Tirupati Inks Ltd Auditor Reports

To,

The Members of Tirupati Inks Limited Delhi

1. Report on the Financial Statements

We have audited the accompanying financial statements of Tirupati Inks Limited

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("the Company"), which comprise the Balance Sheet as at 31 March, 2017, the Statement of Profit and Loss and Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

2. 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 given a true and fair view of the financial position, financial performance 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 preparation 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 effective 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.

3. 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 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 about the amounts and the disclosures 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 preparation 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 control system over financial reporting and the operating effectiveness of such controls. An audit includes evaluating of the accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, 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 qualified audit opinion on the standalone financial statements.

4 Basis for Qualified Opinion

a) The Company has not provided depreciation in accordance with Schedule II of the Companies Act, 2013. It has followed old procedure for calculating depreciation as per Schedule XIV of the Companies Act, 1956 resulting in incorrect determination of depreciation expense. Consequently, we are unable to quantify the impact of depreciation on the Profit & Loss Account and comment on the correctness of the values of Fixed Assets shown in the Balance Sheet.

b) The present financial position of the Company and uncertainties in availability of the required financial resources to operate the Cash Generating Unit (CGU) at the optimum levels leaves doubts that the Value in Use of the Cash Generating Unit may be lower than the carrying amount of the CGU. The Company however has not carried out any exercise to determine the Value in Use of the CGU as per the provisions of AS 28 to ascertain any impairment loss for which provision is required. The impact therefore, presently is not ascertainable.

c) The Company has provided for interest on bank loans only partially in view of non debit by banks and / or non availability of bank statements. The loss of the Company to the extent of non provision of interest liability is under stated and is not quantifiable presently due to lack of required information.

d) The Company has prepared the financial statements on the presumption of going concern. In view of prolonged lock out in its manufacturing facility, substantial losses and disintegration of organizational structure and team, we believe that the presumption of going concern is not valid.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanation given to us, except for the effects of the matter described on the basis for Qualified Opinion paragraph above, the aforesaid 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, of the state of affairs of the Company as at 31st March, 2017, its loss and its Cash flows for the year ended on that date.

6. Emphasis of Matters

We draw attention to the following matters in the notes to the financial statements:

a) The basis of valuation of the inventories taken by the management.

b) The company has not fulfilled its financial commitments and has defaulted in payment of its dues because of financial crisis.

c) The company has received notices under the SARFAESI Act, 2002 and under RDDBFI Act, 1993 from the banks for recovery of their dues.

d) During the quarter ended on June, 2016, the Company had undertaken a detailed technical evaluation of Inventories in view of fast deteriorating chemical properties and possible hazardous environmental impact. The technical experts have advised quick disposal of these stocks which pose environmental risks. Some of these stocks which were not expected to fetch any value in view of loss of expired chemical properties have been disposed off during the quarter ended on September, 2016 resulting in huge loss. This being an extra ordinary situation, the loss has been reflected as Exceptional Items in the Profit & Loss Account.

Further, during the quarter ended on September, 2016, the Board of Directors have decided to write down the value of remaining inventories after a careful assessment of their present condition and realisibility.

The total loss arising during the year on this account of Rs. 4350.27 lacs has been reflected as Exceptional Items in the Profit & Loss Account.

e) Write off of old Trade Receivables of Rs. 4,824.76 lacs on 31.03.2017 against which the Company had made a provision for bad & doubtful debts during the quarter ended on September, 2016. It has been reflected as Exceptional Items in the Profit & Loss Account.

f) The Company has been settling its liabilities with assignment of debts, for which confirmation from respective parties are pending in certain cases.

g) The Greater Noida Manufacturing facility of the Company has been put in a Lock Out since 03.05.2016, consequent to some labour unrest and financial stress. The matter is under the jurisdiction of Assistant Labour Commissioner, Noida and the Company is in process of getting the labour issues resolved with appropriate legal advice.

The Company has not provided for any liability of wages or compensation which may arise after eventual settlement / adjudication. h) The company has defaulted in payment of interest amounting to Rs. 51.50 lacs (approx.) from 01.04.2016 to 31.03.2017 on the Unsecured Loans obtained in the previous years. The provisions for these interest have also not considered in the financial statements ending on 31.03.2017.

Further, the Company has not provided various expenses amounting to Rs. 4.12 lacs (approx.) in its books of accounts during the current financial year.

Our opinion is not modified in respect of these matters.

7. 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 subsection (11) of section 143 of the Companies Act, 2013, we give in the annexure a statement on the matters specified in paragraph 3 and 4 of the order, to the extent applicable.

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

(a) We have sought and, except for the possible effect of the matter described on the basis of qualified opinion paragraph above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the propose of our audit.

(b) Except for the possible effect of the matter described on the basis of qualified opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far it 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 books of account.

(d) Except for the possible effect of the matter described on the basis of qualified opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies

(Accounts) Rules, 2014.

(e) On the basis of the written representation received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 from being appointed as a director in Section 164 (2) of the Act.

(f) In our opinion, the company has reasonably adequate internal control system in place providing operative effectiveness of such

controls.

(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:

i. Except for the possible effect of the matter described on the basis of qualified opinion paragraph above, the financial statements disclose the impact of pending litigation on the financial position of the company which would impact its financial position. (Refer Note No. 2.37 of Notes to Accounts)

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

iii. There was no amount required to be transferred to the Investor Education and Protection Fund by the Company.

For Shashi Dinesh & Co.

Chartered Accountants

(FRN 004975C)

CA Sudhir Kapoor

(Partner)

(Membership No.073456)

Place : Delhi

Date : 30.05.2017

ANNEXURE TO THE INDEPENDENT AUDITORS REPORT ON THE FINANCIAL STATEMENTS OF TIRUPATI INKS LIMITED

We have audited the internal financial controls over financial reporting of Tirupati Inks Limited ("the Company") as of 31 March, 2017 in conjunction with our audit of the 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 (‘ICAI). 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 of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

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) of the Companies Act, 2013, 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of un authorized 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.

Opinion

In our opinion, the Companys internal financial controls system over financial reporting has gradually weakened and such internal financial controls over financial reporting were, though operating as at 31 March 2017, needs to be strengthened 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.

For Shashi Dinesh & Co.

Chartered Accountants

(FRN 004975C)

CA Sudhir Kapoor

(Partner)

(Membership No.073456)

Place : Delhi Date : 30.05.2017

ANNEXURE TO THE AUDITORS REPORT

(i) (a) The company has not been able to produce records showing full particulars of Fixed Assets. We have been explained that due to prolonged lock out and sudden discertion by staff, the Company is not able to locate the register / files.

(b) No physical verification of Fixed Assets is being carried out by the management during the year.

(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) The inventories have not been physically verified during the year by the management. We have been explained that formal inventory verification was rendered difficult and hence not done, because of challenges in availability of staff.

(iii) The company has not granted any loans secured or unsecured to the companies, firms or other parties covered under section 189 of the Companies Act, 2013.

(iv) The Company has not granted any loans, investments, guarantees, and security covered under the provisions of section 185 and 186 of the Companies Act, 2013.

(v) The company has not accepted deposits from public.

(vi) The maintenance of cost records have not been prescribed by the Central Government.

(vii)(a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Employees State Insurance, 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 of statutory dues were in arrears, as at 31st March, 2017 for a period of more than six months from the date they became payable with the appropriate authorities except Income Tax of Rs. 106.74 lacs for the financial year 2013-2014 and VAT amounting to Rs. 6.85 lacs which is not paid till the date of signing of the Balance Sheet.

(b) According to the information and explanations given to us, there are no dues of Duty of Excise, Service Tax, Duty of Customs which have not been deposited with the appropriate authorities on account of any dispute.

However, according to information and explanations given to us, there are statutory disputed dues of income tax, sales tax, and value added tax which have not been deposited by the Company. Refer point no. 2.37(a) of Notes to Accounts.

(viii) The company has defaulted in repayment of its dues to the consortium banks.

(ix) No monies were raised by way of initial public offer or further public offer (including debt instruments) and term loans during the year.

(x) 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) The managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(xii) This clause is not applicable since the company is not a Nidhi Company.

(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.

For Shashi Dinesh & Co.

Chartered Accountants (FRN 004975C)

CA Sudhir Kapoor

(Partner) (Membership No.073456)

Place : Delhi Date : 30.05.2017