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Auditor Report of Phoenix Mills Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of The Phoenix Mills Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2016, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of 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 standalone 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 provision of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of the appropriate accounting policies; making judgements 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 fair 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 standalone 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 from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.

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. 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 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 standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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, and its profit and its cash flows for the year ended on that date.

Matter of Emphasis

We draw attention to Note no. 36 of the accompanying statement relating to the company''s investment in the equity shares of Entertainment World Developers Limited (EWDL) and the pending realization from EWDL against the put option exercised on Fully Convertible Debentures (FCDs) of Treasure World Developers Private Limited (TWDPL). The net worth of EWDL/ TWDPL has been eroded as per the latest unaudited accounts as at 31st March, 2014. For the reason stated in the aforesaid note, Board has estimated and made provision for impairment of the investment and amount due on the put option on FCD''s of Rs. 10,525,00,000 (including Rs. 2,100,00,000 for the current year) as at 31st March 2016, which is considered adequate.

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 appears from our examination of those books.

c) The Balance Sheet, Statement of Profit and Loss and 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, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of written representations received from the directors as on 31st March, 2016 taken on record by the Board of Directors, none ofthe directors is disqualified as on 31st March, 2016, 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".

g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rules 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 (b) to (f) to the financial statements.

ii) The Company did not have any material foreseeable losses on long-term contracts including derivative contracts that require provision under any law or accounting standards for which there were any material foreseeable losses.

iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

"Annexure A" to Independent Auditors'' Report referred to in Paragraph 1 under the heading of "Report on other legal and regulatory requirements" of our report of even date.

(i) In respect of its fixed assets :

a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets on the basis of available information.

b) As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

c) In our opinion and according to the information and explanations given to us, title deeds of immovable properties are held in the name of the company.

(ii) As Company had no Inventories during the year, clause (ii) of paragraph of 3 of the Order is not applicable to the Company.

(iii) The Company has not granted loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act. Therefore, the provision of Clause (iii) of paragraph 3 of the Order is not applicable to the Company.

(iv) In respect of loans, investments, guarantees and security, the Company has complied with the provisions of section 185 and 186 of the Act.

(v) According to the information and explanations given to us, the Company has not accepted any deposits within the meaning of provisions of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under. Therefore, the clause (v) of paragraph 3 of the Order is not applicable to the Company.

(vi) To the best of our knowledge and explanations given to us, the Central Government has not prescribed the maintenance of cost records under sub section (1) of Section 148 of the Act in respect of the activities undertaken by the Company.

(vii) In respect of Statutory dues :

a) According to the records of the Company, undisputed statutory dues including provident fund, employees'' state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues have been regularly deposited with appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues, were outstanding as at March 31, 2016 for a period of more than six months from the date they became payable.

b) According to the records of the Company and the information and explanations given to us, the disputed dues on account of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess amounting to Rs. 333,096,927/- that have not been deposited before appropriate authorities are as under :

Name of Note of Dues Amount in Period to which Forum where Statute Rupees the amount dispute is relates pending

Income Tax Income Tax 223,616,564 A.Y 2010-11 to CIT (Appeals) 1961 A.Y 2013-14

Income Tax Income Tax 89,172,431 A.Y 2004-05 to ITAT 1961 A.Y 2010-11

Service Tax

(Finance Act Service Tax 20,307,932 F.Y 2006-07 CESTAT 1994)

Total 333,096,927

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to a financial institution or bank or to government and dues to debenture holders of the company.

(ix) Accordingly to information and explanation given to us, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments) and in case of terms loans raised by the company has been applied for the purposes for which those are raised.

(x) Based on the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per 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 year.

(xi) In our opinion and according to the information and explanations given to us, 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 Act.

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

(xiii) In our opinion and according to the information and explanations given to us, all transactions with related parties are in compliance with sections 177 and 188 of the Act and their details have been disclosed in the financial statements etc., as required by the applicable accounting standards.

(xiv) In our opinion and according to the information and explanations given to us, the company has made qualified institutional placement of equity shares during the year under review. The Company has complied with requirements of section 42 of the Act and amount raised have been used for the purpose for which funds were raised.

(xv) In our opinion and according to the information and explanations given to us, the Company has not entered into any non-cash transaction with the directors or persons connected with him and covered under section 192 of the Act. Hence, clause (xv) of the paragraph 3 of the Order is not applicable to the Company.

(xvi) To the best of our knowledge and as explained, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For A. M. Ghelani & Company For Chaturvedi & Shah

Chartered Accountants Chartered Accountants

Registration No : 103173W Registration No : 101720W



Chintan A. Ghelani Jignesh Mehta

Partner Partner

Membership No.: 104391 Membership No.: 102749

Place: Mumbai Place: Mumbai

Date: 13th May, 2016 Date: 13th May, 2016


Mar 31, 2015

We have audited the accompanying financial statements of The Phoenix Mills Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of 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 standalone 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 provision of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of the appropriate accounting policies; making judgements 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 fair 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 from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. 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. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the 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 standalone 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 31st March, 2015, its profit and its cash flows for the year ended on that date.

Matter of Emphasis

We refer to Note no. 35 of the accompanying financial statements relating to the company's investment in equity shares of Entertainment World Developers Limited (EWDL) and the pending realization from EWDL against the put option exercised on Fully Convertible Debentures (FCDs) of Treasure World Developers Private Limited (TWDPL). For the reason stated in the aforesaid note, the provision of Rs.84,25,00,000/- made for diminution of the above investments is considered adequate at this stage.

Our opinion is not qualified in respect of this matter

Report on Other Legal and Regulatory Requirements

1 As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of section 143 of the Act (18 of 2013), we give in the Annexure, a statement on the matters specified in paragraph 3 and 4 of the Order.

2 As required under provisions of 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 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 written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of section 164(2) of the Act.

f) With respect to the other matters to be included in the Auditor's Report in accordance with Rules 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 the pending litigations on its financial position vide Notes 27 (b), (c), (d) and (f) to the financial statements.

ii) The Company did not have any long term contracts including derivative contracts that require provision under any law or accounting standards for which there were any material foreseeable losses.

iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.



Annexure referred to in paragraph 1 under the heading Report on other legal and regulatory requirements of our report of even date

i) In respect of its Fixed Assets :

a. The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets on the basis of the available information.

b. As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

ii) The Company did not have any inventory during the year under audit. Therefore, the provisions of Clause (ii) of paragraph 3 of the Order are not applicable to the Company.

iii) The Company has not granted any loans, secured or unsecured to companies, firm or other parties covered in the register maintained under Section 189 of the Act. Therefore, the provisions of Clause (iii) (a) and Clause (iii) (b) 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, there is an adequate internal control system commensurate with the size of the Company and nature of its business for the purchases of fixed assets and for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal control system.

v) According to the information and explanations given to us, the company has not accepted any deposits within the meaning of provisions of section 73 to 76 or any other relevant provisions of the Act and rules framed hereunder. Therefore, provisions of Clause (v) of paragraph 3 of the Order are not applicable to the company.

vi) To the best of our knowledge and as explained, the Central Government has not prescribed the maintenance of cost records under sub section (1) of Section 148 of the Act in respect of the activities undertaken by the Company.

vii) In respect of Statutory dues :

a. According to the records of the Company, undisputed statutory dues including Provident Fund, Employees' State Insurance, Income- Tax, Sales-Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and any other statutory dues have been regularly deposited with appropriate authorities.According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at March 31,2015 for a period of more than six months from the date of becoming payable.

b. According to the information and explanations given to us, there are no dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value added tax, Cess on account of any dispute, which have not been deposited excepting the following:-

Name of Note Amount in Period Forum Statute of Rupees to which where Dues the dispute amount is relates pending

Income Tax Act Income 193,91 1,510 2007-08 to CIT 1961 Tax 2012-13 (Appeals)

Income Tax Act Income 42,817,917 2004-05 to ITAT 1961 Tax 2011-12

Service Tax Service 40,615,864 2006-07 CESTAT (Finance Act 1994) tax

Total 277,345,291

c. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

viii) The Company does not have any accumulated losses at the end of the financial year. The company has not incurred any cash losses during the financial year covered by audit and in the immediately preceding financial year.

ix) According to the records examined by us and the information and explanation given to us, we are of the opinion that the company has not defaulted in re-payment of dues to financial institution and banks. The Company has not borrowed any funds by way of issue of debentures.

x) According to information and explanation given to us the Company has not given guarantee for loans taken by others from Banks or Financial Institutions during the year. Therefore, the provisions of clause (x) of paragraph 3 of the Order are not applicable to the Company.

xi) According to information and explanation given to us, we are of the opinion that the term loans raised during the year were applied for the purpose for which the loans were obtained.

xii) In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year.

For A. M. Ghelani & Company For Chatuvedi & Shah Chartered Accountants Chartered Accountants Registration No : 103173W Registration No : 101720W

Chintan A. Ghelani Amit Chaturvedi Partner Partner Membership No. 104391 Membership No. : 103141

Place: Mumbai Date: 28th May, 2015


Mar 31, 2014

We have audited the accompanying financial statements of Te Phoenix Mills Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for 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 Standards notifed under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Afairs in respect of Section 133 of the Companies Act, 2013. Tis responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair 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 conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Tose 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 disclosures in the financial statements. Te 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. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the efectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion.

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:

(i) in the case of the Balance Sheet, of the state of afairs of the Company as at March 31, 2014;

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

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Matter of Emphasis:

We draw attention to Note no. 35 of the financial statements relating to the company''s investment in equity shares of Entertainment World Developers Limited (EWDL) and the pending realization from EWDL against the put option exercised on Fully Convertible Debentures (FCDs) of Treasure World Developers Private Limited (TWDPL). Te networth of EWDL has been eroded as per the unaudited accounts as at 31st March, 2014. Te Company is of the opinion, for the reasons stated in the aforesaid note, that no provision is considered necessary toward the diminution in the value of the equity investments in EWDL as well as the dues towards the put option on the TWDPL FCDs from EWDL.

Our opinion is not qualifed in this matter.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor''s Report) Order 2003 ("the Order")issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by sub-section (3) of section 227 of the Act, we report that:

a. we have 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 appears from our examination of those books.

c. the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards notifed under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Afairs in respect of Section 133 of the Companies Act, 2013;

e. on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualifed as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

Annexure referred to in paragraph (1) under the heading Report on other legal and regulatory requirements of our Report of even date Re: Te Phoenix Mills Limited ("the Company")

1) In respect of its Fixed Assets: -

a) Te Company has maintained proper records showing the particulars and situation of its fixed assets.

b) According to the information and explanations given to us, the fixed assets were physically verifed by the management in accordance with the phased programme of verifcation, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. Te discrepancies noticed on physical verifcation were not material and have been properly dealt with in the books of accounts.

c) During the year, the Company has not disposed of any substantial part of the fixed assets.

2) Te Company does not have any inventory during the year under audit. Terefore, the provisions of clause (ii) of paragraph 4 the Order are not applicable to the Company.

3) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or parties covered in the register maintained under section 301 of the Companies Act, 1956: -

a) Te Company has granted unsecured loans [interest free as well as interest bearing] to 11 parties covered in the Register maintained under section 301 of the Companies Act, 1956. Te said Loans have been partly squared up during the year under report. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 4,520,605,162/- and the year-end balance is Rs. 3,595,521,142/-.

b) In our opinion and according to the information and explanations given to us, the terms and conditions of the said loans are not prima facie prejudicial to the interest of the Company.

c) As per the information and explanations given to us, the principal amounts and interest, wherever applicable, of the said loans are repayable on demand and there is no repayment schedule. Terefore the question of overdue amounts does not arise.

d) Te Company has not taken loans from any parties listed in the register maintained under section 301 of the companies act, 1956, and therefore requirements of Clauses (iii) (e), (iii) (f) and (iii) (g) of the paragraph 4 of the Order are not applicable.

4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control systems in respect of the above areas.

5) In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956, in our opinion and according to the information and explanations given to us, we state that:

a) the transactions made in pursuance of contracts or arrangements that needed to be entered in the register maintained under section 301 of the companies Act 1956 have been so entered.

b) these transactions have been made at prices which appear prima facie reasonable having regards to the prevailing market prices at the relevant time, as well as the information available with the Company.

6) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Terefore the provisions of clause (vi) of paragraph 4 of the Order are not applicable.

7) In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8) As per the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of the business activities conducted by the Company during the year.

9) a) As per the information and explanations given to us, the Company has generally been regular in depositing the undisputed statutory dues including Provident Fund, Service Tax and other statutory levies as applicable to the Company with the appropriate authorities and there were no undisputed amounts payable in respect of such dues which have remained outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable. In respect of the service tax liabilities as given in note no. 38, we are unable to comment as the matter is subjuidice.

b) Te disputed statutory dues aggregating to Rs. 218,363,930/- that have not been deposited on account of disputed matters pending before the appropriate authorities are as under:

Period to Forum which the where Name of Note of Amount in amount dispute is Statute Dues Rs. relates pending

Income Tax Income 196,176,277 A.Y 2004-05 CIT Act 1961 Tax to 2011-12 (Appeals)

Income Tax Income 233,455 A.Y 2004-05 ITAT Act 1961 Tax

Service Tax Service 20,307,932 2006-07 CESTAT (Finance tax Act 1994)

10) Te Company does not have accumulated losses at the end of the financial year. Te Company has not incurred cash losses in the financial year under report as well as in the immediately preceding financial year.

11) Based on our audit procedures and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions/banks. Te Company has not borrowed any funds by way of issue of debentures.

12) In our opinion, the company has maintained adequate documents and records where it has granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13) In our opinion, the Company is not a chit fund / nidhi / mutual benefit fund / society. Terefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

14) Te Company has maintained proper records of the transactions and contracts in respect of dealing in shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name except securities pledged with the banks/ financial institutions.

15) Te Company has given guarantees for loans taken by others from banks and financial institutions. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

16) Based on information and explanations given to us by the management, the term loans have been applied for the purpose for which they were raised.

17) According to the information and explanations given to us and the records examined by us, the funds raised on short term basis have prima facie, not been used during the year for long term investments.

18) Te Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19) Te Company has not issued any debentures. Terefore, the provisions of clause (xix) of paragraph 4 of the Order are not applicable.

20) Te Company has not raised any monies by way of public issues during the year.

21) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we have not come across any instance of material fraud on or by the Company, noted or reported during the course of our audit.

For A. M. Ghelani & Company For Chaturvedi & Shah

Chartered Accountants Chartered Accountants,

(Firm Registration (Firm Registration No.103173W) No.101720W)

Chintan A. Ghelani Amit Chaturvedi

Partner Partner

Membership No: 104391 Membership No: 103141

Place: Mumbai Date : 28th May, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of The Phoenix Mills Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2013'' the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for 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 Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair 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 conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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 disclosures in the financial statements. 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. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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:

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2013;

b) In the case of the Statement of Profit and Loss, of the Profit of the Company for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

a) As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

b) As required under provisions of section 227(3) of the Companies Act, 1956: we report that:

i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

ii) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii) 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;

iv) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the accounting standards referred to in subsection (3C) of section 211 of the Act;

v) on the basis of the written representations received from the directors as on 31st March, 2013 and taken on record, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of section 274(1)(g) of the Act.

Re: The Phoenix Mills Limited ("the Company")

1) In respect of its Fixed Assets: -

a) The Company has maintained proper records showing the particulars and situation of its fixed assets.

b) According to the information and explanations given to us, the fixed assets were physically verified by the management in accordance with the phased programme of verification, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books of accounts.

c) During the year, the Company has not disposed off any substantial part of the fixed assets.

2) The Company does not have any inventory during the year under audit. Therefore, the provisions of clause (ii) of paragraph 4 the Order are not applicable to the Company.

3) In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or parties covered in the register maintained under section 301 of the Companies Act, 1956: -

a) The Company has granted unsecured loans [interest free as well as interest bearing] to 9 parties covered in the Register maintained under section 301 of the Companies Act, 1956. The said Loans have been partly squared up during the year under report. In respect of the said loans, the maximum amount outstanding at any time during the year is Rs. 3,699,361,919 and the year-end balance is Rs. 2,585,816,333.

b) In our opinion and according to the information and explanations given to us, the terms and conditions of the said loans are not prima facie prejudicial to the interest of the Company.

c) As per the information and explanations given to us, the principal amounts and interest, wherever applicable, of the said loans are repayable on demand and there is no repayment schedule. Therefore the question of overdue amounts does not arise.

d) The Company has not taken loans from any parties listed in the register maintained under section 301 of the companies act, 1956, and therefore requirements of Clauses (iii) (e), (iii) (f) and (iii) (g) of the paragraph 4 of the Order are not applicable.

4) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets and for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal control systems in respect of the above areas.

5) In respect of contracts or arrangements referred to in section 301 of the Companies Act, 1956, in our opinion and according to the information and explanations given to us, we state that:

a) the transactions made in pursuance of contracts or arrangements that needed to be entered in the register maintained under section 301 of the companies Act 1956 have been so entered.

b) these transactions have been made at prices which appear prima facie reasonable having regards to the prevaling market prices at the relevant time, as well as the information available with the Company.

6) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. Therefore the provisions of clause (vi) of paragraph 4 of the Order are not applicable to the Company.

7) In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8) As per the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 in respect of the business activities conducted by the Company during the year.

9) a) As per the information and explanations given to us, the Company has generally been regular in depositing the undisputed statutory dues including Provident Fund, Service Tax and other statutory levies as applicable to the Company with the appropriate authorities and there were no undisputed amounts payable in respect of such dues which have remained outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable. In respect of the service tax liabilities as given in note no. 37, we are unable to comment as the matter is subjuidice.

b) The disputed statutory dues aggregating to Rs. 148,238354/- that have not been deposited on account of disputed matters pending before the appropriate authorities are as under:

Period to Forum which the where Name of Note of Amount in amount dispute is Statute Dues Rs. relates pending

Income Income 1,20,972,257 2003-04 CIT (Appeals) Tax Act Tax to 1961 2010-11

Central Excise 1,646,266 1986-87 Commissioner Excise Act. Duty to (Appeals) 1944 1992-93 - As directed by CEGAT

Service Tax Service 20,307,932 2006-07 CESTAT (Finance tax Act 1994)

10) The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses in the financial year under report as well as in the immediately preceding financial year.

11) Based on our audit procedures and explanations given to us, the Company has not defaulted in repayment of dues to financial Institutions/banks. The Company has not borrowed any funds by way of issue of debentures.

12) In our opinion and according to the information and explanations given to us, the Company has not granted loans/ advances on the basis of security by way of pledge of shares, debentures and other securities and therefore, the provisions of the clause (xii) of paragraph 4 of the Order are not applicable.

13) In our opinion, the Company is not a chit fund / nidhi / mutual benefit fund / society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.

14) The Company has maintained proper records of the transactions and contracts in respect of dealing in shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name except securities pledged with the banks/ financial institutions.

15) According to information and explanation given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions. Therefore, the provisions of clause (xv) of the Order are not applicable to the Company.

16) The Company has not raised new term loans during the year. Therefore, the provisions of clause (xvi) of the Order are not applicable to the Company.

17) According to the information and explanations given to us and the records examined by us, the funds raised on short term basis have prima facie, not been used during the year for long term investments.

18) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

19) The Company has not issued any debentures. Therefore, the provisions of clause (xix) of paragraph 4 of the Order are not applicable to the Company.

20) The Company has not raised any monies by way of public issues during the year.

21) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we have not come across any instance of material fraud on or by the Company, noted or reported during the course of our audit.

For A. M. Ghelani & Company For Chaturvedi & Shah

Chartered Accountants Chartered Accountants,

(Firm Registration (Firm Registration

No.103173W) No.101720W)

Chintan A. Ghelani Amit Chaturvedi

Partner Partner

Membership No: 104391 Membership No: 103141

Place: Mumbai

Date: 30th May, 2013


Mar 31, 2010

1. We have audited the attached Balance Sheet of THE PHOENIX MILLSLIMITED as at 31st March,2010,the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on ouraudit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards requirethatwe plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basisforouropinion.

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order,totheextentapplicabletothe Company.

4. Furtherto our comments in the Annexure referred to in paragraph 3 above we reportthat:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposesof ouraudit.

(b) In our opinion, the company has kept proper books of account as required by law so far as appearsfrom ourexamination of those books.

(c) The Balance Sheet, the Profit and Loss Account and the Cash flow Statement dealt with by this report are in agreement with the books of accounts.

(d) In our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt by this report are in compliance with the mandatory Accounting Standards referred to in Section 211(3C) ofthe Companies Act, 1956.

(e) On the basis of the written representations received from the directors as on 31st March 2010 and taken on record by the Board of Directors, we report that none of the directors are disqualified as on 31st March 2010 from being appointed as directors in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

(f) In ouropinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generallyacceptedinlndia:-

i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010;

ii) In the case of the Profit and Loss Account,of the Profit of the Companyfortheyearended on that date; and

iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Annexure to Auditors Report (Referred to in Paragraph 3 of our report of even date)

1) Inrespect of its Fixed Assets:-

a) The Company has maintained proper records showing the particulars and situation of its fixed assets.

b) According to the information and explanations given to us, the fixed assets were physically verified by the management in accordance with the programme of verification, which in our opinion, is reasonable having regard to the size of the Company and nature of its assets. The discrepancies noticed on physical verification were not material and have been properly dealt with in the books of accounts.

c) During the year, the Company has not disposed off anysubstantial part of thefixed assets.

2) a) According to the information and explanations

given to us, the stock of finished goods have been physically verified by the management at theendoftheyear. lnouropinion,thefrequency of verification is reasonable.

b) According to the information and explanations giventous,inouropinion,the procedures forthe physical verification of stocks followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and book records were not material, having regard to the size of the operations of the Company.

3) In respect of loans,securedorunsecured,grantedor taken by the company to/from companies, firms or parties covered in the register maintained under section 301of the CompaniesAct, 1956:-

a) The Company has granted unsecured loans to three wholly owned subsidiaries and two other companies covered in the Register maintained under section 301 of the Companies Act, 1956. In respect of the said loans, the maximum amount outstandingat anytime duringthe year is Rs. 2,67,37,81,922/-and the year-end balance isRs. 2,04,92,05,733/,

b) In ouropinion and accordingtothe information and explanations given to us, the terms and conditions of such loans given to the Wholly owned subsidiaries and to the other companies covered in the Register maintained undersection 301 ofthe Companies Act, 1956 are not prima facie prejudicial to the interest ofthe Company.

c) As per the information and explanation given to us, the principal amounts and interest, wherever applicable, of the said loans are repayable on demand and there is no repayment schedule. Therefore, the question of overdue amounts does notarise.

d) The company had not taken loans from any parties listed in the Register maintained under section 301ofthe CompaniesAct, 1956

4) In ouropinion and accordingto the information and explanations given to us, there is an adequate internal control system commensurate with the size ofthe companyand the nature of its business forthe purchase of inventory and fixed assets and also for the sale of goods and services. Duringthe course of our audit, we have not observed any continuing failure to correct major weaknesses in the internal controlsystemsinrespectoftheaboveareas.

5) In respect of transactions covered undersection 301 of the Companies Act, 1956, in our opinion and according to the information and explanations given to us;

a) The transactions made in pursuance of contracts or arrangements, that needed to be entered in the register maintained under section 301 ofthe Companies Act, 1956 have been so entered.

b) These transactions have been made at prices which are comparable to similar transactions entered into with other parties.

6) According to the information and explanations given to us, the company has not accepted any deposits from the public during the year. Therefore the provisions of clause (vi) of paragraph 4 of the order arenotapplicabletothecompany.

7) In our opinion, the company has an internal audit system commensurate with the size ofthe Company and the nature of its business.

8) As per the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 209(l)(d) ofthe CompaniesAct, 1956 in respect of the business activities conducted by the company duringthe year.

9) a) As perthe information and explanations given to us, the company has generally been regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax and Sales Tax with the appropriate authorities and there were no undisputed amounts payable in respect of such dues which have remained outstanding as at 31st March, 2010 for a period of more than six monthsfromthe date they became payable

b) The statutory dues that have not been deposited on account of disputes pending before the appropriate authorities are Excise duty amounting toRs. 1,13,76,598 for the period from 1986-87 to 1992-93 where the dispute is pending before The Commissioner (Appeals) as directed by CEGAT.

10) The Company does not have accumulated losses at the end of the financial year. The company has not incurred cash losses in the financial year under report as well as in the immediately preceding financial year.

11) As per the information and explanations given to us, the company has not defaulted in repayment of dues to financial Institutions/banks. The company has not borrowed any funds by way of issueof debentures.

12) According to the information and explanations given to us, the company has not granted loans/advances on the basis of security by way of pledge of shares, debentures and other securities and therefore, the provisions of the clause (xii) of paragraph 4 of the Orderarenotapplicable.

13) In ouropinion, the Company is not a chitfund/ nidhi/ mutual benefit fund / society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Order are notapplicable to the Company.

14) In our opinion, the company has maintained proper records of the transactions and contracts in respect of dealing in shares, securities and other investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name except the securities pledged with the banks/ financial institutions.

15) According to the information and explanations given to us and the records examined by us, the company has given a guarantee for loan taken by its subsidiary from financial institutions. In our opinion, based on the information and explanations given to us, the

terms and conditions of the same are prima facie not prejudicialtotheinterestofthecompany.

16) As per the information and explanations given to us, the term loans have prima facie, been applied forthe purpose forwhich they wereobtained.

17) According to the information and explanations given to us, and the records examined by us, the funds raised on shortterm basis have prima facie, not been used duringtheyearforlongterm investments.

18) According to the information and explanations given to us, the company has not made any preferential allotment of shares, during the year, to parties and companies covered in the Register maintained under section 301ofthe Companies Act, 1956.

19) The company has not issued any debentures and hence the question of creating any securities in respectthereof does notarise.

20) During the earlier year, the company had raised money by way of placement of equity shares to qualified institutions. We have verified the end use of the money raised as disclosed by the Management in the Notes to accounts.

21) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company has been noticed or reported duringtheyear.

For A. M. Ghelani & Company For Chaturvedi & Shah

Chartered Accountants Chartered Accountants



Chintan A. Ghelani Amit Chaturvedi

Partner Partner

Membership No: 104391 Membership No: 103141

Registration No: 103173W Registration No: 101720W

Place: Mumbai

Date: 28th July, 2010



 
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