VKS Projects Ltd Auditor Reports

To,

The Members of,

VKS PROJECTS LIMITED

Report on the Financial Statements

1. We have audited the accompanying financial statements of VKS PROJECTS LIMITED (CIN- L74210MH1998PLC113596) ("The Company"), which comprises the Balance Sheet as at March 31, 2016, 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.

Managements Responsibility for the Financial Statements

2. 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 to 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 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

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. 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.

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute if Chartered Accountants of India. Those Standards and pronouncements 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.

6. 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, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. 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.

7. 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.

Emphasis of Matter

8. We invite attention to Note no 25(ii) to the financial statements regarding non reconciliation and non availability of balance confirmation from Various Lenders, Sundry Creditors, Trade Receivables and parties to whom Loans and Advances and Deposits have been made.

9. As referred in Note 25(iiii) to the financial statement, the company have not complied with section 203 & section 134 (1) of Companies Act, 2013.

Opinion

10. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the above matter and subject to our remarks as stated in notes hereunder vide "Annexure C", 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 March 31, 2016 and its loss and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

11. As required by "the Companies (Auditors Report) Order, 2015 ("the Order")", issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (hereinafter referred to as the "Order"), and on the basis of such checks of the books and records of the Company as we consider appropriate and according to the information and explanation given to us, we give in the "Annexure A" statement on the matters specified in the paragraph 3 and 4 of the Order.

12. 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 faras 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 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 representations received from the directors as on March 31, 2016 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 Act; and

f. With respect to the adequacy of the Internal financial controls over financial reporting of the Company and operative effectiveness of such controls, refer to our separate report in "Annexure B" to this report; 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:

• The Company has disclosed the impact, if any, of pending litigations as at March 31, 2016 on its financial position in its financial statements - Refer Note No. 25 (iv);

• 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 i.e Nil; and

• There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2016- N.A.

For J. Maitra & Associates

Chartered Accountants

Firm Registration Number: 119676W

Joyashish Maitra

(Proprietor)

Membership Number: -107546

Place: Mumbai

Date: May 11, 2016

Annexure A to Independent Auditors Report (Referred to in our report of even date)

1) In respect of Fixed Assets:

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

b) As explained to us, the assets have been physically verified by the management in accordance with a phased program of verification of its Fixed Assets including Capital Work in Progress adopted by the Company which, in our opinion, is reasonable, considering the size and the nature of its business. No material discrepancies have been noticed on such physical verification, however no such report provided to us for verification;

c) The title deeds of immovable properties are held in the name of the company.

2) INVENTORIES

a) According to the information and explanations given to us, the inventory has been physically verified by the management during and at the close of the year.

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 as evidenced by the written procedures and instructions are reasonable and adequate in relation to the size of the company and nature of its business.

d) The company is maintaining proper records of inventory. As explained to us, no discrepancies were noticed on physical verification between physical stocks and book records. However, physical verification reports are not produced before us for verification.

3) In respect of the loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013:

a) According to the information and explanations given to us, the company has granted unsecured loan. The amount and number of parties involved are INR 7527000/- and 2 parties respectively with closing balance being INR 6829000/- of 2 parties respectively.

b) The company has granted aforementioned advances as non-interest bearing advances.

c) Terms and conditions for the repayment of the loan granted at clause (a) above is not specified, hence regularity of receipt of loan amount could not be commented upon.

d) In view of clause 3(c) above, clause 3(d) are not applicable.

e) According to the information and explanations given to us, the company has taken unsecured loan. The amount and number of parties involved are INR 8569486/- and 1 parties respectively with closing balance being INR 14407556/- of 2 parties respectively.

f) The company has taken aforementioned advances as non-interest bearing advances.

g) Terms and conditions for the repayment of the loan granted at clause (a) above is not specified, hence regularity of receipt of loan amount could not be commented upon.

h) In view of clause 3(c) above, clause 3(d) are not applicable.

4) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and I86 of the Companies Act, 2013 In respect of loans, investments, guarantees, and security.

5) In our opinion and according to the information and explanations given to us, the company has not complied with the provision of section 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2013 with regard to the deposits accepted from the public and the directives issued by the Reserve Bank of India in this matter. According to the information and explanation given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal in this regard.

6) We have broadly reviewed the records maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under Sub-Section(1) of Section 148 of the act and are of the opinion that prima facie the , prescribed cost records have been maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7) In respect of Statutory dues:

a) The Company is not regular (defaulted) in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, custom duty, excise duty and other statutory dues, applicable to it with a closing balance as on March 31, 2016for Service Tax, Sales Tax and Income Tax. Service Tax dues as at the end of the year were Rs. 2,81,62,421/- Sales Tax were of Rs. 6,29,080, TDS were of Rs. 1,38,96,240/- and Income tax were Rs.2,73,93,083/-.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees State Insurance, custom duty, sales tax, excise duty and other statutory dues were outstanding, as at March 31, 2016 for a period of more than six months from the date were they became payable except the followings.

Sr. No. Particulars	Amount Outstanding for more than 6 months as on March 31, 2016
1 Income Tax	2,73,93,083
2 Service Tax	2,81,62,421
3 Sales Tax	6,29,080
4 Tax Deducted at Source	1,38,96,240

Note: The sales tax department has initiated proceedings for various financial years starting from 2006-07 to 2012-13 on the company, in the absence of the detailed information and explanation in respect of Tax Liability, Interest and Penalty thereon, we are unable to comment upon the impact of the same on the statement of profit and loss account.

c) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of wealth tax, service tax and cess which have not been deposited on account of any dispute however the demand raised by the sales tax departments are still pending for deposition however exact demand amount is not provided to us by the management hence impact of the same is not commented.

8) In our opinion and according to the information and explanations given to us and based on the documents and records produced to us that the company has defaulted in repayment of dues to financial institution and banks during the financial year covered under audit.

9) Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of initial public offer or further public offer including debt instruments and term Loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commentedupon.

10) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during theyear.

11) Based upon the audit procedures performed and the information and explanations given by the management, 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 CompaniesAct.

12) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to theCompany.

13) In our opinion, all transactions with the related parties are incompliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

14) Based upon the audit procedures performed and the information and explanations given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commentedupon.

15) Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commentedupon.

16) In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commentedupon.

For J. Maitra & Associates

Chartered Accountants

Firm Registration Number: 119676W

Joyashish Maitra

(Proprietor)

Membership Number: -107546

Place: Mumbai

Date: May 11, 2016

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 VKS PROJECTS LIMITED ("the Company") as of 31 March 2016 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 (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 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 has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2016, 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 J. Maitra & Associates

Chartered Accountants

Firm Registration Number: 119676W

Joyashish Maitra

(Proprietor)

Membership Number: -107546

Place: Mumbai

Date: May 11, 2016

Annexure C to Independent Auditors Report

1. Inability to comment on Inter Corporate Deposits and Other Loans and Advances taken from various parties as at March 2016, in the absence of third party confirmation, reconciliation, if any and other sufficient appropriate audit evidence.

2. No Provision is made for Interest Payable on Inter Corporate Deposits and Other Loans and Advances taken by the Company and no provision made of Interest Receivable on Inter Corporate Deposits and Other Loans and Advances provided by the Company, consequently the profit/loss of the year are not ascertainable.

3. Inability to comment on Trade Payables and dues to Related Parties as at March 2016, in the absence of the third party confirmation, reconciliation, if any and other sufficient appropriate audit evidence.

4. No Provision made for Interest payable on Loans taken from Banks and NBFC Companies which are already been declared as NPA, consequently the loss is not ascertainable.

5. Inability to comment on Balance Recoverability, if any of Trade Receivables and Other Short Term Loans and Advances as at March 2016, in the absence of sufficient appropriate audit evidence.

6. Inability to comment on Balance Recoverability, if any of Sundry Deposits and Other Current Assets as at March 2016, in the absence of sufficient appropriate audit evidence.

7. With reference to Fixed Deposits Accepted by the Company, the Company has defaulted in repayment of dues as at March 2016. Further, the Company has not made provisions for penal interest as per the Companies (Acceptance of Deposits) Rule 2014. The Company has not intimated to the tribunal on monthly basis about the default in repayment as per section 73(4) of the Companies Act 2013 corresponding to section 58AA of the Companies Act, 1956.

8. Inability to comment on impairment provisions, if any as per the Accounting Standard 28 "Impairment of Assets" on Plant and Machinery along with other fixed assets amounting to INR 1098.85Lacs situated atvarious sites of the Company which have been generally operating at lower capacity, in the absence of future cash flows projection and information about the value of use.

9. A notice has been issued by the State Bank of India under section 13 (12) read with rule 3 of the Security Interest (Enforcement) Rules, 2002 for non repayment of installments and interest thereon after the due date by the Company and therefore all the loan accounts became Non Performing Assets with effective from respective dates mentioned in such notice. We are informed that the Company has filed response against such notices and requested to restructure the loan accounts. These factors along with other matter as set forth in said notice, raise substantial doubt about the companys ability to continue as going concern in the foreseeable future however the companys financial statements have been prepared on going concern basis on the basis of management assurance.

10. Tangible Assets are stated at cost net of recoverable taxes, trade discounts, and rebates, less accumulated depreciation.

11. Depreciation on Fixed Assets is provided to the extent of depreciable amount on Written Down Value (W.D.V.) Method. Depreciation is provided based on useful life of asset described in Schedule II to the Companies Act, 2013.

12. The Sales Tax Department initiated proceedings for various financial years starting from 2006-07 to 201213 on the Company, in the absence of the detailed information and explanation in respect of Tax Liability, Interest and Penalties thereon, we are unable to comment upon the impact of the same on the statement of profit and loss account.

13. It is informed to us that the Company has not complied with the provisions of filing of Returns for TDS during the period under review however the company has not provided the effect of the same in the books of accounts.

14. As per explanation and information provided to us by the Company Management about the Future Business of the Company, Realization of Current Assets and Default in Repayment of loans to Banks and NBFCs, the Going Concern assumption of the Company in near future is considered inappropriate, as there is significant material impact on the Companys Going Concern after the due action taken by the Banks and NBFCs for default of repayment of dues however the companys financial statements have been prepared on going concern basis on the basis of management assurance.

15. The Company has not provided us the details of pending litigation against the company and its directors for various matters including the financial matters hence we are not able to comment upon the financial impact of the same on the financial statements.

For J. Maitra & Associates

Chartered Accountants

Firm Registration Number: 119676W

Joyashish Maitra

(Proprietor)

Membership Number: -107546

Place: Mumbai

Date: May 11, 2016