Zenith Birla (India) Ltd Auditors Report.

To the Members of ZENITH BIRLA (INDIA) LIMITED

Report on the Audit of Standalone Ind AS Financial Statements

We have audited the accompanying (Standalone) Ind AS financial statements of ZENITH BIRLA (INDIA) LIMITED ("the Company") which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit (including Other Comprehensive Income), the Statement of Changes in Equity and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information(herein after referred to as "Ind AS financial statements").

Managements Responsibility for the (Standalone) Ind AS 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 (Standalone) Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the India Accounting Standards ("Ind AS") specified under Section 133 of the Act, read with Rule7 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Auditors Responsibility

Our responsibility is to express an opinion on these (Standalone) Ind AS 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 of the Ind. AS financial statements 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 Standalone Ind. AS financial free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Standalone Ind. AS financial statements. The procedures selected depend on the auditors judgment, the assessment of the risks of material misstatement of the Standalone Ind. AS financial 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 controls system over has in place financial adequate internal 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 Standalone Ind.AS financial statements.

We are also responsible to conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists, related to events or conditions that may cast significant doubt on the entitys abilities to continue as going concern. If we conclude that a material uncertainty exist. we are required to draw attention in the auditors report to the related disclosure in the financial statements or, if such disclosures are inadequate to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditors report. However, future events or conditions may cause an entity to cease to continue as a going concern.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the (Standalone) Ind. AS financial statements

Basis for Qualified Opinion

1. With reference to Note No. 49 regarding the non provision by the Company of the interest amounting to Rs. 38.36 crores for the year and Rs 174.88 crores upto 31-03-2018 on its working capital and term loan facilities from Banks. Had this amount been provided for, the loss would have been higher by Rs 38.36 crores and the secured loans would have been cumulatively higher by Rs174.88 crores.

2. The Company has not complied with the provisions of the section 74 or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014 with regard to non repayment of deposits and interest on due date, maintenance of liquid assets to the extent required as well as not fully complying with the orders passed by the Company Law Board.

3. With reference to Note No. 47 regarding the balance of Sundry Creditors, Debtors, Loans and Advances, Deposits, Current Liabilities, Inter Units balances etc being not confirmed by the parties/units and hence our inability to state whether these balance are recoverable/payable to the extent stated.

4. With reference to Note No.53 which indicates that the Company has accumulated losses exceeding the Share Capital and Reserves and its net worth has been fully eroded. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Companys ability to continue as a going concern. However the Standalone Ind AS financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said note.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, subject to the effect of the matters described in the basis for Qualified Opinion paragraph above the aforesaid (Standalone) Ind AS 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 including the Ind AS, of the state of affairs of the Company as at March 31, 2018, and its Loss(including other comprehensive income).changes in equity and its Cash Flow for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016("Other Order") issued by the Central Government in terms of section 143(3) of the Act, we give in "Annexure A" a statement on the matters specifiedin paragraphs 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 purpose 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 the Statement of Changes in Equity 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) Ind. financial statements comply with the Accounting AS Standards specified under section 133 of the Act.

e. On the basis of written representations received from the directors as on March 31,2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 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 reporting of the Company and controlsover the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

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 does not have any pending litigations which would impact its financial position. except for the action initiated under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 by the Banks.

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

iii. An amount of Rs13,75,992 required to be transferred on 07-09-17 was actually transferred on 09-02-18 to the Investor Education and Protection Fund by the Company.

iv. The disclosures in the Ind AS Financial Statements regarding holdings as well as dealing in specified bank notes during the period from 8th November, 2016 to 30th December, 2016 have not been made since they do not pertain to the financial year ended 31st March, 2018.

For, THAKUR VAIDYANATH AIYAR & CO.
CHARTERED ACCOUNTANTS
Firms registration number:000038N
C V PARAMESWAR
Place: MUMBAI Partner
Date: 29.05.2018 Membership number: 011541

"Annexure A"

To the Independent Auditors Report on the Standalone Ind.AS Financial Statements of ZENITH BIRLA (INDIA) LIMITED

(Referred to in paragraph 2 under the heading ‘Report on Other Legal & Regulatory Requirement of our report of even date to the Standalone Ind AS Financial statements of the Company for the year ended March 31, 2018):

i) (a) The Fixed Assets Register maintained by the Company in physical form earlier till March 2016 is informed as lost in transaction. The Fixed Assets Register since being maintained in the computer system needs updation of the relevant particulars.

(b) The Fixed Assets are physically verified by the management according to a phased programme designed to cover all the items over a period of three years which in our opinion is reasonable having regard to the size of the Company and nature of its assets As per the information given to us no material discrepancy was noticed on such verification.

(c) As per the information and explanations provided to us, title deeds of immovable properties are generally in the name of the Company except in the case of 1 freehold property valued at Rs 325.90 lacs. ii) The inventory (excluding stock with third parties) has been physically verified by the management during the year. In respect of inventories lying with third parties these have been confirmed by them. In our opinion the frequency of verification is reasonable. The discrepancies noticed on physical verification of inventory as compared to book records were not material. iii) The Company has granted unsecured loans in the earlier years to eight Companies covered in the register maintained under section 189 of the Companies Act, 2013; (a) The terms and conditions of such loan are not prejudicial to the Companys interest.

(b) The schedule of repayment of principal and payment of interest has not been stipulated.

(c) As there is no stipulation about repayment of principal and payment of interest, there is no overdue amount. 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 Companies Act, 2013 in respect of loans, investments, guarantees, and security, where applicable. v) In our opinion and according to the information and explanations given to us, in respect of compliance by the Company with the directives issued by the Reserve Bank of India, the provisions of section 74 or any other relevant provisions of the Act and the rules framed thereunder, with regard to the deposits accepted from the public, we have to state that these have not been complied with in respect to non repayment of deposits and interest on due date and maintenance of liquid assets to the extent required as per Rule 13 of the Companies (Acceptance of Deposits) Rules, 2014. The Company has also not fully complied with the orders passed by Company Law Board. vi) We have broadly reviewed the books of accounts maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under sub section (i) of Section 148 of the Companies Act, 2013, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have however not made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion except for dues in respect of Dividend Distribution Tax, Tax Deducted at Source, Profession Tax, Tax Collected at Source, Provident Fund, Labour Welfare Fund, and Excise Duty the Company is generally regular in depositing the undisputed statutory dues including Custom Duty, Cess and other material statutory dues, as applicable. The following balances remain in arrears as at the last day of the financial year for a period exceeding six months from the date they become payable :

Nature of Due Amount Outstanding (Rs)
Income Tax Deducted at Source 34,21,188
Income Tax Collected at Source 61,473
Provident Fund 8.25.019
Labour Welfare Fund 540
Profession Tax 1,31.862
Excise Duty 61,78,993
Dividend Distribution Tax 3,59,08,091
Interest on Dividend Distribution Tax 2,69,31,068

(b) According to the information and explanations given to us and the records of the Company examined by us, there were no disputed dues in respect of Service tax. The particulars of dues of Custom Duty, Excise Duty, Sales Tax, Value Added tax and Income tax as at March 31, 2018, which have not been deposited on account of disputes, are as follows:

Name of the statute Nature of Dues Period to which the matter pertains to Forum where dispute is pending Amount
(Rs. In Lacs)
Custom Act, 1962 Custom Duty 1985-86 High Court 03.45
1998-99 Tribunal 82.00
Central Excise Act, 1959 Excise Duty 1995-96 Commissioner Appeal 129.78
Central Sales Tax Act, 1956 Central Sales Tax 1995-96 Tribunal 78.88
Maharashtra Value Added Tax, 2002 Value Added Tax 2006-07 Joint Commissioner Appeal 8,181.18
2007-08 Joint Commissioner Appeal 2,577.63
2009-10 Joint Commissioner Appeal 6,215.77
2011-12 Joint Commissioner Appeal 351.53
2013-14 Joint Commissioner Appeal 30.67
Income Tax Act, 1961 Income Tax 2008-09 CIT (Appeal) 2,545.08
2009-10 CIT (Appeal) 102.01
2010-11 CIT (Appeal) 1,108.80
2011-12 CIT (Appeal) 189.88
2013-14 CIT (Appeal) 2.18

viii) According to the records of the Company examined by us and the information and explanations given to us, there has been default in payments to the banks since August 2012 and the Companys outstanding as at 31st March 2018 as per the notice received from the banks is Rs22817.89 lacs plus interest of Rs 17487.23 lacs for the period upto 31st March 2018.

The lender wise details are as under:

Name of Lender Amount of default (Rs. in lacs)
State Bank of India 15665.43
Punjab National Bank 451.80
Bank of Baroda 1329.87
Oriental Bank of Commerce 1871.51
Bank of India (since assigned to Edelweiss ARC) 2264.81
Punjab National Bank (Term Loan) 1234.46

ix) 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 not availed term loan during the year. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company.

x) 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 the year.

xi) In our opinion and according to the information and explanations given to us, the Company has not paid/ provided managerial remuneration. Hence the provisions of clause 3(xi) of the Order are not applicable to the Company.

xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 3 (xii) of the Order are not applicable to the Company.

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

xiv) 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.

xv) 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.

xvi) 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.

For, THAKUR VAIDYANATH AIYAR & CO.
CHARTERED ACCOUNTANTS
Firms registration number:000038N
C V PARAMESWAR
Place: MUMBAI Partner
Date: 29.05.2018 Membership number: 011541

"Annexure B" to the Independent Auditors Report of even date on the Standalone Ind.AS Financial Statements of ZENITH BIRLA (INDIA) LIMITED 31st March 2018

Report on the Internal Financial Controls over financialreporting 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 ZENITH BIRLA (INDIA) Company") as of March 31, 2018 in conjunction with our audit of the standalone Ind AS financialstatements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsibleforestablishingandmaintaininginternalfinancialcontrols based on the by the Company considering the essential components of internalcontroloverfinancial 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 controls over financial reporting was established and maintained and if such controls operated effectively financial 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 financialcontrols 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 judgement, 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 adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on 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, THAKUR VAIDYANATH AIYAR & CO.
CHARTERED ACCOUNTANTS
Firms registration number:000038N
C V PARAMESWAR
Place: MUMBAI Partner
Date: 29.05.2018 Membership number: 011541

Statement on impact of Audit Qualifications (for audit report with modified opinion) submitted along-with

Annual Audited Financial Results (Standalone)

Statement on Impact of Audit Qualifications for the Financial Year ended March 31, 2018 [ See regulation 33 of the SEBI(LODR)(Amendment) Regulations,2016]

SR. No. Particulars Audited Figures Rs in lacs (as reported before adjusting for qualifications) Adjusted Figures Rs in lacs (audited figures after adjusting for qualifications)
1. Turnover/ Total Income 14510 14510
2. Total Expenditure 18621 18659
3. Net Profit/(Loss) (4111) (4149)
4. Earnings Per Share (Rupees) (3.13) (3.16)
5. Total Assets 34041 34041
6. Total Liabilities 45930 63418
7. Net Worth (11889) (29377)
8. Any other financial item(s)( as felt appropriate by the management) - -

II Audit Qualification( each audit qualification Separately): a. Details of Audit Qualification:

1. With reference to Note No. 4 regarding the non provision by the Company of the interest amounting to Rs. 38.36 crores for the year and Rs. 174.88 crores upto 31-03-2018 on its working capital and Term Loan facilities from banks. Had this amount been provided for, the loss would have been higher by Rs. 38.36 crores and the secured loans would have been cumulatively higher by Rs. 174.88 crores.

2. The Company has not complied with the provisions of the section 74 or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014 with regard to non repayment of deposits and interest on due date, maintenance of liquid assets to the extent required as well as not fully complying with the orders passed by the Company Law Board.

3. With reference to Note No. 8 regarding the balance of Sundry Creditors, Debtors, Loans and Advances, Deposits, Current Liabilities , inter units etc being not confirmed by the parties/units and hence our inability to state whether these balance are recoverable/payable to the extent stated.

4. With reference to Note No. 9 which indicates that the Company has accumulated losses exceeding the Share Capital and Reserves and its net worth has been fully eroded. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Companys ability to continue as a going concern. However the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said note.

b. Type of Audit Qualification: Qualified/ Disclaimer of Opinion/ Adverse Opinion c. Frequency of Qualification

Qualification no. 1 to 4 is repetitive.

d. For Audit Qualification(s)where the impact is quantified by the auditor, Management views:

The Company is trying for One Time Settlement (OTS) with the banks. Hence, it is felt prudent for not providing for interest after the accounts became NPA.

e. For Audit Qualification(s)where the impact is not quantified by the auditor:

(i) Managements estimation on the impact of audit qualification: (ii) If management is unable to estimate the impact, reasons for the same:

For qualification on balances of sundry creditors, debtors, etc:

Reconciliation of balances of sundry creditors, debtors and other parties are an ongoing basis and the figures would be ascertained only when the reconciliation is finalised. Hence at this stage, impact of the same is not ascertainable.

For qualification on non compliance of section 74(2) of the Companies Act, 2013:

The company has taken on priority to clear the dues of deposit holders who are incapacitated and to comply with the orders of existing authorities. For the rest the company has already started the process of settling their dues through sale proceeds of the assets sold by MPID court of the other Company who has given NOC for using the amount towards repayment of the Fixed Deposits of the Zenith Birla (India) Limited and will complete it before the end of Financial Year 2018-19

For qualification on accounting ongoing concern basis:

On account of strategic understanding with suppliers/ customers, which is continuing, the Company is on revival mode and is operating some of its units. In view of the same going concern concept holds good. iii) Auditors Comments on (I) or (II) above

No further comments.

III Signatories:

Whole time Director : (Mr. Ram Sahay Jagetiya)
Chief Financial officer : (Mr. B. Girvanesh)
Audit Committee Chairman : (Mrs. Pratiksha Sonavane)
Statutory Auditor : (C. V. Parameswar)
(M/s Thakur, Vaidyanath Aiyar & Co. Chartered Accountants, Mumbai)
Place: Mumbai
Date: 29.05.2018