Auditor Report of Sanghvi Forging & Engineering Ltd.

Mar 31, 2018

Report on the Standalone Financial Statements

We have audited the accompanying Standalone Financial Statements of SANGHVI FORGING & ENGINEERING LIMITED (“the Company”) which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss, the Cash Flow Statement and the Statement of Changes in Equity for the year 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 and presentation of these Standalone Financial Statements of the Company that give a true and fair view of the financial position and financial performance including Cash Flow Statement and the Statement of Changes in Equity of the Company in accordance with the Accounting principles generally accepted in India, including the Accounting Standards specified u/s 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS 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 Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS 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 Ind AS 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 opinion on whether the company has in place an adequate internal financial control system over financial reporting and operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the Ind AS 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 Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the statement of affairs of the Company as at March 31, 2018, and its Profit, its Cash Flows and the changes in equity for the year ended on that date.

Other Matter

The Comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as on April 1, 2016 prepared in accordance with Ind AS included in these Ind As financial statements have been audited by the predecessor auditor. The report of the predecessor auditor on comparative financial information and the said opening balance sheet dt. 29.05.2017 has expressed an unmodified opinion.

Our opinion on the financial statements and our report on Other Legal regulatory Requirements below is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), as amended, 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 purpose of our audit;

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

c. the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account

d. in our opinion, the aforesaid Standalone Ind AS financial statements comply with the Indian Accounting Standards specified under section 133 of the Act,

e. On the basis of written representations received from the directors as on March 31, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act.

f. With respect to the adequacy of the internal financial 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 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 Note No. 30 of the standalone financial statements

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

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

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

(b) As explained to us, the Fixed Assets are physically verified by the management at the year end, which in our opinion, is reasonable having regard to the size of the company and nature of its business and no material discrepancies have been noticed between the books records and the physical fixed assets.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company. The title deeds of immovable properties are Leasehold rights of Factory, Land and Building held by the company.

2) (a) The management has conducted the physical verification of inventory at reasonable intervals.

(b) The discrepancies noticed on physical verification of the inventory as compared to books records which has been properly dealt with in the books of account were not material.

3) The Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the Register maintained under section 189 of the Act. Accordingly, the provisions of clause 3 (iii) (a) to (c) of the Order are not applicable to the Company and hence not commented upon.

4) In our opinion and according to the information and explanations given to us, and as per the expert legal opinion obtained by the Company, the Company has not granted any loans, or provided any guarantees or security to the parties covered under section 185 and 186 of the Companies Act, 2013.

5) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

6) As per information & explanation given by the management, maintenance of cost records has been prescribed by the Central Government under- sub-section (1) of Section 148 of the Act, and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7) (a) According to information and explanations given to us and on the basis of our examination of the books of account, and records, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, employee state Insurance, Income-Tax, Sales tax, Service Tax, Goods and Service Tax, Duty of Customs, Duty of Excise, Value added Tax, Cess and any other statutory dues with the appropriate authorities except for delayed deposit of Provident fund and TDS dues in certain months and that no undisputed amounts payable in respect of the above were in arrears as at March 31, 2018 for a period of more than six months from the date on when they become payable.

(b) According to the information and explanation given to us, there are no dues of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax outstanding on account of any dispute are as follows:

Name of Statue	Name of Dues	Amount (Rs. in’000)	Period to which amount relates (FY)	Forum where dispute is pending
Income Tax Act, 1961	Income Tax	5282.61	10-11 11-12	ITAT, Ahmedabad
Central Excise Act, 1944	Service Tax	5165.93	2011-12 to 2015-16	CESTAT Ahmedabad
Central Excise Act, 1944	Service Tax	6335.02	2011-2014	CESTAT Ahmedabad
Central Excise Act, 1944	Excise Duty	2979.31	2011-12 to 2014-15	CESTAT Ahmedabad
Central Sales Tax Act, 1956	Sales Tax	7049.21	2010-11 to 2011-12	Asst. CCT (Appeal)

8) Based upon the audit procedures performed and the information and explanations given by the management, the company has defaulted in repayment of its loan and interest to the banks. Estimated instalments and interest due but not paid to the banks as at March 31 2018 aggregated to H21,82,72,680 (P.Y. H9,64,91,596) & interest thereon H20,68,09,060 (P.Y. H9,23,67,396) since July 2016.

9) Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of initial public offer or further public offer including debt instruments. According to the information and explanations provided to us, term loans availed by the company were, prima facie; applied for the purpose for which the loans were obtained.

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

11) Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals and resolutions mandated by the provisions of section 197 read with Schedule V to the Companies Act;

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

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

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

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

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

We have audited the internal financial controls over financial reporting of Sanghvi Forging & Engineering Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Ind AS 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 the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. 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 Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the 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, and to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential Components of Internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by Institute of Chartered Accountants of India.

For V. K. SHASTRI & CO.

Chartered Accountants

FRN: 113325W

CA. V. K. SHASTRI

Place: Vadodara (Sole- Proprietor)

Date: 30/05/2018 Membership No. : 042774

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Mar 31, 2016

INDEPENDENT AUDITORS REORT

To the Members of

SANGHVI FORGING & ENGINEERING LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of SANGHVI FORGING & ENGINEERING LIMITED which comprise the Balance sheet as at 31 March 2016 and the Statement of Profit and Loss, the Cash flow Statement for the year the 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 and presentation of these standalone financial statements of Company that give a true and fair view of the financial position and financial performance and cash flows of the company in accordance with the Accounting principles generally accepted in India, including accounting Standards specified u/s 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility 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 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 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 there under.

We conducted our audit in accordance with the Standards on Auditing specified u/s 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 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 control relevant to the company''s preparation of the financial statements that give 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 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 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 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 affairs of the company as at 31 March 2016;

(ii) In the case of the statement of profit and loss, of the Loss for the year ended on that date;

(iii) 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

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

b. In our opinion proper books of account as required by law have been kept by the company so far as 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 Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in section 133the Act, read with rule 7 of the Companies (Accounts) Rules, 2014

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

g. With respect to the matter 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 Note 2.25(1A) of the standalone financial statements.

ii. The Company did not have any long term contracts including derivatives contracts for which there were an material foreseeable losses;

iii. There is no such amount which is required to be transfer to the Investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under.

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

(b) As explained to us, fixed assets are physically verified by the management according to a phased programme designed to cover all items over a period of three year, which in our opinion, is reasonable, looking to the size of the company and its nature of business, and no material discrepancies were noticed on such verification.

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

ii. (a) As explained to us, Inventories has been physically verified during the year and at the year-end.

(b) In our opinion the procedures of physical verification of inventory 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. In our opinion and according to information given to us no major discrepancies noticed on physical verification of stocks as compared to book records.

iii. The Company has granted interest free unsecured loan to company covered in the register maintained under section 189 of the Act.

(a) As information given to us, the terms and conditions of grant of such loans is not prejudicial to the interest of the company.

(b) As information given to us, there is no stipulation of repayment of loan.

(c) Since there is no stipulation of repayment of loan, clause of the Order is not applicable.

iv. In our opinion and according to the information and explanations given to us, the Company has not given any Loans nor made any investments under the provisions of section 185 and 186 of the Act.

v. The Company has not accepted any deposits during the year from the public within the meaning of sections 73 & 74 of the Act and the rules framed there under to the extent notified.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to Rules prescribed by the Central Government under Section 148(1) of the Act and are of the opinion that, prima-facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanations given to us ,the company is generally regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, , service tax, duty of customs, duty of excise, value added tax or cess dues with the appropriate authorities. There are no undisputed amounts payable as at 31.03.2016 for a period of more than six months from the date they became payable.

viii. Based on our audit procedures and on the information and explanation given to us by management, the company has defaulted in repayment of its loan and interest to the banks. Estimated unpaid overdue installments and interest to banks as at March 31, 2016 aggregated to Rs.2,82,96,000/- & interest there on Rs.2,51,00,000/- since January 2016 (P.Y. Rs.1,1 1,18,000 & Interest thereon of Rs.17,67,000/- since February 2015).

(b) According to the information and explanation given to us, there are no dues of income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax or cess dues under dispute as on 31st March 2016 except Income Tax, Service Tax and Excise Duty dues:

Name of Statue	Nature of Dues	Amount (Rs. 000)	Period to which it relates (F.Y.)	Forum where the dispute is pending
Income Tax Act, 1961	Income Tax	282.61 5000.00	2012-13 to 2013-14	ITAT, Ahmedabad
Central Excise Act, 1944	Service Tax	1955.60	2007-08 to 2011-12	CESTAT Ahmedabad
Central Excise Act, 1944	Service Tax	7653.06	2007-08 to 2013-14	Asst. Commissioner of Central Excise, Custom & Service Tax Vadodara
Central Excise Act, 1944	Excise	2979.31	2011-12 to 2014-15	Additional Commissioner of Central Excise , Custom & Service Tax Vadodara
Central Sales Tax Act, 1956	Sales Tax	7104.84	2010-11 to 2011-12	Asst. CCT (Appeal)

ix. According to the information and explanations given to us , the term loan was applied for the purpose for which they were obtained.

x. During the course of our examination of the books and

records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

xi. In our opinion and according to the information and explanations given to us, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

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

xiii. In our opinion and according to the information and explanations given to us, the company has entered into transactions with related parties in compliance with Section 188 and 177 of Companies Act, 2013 where applicable and the details of such related party transactions have been disclosed in the financial statement as required by relevant Accounting Standards (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,2014.

xiv. According to the information and explanations given to us, The Company does not have made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable.

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 noncash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

We have audited the internal financial controls over financial reporting of SANGHVI FORGING & ENGINEERING LIMITED as of 31 March 2016 in conjunction with our audit Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") of the standalone 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 the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the 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 authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the 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 31 March 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Shah & Bhandari

Chartered Accountants

Firm No.: 1 18852W

Yogesh Bhandari

Place: Vadodara Partner

Date: 25th May, 2016 M.No.046255

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Mar 31, 2015

We have audited the accompanying financial statements of SANGHVI FORGING & ENGINEERING LIMITED which comprise the balance sheet as at 31 March 2015 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 and presentation of these standalone financial statements that give a true and fair view of the financial position and financial performance and cash flows of the company in accordance with the Accounting principles generally accepted in India, including accounting Standards specified u/s 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility 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 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 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 there under.

We conducted our audit in accordance with the Standards on Auditing specified u/s 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 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 control relevant to the company's preparation of the financial statements that give 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 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 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 above 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:

1) in the case of the balance sheet, of the state of affairs of the company as at 31 March 2015;

2) in the case of the statement of profit and loss, of the Loss for the year ended on that date;

3) 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

1. As required by the Companies (Auditor's Report) Order, 2015 ("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 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 obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion proper books of account as required by law have been kept by the company so far as 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 Balance Sheet and Statement of Profit and Loss comply with the Accounting Standards referred to in section 133 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 31 March 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015, from being appointed as a director in terms of section 164(2) of the Act.

f. With respect to the matter 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 Note 2.25(1A) of the standalone financial statements.

ii. The Company did not have any long term contracts including derivatives contracts for which there were an material foreseeable losses;

iii. There is no such amount which is required to be transfer to the Investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under.

Annexure to the Auditor's Report

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

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the company and its nature of business, and no material discrepancies were noticed on such verification.

2 (a) As explained to us, Inventories has been physically verified during the year and at the year-end.

(b) In our opinion the procedures of physical verification of inventory 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. As informed to us the discrepancies noticed on physical verification of stocks as compared to book records were not Material, however, the same have been properly dealt with in the books of account.

3 The company has granted Interest free unsecured loan to a company covered in the register maintained under section 189 of the Act.

(a) As information given to us, there is no stipulation of repayment of loan. Accordingly, clause of the Order is not applicable to the company in respect of repayment of the principal amount.

(b) Since there is no stipulation of repayment of loan, clause of the Order is not applicable.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. The Company has not accepted any deposits during the year from the public, within the meaning of the provisions of Section 73 & 74 of the Act and rules made there under.

6. We have broadly reviewed the cost records maintained by the Company pursuant to Rules prescribed by the Central Government under Section 148(1) of the Act and are of the opinion that, prima-facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

7. (a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, custom duty, excise duty, wealth tax and other material statutory dues applicable to it. And there are no undisputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no disputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2015 except Income Tax, Service Tax and Excise Duty dues:

Name of Statue Nature of Dues Amount (Rs. 000)

Income Tax Act, 1961 Income Tax 850.20 282.61 5000.00

Central Excise Act, 1944 Service Tax 1955.60

Central Excise Act, 1944 Service Tax 782.92

Central Sales Tax Act, 1956 Sales Tax 757.71

Central Sales Tax Act, 1956 Sales Tax 2031.44

Name of Statue Period to which Forum where the it relates dispute is pending

Income Tax Act, 1961 A.Y. 2008-09 CIT (Appeals) F.Y. 2011-12 A.Y. 2012-13

Central Excise Act, 1944 F.Y. 2007-08 CESTAT Ahmedabad F.Y. 2008-09 F.Y.2010-11 & F.Y. 2012-13

Central Excise Act, 1944 F.Y. 2007-08 Asst. Commissioner of F.Y. 2008-09 Central Excise, F.Y. 2009-10 Custom & F.Y. 2009-10 Service Tax Vadodara F.Y. 2010-11 F.Y. 2011-12 &

Central Sales Tax Act, 1956 F.Y. 2008-09 GAT, Tribunal, F.Y. 2009-10 Ahmedabad

Central Sales Tax Act, 1956 F.Y.2010-11 Asst. CCT (Appeal)

* Out of above Rs.1452.81 thousand paid under protest

(c) According to the information and explanation given to us, there is no such amount Which were required to be transferred to the Investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under.

8. The company does not have accumulated losses at the end of the financial year and has not incurred cash loss in the current year. However there is cash losses in the immediately preceding financial year.

9. Based on our audit procedures and on the information and explanation given to us by management, the company has defaulted in repayment of its loan and interest to the banks. Estimated unpaid overdue instalments and interest to banks as at March 31, 2015 aggregated to Rs.11118 thousand & Interest thereon of Rs.1767 thousand since February 2015 (P.Y. Rs.9666 thousand and interest thereon of Rs.1882 thousand since February 14).

10. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

11 According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

12. To the best of our knowledge and belief and according to information and explanation given to us no fraud on or by the company has been noticed or reported during the year under report.

For Shah & Bhandari Chartered Accountants FRN: 118852W

Yogesh Bhandari Place: Vadodara Partner Date : 29.05.2015 M.No.: 046255

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Mar 31, 2014

We have audited the accompanying financial statements of SANGHVI FORGING & ENGINEERING LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, 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

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 notified under the Companies Act, 1956 read with General circular 15/2013 dated 13 September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control 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 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 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 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 effectiveness 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 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 March 31,2014;

b) in the case of the Profit and Loss Account, of the loss 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

1. As required by the Companies (Auditor''s Report) Order, 2003 ("theOrder") 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 section 227(3) 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 purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the Company so far as 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 Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with General circular 15/2013 dated 13 September

2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of Companies Act,2013

e) on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified 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 TO THE AUDITOR''S REPORT (Referred to in paragraph 3 of our report of even date)

1 (a) The company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets .The fixed asset register is updated.

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the company and its nature of business, and no material discrepancies were noticed on such verification.

(c ) The company has not disposed off any substantial part of its fixed assets during the year, which can affect the going concern.

2 (a) As explained to us, Inventories has been physically verified during the year and at the year-end.

(b) In our opinion the procedures of physical verification of inventory 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. As informed to us the discrepancies noticed on physical verification of stocks as compared to book records were not Material, however, the same have been properly dealt with in the books of account.

3 (a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Hence, Clause (03)(a) to (d) of the Order are not applicable.

(e) The company has taken interest free unsecured loans from 14 parties (P.Y.12 parties) covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance is Rs. 375.33 Lac (P.Y. Rs. 303.46 Lac) and year-end balance is Rs. 268.70 Lac (P.Y. Rs. 303.46 Lac)

(f) In our opinion and information given to us the ,other terms and conditions of unsecured loans taken by the company, are not prima facie prejudicial to the interest of the company.

(g) As per information given and explanation given to us, there is no stipulation as regards to repayment of principal.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in (a) above and exceeding the value in Rs. 5 Lac with the parties during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits during the year from the public, within the meaning of the provisions of Section 58A & 58AA of the Companies Act, 1956 and rules made there under. Hence, clause (vi) of the order is not applicable.

7. In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima-facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, custom duty, excise duty and other material statutory dues applicable to it. However there are few installments of late payment of TDS and PF during the year.

(b) According to the information and explanations given to us, there are no disputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2014 for a period of more than six months from the date they became payable, except Income Tax, Service Tax and Excise Duty dues:

Name of Statue Nature of Due Amount Period to which it relates

Income Tax Act 1961 Income Tax 850.20 A.Y. 2008-09

928.34 A.Y. 2009-10 282.61 A.Y. 2011-12

Central Excise Act, 1944 Service Tax 915.36 f.Y. 2007-08, F.Y. 2008-09 & F.Y. 2010-11

Central Excise Act, 1944 Service Tax 346.14 F.Y. 2007-08, F.Y. 2008-09, F.Y. 2009-10 & F.Y. 2010-11

Central Excise Act, 1944 Service Tax 74.54 F.Y. 2011-12

Central Excise Act, 1944 Service Tax 520.12 F.Y. 2011-12

Central Sales Tax Act, 1956 Sales Tax 1902.23 F.Y. 2008-09 & F.Y. 2009-10

Name of Statue Forum where the dispute is pending

Income Tax Act 1961 CIT (Appeals)

Central Excise Act, 1944 Commissioner of Central Excise (Appeals)

Central Excise Act, 1944 Asst. Commissioner of Central Excise

Central Excise Act, 1944 Asst. Commissioner of Central Excise, Custom & Service Tax Vadodara-II

Central Excise Act, 1944 Additional Commissioner of Central Excise , Custom & Service Tax Vadodara-II

Central Excise Act, 1956 Asst. CCT (Appeal)

10. The company does not have accumulated losses at the end of the financial year and has incurred cash loss in the current year. However there is no cash losses in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanation given to us by management, the company has defaulted in repayment of its loan and interest to the banks. Estimated unpaid overdue interest and installments to banks as at March 31, 2014 aggregated to Rs. 115.47 lac since February 14, also in the repayment of term loan installment and interest there on amounting to Rs. 40.51 lac due in August 13 & Rs. 123.12 lac due in November 13 were paid in October 13 & January 14 respectively.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities of similar nature and hence maintenance of documents and records relating to such items are not applicable.

13. The clause (xiii) of the order is not applicable to the company, as the company is not a chit fund company or nidhi / mutual benefit fund/society.

14. The clause (xiv) of the order is not applicable to the company as the company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

18. The company has made preferential allotment of Rs. 60,00,000/-(6,00,000 equity shares of Rs. 10 each at a premium of Rs. 27.50/- per 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 hence clause (xix) of the order is not applicable.

20. The company has not raised any money by public issues hence clause (xx) of the order is not applicable to the company.

21. To the best of our knowledge and belief and according to information and explanation given to us no fraud on or by the company has been noticed or report- ed during the year under report.

For SHAH & BHANDARI Chartered Accountants FRN: 118852W

(Yogesh Bhandari) Place : Vadodara Partner Date : 26-05-2014 Membership No. 046255

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of SANGHVI FORGING & ENGINEERING LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, 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

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 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 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 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 March 31, 2013;

b) in the case of the Profit and Loss Account, of the profit 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

1. As required by the Companies (Auditor''s Report) Order, 2003 ("theOrder") 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 section 227(3) 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 purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the Company so far as 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 ofaccount.

d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

1 (a) The company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets .The fixed asset register is updated.

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the company and its nature of business, and no material discrepancies were noticed on such verification.

(c ) The company has not disposed off any substantial part of its fixed assets during the year, which can affect the going concern.

2 (a) As explained to us, Inventories has been physically verified during the year and at the year-end.

(b) In our opinion the procedures of physical verification of inventory 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. As informed to us the discrepancies noticed on physical verification of stocks as compared to book records were not Material, however, the same have been properly dealt with in the books of account.

3 (a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of he Act. Hence, Clause (03)(a) to (d) of the Order are not applicable.

(b) The company has taken unsecured loans from 12 parties (P.Y.14 parties) covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance is Rs.303.46Lacs (P.Y. Rs.347.20 Lacs) and year-end balance is Rs.303.46Lacs (P.Y. Rs.91.51 Lacs.)

(c) In our opinion and information given to us the rate of interest and other terms and conditions of loans taken by the company, secured or unsecured, are not prima facie prejudicial to the interest of the company.

(d) As per information given and explanation given to us, the payment of interest is regular and there is no stipulation as regards to repayment of principal.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in (a) above and exceeding the value in Rs.5 Lacs with the parties during the year have been made at process which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits during the year from the public, within the meaning of the provisions of Section 58A & 58AA of the Companies Act, 1956 and rules made there under. Hence, clause (vi) of the order is not applicable.

7. In our opinion, the internal audit functions carried out during the year by firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima-facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

9. (a) The company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, custom duty, excise duty and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no disputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2013 for a period of more than six months from the date they became payable, except Income Tax, Service Tax and Excise Duty dues:

Name of Statue Nature of Amount (Rs.''000) Period to which it relates Dues

Income Tax Act, 1961 Income Tax 856.49 A.Y. 2008-09

Income Tax Act, 1961 Income Tax 969.13 A.Y. 2009-10

Income Tax Act, 1961 Income Tax 848.01 A.Y. 2010-11

Central Excise Act, 1944 Excise Duty 776.34 F.Y. 2007-08 & F.Y. 2008-09

Central Excise Act, 1944 Service Tax 915.36 F.Y. 2007-08, F.Y. 2008-09 & F.Y. 2010-11

Central Excise Act, 1944 Service Tax 346.14 F.Y. 2007-08, F.Y. 2008-09, F.Y. 2009-10 & F.Y. 2010-11

Central Sales Tax Act, 1956 Sales Tax 807.10 F.Y. 2008-09

Name Forum where the dispute is pending

Income Tax Act, 1961 CIT (A)

Income Tax Act, 1961 CIT (A)

Income Tax Act, 1961 CIT (A)

Income Tax Act, 1961 Commissioner of Central Excise (Appeals)

Income Tax Act, 1961 Commissioner of Central Excise (Appeals)

Income Tax Act, 1961 Asst. Commissioner of Central Excise

Income Tax Act, 1961 Asst. CCT (Appeal)

10. The company does not have accumulated losses at the end of the financial year and has not incurred any cash losses in the current year as well as in the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanation given to us, we are of the opinion that the company has not defaulted in repayment of its dues to the banks.

12. The company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities of similar nature and hence maintenance of documents and records relating to such items are not applicable.

13. The clause (xiii) of the order is not applicable to the company, as the company is not a chit fund company or nidhi / mutual benefit fund/society.

14. The clause (xiv) of the order is not applicable to the company as the company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the company has not given any guarantee for loans taken by others from bank or financial institutions.

16. According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

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. Hence clause (xviii) of the order is not applicable.

19. The company has not issued any debentures hence clause (xix) of the order is not applicable.

20. The company has not raised any money by means of public issue during the year hence clause (xx) of the Order is not applicable to the company.

21. To the best of our knowledge and belief and according to information and explanation given to us no fraud on or by the company has been noticed or reported during the year under report.

For SHAH & BHANDARI Chartered Accountants

FRN: 118852W

(YOGESH BHANDARI)

Place : VADODARA PARTNER

DATE : May 28, 2013 Membership No. 046255

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Mar 31, 2012

We have audited the attached Balance Sheet of Sanghvi Forging and Engineering Ltd. as at March 31, 2012, the Profit and Loss Account and also the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit 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 basis for our opinion.

2. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 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.

3. Further to our comments in the Annexure referred to in paragraph 2 above, 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 purpose of our audit.

b) In our opinion, proper books of account, as required by the law, have been kept by the Company, so far as appears from our examination of those books.

c) The Balance Sheet, the Profit & Loss Account 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 Profit & Loss Account and the cash flow statement dealt with by this report comply with the mandatory Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act 1956

e) In our opinion, and based on information and explanation given to us, none of Directors are disqualified as on March 31, 2012 from being appointed as Directors in term of section 274(1)(g) of The Companies Act, 1956.

f) In our opinion 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 except for the classification of short term liability amounting to Rs.12,678.28 thousands classified as a long term liability resulting in understatement of short term liabilities and overstatement of long term liabilities by the said amount and classification of capital advances amounting to Rs. 67,009.22 thousands classified as short term loans and advances instead of long term loans and advances resulting in overstatement of short term loans and advances and understatement of long term loans and advances by the said amount, however it has no impact on state of affairs of the Company except classification which are contrary to the Schedule VI of Companies Act, and present a true and fair view in conformity with the accounting principles generally accepted in India:

(i) In so far as it is relates to Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

(ii) In so far as it relates to the Profit & Loss Account, the profit of the Company for the year ended on that date; and

(iii) In so far as it relates to the cash flow statement, of the cash flow of the Company for the year ended on that date.

ANNEXURE TO THE AUDITOR'S REPORT

(Referred to in paragraph 3 of our report of even date)

1 (a) The Company has maintained proper records showing

full particulars, including quantitative details and situation of its fixed assets. The fixed asset register is updated.

(b) As explained to us, fixed assets are physically verified by the management at the year-end, which in our opinion, is reasonable, looking to the size of the Company and its nature of business, and no material discrepancies were noticed on such verification.

(c) The Company has not disposed off any substantial part of its fixed assets during the year, which can affect the going concern.

2 (a) As explained to us, Inventories has been physically

verified during the year and at the year-end.

(b) In our opinion the procedures of physical verification of inventory 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. As informed to us the discrepancies noticed on physical verification of stocks as compared to book records were not Material, however, the same have been properly dealt with in the books of account.

3 (a) The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Hence, Clause (03)(a) to (d) of the Order are not applicable.

(b) The Company has taken unsecured loans from 15 parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum balance is Rs. 417.54 Lacs (P.Y. 448.51 Lacs) and year end balance is Rs. 161.51 Lacs (P.Y. 347.22 Lacs.)

(c) In our opinion and information given to us the rate of interest and other terms and conditions of loans taken by the Company, secured or unsecured, are prima facie prejudicial to the interest of the Company.

(d) As per information given and explanation given to us, the payment of interest is regular and there is no stipulation as regards to repayment of principal.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods and service. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

5. (a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements referred to in (a) above and exceeding the value in Rs. 5 Lacs with the parties during the year have been made at process which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has not accepted any deposits during the year from the public, within the meaning of the provisions of Section 58A & 58AA of the Companies Act, 1956 and rules made there under. Hence, clause (vi) of the order is not applicable.

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

8. We are informed that the Central Government has prescribed maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 and the Company has maintained the prescribed cost records.

9. (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, income tax, custom duty, excise duty and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, there are no undisputed amounts payable in respect of income tax, sales tax, customs duty, excise duty, as at 31.03.2012 for a period of more than six months from the date they became payable, except Income Tax, Service Tax and Excise Duty dues:

Name of Statue Nature of Dues Amount (Rs. '000)

Income Tax Act, 1961 Disallowances 856.49

Income Tax Act, 1961 Disallowances 969.13

Central Excise Act, Wrong availment of cenvat 776.34 1944 credit on capital goods

Central Excise Act, For Reversal Of Credit with 915.36 1944 respect to Service tax Credit of BAS on paid of Foreign Commission

Central Excise Act, Wrong availment of cenvat 346.14 1944 credit against input service like CHA agents etc.



Name of Statue Period to which Forum where the it relates dispute is pending

Income Tax Act, 1961 A.Y. 2008-09 CIT (A)

Income Tax Act, 1961 A.Y. 2009-10 CIT (A)

Central Excise Act, F.Y. 2007-08 & Commissioner of 1944 2008-09 Central Excise (Appeals)

Central Excise Act, F.Y. 2007-08, Commissioner of 1944 F.Y. 2008-09 & Central Excise F.Y. 2010-11 (Appeals)

Central Excise Act, F.Y. 2007-08, Asst. Commissioner of 1944 F.Y. 2008-09, Central Excise F.Y. 2009-10 & F.Y. 2010-11

10. The Company does not have accumulated losses at the end of the financial year and has not incurred any cash losses in the current year.

11. Based on our audit procedures and on the information and explanation given to us, we are of the opinion that the Company has not defaulted in repayment of its dues to the banks. The Company has not issued any debentures.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities of similar nature and hence maintenance of documents and records relating to such items are not applicable.

13. The clause (xiii) of the order is not applicable to the Company, as the Company is not a chit fund company or nidhi/mutual benefit fund/society

14. The clause (xiv) of the order is not applicable to the Company as the Company is not dealing or trading in shares, securities, debentures and other investments.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

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. Hence clause (xviii) of the order is not applicable.

19. The Company has not issued any debentures hence clause (xix) of the order is not applicable.

20. The Company has raised Rs. 39,95,19,040/- (4722004 equity shares of Rs. 10/- each at a premium of Rs. 75/- per shares) by means of public issue during the year and funds have been utilised for the purpose for which the issue was made.

21. To the best of our knowledge and belief and according to information and explanation given to us no fraud on or by the Company has been noticed or reported during the year under report.

For Shah & Bhandari Chartered Accountants FRN: 118852W

Yogesh Bhandari Partner Membership No. 046255

Place: VADODARA Date : 29/05/2012