in respect of twenty subsidiaries whose consolidated Ind AS financial statements include total assets of Rs. 30,029.24 mn as at March 31, 2018, and total revenues of Rs. 4,372.99 mn and net cash inflows of Rs. 303.80 mn for the year ended on that date. These financial statements and other financial information have been audited by other auditors, which financial statements, other financial information and auditors reports have been furnished to us by the management. The consolidated Ind AS financial statements also include the Groups share of net loss of Rs. 333.79 mn and the other comprehensive income of Rs. 1.07 mn for the year ended March 31, 2018, as considered in the consolidated Ind AS financial statements, in respect of one associate and two jointly controlled entities, whose financial statements, other financial information have been audited by other auditors and whose reports have been furnished to us by the management. The above financial information are before giving effect to any consolidation adjustments.

8. Further, consolidated Ind AS financial statement includes unaudited consolidated Ind AS financial statements of three foreign subsidiary, including two step down subsidiaries. The consolidated net assets of these three subsidiaries as at March 31, 2018 and their consolidated net result included in the consolidated Ind AS financial statements amounted to Rs. 1,866.60 mn and Nil respectively. These financial statements and other financial information have been furnished to us by the management. The consolidated Ind AS financial statements of the company does not include the companys share of profit in respect of one associate in which the Holding Company has equity investment of Rs. 0.95 mn as at March 31, 2018.

9. Our opinion on the consolidated Ind AS financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements / financial information certified by the management.

Report on Other Legal and Regulatory Requirements

1 As required by Section 143(3) of the Act, we report to the extent applicable, we report that:

a. we / the other auditors whose reports we have relied upon have sought obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books and the reports of the other auditors;

c. the Consolidated Balance Sheet, Consolidated Statement

of Profit and Loss including Other Comprehensive Income, the Consolidated Cash Flow Statement and the Consolidated Statement of Changes in Equity dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the consolidated Ind AS financial statements;

d. in our opinion, the aforesaid consolidated Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standard) Rules, 2015, as amended;

e. On the basis of the written representations received from the directors of Holding Company as on March 31, 2018 and taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors who are appointed under Section 139 of the Act, of its subsidiary companies, associates and jointly controlled entities and incorporated in India, none of the Directors of the Groups companies, its associates and its jointly controlled entities incorporated in India is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act;

f. With respect to the adequacy of the internal financial controls over financial reporting and the operating effectiveness of such controls of Holding Company, subsidiary companies, associates, and jointly controlled entities incorporated in India refer to our separate report in "Annexure A" to this Report; and

g. 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 explanation given to us and based on the consideration of the report of the other auditors on separate financial statements as also the other financial information of the subsidiaries, associates and jointly controlled entities as noted in the Other Matters paragraph:

i. The consolidated Ind AS financial statements disclose the impact of pending litigations on its consolidated financial position of the Group, its associates and its jointly controlled entities - Refer Note 11 to the consolidated Ind AS financial statements;

ii. The Group, its associates and its jointly controlled entities incorporated in India have made provision as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 2.36 to the consolidated Ind AS financial statements; and

iii. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Group, its associates and its jointly controlled entities incorporated in India.

For M V NARAYANA REDDY & CO.
Chartered Accountants
Firm Registration No. 002370S
Sd/-
M V NARAYANA REDDY
Place : Hyderabad Partner
Date : 30-May-2018 Membership No. 028046