Lanco Infratech Ltd Auditor Reports

To

The Members of Lanco Infratech Limited

Report on the Financial Statements

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

Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that 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 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.

Auditor’s 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 thereunder.

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 of 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. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s 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, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of Affairs of the Company as at March 31, 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

Attention is invited to

a) Note 50 to the financial statements, which explain the structuring undertaken by the management during the year ended March 31, 2012. The Company’s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to Rs.6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 96% in value, of the lenders consenting to the structuring, the management is confident of receiving balance approvals from lenders and customer and has taken the effect of these transfers while preparing these financial statements. In case any of these residual approvals are not granted, the management will have to revisit the structure and the consequential impact would then be recorded in these financial statements.

b) (i) Note 51 to the financial statements, regarding the adequacy of disclosure concerning the Company’s ability to meet its financial obligations, repayment of various loans and unpaid interest and the ability to fund various obligations pertaining to operations including unpaid/overdue creditors, for ensuring/commencing normal operations and further investments required towards ongoing projects. These matters essentially require the Company to garner such additional cash flows to fund and meet the requirements.

(ii) The Company incurred a Net Loss of Rs. 445 Crores for the year and has unpaid loans and other unpaid dues aggregating Rs. 1,447 Crores falling due over next twelve month period which also includes repayment of loans sanctioned under restructuring in respect of which, the Company obtained certain reliefs in relation to repayment timelines of loans and accumulation of unpaid interest and additional funding for commencing normal operations.

(iii) Certain variances in sanctioned/contracted terms under CDR scheme in regard to disbursements made and their utilization thereon, together with considerable delay in implementation of CDR scheme, eventually did not enable the Company to achieve the anticipated performance levels of operations at EPC. Incurrence of further losses and cost overruns in project companies due to delayed execution have been reported. As explained by the management, the Company commenced operations at EPC as well as at the projects which are under construction and in our view, there may be further delays in time lines agreed with project companies which may result in further cost overruns, which in turn may require the Company to arrange the funding for the additional cost. As further explained by the management, the Company is making efforts to reorganise the funding pattern to ensure the completion of under construction projects and disposal of assets to meet the funding gaps. These submissions and assertions by the management, are under evaluation by lenders which envisage that the Company will have the ability to garner the required cash flows, which have not been independently assessed by us.

(iv) Notwithstanding the efforts as stated above to meet the funding obligations which would involve time to materialise, these financial statements have been prepared based on the assumption, and considering the management assessment to get requisite further funding from various sources including additional funding from the lenders, disbursement of sanctioned facilities and the Company’s efforts in disposing assets. Relying on the above, no adjustments have been made in these financial statements towards any possible impact on account of low key operations and delayed execution of projects under implementation.

c) Note 52 to the financial statements, dealing with cancellation of coal blocks by the Hon’ble Supreme Court, which included coal mine jointly allotted to Tamil Nadu Electricity Board and Maharashtra State Mining Corporation Limited, the Allottees. Mahatamil Mining and Thermal Energy Limited (MMTEL), a subsidiary of the Company, entered into Coal Mining Services Agreement with the Allottees of the mine, pursuant to which, the amount invested amounting to Rs. 171.26 Crores, the realizability of which is dependent on the compensation to be awarded under the Ordinance issued by Government of India. The Company obtained a legal opinion in this regard based on which, the investment is considered to be recoverable and, hence no adjustments have been made in these financial statements.

d) Note 53 to the financial statements, in relation to the carrying value of assets held by step down subsidiaries of Lanco Resources International Pte Limited (LRIPL) a subsidiary of the Company, in view of continued losses exceeding net worth of LRIPL, considering the management’s initiatives to be implemented with significant financial resources to be deployed in the mining activity and the development of associated infrastructure, being the port, the management is of the view that the carrying value of the assets are realizable at the value stated therein. Accordingly, no adjustments have been made in these financial statements.

e) Note 54 to the financial statements, in relation to Lanco Kanpur Highways Limited (LKHL), a subsidiary of the Company, has received a notice of termination to the Concession Agreement from National Highways Authority of India (NHAI) and LKHL has also issued a notice of termination to NHAI. Arbitration proceedings have been initiated to settle the claims and the counter claims associated with the termination as per the Concession Agreement. As on March 31, 2016 LKHL has incurred certain costs towards the project, the realizability of these amounts is dependent on the outcome of the arbitration proceedings.

Our opinion is not qualified in the respect of the above matters.

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.

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 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) The matters described in the Clause (b) and Clause (d) of the Emphasis of Matter Paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of 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.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and operating effectiveness of such controls, refer to our separate report "Annexure B" and

h) With respect to the other matters to be included in the Auditor’s 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 No. 40 to the financial statements.

ii. The Company has made provisions, as required under applicable laws or accounting standards in respect of the material foreseeable losses on the long term contract. The Company did not have any long term derivative contracts.

iii. There are no amounts which were required to be transferred, to the Investor Education and Protection Fund by the Company.

	For Brahmayya & Co.,
	Chartered Accountants
	Firm’s Regn No. 000511S
	Lokesh Vasudevan
Place : Gurgaon	Partner
Date : May 27, 2016	Membership No. 222320

ANNEXURETO T HE INDEPENDENT AUDITOR’S REPORT

Annexure A to the Independent Auditor’s Report

Referred to in Clause 1 of "Report on Other Legal and Regulatory Requirements" Paragraph of the Independent Auditor’s Report of even date to the members of Lanco Infratech Limited on the financial statements as of and for the year ended March 31, 2016

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c) According to the information and explanations given to us and on the basis of our examination of records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on physical verification of inventory. In respect of inventories lying with third parties, these have substantially been confirmed by them.

(iii) According to the information and explanations given to us, the Company has not granted any loans secured or unsecured to Companies, Firms, Limited Liability Partnership or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Therefore, the provisions of clause (iii), (iii) (a), (iii) (b) and (iii) (c) of Paragraph 3 of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 with respect to the loans, advances and guarantee made. The provisions of Section 186 are not applicable to the Company.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148 (1) of the Companies Act, 2013 and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(vii) (a) The Company is regular in depositing the undisputed statutory dues including Provident Fund, Employee’s State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues with the appropriate authorities though there have been delays in some instances.

According to the information and explanations given to us, no undisputed statutory dues payable in respect of Provident Fund, Employee’s State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues with the appropriate authorities which were outstanding at the year end for a period of more than six months from the date they became payable except as follows: -

Name of the Statute	Nature of the Dues	Amount	Due Date	Date of Payment
		(Rs. in Crores)
The Building and Other Construction Workers Welfare Cess Act, 1996	Labour Building and Other Construction Workers Welfare Cess	0.25	FY 2012-13 to FY 2015-16	Yet to be remitted
Mines and Minerals (Development and Regulation) Act, 1957	Royalty and Seinerage	0.01	FY 2014-15 to FY 2015-16	Yet to be remitted.

(b) According to the records of the Company and the explanation and information given to us, the dues outstanding of income tax or sales tax or service tax or duty of custom or duty of excise or value added tax or cess, that have not been deposited, on account of dispute are as follows:

Name of the Statute	Nature of the Dues	Amount	Amount paid under Protest	Period to which the amount relates	Forum where dispute is pending
		(Rs. in Crores)	(Rs. in Crores)
Income Tax Act, 1961	Income Tax	1.97	-	Assessment year 2002-03	Honorable High Court- Hyderabad
Income Tax Act, 1961	Income Tax	2.26	-	Assessment Year 2003-04	Honorable High Court- Hyderabad
Income Tax Act,1961	Income Tax	2.06	-	Assessment Year 2003-04	Honorable High Court- Hyderabad
Income Tax Act, 1961	Income Tax	0.13	-	Assessment Year 2004-05	Honorable High Court- Hyderabad
Income Tax Act,1961	Income Tax	0.46	-	Assessment Year 2006-07	Honorable High Court- Hyderabad.
Income Tax Act, 1961	Income Tax	0.41	-	Assessment Year 2007-08	Honorable High Court- Hyderabad
Income Tax Act, 1961	Income Tax	11.85	-	Assessment year 2010-11	Commissioner of Income Tax (Appeals)
Income Tax Act, 1961	Income Tax	226.49	-	Assessment Year 2011-12	Dispute Resolution Panel- Hyderabad
Income Tax Act, 1961	Income Tax	0.48	-	Assessment year 2012-13	Commissioner of Income Tax (Appeals)
Income Tax Act, 1961	Income Tax	0.02	-	Assessment Year 2012-13	Commissioner of Income Tax (Appeals)
Income Tax Act,1961	Income Tax	0.00*	-	Assessment Year 2012-13	Dispute Resolution Panel- Hyderabad
Andhra Pradesh General Sales Tax Act 1956	Sales Tax	0.03	-	Financial Year 2001-02	The Sales Tax Appellate Tribunal, Hyderabad
Andhra Pradesh Tax on Entry of Goods Act 2001	Entry Tax	0.02	-	Financial Year 2007-08	Commercial Tax Officer, Begumpet
Tamil Nadu Value Added Tax Act 2006	Sales Tax (Including Penalty)	0.38	-	Financial Year 2007-08	The Appellate Deputy Commissioner, CT Chennai
Tamil Nadu Value Added Tax Act 2006	Value Added Tax	0.46	-	Financial Year 2007-08	Assistant Commissioner (CT), T. Nagar (East) Assessment Circle, Chennai
Bihar Value Added Tax Act, 2005	Sales Tax	1.08	-	Financial Year 2007-08	The Joint Commissioner of Commercial Taxes (Appeals) Central Division, Patna
Tamil Nadu Value Added Tax Act 2006	Value Added Tax	0.85	-	Financial Year 2008-09	Assistant Commissioner (CT), T. Nagar (East) Assessment Circle, Chennai
Andhra Pradesh Value Added Tax Act 2005	Sales Tax	0.01	-	Financial Year 2009-10	The Appellate Deputy Commissioner, CT. Panjagutta-Hyderabad
Tamil Nadu Value Added Tax Act 2006	Value Added Tax	17.18	-	Financial Year 2009-10	Assistant Commissioner (CT), T. Nagar (East) Assessment Circle, Chennai
Uttar Pradesh Value Added Tax Act, 2008	VAT	236.49	-	Financial Year 2009-10	Jt. Commissioner of Commercial Taxes, Varanasi Zone
Uttar Pradesh Value Added Tax Act, 2008	Entry Tax	3.40	-	Financial Year 2009-10	Jt. Commissioner of Commercial Taxes, Varanasi Zone
Tamil Nadu Value Added Tax Act 2006	Sales Tax	0.89	-	Financial Year 2010-11	Joint Commissioner (North) Chennai
Tamil Nadu Value Added Tax Act, 2006	Value Added Tax	49.78	-	Financial Year 2010-11	Assistant Commissioner (CT), T. Nagar (East) Assessment Circle, Chennai
West Bengal Value Added Tax, 2003	Value Added Tax	0.10	-	Financial Year 2010-11	Joint Commissioner of Commercial Taxes, CTO, Raiganj
Maharashtra Value Added Tax Act, 2002	Value Added Tax	0.12	-	Financial Year 2010-11	Assistant Commissioner of Commercial Taxes, Audit Wing – 2
Maharashtra Value Added Tax Act, 2002	Sales Tax	1.09	-	Financial Year 2010-11	Assistant Commissioner of Commercial Taxes, Audit Wing – 2
Maharashtra Value Added Tax Act, 2002	Sales Tax	20.47	-	Financial Year 2011-12	Dy. Commissioner of Sales Tax, Mumbai
Andhra Pradesh Value Added Tax Act, 2005	VAT	0.17	-	Financial Year 2010-11	Commercial Tax Officer, Begumpet
Gujarat Value Added Tax Act, 2003	Value Added Tax	1.06	-	Financial Year 2010-11	ACCT, Vyara, Gujarat
Uttar Pradesh Value Added Tax Act, 2008	VAT	194.25	-	Financial Year 2010-11	Jt. Commissioner of Commercial Taxes, Varanasi Zone
Uttar Pradesh Value Added Tax Act, 2008	Sales Tax	0.05	-	Financial Year 2010-11	Jt. Commissioner of Commercial Taxes, Varanasi Zone
Uttar Pradesh Value Added Tax Act, 2008	Entry Tax	0.60	-	Financial Year 2010-11	Jt. Commissioner of Commercial Taxes, Varanasi Zone
Tamil Nadu Value Added Tax Act, 2006	Value Added Tax	19.99	-	Financial Year 2011-12	Assistant Commissioner (CT), T. Nagar (East) Assessment Circle, Chennai
The Central Sales Tax Act, 1956	Central Sales Tax	0.20	-	Financial Year 2011-12	Assistant Commissioner (CT), T. Nagar (East) Assessment Circle, Chennai
Andhra Pradesh Value Added Tax Act, 2005	Penalty	0.06	-	Financial Year 2011-12	ACTO, Begumpet Circle, Hyderabad
Maharashtra Value Added Tax Act,2002	VAT	2.44	-	Financial Year 2011-12	Dy. Commissioner of Sales Tax, Mumbai
Uttar Pradesh Value Added Tax Act, 2008	VAT	54.28	-	Financial Year 2011-12	Jt. Commissioner of Commercial Taxes, Varanasi Zone
Uttar Pradesh Value Added Tax Act, 2008	Sales Tax	0.05	-	Financial Year 2011-12	Jt. Commissioner of Commercial Taxes, Varanasi Zone
Uttar Pradesh Value Added Tax Act, 2008	Entry Tax	1.10	-	Financial Year 2011-12	Jt. Commissioner of Commercial Taxes, Varanasi Zone
Tamil Nadu Value Added Tax Act, 2006	Value Added Tax	3.80	-	Financial Year 2012-13	Assistant Commissioner (CT), T. Nagar (East) Assessment Circle, Chennai
Madhya Pradesh Value Added Tax Act, 2002	Sales Tax	0.26	-	Financial Year 2012-13	Additional Commissioner of Commercial Taxes, Jabalpur Division.
Tamil Nadu Value Added Tax Act, 2006	Value Added Tax	0.11	-	Financial Year 2013-14	Assistant Commissioner of Commercial Taxes, T. Nagar East Assessment Circle, Chennai
Madhya Pradesh Value Added Tax Act, 2002	Sales Tax	2.76	-	Financial Year 2013-14	Additional Commissioner of Commercial Taxes, Jabalpur, Division 1
The Finance Act, 1994	Service Tax	0.14	-	April 2005 - March 2008	CESTAT, Bengaluru
The Finance Act, 1994	Service Tax	15.47	-	April 2005 - March 2008	CESTAT, Hyderabad
The Finance Act, 1994	Service Tax	0.16	-	June 2005 - August 2008	CESTAT, Bengaluru
The Finance Act, 1994	Service Tax	15.58	2.66	June 2007- March 2008	CESTAT, Bengaluru
The Finance Act, 1994	Service Tax	3.86	-	June 2007- July 2008	CESTAT, Bengaluru
The Finance Act, 1994	Service Tax	0.01	0.01	April 2008 - March 2009	CESTAT, Hyderabad
The Finance Act, 1994	Service Tax	6.58	-	April 2008 - June 2009	CESTAT, Hyderabad
The Finance Act, 1994	Service Tax	0.38	0.38	July 2008- September 2009	CESTAT, Bengaluru
The Finance Act, 1994	Service Tax	0.00**	-	April 2008 - March 2009	The Commissioner-Delhi
The Finance Act, 1994	Service Tax	8.98	-	July 2009- March 2010	CESTAT, Hyderabad
The Finance Act, 1994	Service Tax	0.11	-	October 22, 2009 - February 28, 2011	CESTAT, Bengaluru
The Finance Act, 1994	Service Tax	64.42	-	April 2010 - March 2011	The Commissioner-Gurgaon
The Finance Act, 1994	Service Tax	0.48	-	March 2011 - March 2012	The Commissioner-Delhi
The Finance Act, 1994	Service Tax	18.02	-	April 2011 - March 2012	The Commissioner-Gurgaon
The Finance Act, 1994	Service Tax	6.01	-	April 2012 - March 2013	The Commissioner-Gurgaon
The Finance Act,1994	Service Tax	0.23	-	April 2013-March 2014	The Commissioner, Delhi

*Case is pending with Dispute Resolution Panel - refer Note 40(A).

**Amount involved is Rs. 16,927.

(viii) According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of principal of Rs.42.33 Crores to the lenders as on the reporting date. Details of default to the Banks and Financial Institutions are as follows:

		(Rs. Crores)
Sl. No.	Bank	Amount
1.	Allahabad Bank	3.75
2.	Andhra Bank	1.52
3.	Bank of Baroda	1.08
4.	Bank of Maharashtra	3.21
5.	Canara Bank	1.71
6.	Central Bank of India	6.47
7.	Corporation Bank	0.52
8.	Dena Bank	1.60
9.	ICICI Bank	3.20
10.	IDBI Bank	2.75
11.	Kotak Mahindra Bank	0.45
12.	Indian Overseas Bank	4.22
13.	Jammu and Kashmir Bank	0.47
14.	Oriental Bank of Commerce	1.56
15.	Punjab and Sind Bank	0.30
16.	Punjab National Bank	3.23
17.	State Bank of Bikaner and Jaipur	0.24
18.	State Bank of Hyderabad	0.24
19.	State Bank of India	1.55
20.	State Bank of Patiala	1.80
21.	Union Bank of India	0.59
22.	United Bank of India	1.02

 

Sl. No.	Financial Institution	Amount
1.	Life Insurance Corporation	0.85

(ix) Based on the information and explanations given to us by the management, term loans disbursed, including Priority Loan under CDR scheme have been utilized for the purposes of CDR Scheme cash flows envisaged as approved by the lenders under the CDR package.

(x) According to the information and explanations given to us, no fraud by the Company or on the Company by its Officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us and based on our examination of records of the Company, the Company has paid/provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V of the Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi company. Accordingly, the provisions of clause (xii) of the paragraph 3 of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties, prima facie are in compliance with sections 177 and 188 of the Act, where applicable, and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with directors. Accordingly, clause (xv) of the paragraph 3 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. Therefore, the provision of clause (xvi) of the paragraph 3 of the Order is not applicable to the Company.

	For Brahmayya & Co.,
	Chartered Accountants
	Firm’s Regn No. 000511S
	Lokesh Vasudevan
Place : Gurgaon	Partner
Date : May 27, 2016	Membership No. 222320

Annexure B to the Independent Auditor’s 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 Lanco Infratech Limited ("the Company") as of March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on "Guidance Note on Audit of Internal Financial Controls Over Financial Reporting as issued by The Institute of Chartered Accountants of India & Standard Operating Procedures as adopted by the Company". 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 Company’s 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 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 Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s 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 company’s 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 company’s 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, 2016, based on "Guidance Note on Audit of Internal Financial Controls Over Financial Reporting as issued by The Institute of Chartered Accountants of India & Standard Operating Procedures as adopted by the Company"

	For Brahmayya & Co.,
	Chartered Accountants
	Firm’s Regn No. 000511S
	Lokesh Vasudevan
Place : Gurgaon	Partner
Date : May 27, 2016	Membership No. 222320
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