Vijay Shanthi Builders Ltd Auditors Report.

TO THE MEMBERS OF Vijay Shanthi Builders Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Vijay Shanthi Builders Limited ("the Company"), which comprise the Balance Sheet as at 31st March 2017, 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 and presentation 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 and Companies (Accounting Standards) Amendment Rules, 2016.

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 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 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 evidence 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. An audit also includes evaluating the appropriateness 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 audit opinion on the financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the paragraphs "Emphasis of Matter",the afore said 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 2016, its profit and its cash flows for the year ended on that date.

Emphasis of Matters

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

I. The Company has adopted selective accounting policy by deviating from Guidelines prescribed by ICAI in respect of revenue recognition of Accounting for Real Estate transactions, in the matter of one of its projects. In this regard, all significant risks & rewards are transferred to the buyers and it is not unreasonable to expect ultimate collection with no significant uncertainty existing regarding the amount of consideration. However the Company has added the profit quantum as worked out by the management in its WIP-Closing Inventory instead of recognizing the revenue.

II. Refer No.18 (a) (ii) to the financial Statements: In absence of confirmation from the concerned banks, we are unable to comment about the correctness of balances grouped under Bank Accounts which amounts to Rs.3,18,211.82/-

Our opinion is not modified in respect of the matters mentioned above.

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 Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.

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) 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 aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act and the Companies (Accounting Standards) Amendment Rules, 2016 except Accounting standard 15 - Employee Benefits, where the company has not accounted for the provision for Gratuity on the basis of Actuarial valuation certificate.

(e) On the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as On 31 March 2017 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"; 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 explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note 27.1 to the financial statements

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

iii. The below mentioned is the instance of delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company.

Financial Year Date of declaration of dividend Unclaimed amount as on March 31, 2016 Due Date for transfer to Investor Education and protection Fund Actual date of transfer to Investor Education and protection Fund Amount of Transfer to Investor Education and protection Fund
2008-09 30.09.2009 4,34,991.60 29.10.2016 02.11.2016 4,34,552.00

IV. The Company has provided requisite disclosures in Note 18 to these financial statements as to holdings as well as dealings in Specified bank Notes during the period from 8 November 2016 to 30 December 2016 and these are in accordance with the books of accounts maintained by the company

For Vinodh Kothari & Co.,

Chartered Accountants

Firms Registration Number: 012717S

Vinodh Kothari

Partner

Membership Number: 221340

Place: Chennai

Date: 02nd June 2017

Annexure - A to the Auditors Report

The Annexure referred to in Independent Auditors Report to the members of the Company on the financial statements for the year ended 31 March 2017, we report that:

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

(b) As explained to us, all the fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification

(c) Accor ding 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 included in fixed assets are not held in the name of the Company as mentioned below:

Sl.No Asset Category Gross Block Remarks
1 Land 18,00,000 Title deeds are not provided

(ii) As explained to us, the inventory has been physically verified at reasonable intervals during the year by the management. In our opinion, the frequency of verification is reasonable. The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business. No material discrepancy noticed on verification between the physical stocks and the book records.

(iii) In respect of loans in the nature of project advances/trade credits granted by the Company to two companies and one proprietorship firm, covered in the register maintained under section 189 of the Companies Act, 2013, according to the information and explanations given to us: However Loans in the nature of trade Credits been given to entities covered in the register maintained under S.189 of the Companies Act, 2013(‘the Act)

(a) The loan granted is repayable on demand. The loan is given interest free which is not prima facie prejudicial to the interest of the Company considering Companys economic interest in such entity.

(b) W e are informed that the Company has demanded repayment of such loans during the year and the same have been repaid as per the instruction. Hence there has been no default on the part of the parties to whom the money has been lent.

(c) Ther e is no overdue amount in respect of the loans granted to such Companies, firms or other parties. (iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act, with respect to the loans and investments made.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits in contravention of Directives issued by Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Act and the rules framed there under, where applicable. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or any other tribunal.

(vi) W e have broadly reviewed the books of accounts and records maintained by the company pursuant to the rules prescribed under section 148(1) of the Act for maintenance of cost records in respect of materials, labour and other items and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of records.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues have not been regularly deposited during the year by the Company with the appropriate authorities.

The undisputed amounts payable in respect of Income tax, TDS, Dividend Distribution Tax Service tax and EPF that were in arrears, as 31st March, 2017 for a period of more than six months from the date they became payable are given below:

Name of the Statute Nature of Dues Amount of Default (Rs.) Period of Default
Income tax Act,1961 Income Tax and interest 95,67,190# AY 2015-16
Income tax Act,1961 Income Tax 33,26,869* AY 2016-17
Income tax Act,1961 TDS 90,250 FY 2015-16
Income tax Act,1961 TDS 60,78,724 APRIL-SEP 2016
Income tax Act,1961 Dividend Distribution Tax 33,99,095 FY 2012-13
Service tax Service Tax 32,52,610 APRIL-SEP 2016
Employees Provident Funds & Miscellaneous Provisions Act,1952 EPF 95,894 FY 2015-16
Employees Provident Funds & Miscellaneous Provisions Act,1952 EPF 4,76,362 APRIL-SEP 2016

# The said amount includes interest U/s.234A, 234B & 234C.

* The amount is based on the estimated calculation and does not include any interest Which may vary accordingly.

(b) Accor ding to the information and explanations given to us, there are no dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax ,Excise Duty and Cess that have not been deposited with appropriate authorities on account of any dispute except the following:

Name of the Statute Nature of dues Amount (in Rs) Period to which the amount relates Forum where dispute is Pending
Service tax Service tax and Penalty 15,00,01,000 April 2009 to June 2010 CESTAT, Chennai
ESI ESI contribution and Interest 2,96,010 January 2012 to December 2012 Honble Principal Labour Court, Chennai
Consumer Forums Consumer Claims 35,50,000 Not Available Not Available

(viii) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion, the company has not defaulted in repayment of dues to a financial institution, Government or dues to debenture holders.

(ix) The company has not raised money by way of initial public offer or further public offer (including debt instrument). However the moneys were raised by way of term loans which were applied for the purposes for which those were raised.

(x) Based upon the audit procedures performed and according to the information and explanations given to us, no fraud by the company or any fraud on the company by its officers or employees has been noticed or reported during the course of our audit, that causes the financial statements to be materially misstated.

(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) The company is not a Nidhi Company hence this clause is not applicable. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) Based upon the audit procedures performed and according to the information and explanations given to us, All transactions with related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Financial statements etc. as required by the applicable accounting standards.

(xiv) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) Accor ding 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 not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For Vinodh Kothari & Co.,

Chartered Accountants

Firms Registration Number: 012717S

Vinodh Kothari

Partner

Membership Number: 221340

Place: Chennai

Date: 02nd June 2017

Annexure - B to the 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 Vijay Shanthi Builders 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 unauthorised 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 has, in all material respects, an internal financial controls system over financial reporting and such internal financial controls over financial reporting needs to be improved upon as at 31 March 2017, 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 Vinodh Kothari & Co.,

Chartered Accountants

Firms Registration Number: 012717S

Vinodh Kothari

Partner

Membership Number: 221340

Place: Chennai

Date: 02th June 2017