Samtel Color Ltd Auditor Reports

To The Members of Samtel Color Limited

Report On the Financial Statements

We have audited the accompanying Financial Statements of Samtel Color Limited ("the Company") which comprises the Balance Sheet as at 31^st March, 2016, the Statement of Profit and Loss and 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 Financial Statements

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 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 of 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 misstatements, whether due to fraud or error.

Auditors 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 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 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 auditors judgment, including the assessment of the risks of the material misstatement of the financial statements, whether due to error or fraud. In making those risk assessments, the auditor considers internal control relevant to the Companys preparation of the 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 accounting policies used and -reasonableness of the accounting estimates made by the companys directors as well as youre getting the oral presentation of the financial statement.

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

Basis for Qualified Opinion

(A) The financial statements have been prepared by the Company on the going concern basis as fully elaborated in Note 37 of the financial statements further we also draw attention on note no. 37 and (48) of Financial Statements

(i) The declaration of the company as a sick industrial company under section 3(1) of Sick Industrial Companies Act, 1985 via order of BIFR bench dated 3rd December, 2014 against case no. 58/2012. During the year the draft rehabilitation scheme in line with prescribed procedure & rules under SICA was filed and :

1. as per direction of BIFR dated 6th October, 2015, the Company has to submit the updated DRS after incorporation of all the observations made by ICICI ( OA) and the Company has replied/ clarified observation of OA on 16th December, 2015. Meanwhile OA has applied on behalf all the applicant under third proviso to the section 15 of SICA for abatement of reference filed by the Company on account of action taken by the OA under Section 13 (4) of SARFAESI Act, 2002.

(B) We had reported in our audit report for the year ended 31" March 2012 as under.

(i) In view of the continued failure of the Company to disburse the legitimate dues of the workmen, Hanble High Court of Himachal Pradesh (Shimlo) has settled the dispute by passing an order for the closure of Deflection Yoke unit of Porwanoo (H.P) and thereby, pay off the corresponding outstanding dues by selling the industrial undertaking/Campany assets etc.,

5. row material & finished goods inventory amounting to Rs. 311.90 Lacs and Rs. 55 lacs respectively hove been seized by the excise authorities due to non-payment of excise dues;

(vi) there is non-submission of various statutory returns acknowledged by the respective authorities, non-provision/deposition of various overdue statutory liabilities like PF/Service Tax/TDS/Excise/ Vat & CST/WCT/TCS/ESI/Gratuity/Bonus/ Preference dividend & related over dues (interest and penalty), non-deduction of TDS on provisional expenses; and as explained by management exact amount of which could not be ascertained in present scenario;

(vii) there is increase in diminution of investments in current year of Rs.841. 48 lac;,

(viii) Assets lying with the Provident Fund trust hove been transferred to Regional Provident Fund Commissioner and those related to Gratuity Trust hove been settled by adjustment of employees dues. However, as per the management, related liability hos been accounted for completely and there will be no demand over and above the same;

(ix) Company has accounted for its gratuity and leave encashment liability on actual basis rather than on actuarial valuation method which has been prescribed in Accounting Standard AS-15, "Employee Benefits".

(D) We further report that during the year ended 31" March, 2014 the facts and situation mentioned above continues:-

Further the Company has not complied with the provisions of clause 35 of listing agreement (submission of shareholding pattern) and requirements of SE8I circular no. D & CC/

FITTC/CIR-16/2002 dated 31.12.2002 regarding Reconciliation of Shore Capitol Audit Report, for the quarter ended 31" December 2013. This default wos made good on 23 June, 2014. However due to delay NSE has imposed a penalty of Rs. 9.32 lacs vide notice no. FINES/ 2013-14/230721-T dated 17 February, 2014 which is still unpaid.

(E) We further reports that during the year ended 31st March, 2015 the facts and situotion mentioned above continues, Further

(i) the Company has not appointed any Chief Financial officer as per the requirement of section 203 of the Companies Act 2013, in respect of the key managerial personnel;

(ii) the balances outstanding in banks (except one operative bank) ore subject to confirmation;

3. during the financial year 2013-14, the Company had provided further diminution in long term investment in Somtel Gloss Limited of Rs. 937.87 lacs, diminution of investment in current year has not been considered by the management since, as explained to us, the realisation value of land during disposal of Samtel Gloss Limited will be higher after setting off all liabilities [refer note no. 37(g)];
4. (iv) the shares against subscription money received from Promoters Group company of Rs. 3000 Iacs, in terms of CDR Scheme, could not be issued due to non-approval from Stock Exchange. After the lapse of extended period as provided in MCA N/N the company may be in default of provision of section 73 to 76 of the Companies Act, 2013 read with companies (Acceptance of Deposits) Rules, 2014 and relevant Amendment Rules 2015
5. (F) In continuation to aforesaid observations, we report that:
6. The shares against subscription money received from Promoters Group Company of Rs. 3000 lacs, in terms of CDR Scheme, could not be issued due to non-approval from Stock Exchange. After the lapse of extended period as provided in MCA Notification the Company is in default of provision of section 73 to 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 and relevant Amendment Rules 2015

(F) In continuation to aforesaid observations, we report that:

The shares against subscription money received from Promoters Group Company of Rs. 5000 lacs, in terms of CDR Scheme, could not be issued due to non-approval from Stock Exchange. After the lapse of extended period as provided in MCA Notification the Company is in default of provision of section 73 to 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 and relevant Amendment Rules 2015

These factors raise substantial doubts as to the Companys ability to continue os going concern and therefore, the company may not be able to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include any adjustment relating to the recoverability and classification of recorded assets amounts.

Based on the above facts we are of the opinion that going concern assumption has been affected and the financials should have been stated at net realisable value.

e. On the basis of written representations received from the directors as on 31 March 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016, from being appointed as a director in terms of Section 164(2) of the Act.

i) The Company has disclosed the impact of pending litigation on its financial position in its financial statements- Refer Note 27 to the financial statements;

Membership No. 95960