Religare Enterprises Ltd Directors Report.

TO THE MEMBERS OF RELIGARE ENTERPRISES LIMITED Report on the Audit of the Standalone Financial Statements Qualified Opinion

1. We have audited the accompanying standalone financial statements of Religare Enterprises Limited ("the Company"), which comprise the Balance Sheet as at March 31,2019, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flow for the year then ended and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").

2. In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matters described in the Basis for Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("the Act) in the manner so required and give a true and fair view in conformity with Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015, as amended, ("IND AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31 2019, the loss and total comprehensive income , changes in equity and its cash flow for the year ended on that date.

Basis for Qualified Opinion

3. Attention is invited to Note No 32.6 of the standalone financial statements of the company relating to pending RELs application with Honble High Court of Delhi for staying the redemption of 1,500,000 non-convertible preference shares of the Company held by Oscar Investments Limited, Promoters Group Company and due on October 31, 2018 with an approx, redemption value of Rs. 4,190.28 lakhs. Pending the outcome of the application, we are unable to comment the likely implication on the financial statements.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the standalone financial statements.

Emphasis of Matter

4. Attention is invited to Note No - 32.5 of the standalone financial statements of the company with respect to the appeal filed with Honble Debt Recovery Appellate Tribunal against dismissal of application filed by the company for vacation of stay dated Mar 21, 2018 qua the company and deletion of Companys name from the legal proceedings between Axis Bank & Religare Capital Markets International (Mauritius) Limited (i.e. RCMIML), wherein the company had issued the non -disposal undertaking( i.e. NDU) with respect to the shares of Religare Health Insurance Company Limited (i.e. RHICL) for a standby letter of credit facility availed by RCMIML from Axis Bank (claimed amount of Rs 31,293 lacs). The management has represented that it has been legally advised that the said NDU does not contemplate any payment/ repayment obligations on the company in case of any default on the part of RCMIML. We have relied on the representation ofthe management.

Our report is not modified in respect of this matter.

Key Audit Matters

5. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter Auditors response
Valuation of Investments and Impairment thereon

The Company has investments in its subsidiaries most of which was valued at fair value as on the date of transition and taken as deemed cost under IND AS and subjected

Principle Audit Procedures

Besides obtaining an understanding of Managements processes and controls with regard to testing the investments for impairment our procedures included the following:

to impairment testing at the end of each reporting period thereafter. - Comparing the carrying amount of investments with the subsidiary balance sheet to identify whether their
We do not consider the valuation of this investments to be at a high risk of significant misstatement or to be subject to a significant level of judgement, except for the investment net assets, being an approximation of their minimum recoverable amount, were in excess of their carrying amount and assessing whether subsidiary have historically been profit-making.
valuation based on appropriate valuation methodology followed by the valuer in material subsidiaries. - The carrying amount exceeded the net asset value, comparing the carrying amount of the investment with
The valuations involve significant estimates and judgment, due to the inherent uncertainty involved in forecasting future cash flows and in selection of listed peer companies under a particular valuation methodology. the expected value of the business based on a suitable adjusted net asset value , discounted cash flow analysis.

- We understood the methodology applied by management in performing its impairment test for the investment at cost and walked through the controls over the process.

On account of major investments in material subsidiaries as indicated above in the context of total investment of the Company, this is considered to be significant to our overall audit strategy and planning. - We challenged the assumptions made by management for the input data used by managements fair valuation expert through discussions, comparisons to industry peers and other available independent external data sources. We also performed sensitivity analysis on the
The Company has engaged a valuation expert to evaluate the fair value of the investments. key assumptions.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

6. The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Companys annual report particularly with respect to the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business responsibility report and Corporate Governance report, but does not include the standalone financial statements and our auditors report thereon. The other information is expected to be made available to us after the date of this auditors report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

When we read the other information identified above if, we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

7. The Companys Board of Directors is responsible for the matters stated in section 134(5) of 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, total comprehensive income, changes in equity and cash flows of the Company in accordance with IND AS and the accounting principles generally accepted in India. 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.

In preparing the standalone financial statements, the Board of Directors are responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

8. Our objectives are to obtain reasonable assurance about whether the Standalone Financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. Ifwe conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.

Other Matter

9. The comparative financial information of the Company for the year ended March 31,2019 and the transition date opening balance sheet as at April 01,2017 included in these Standalone Financial Statements, are based on the previously issued statutory financial statements prepared in accordance with the Accounting Standards Specified under Section 133 of the Act read with relevant rules issued there under and other accounting principles generally accepted in India audited by us in our report for the year ended March 31, 2018 dated May 30, 2018 and predecessor auditor whose report for the year ended March 31, 2017 dated June 29, 2017 respectively expressed a unmodified opinion on those Standalone Financial Statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016("the Order"), issued by the Central Government of India in terms of sub section (11) of section 143 of the companies Act, 2013, we give in the ‘‘Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, based on our audit we report that:

a) We have sought and except for the matters referred to in paragraph 3 above 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, except for the indeterminate effect of the matters referred to paragraph 3 above, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss including other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account except for our qualification as mentioned above.

d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act, read with relevant rules issued thereunder.

e) On the basis of the written representations received from the directors as on March 31,2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 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 of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses a modified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

g) With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) ofthe Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, remuneration paid by the company to its whole-time director during the year is in accordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 ofthe Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best ofour 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 standalone financial statements, (refer note no. 32).

(ii) The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts.

(iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

For S. S. Kothari Mehta & Company
Chartered Accountants
Firms Registration Number: 000756N
Sd 1-
Naveen Aggarwal
Place: New Delhi Partner
Date: May 23, 2019 Membership Number: 094380

ANNEXURE ‘A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements section of our report to the

Members of Religare Enterprises Limited of even date)

i. In respect of the Companys fixed assets:

a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

b) According to the information and explanation provided to us, the fixed assets has been physically verified by the management during the year. In our opinion the frequency of such verification is reasonable having regard to the size of the company and the nature of its fixed assets. The discrepancies, if any, noticed on such physical verification has been properly dealt with in the books of account.

c) According to the information and explanations given to us and on the basis of our examination of records of the company, the title deeds of immovable properties are held in the name of the Company/erstwhile company merged in the company in earlier year.

ii. The Company is engaged in the business of rendering services and lending money, consequently, does not hold any inventory. Accordingly, Clause (ii) of Para 3 of the order is not applicable to the Company.

iii. As per the information and explanation given to us and on the basis of our examination of the records, the Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 ofthe Companies Act, 2013.

iv. As per the information and explanation given to us and on the basis of our examination of the records, the Company has not granted any loans or made any investment or provided any guarantees or security to parties covered under section 185.

As per the information and explanation given to us and on the basis of our examination of the records, the company has complied with the provisions of section 186 ofthe Companies Act 2013 in respect of the loans and investments made and guarantees and security provided by it.

v. In our opinion and as per the information and explanation provided to us, the Company has not accepted any deposits from the public within the meaning of directives issued by the Reserve Bank of India and provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed thereunder to the extent notified.

vi. As per the requirement under section 148(1) of Companies Act, 2013 the Central government has not prescribed for maintenances of the cost records for any of the products of the company. Accordingly, Clause (vi) of Para 3 of the order is not applicable to the Company.

vii. According to the information and explanations given to us, in respect of statutory dues:

a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund, employees state insurance, income tax, sales tax, value added tax, service tax, Goods and Services Tax, cess and other material statutory dues as applicable with the appropriate authorities with slight delays in certain cases. Further, there were no undisputed amounts outstanding at the year-end for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, service tax, sales tax, value added tax and Goods and Services Tax which have not been deposited on account of any dispute except for the following:

Name of the Statute Nature of Dues Amount (Rs.) Period to which the amount relates Forum where the dispute is pending
Income Tax Act, 1961 Income Tax Demands 70,117,130 A.Y. 2008-09 Income Tax Appellate Tribunal
8,263,106 A.Y. 2009-10 Commissioner of Income Tax (Appeals)
3,232,216 A.Y. 2010-11 Income Tax Appellate Tribunal
36,271,324 A.Y. 2011-12 Income Tax Appellate Tribunal
6,269,624 A.Y. 2011-12 Commissioner of Income Tax (Appeals)
43,300,168 A.Y. 2012-13 Commissioner of Income Tax (Appeals)*
761,125 A.Y. 2013-14 Commissioner of Income Tax (Appeals)
4,073,675 A.Y. 2015-16 Commissioner of Income Tax (Appeals)
Service Tax Regulations Service Tax 2,111,360 FY 2005-06 to FY 2009-10 Custom Excise and Service Tax Appellate Tribunal**
3,954,567 FY 2010-11 Custom Excise and Service Tax Appellate Tribunal
5,195,173 FY 2011-12 Custom Excise and Service Tax Appellate Tribunal

* Partial amount of Rs. 3,000,000 has been paid under protest.

** Inclusive of Penalty of Rs. 1,058,180

viii. In our opinion and according to the information & explanations given to us, the company has defaulted in repayment of loan or borrowing to financial institution i.e Religare Finvest Limited, its subsidiary which is a non - banking finance company as per Section 45I of RBI Act, 1934.

However, The Company has not taken any loans or borrowings from any bank and Government.

Lender wise details are as follows:

Name of Lender Amount ofdefault as at March 31,2019 (INR in lakhs)* Period of Default
Religare Finvest Limited 18,550.00 Ranging from 187 days to 413 days

*The amount is exclusive of interest thereon.

ix. As per the information and explanation given to us and on the basis of our examination of the records, the company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause (ix) of para 3 of the order is not applicable to the company.

x. As per the information and explanation given to us and on the basis of our examination of the records we have neither come across any instance of material fraud by the company or on the company by its employees, noticed or reported during the year, nor have been informed of such case by the management.

xi. As per the information and explanation given to us and on the basis of our examination of the records, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 of Companies Act, 2013 read with Schedule V to the Act.

xii. The company is not Nidhi Company. Accordingly, Clause (xii) of Para 3 of the order is not applicable to the Company.

xiii. As per the information and explanation given to us and on the basis of our examination of the records, the company has transacted with the related parties which are in compliance with sections 177 and 188 of Companies Act, 2013 and the details have been disclosed in the financial statements as required by IND AS 24.

xiv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has made preferential allotment of warrants convertible into equity shares during the year and requirements of Section 42 of the Companies Act, 2013 have been complied with. The company had duly utilised the funds received from the warrant holders for the purposes forwhich it has been raised.

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. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi. The Company is required to and has been registered under section 45-IAof the Reserve Bank of India Act, 1934 as a Core Investment Company (CIC).

For S. S. Kothari Mehta & Company
Chartered Accountants
Firms Registration Number: 000756N
Sd 1-
Naveen Aggarwal
Place: New Delhi Partner
Date: May 23, 2019 Membership Number: 094380

ANNEXURE "B" TO THE INDEPENDENT AUDITORS REPORT

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

We have audited the internal financial controls over financial reporting of Religare Enterprises Limited ("the Company") as at March 31,2019 in conjunction 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 essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India". These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness ofthe accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of 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 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information & explanation given to us and based on our audit, the following material weaknesses has been identified in the Companys internal financial controls overfinancial reporting:-

During the current financial year, the Company has initiated the process of updating the documentation for Micro Small & Medium Enterprises as per MSMED Act 2006, however, conclusion ofthe same is yet to be achieved.

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

In our opinion, to the best of our information and according to the explanation given to us, except for the possible effects of the material weaknesses described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as on March 31,2019, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company for the year ended March 31, 2019, and the material weakness does not affect our opinion on the said standalone financial statements of the Company.

For S. S. Kothari Mehta & Company
Chartered Accountants
Firms Registration Number: 000756N
Sd 1-
Naveen Aggarwal
Place: New Delhi Partner
Date: May 23, 2019 Membership Number: 094380