UB Engineering Ltd Auditor Reports

To

The Members of

UB Engineering Limited

Report on the Financial Statements

We have audited the accompanying stand-alone financial statements of UB Engineering Limited ( the Company ) which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and the Cash Flow Statement, and a summary of significant accounting policies and other explanatory information for the year then ended.

Managementfs responsibility for the Financial Statements

The Company s Management is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these stand-alone 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 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.

Auditors Responsibility

Our responsibility is to express an opinion on these stand-alone financial statements based on our audit.

We have taken in to 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 the 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 financial control relevant to the

Company s 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 effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 qualified audit opinion on the stand-alone financial statements.

Basis for Qualified Opinion

Reference is invited to Note No. 21 wherein, Management has given reasons for presenting Financial Statements on the principles applicable to going concern, which are in our opinion is based upon happening of certain future events and on which we are unable to form such an opinion.

i) Notwithstanding erosion of net-worth and reference to BIFR, the Audited Financial Statements for the year ending March 2016 are prepared on going concern basis, which in our opinion is based on happening of events futuristic in nature, hence not verifiable and on which we are unable to form such an opinion. (Refer Note No. 21)

ii) During the F.Y. 2012-13, a Bank Guarantee invoked by a customer of Rs. 191.65 Million in August 2012, which is being contested before High Court of Punjab and Haryana at Chandigarh, has been referred to arbitration and not fully provided for. (Refer Note No. 23)

iii) Consortium Banks had classified the account of the Company as Non-Performing Asset (NPA) with effect from April 1, 2014. (Refer Note No. 24)

iv) Consortium Banks have enforced the security of assets at Fabrication Unit situated at Durg (Chhattisgarh), Shirwal, Pune and Chiplun. Consortium Banks have filed Miscellaneous Application with BIFR for abatement of reference under Section 15 of SICA and some member banks have individually filed applications with appropriate authorities for recovery of their Dues. Company is contesting these applications by appropriate legal process.(Refer Note No. 24)

v) During the year, various Bank Guarantees aggregating to Rs. 375.96 Million issued on behalf of the Company towards performance / mobilization advance / security have been invoked by various Clients. The Company has assessed potential losses that may ultimately arise as a consequence and the actual financial loss would depend on outcome of negotiation with Clients. Liabilities are included in Dues to Banks and appropriate provision has been considered in Accounts. (Refer Note No. 25)

vi) During the year, Bad Debts Written off as well as Provision for Bad and Doubtful Debts are considered in Contract Costs, based on Management Declaration, on which we have relied upon. (Refer Note No. 26)

vii) Statutory Dues excluding interest aggregating to Rs. 154.73 Million (approx.) were outstanding as on March 31, 2016 mainly towards Indirect Taxes (Including Service Tax) etc. (Refer Note No. 30)

viii) The entire expenditure incurred at or for contract sites are shown under head "Contract Costs" without classifying the same under nominal heads of expenditure. (Refer Note No. 35)

ix) Post March 31, 2016 various Bank Guarantees aggregating to Rs. 139.00 Million issued to clients on behalf of the Company towards performance / mobilisation advance / security were invoked by various clients. The Company has assessed potential losses that may arise as a consequence and appropriate provision has been considered in Accounts. The actual financial loss would depend on outcome of negotiation with Client. (Refer Note No. 37)

x) Winding up petitions were filed by two vendors, for which Honorable High Court, Mumbai has passed orders for adjournment sine die in view of BIFR Registration. (Refer Note No.38)

xi) Managerial Remuneration of Rs.10.50 Million Is subject to approval of the Central Government. (Refer Note No.43) xii) The Company does not have minimum number of stipulated Directors as required as per Companies Act, 2013.

In view of the observations in the paragraph above "Basis for Qualified Opinion", we are unable to express any opinion as a true and fair view.

(a) in the case of the Balance sheet, of the state of affairs of the Company as at March, 31, 2016;

(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

(c) In the case of the 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 paragraphs 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 obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;b b. In our opinion, 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 and the Cash Flow Statement dealt with by this report are in agreement with the books of account; d. In our opinion, the Balance Sheet, the Statement of Profit and Loss comply with the Accounting Standards referred to in Section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014. e. .On the basis of written representations received from the Directors as on March 31, 2016, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2016, from being appointed as a Director in terms of Section 164(2) of the Companies Act, 2013. f. We have issued a separate report on the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls. The said report can be found in "Annexure B" to this report. 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 & to the best of our information and according to the explanations given to us i) The Company has not quantified the impact of pending litigations on its financial position in its financial statements in accordance with the generally accepted accounting practice. ii) The Company did not have any on long-term contracts (including derivative contracts) for which a provision is required for material foreseeable losses under the applicable law or accounting standards. iii) There were no amounts which were required to be transferred to the "Investor Education and Protection Fund" by the Company.

	For M/s. V. P. MEHTA & Co.
	CHARTERED ACCOUNTANTS
	(Firm Registration No.106326 W)
	VIPUL P. MEHTA
	(PROPRIETOR)
	Membership No. 035722
Place : Pune
Date : November 8, 2016

Annexure A to the Auditors Report

The Annexure referred to in paragraph 7(1) under "Report on Other Legal and Regulatory Requirements" of our report of even date

Sr.No. Particulars

(i) In Respect of its Fixed Assets:

(a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets at respective sites.

(b) Most of these Fixed Assets have been physically verified by the Management at reasonable intervals in accordance with regular program of verification, We have been informed that there is no material discrepancies between book records and physical verification. However, the records are not been fully verifiable for closed and terminated sites. We have relied on the Management Decision on the same.

c) According to the information and explanation given to us, the title deeds of immovable properties are held in the name of Company. (ii) (a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals at certain sites.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(iii) According to the information and explanations given to us, during the year the Company has not granted loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act 2013. The Company had given advances to subsidiary and step-down subsidiaries of Rs. 114.49 Million over the years which has been fully provided for in the books. (iv) According to the information and explanations given to us, and based on our examination of the records of the Company, the Company has not given any loans, made any investments, provided any guarantee / security to any persons during the year. Therefore, the provisions of clause 3(iv) of the Companies (Auditor s Report) Order, 2016 are not applicable to the Company.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year. However, Company has received Inter-corporate Unsecured Loan from the Subsidiary of the Promoter Company.

(vi) According to the information and explanations given to us, the Central Government has prescribed maintenance of cost records Section 148(1) of the Companies Act, 2013. (vii) According to the information and explanations given to us

(a) The Company is not regular in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities.

(b) There were undisputed amounts payable in respect of provident fund, employees state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues in arrears as at March 31,2016 for period of more than six months from the date they became payable as under -

- Service Tax - Rs.33.36 Million ( excluding interest and Penalty )

- Provident Fund Rs. 0.15 Million ( excluding Penalty and Damages )

- T.D.S. - Nil ( excluding Interest )

- Profession Tax - Rs. 2.41 Million

- E.S.I. - Rs. 0.05 Million

- Employee s Deposit Linked Insurance - Rs. 5.69 Million relating to earlier years.

- Gratuity Rs. 17.94 Million

(c) Details of the amounts due on account of dispute in respect of Sales Tax and Income Tax dues as of March 31, 2016, have not been deposited with the authorities and the forum where the disputes are pending as given below

Particulars	Nature of the Dues	Financial Year to which the Amounts Relate	Amount Outstanding (Rs. Million )	Forum where dispute is pending
Sales Tax and other Indirect Taxes	Sales Tax, Service Tax, Customs	1987- 2016	960.56	Sales Tax , Central Excise and Customs Authorities in Various States
Sales Tax Deferral Scheme	Sales Tax	1987 1994	53.86	High Court, Mumbai
Income Tax	Income Tax	2009-10	198.98 (Entire Demand has been set off against T.D.S. Claim till March 2016)	Commissioner of Income Tax (Appeals), Pune for Both cases.
		2011-12	10.76 (Out of this Rs. 9.85 Million has been set off against T.D.S. Claim in May 2016)

(viii) The Company has defaulted in repayment of Loans and Borrowings to the Consortium Banks. The Company s account is declared as Non-Performing Asset ( NPA ) by the Consortium Banks with effect from April 1, 2014.

Various Bank Guarantees invoked during the year have been shown as Dues to the Banks.

(ix) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Therefore, the provision of Clause

3(ix) of the Companies (Auditor s Report ) Order. 2016 are not applicable to the Company.

(x) According to the information and explanations given to us, no significant fraud by the Company or on the Company by its officers or employees, that causes a material misstatement to the financial statements, has been noticed or reported during the year.

(xi) According to the information and explanations given to us, the Company has paid Managerial Remuneration during the year. However, the same is subject to approval of the Central Government.

(xii) As the Company is not the Nidhi Company, the provision of Clause 3

(xii) of the Companies

(Auditor s Report ) Order, 2016 are not applicable to the Company.

(xiii) According to the information and explanations given to us, the Company has made all the transactions with the related parties in compliance with Sections 177 & 188 of Companies Act and the details have been disclosed in the Financial Statements as required by the applicable Accounting Standards.

(xiv) According to the information and explanations given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year as per Section 42 of the Companies Act,.2013. Accordingly, the provision of Clause 3

(xiv) of the Companies (Auditor s Report ) Order 2016 is not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with the directors or persons connected with him as per Section 192 of Companies Act, 2013.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the clause 3(xvi) is not applicable.

	For M/s. V. P. MEHTA & Co.
	CHARTERED ACCOUNTANTS
	(Firm Registration No.106326W)
	VIPUL P. MEHTA
	(PROPRIETOR)
	Membership No. 035722
Pune
November 8, 2016

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT

Of even date on the stand-alone Financials Statements of UB ENGINEERING LIMITED.

Report on the Internal Financial Controls under Clause (i) of Section 143(3) of the Companies Act,

2013 ("the Act").

We have audited the internal financial controls over financial reporting of (the Company) as of March 31, 2016 in conjunction with our audit of the stand-alone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Company s Management is responsible for establishing and maintaining internal financial controls. 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 company s 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 auditor s 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 I/we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company s 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 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.

Opinion

In our opinion, the Company does not have an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were not operating effectively as at March 31, 2016.

	For M/s. V. P. MEHTA & Co.
	CHARTERED ACCOUNTANTS
	(Firm Registration No.106326W)
	VIPUL P. MEHTA
	(PROPRIETOR)
	Membership No. 035722
Pune
November 8, 2016