Auditor Report of Cimmco Ltd.

Mar 31, 2018

Report on the Indian Accounting Standards (Ind AS) Financial Statements

1. We have audited the accompanying Ind AS financial statements of CIMMCO LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement ofChanges in Equityfor the year then ended, and a summary ofthe significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS Financial Statements

2. 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 Ind AS financial statements to give a true and fair view ofthe financial position, financial performance (including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards specified in the Companies (Indian Accounting Standards) Rules, 2015 (as amended) under Section 133 ofthe Act. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions ofthe Actforsafeguarding ofthe assets ofthe 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 ofadequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness ofthe accounting records, relevant to the preparation and presentation ofthe Ind AS financial statements that give a true and fairview and arefree from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

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

4. We have taken into account the provisions ofthe Act and the Rules made thereunder including the accounting and auditing standards and matters which are required to be included in the audit report under the provisions ofthe Act and the Rules made thereunder.

5. We conducted our audit ofthe Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act and other applicable authoritative pronouncements issued by the Institute of Chartered Accountants of India. Those Standards and pronouncements require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.

6 An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditors’judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due tofraud 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. 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 ofthe Ind AS financial statements.

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

Basis for qualified opinion

8. We draw your attention to Note 6 (a) to the Ind AS financial statements regarding certain claims amounting to Rs. 854.81 lacs (Rs. 854.81 lacs as at March 31,2017) net ofexpected credit loss of Rs. 3,097.53 lacs (Rs. 3,097.53 lacs as at March 31,2017), which has been considered good and recoverable by the management. Pending outcome of the Company’s appeal against the arbitration order and final decision ofthe Hon’ble High Court of Delhi, we are unable to comment on the recoverability of the above, and its consequential impact on these Ind AS financial statements.

Qualified Opinion

9. 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 except for the indeterminate effects of the matter referred to in Basis for Qualified Opinion paragraph above, give a true and fairview in conformity with the accounting principles generally accepted in India, ofthe state of affairs ofthe Company as at March 31,2018, and its total comprehensive income (comprising of loss and other comprehensive income), its cash flows and the changes in equityfor theyear ended on that date.

Emphasis of Matter

10. The Ind AS financial statements for theyear ended March 31,2017 have been revised by the management to include thefinancial information ofTitagarh Agrico Private Limited consequent to its amalgamation with the Company with effect from April 1, 2016, the appointed date, pursuant to the Order of National Company Law Tribunal dated October 16,2017 as referred to in Note41 to the Ind AS financial statements. Ouropinion is not modified in respect ofthis matter.

Other Matter

11. The Ind AS financial statements ofthe Company and Titagarh Agrico Private Limited (amalgamated with the Company with effect from April 1,2016as referred to in paragraph 10above) for theyearended March 31,2017, were audited by anotherfirm ofchartered accountants under the Companies Act, 2013 who, vide their reports dated May 18,2017, expressed a modified and an unmodified opinion respectively on those financial statements. Our opinion is not modified in respect ofthis matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor’s Report) Order, 2016, issued by the Central Government of India in terms ofsub-section (11)ofsection 143 of the Act (“the Order”), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order.

13. As required by Section 143 (3) ofthe Act, we report that:

(a) We have sought and except for the indeterminate effects ofthe matter referred to in the Basis for Qualified Opinion paragraph above, 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, exceptfor the indeterminate effects ofthe matter referred to in the Basis forQualified Opinion paragraph above, proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination ofthose books.

(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the Statement ofChanges in Equity dealt with by this Report are in agreement with the books ofaccount.

(d) In our opinion, except for the indeterminate effects of the matter referred to in the Basis for Qualified Opinion paragraph above, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 ofthe Act.

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

(f) The qualification relating to the maintenance ofaccounts and other matters connected therewith are as stated in the Basis forQualified Opinion paragraph above.

(g) With respect to the adequacy ofthe internal financial controls with reference to financial statements ofthe Company and the operating effectiveness ofsuch controls, refer to our separate Report in Annexure A.

(h) With respect to the other matters to be included in the Auditors’Report in accordance with Rule 11 ofthe Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us:

i. The Company has disclosed the impact, if any, of pending litigations as at March 31, 2018 on its financial position in its Ind AS financial statements - Refer Note 34 to the Ind AS financial statements.

ii. The Company has long-term contracts as at March 31, 2018 for which there were no material foreseeable losses. The Company did not have any derivative contracts as at March 31, 2018.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during theyearended March 31,2018.

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable to the Company for theyearended March 31,2018.

ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT

Referred to in paragraph 13(g) of the Independent Auditors’ Report of even date to the members of Cimmco Limited on the Ind AS financial statements as of and for the year ended March 31,2018

Report on the Internal Financial Controls with reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Act

1. We have audited the internal financial controls with reference to financial statements of CIMMCO 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

2. 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 ofinternal 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 ofthe accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on the Company’s internal financial controls with reference to financial statements 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 deemed to be prescribed under section 143(10) ofthe Act 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 ICAI. 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 with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, 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 orerror.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Company’s internal financial controls system with reference tofinancial statements.

Meaning of Internal Financial Controlswith reference to financial statements

6. A company’s internal financial controls with reference tofinancial statements 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 controls with reference to financial statements 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 ofthe assets ofthe 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 ofthe company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financial statements

7. Because ofthe inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion orimpropermanagementoverrideofcontrols, material misstatementsdueto errororfraud may occurand not bedetected.Also, projections of any evaluation ofthe internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Basis for Qualified Opinion

8. According to the information and explanations given to us and based on our audit, the following material weakness has been identified in the operating effectiveness ofthe Company’s internal financial controls with reference to financial statements as at March 31,2018:

The Company’s internal financial controls relating to review of Claims Receivable for appropriate provisioning did not operate effectively which resulted in non-ascertainment of adequate provision against certain Claims Receivable due from a customer (Refer the Basis for Qualified Opinion paragraph in the main audit report).

9. A’material weakness’is a deficiency, ora combination of deficiencies, in internal financial controls with reference tofinancial statements, such that there is a reasonable possibility that a material misstatement of Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Qualified Opinion

10. In our opinion, except for the effects of the material weakness described in the Basis for Qualified Opinion paragraph above, the Company has, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements 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 ofinternal control stated in the Guidance Note on Audit oflnternal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

11. We have considered the material weakness identified and reported above in determining the nature, timing and extent ofaudit tests applied in ouraudit ofthe Ind AS financial statements ofthe Companyfortheyearended March 31,2018, and the material weakness has affected our opinion on the Ind AS financial statements ofthe Companyfor theyear ended on that date and we have issued a qualified opinion on the Ind AS financial statements of the Company (Refer paragraph 9 of the main audit report).

Annexure B to Independent Auditors’ Report

Referred to in paragraph 12 of the Independent Auditors’Report of even date to the members of Cimmco Limited on the Ind AS financial statementsasofandfortheyear ended March 31,2018

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

(b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period ofthreeyears which, in our opinion, is reasonable having regard to the size ofthe Company and the nature ofits assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

(c) The title deeds of immovable properties, as disclosed in Note 3(i) on property, plant and equipment and Note 3(ii) on investment properties to the Ind AS financial statements, are held in the name of the Company, except for the following [details of which are set out in Notes 3(i) and 3 (ii) to the Ind AS financial statements]:

No. of cases	Particulars	Gross Block (Rs. in lacs)	Net Block (Rs. in lacs)	Remarks
1	Freehold Land	4,734.83	4,734.83	Original copy oftitle deeds not available with the Company
2	Investment Properties - Freehold Land	821.24	821.24	Original copy of title deeds not available with the Company

ii. The physical verification of inventory (excluding stocks with third parties) have been conducted at reasonable intervals by the Management during theyear. In respect of inventory lying with third parties, these have substantially been confirmed by them.The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii. 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 ofthe Act. Therefore, the provisions ofClause 3(iii), (iii)(a), (iii)(b) and (iii)(c) ofthe said Order are not applicable to the Company.

iv. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions ofSection 185 and 186 ofthe Companies Act, 2013 in respect ofthe loans and investments made, and guarantees and security provided by it, as applicable.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73, 74, 75 and 76 ofthe Act and the Rules framed there under to the extent notified.

vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination ofthe records with a view to determine whether they are accurate or complete.

vii. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect ofincome tax, service tax, value added tax, provident fund, duty of customs and goods and service tax with effect from July 1,2017, though there has been delay in a few cases, and is regular in depositing undisputed statutory dues, including employees’state insurance, sales tax, duty of excise, cess and other material statutory dues, as applicable, with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of service-tax, value added tax and goods and service tax which have not been deposited on account of any dispute. The particulars of dues of income-tax, sales tax, duty ofcustoms, duty ofexcise and as at March 31,2018which have not been deposited on account ofadispute, are as follows:

Name of the Statute	Natureof Dues	Amount (Rs. in lacs)	Period to which the amount relates	Forum where dispute is pending
The Central Excise Act, 1944	Excise duty	126.27 19.68 42.96 4.86 5.93	1989-1994 1999-2001 January2011 to March 2015 2011-12 April 2015to December 2016	High Court CESTAT Commissioner of Central Excise (Appeal) Commissioner of Central Excise Assistant Commissioner Central Excise
The Customs Act, 1962	Customs duty	32.17 20.00 30.63	2004-2005 2000-2001,1985-1987 1992-93	CESTAT Additional/Deputy Director of Enforcement Additional Commissioner Customs
The Rajasthan Sales TaxAct	Sales tax	154.25	2013-2014	Appellate Authority, Commercial Taxes
The Orissa Sales Tax Act	Sales tax	117.60	1999-2001	High Court
The Income-tax Act, 1961	Income tax	73.98	2004-2005	Income Tax Appellate Tribunal

viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government or dues to debenture holders, as applicable, as atthe balance sheet date.

ix. In our opinion, and according to the information and explanations given to us, the moneys raised by way of term loans have been applied, on an overall basis, for the purposes forwhich they were obtained. The Company has not raised any moneys by way of initial public offer and further public offer (including debt instruments).

x. During the course of our examination ofthe 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 oron the Company by its officers or employees, noticed or reported during theyear, nor have we been informed ofany such case by the Management.

xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule VtotheAct.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014are not applicable to it, the provisions ofClause 3(xii) ofthe Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of related party transactions have been disclosed in the Ind AS financial statements as required under Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act.

xiv. The Company has not made any preferential allotment or private placement ofshares orfully or partly convertible debentures during theyear under review. Accordingly, the provisions ofClause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions ofClause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered underSection 45-IA ofthe Reserve BankofIndia Act, 1934. Accordingly, the provisions ofClause 3(xvi) of the Order are not applicable to the Company.

For Price Waterhouse & Co Chartered Accountants LLP

Firm Registration Number: 304026E/E-300009

Chartered Accountants

Avijit Mukerji

Place: Kolkata Partner

Date: May 29,2018 Membership No.: 056155

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Mar 31, 2017

To the Members of CIMMCO LIMITED

Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements of Cimmco Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Ind AS 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 Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control 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 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 in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 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 controls 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. 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 Ind AS financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Ind AS financial statements.

Basis for qualified opinion

We draw attention to note no. 6(a) regarding lease rent receivable from Indian Railways of Rs. 854.81 lacs (Rs. 759.83 lacs as at March 31, 2016), net of expected credit loss amounting to Rs. 3097.53 lacs, measured and recognized as on the date of transition based on the management''s estimate of time for final outcome of the matter in Court/Arbitration proceedings and adjusted with opening retained earnings. Pending outcome of Company''s appeal against the arbitration order and final decision of the Court, we are unable to comment on recoverability of the above, and its consequential impact on these financial statements. Our audit opinion on the financial statements for the year ended March 31, 2016 was also modified on this matter.

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, 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 state of affairs of the Company as at March 31,2017, of its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to Note 40 to the financial statements in respect of Scheme of Amalgamation to merge the business of Titagarh Agrico Private Limited with the Company with effect from 1st April, 2016 subject to necessary approvals, more fully described therein. Pending completion of necessary approvals, no adjustment has been made in these financial statements. 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, 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 1 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 except for the matter described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

(b) Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph, 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 including the Statement of Other Comprehensive income, Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid Ind AS financial statements comply with the Accounting Standards specified under section 133 of the Act, Companies (Indian Accounting Standards) Rules, 2015, as amended ;

(e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;

(f) On the basis of written representations received from the directors as on March 31,2017, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2017, from being appointed as a director in terms of section 164 (2) of the Companies Act, 2013;

(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

(h) 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 2" to this report;

(i) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements - Refer Note 15(b)(i)and 33 to the Ind AS 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.

iv. The Company has provided requisite disclosures in Note 35 to these Ind AS financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8,2016 to December 30,2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including Specified Bank Notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management.

ANNEXURE 1 TO THE AUDITOR''S REPORT

Referred to in our report of even date to the members of CIMMCO LIMITED as at and for the year ended March 31,2017

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the title deeds of immovable properties included in property, plant and equipment and investment property are held in the name of the company except for 3 numbers of freehold land aggregating to gross block and net block of Rs. 5,556.07 lacs as at March 31,2017 for which original registered sale deed/conveyance deed/transfer deed /assignment deed were not available with the Company and we have been provided with the photo copies of the same. Hence, we are unable to comment on the same. Further, above includes freehold land aggregating to Rs. 2,345.80 lacs for which a dispute was raised by a third party for the title of the land which is pending resolution in the Hon''ble Supreme Court of India as at March 31, 2017. Also refer note 3(i)(a) and 3(i)(b) of the financial statements.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted in respect of which provisions of section 185 and 186 of the Companies Act, 2013are applicable and hence not commented upon.

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

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, related to the manufacture of wagons and engineering products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, done a detailed examination of the same.

(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income tax, sales-tax, service tax, customs duty, excise duty, value added tax and cess on account of disputes are as follows:

Name of the Statute	Nature of Dues	Amount (Rs. in lacs)	Period to which the amount relates	Forum where dispute is pending
The Central Excise Act, 1944	Incorrect availment of cenvat credit, non-payment of excise duty/non- maintenance of separate records for common inputs and input services used for production of exempted and non-exempted excisable products/non- inclusion of value of free supply in the assessable value/non-compliance with Rule6(3A) etc.	2211.47	1986,1999-2000 and 2011-15	Hon''ble CESTAT, Delhi
		126.28	1989-1994	Hon''ble High Court, Gwalior
		46.44	2010-2011 and 2011-2015	Additional Commissioner of Central Excise, Jaipur
The Customs Act, 1962	Differential Customs Duty, Penalty for non-submission of necessary documents for consumption of imported goods	32.17	2004-2005	Hon''ble CESTAT, Delhi
The Customs Act, 1962	Differential Customs Duty, Penalty for non-submission of necessary documents for consumption of imported goods.	20.00	2000-2001 1986-1987	Additional/Deputy Director of Enforcement
The Rajasthan Sales Tax Act	Differential Sales Tax	173.00	1997-1998	Rajasthan Tax Board
The Orissa Sales Tax Act	Differential Sales Tax / Entry Tax/Penalty	147.04	1999-2001 to 2000-2001	Deputy Commissioner of Commercial Taxes

(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowings to a bank. The Company did not have any outstanding loans or borrowing dues in respect of a financial institution or to government or dues to debenture holders during the year.

(ix) According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer / debt instruments and term loans hence, reporting under clause (ix) is not applicable to the Company and hence not commented upon.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the company or no fraud on the company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013whereapplicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the company and, not commented upon.

(xv) According to 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 as referred to in section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

ANNEXURE 2 TO THE INDEPENDENT AUDITOR''S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF CIMMCO LIMTED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3ofSection 143oftheCompaniesAct, 2013("the Act")

We have audited the internal financial controls over financial reporting of CIMMCO LIMITED ("the Company") as of March 31, 2017, in conjunction with our audit 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 controls 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 the 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified 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.

An 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 controls 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 qualified audit opinion on the internal financial controls 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weakness has been identified as at March 31,2017:

Attention is drawn to Basis for qualified opinion paragraph of Auditors'' Report on Standalone Financial Statements more fully described therein, regarding lease rent receivable from Indian Railways of Rs 854.81 lacs (Rs 759.83 lacs as at March 31,2016), net of expected credit loss amounting to Rs. 3097.53 lacs, measured and recognized as on the date of transition based on the management''s estimate of time for final outcome of the matter in Court/Arbitration proceedings and adjusted with opening retained earnings. Pending outcome of Company’s appeal against the arbitration order and final decision of the Court, we are unable to comment on the recoverability of the above, and its consequential impact on these financial statements. This could potentially result in misstatement of Company’s other financial assets.

A ‘material weakness’s a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company''s annual or interim financial statements will not be prevented or detected on a timely basis. In our opinion, the Company has, in all material respects, maintained adequate internal financial controls over financial reporting as of March 31, 2017, 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 Auditor Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India, and except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company''s internal financial controls over financial reporting were operating effectively as of March 31,2017.

We also have audited, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act, the financial statements of Cimmco Limited, which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. Material weakness as described above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the March 31,2017 standalone financial statements of Cimmco Limited and this report does not affect our report dated May 18,2017, which expressed a qualified opinion on those financial statements.

For S. R. BATLIBOI & CO. LLP

Chartered Accountants

ICAI Firm Registration No.: 301003E/E300005

per Kamal Agarwal

Place: Kolkata Partner

Date: May 18,2017 Membership No.: 058652

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Mar 31, 2016

INDEPENDENT AUDITOR''S REPORT

To the Members of CIMMCO LIMITED Report on the Financial Statements

We have audited the accompanying financial statements of CIMMCO LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement forth year then ended, and a summary of significant counting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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 misstatements, 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 there under. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of 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 qualified audit opinion on the financial statements.

Basis for qualified opinion

We draw attention to note no. 13(i) regarding certain claims of Rs 3,952.35 lacs (Rs 3,952.35 lacs as at March 31, 2015), which has been considered good of recovery by the management. Although the management is hopeful to recover the claims in full, pending final decision of the Court, we are unable to comment on its recoverability including consequential impact that may arise in this regard in these financial statements. This had also caused us to qualify our audit opinion on the financial statements for the year ended March 31,2015.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of the matter described in the Basis for Qualified Opinion paragraph above, the financial statements give the information required by the Act in the manner so required and give a true and Fairview in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2016, its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to note no. 29(A) regarding certain claims raised by a Sub-contractor against the Company, which has been upheld by the arbitration tribunal and a demand of Rs 2,525.85 lacs (including interest of Rs. 1,721.63 lacs) has been awarded against the Company. The Company has filed an appeal against the said award with the Hon''ble High Court of Delhi in respect of which, a stay has been granted by the Hon''ble High Court. Pending final decision of the Hon''ble High Court, the Company has not given any effect to the above demand in these financial statements. 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, 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 1 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, except for the matter described in the Basis for Qualified Opinion paragraph, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) Except for the possible effect of the matter described in the Basis for Qualified Opinion paragraph, 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) Except for the possible effect of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of written representations received from the directors as on March 31,2016, and taken on record by the Board of Directors , none of the directors is disqualified as on March 31,2016, from being appointed as a director in terms of Section 164 (2) of the Companies Act, 2013;

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

h) 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 2" to this report;

i) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 6(b)(i) and 29 to the 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.

Referred to in our report of even date to the members of Cimmco Limited as at and for the year ended March 31,2016

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the title deeds of immovable properties included in fixed assets are held in the name of the Company except for 3 numbers of freehold land aggregating to gross block and net block of Rs. 4,713.30 lacs as at March 31,2016 for which original registered sale deed / conveyance deed / transfer deed /assignment deed were not available with the Company and we have been provided with the photo copies of the same. Hence, we are unable to comment on the same. Further, above includes freehold land aggregating to Rs. 2,728.60 lacs for which a dispute was raised by a third party for the title of the land which is pending resolution in the Hon''ble Supreme Court of India as at March 31, 2016. Also refer Note 9(b) of the financial statements.

(ii) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

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

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees and securities granted in respect of which provisions of Section 185 and 186 of the Companies Act 2013are applicable and hence not commented upon.

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

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013, related to the manufacture of wagons and engineering products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(vii) (a) Undisputed statutory dues including provident fund, employees ‘state insurance, income-tax, sales-tax, service tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, service tax, sales-tax, duty of custom, duty of excise, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income tax, sales-tax, service tax, customs duty, excise duty, value added tax and cess on account of dispute are as follows:

Name of the Statute	Nature of Dues	Amount (Rs. in lacs)	Period to which the amount relates	Forum where dispute is pending
The Central Excise Act, 1944	Incorrect a ailment of cenvat credit, non-payment excise duty, non- maintenance of separate records for common inputs and input services used for production of exempted and non-exempted excisable products/non- inclusion of value of free supply in the assessable value/non-compliance with Rule6(3A) etc.	2157.68	1999-2000 and 2011-12	Hon''ble CESTAT, Delhi
		126.28	1989-1994	Hon''ble High Court, Gwalior
		46.44	2010-2011 and 2011-2015	Additional Commissioner of Central Excise, Jaipur
The Customs Act, 1962	Differential Customs Duty, Penalty for non-submission of necessary documents for consumption of imported goods	32.17	2004-2005	Hon''ble CESTAT, Delhi
The Rajasthan Sales Tax Act / Central Sales Tax Act, 1956	Differential Sales Tax and Non-submission of statutory forms	37.27 (net of of Rs. 483.36 lacs paid under protest)	1998-99 to 2000-01	Hon''ble High Court, Rajasthan

(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a bank. The Company did not have any outstanding loans or borrowing dues in respect of a financial institution or to government or dues to debenture holders during the year.

(ix) According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer / debt instruments and term loans hence, reporting under clause (ix) is not applicable to the Company and hence not commented upon.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the company or no fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with Section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

(xv) According to 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 as referred to in Section 192 of Companies Act, 2013.

(xvi) According to the information and explanations given to us, the provisions of Section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

ANNEXURE 2 TO THE INDEPENDENT AUDITOR''S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF CIMMCO LIMTED

Report on the Internal Financial Controls under Clause (i) of Sub-section 3ofSection 143of the Companies Act, 2013("the Act")

We have audited the internal financial controls over financial reporting of CIMMCO LIMITED ("the Company") as of March 31, 2016, in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on 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 the 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified 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.

An 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 qualified audit opinion on the internal financial controls 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 over ride 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weakness has been identified in the operating effectiveness of the Company''s internal financial controls over financial reporting as at March 31,2016:

Attention is drawn to Basis for qualified opinion paragraph of Auditors ‘Report on Financial Statements more fully described therein, regarding certain claims of Rs 3,952.35 lacs (Rs 3,952.35 lacs as at March 31, 2015), which has been considered good of recovery by the management. Although the management is hopeful to recover the claims in full, pending final decision of the Court, we are unable to comment on its recoverability. This could potentially result in misstatement of Company''s Other Assets.

A ‘material weakness’s a deficiency, ora combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company''s annual or interim financial statements will not be prevented or detected on a timely basis. In our opinion, the Company has, in all material respects, maintained adequate internal financial controls over financial reporting as of March 31,

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 Auditor Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India, and except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company''s internal financial controls over financial reporting were operating effectively as of March 31,2016.

Explanatory paragraph

We also have audited, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act, the financial statements of Cimmco Limited, which comprise the Balance Sheet as at March 31, 2016, and the related 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. Material weakness as described above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2016 financial statements of Cimmco Limited and this report does not affect our report dated May 25, 2016, which expressed a qualified opinion on those financial statements.

For S. R. BATLIBOI & CO. LLP

Chartered Accountants ICAI

Firm Registration No.: 301003E/E300005

per Kamal Agarwal

Place: Kolkata Partner

Date: May 25,2016 Membership No.: 58652

---

Mar 31, 2015

We have audited the accompanying financial statements of Cimmco Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2015, 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 financial statements that give a true and Fairview of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls 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 internal control. 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 qualified audit opinion on the financial statements.

Basis for Qualified Opinion

We draw attention to Note No. 12.2 regarding certain claims of Rs 4,695.36 lacs (Rs 4,899.34 lacs as at 31 st March 2014), net of Rs 150.00 lacs received under a guarantee given by the Company, which have been considered good and recoverable by the management. Although the management is hopeful to recover the claims in full, pending decision of the Courts/ Arbitration proceedings we are unable to comment on their recoverability and any consequential impact arising there from in these financial statements. Our audit opinion on the financial statements for the previous year was also qualified in respect of the above matter.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2015, of its loss and its 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 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) Except for the possible effect of the matter described in the Basis for Qualified Opinion paragraph, 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) Except for the possible effect of the matter described in the Basis for Qualified Opinion paragraph, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

e) The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company;

f) On the basis of written representations received from the directors as on March 31,2015, and 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 Companies Act, 2013;

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above;

h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 6(b)(1) and 30 to the 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 are no amounts which were required to be transferred, during the year to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE AUDITOR'S REPORT

Referred to in our report of even date to the members of Cimmco Limited as at and for the year ended March 31,2015

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification. (ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) 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 and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a) and (b) of the Order are not applicable to the Company and hence not commented upon. (iv) In our opinion and according to the information and explanations given to us and having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas. (v) The Company has not accepted any deposit from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013, related to the manufacture of wagons and engineering products, and are of the opinion that prima facie, the specified accounts and records have been made and maintained. We have not, however, made a detailed examination of the same. (vii) (a) Undisputed statutory dues including provident fund, employees ,state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues as applicable to the Company have generally been regularly deposited with the appropriate authorities. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, value added tax and cess on account of any dispute, are as follows:

Name of the Statute Nature of Dues Amount (Rs. in lacs)

The Central Excise Act, Incorrect availment of cenvat 2157.68 1944 credit, non-payment of excise duty, non- maintenance of 126.28 separate records for common inputs and input services used 224.19 for production of exempted and non-exempted excisable products and non-inclusion of value of free supply in the assessable value, non-compliance with Rule 6(3A) etc.

The Customs Act, 1962 Differential Customs Duty, Penalty 32.17 for non-submission of necessary documents for consumption of imported goods

The Rajasthan Sales Differential Sales Tax 520.63

Tax Act / Central Sales and Non-submission Tax Act, 1956 of statutory forms



Name of the Statute Period to which Forum where the amount relates dispute is pending

The Central Excise 1999-2000 Hon'bleCESTAT, Act,1944 and 2011-12 Delhi

1989-1994 Hon'ble High Court, Gwalior

1993-94 Hon'ble Supreme Court

The Customs Act,1962 2004-05 Hon'bleCESTAT, Delhi

The Rajasthan Slaes 1998-90 to Hon'ble High Court,

Tax Act/ Central 2000-01 Rajasthan Sales Tax Act,1956

(d) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company, during the year in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

(viii) Without considering the consequential effects, if any, of the matter stated in the basis for qualified opinion paragraph of our auditors ,report, the Company's accumulated losses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash losses in the current and immediately preceding financial year.

(ix) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a bank. The Company did not have any outstanding dues in respect of a financial institution or debenture holders during the year.

(x) 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.

(xi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xii) 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 report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI&CO.LLP

Chartered Accountants

ICAI Firm Registration No.:301003E

per Kamal Agarwal

Place :Kolkata Partner

Date: April 18,2015 Membership No.: 58652

---

Mar 31, 2014

We have audited the accompanying financial statements of Cimmco 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 accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956, read with General Circular 8/2014 dated 4th April 2014 issued by the Ministry of Corporate Affairs. 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 the 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.

Basis for Qualified Opinion

We draw attention to note No. 13.2 regarding certain claims ofRs 4899.34 lacs (Rs 4899.34 lacs as at 31st March 2013), net ofRs 150 lacs received under a guarantee given by the Company, which have been considered good of recovery by the management. Although the management is hopeful to recover the claims in full, pending decision of the Courts/Arbitration proceedings we are unable to comment on their recoverability Our audit opinion on the financial statements for the previous year was also qualified in respect of the above matter.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of the matter described in the Basis for Qualified Opinion paragraph, 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 Statement of Profit and Loss, 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 ("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 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 8/2014 dated 4th April 2014 issued by the Ministry of Corporate Affairs;

(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 Companies Act, 1956.

ANNEXURE TO THE AUDITOR''S REPORT

Referred to in our report of even date to the members of Cimmco Limited as at and for the year ended March 31,2014

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no disposal of a substantial part of fixed assets during theyear.

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

(b) 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 and no material discrepancies were noticed on such physical verification.

(iii) (a) According to the information and explanations given to us, 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 Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon. (b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon. (iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas. (v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon. (vi) The Company has not accepted any deposit from the public within the purview of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, related to the manufacture of wagons and engineering products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees''state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees''state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows :

Name of the Nature of Dues Amount Period to Statute Rs in which amount Lacs relates

The Central Incorrect availment of cenvat 2508.15 Various Excise Act, credit, non-payment of excise duty and non-maintenance of separate records for common inputs and input services used for production of exempted and non-exempted excisable products etc

The Customs Differential Customs Duty, Penalty 32.17 The details Act, 1962 for non realization of export proceeds are no

The Rajasthan " Differential Sales Tax 1321.41 1982-1983 Sales Tax Act/Central 1987-1988 Sales Tax Act, 1956 1989-1990

1996-2001

Name of the Statute Forum where dispute is pending

The Central Excie At various Appellate Authorities, High Court, Act 1994 Supreme Court, Commissioner of Central Excise

The Customs Act 1962 readily available

The Rajasthan Sales Deputy Commissioner, Jaipur Tax Act/ Central Sales Tax Act 1956

(x) Without considering the consequential effects, if any, of the matter stated in the basis for qualified opinion paragraph of our auditors'' report, the Company''s accumulated tosses at the end of the financial year are more than fifty percent of its net worth. The Company has incurred cash tosses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a bank. The Company did not have any outstanding dues in respect of a financial institution or debenture holders during the year.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank orfinancial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) 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.

(xviii) The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through public issue during the year.

(xxi) 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 report that no fraud on or by the Company has been noticed or reported during the year.

ForS.R. BATLIBOI&CO.LLP Firm Registration No.:301003E Chartered Accountants Per Bhaswar Sarkar Place :Kolkata Partner Date: May 29,2014 Membership No.: 55596

---

Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Cimmco 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 accounting principles generally accepted in India, including 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 the 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.

Basis for Qualified Opinion

We draw attention to the following Notes on the financial statements:

i. Note No. 33 regarding demand ofRs. 1325 lacs (Rs. 1800 lacs as at 31st March 2012) plus interest thereon (amount unascertainable) made by Asset

Reconstruction Company (India) Limited (ARCIL), which is disputed by the Company and hence, no provision there against has been made in the accounts. Pending outcome of the matter, the impact, if any, of the above non provision is presently unascertainable. Our audit opinion on the financial statements for the previous year was also qualified in respect of the above matter.

ii. Note No. 13.2 regarding certain claims of Rs. 4899.34 lacs (Rs. 4899.34 lacs as at 31st March 2012), net of Rs. 150 lacs received under a guarantee given by the Company, which have been considered good of recovery by the management. Pending decision of the Courts/Arbitration proceedings, the recoverability of these claims is presently unascertainable, although the management is hopeful to recover these claims in full. This matter was covered as emphasis of matter in our audit opinion on the financial statements for the previous year.

Hi. Note No. 11 regarding recognition of net deferred tax asset (DTA) of Rs. 131.00 lacs on unabsorbed depreciation and brought forward business tosses upto 31st March 2013, based on the future profitability projections made by the management. We are unable to express an opinion on the virtual certainty of achieving these projections as required by Accounting Standard 22, Accounting for Taxes on Income, and the consequential impact, if any, of the recognition of such deferred taxasset.

Had the impact of item (Hi )stated above been considered, the loss for the year would have been Rs. 1,131.27 lacs as against the reported loss of Rs. 1,000.27 lacs and net deficit in the Statement of Profit and Loss in the Reserves and Surplus would have been Rs. 2,723.72 lacs as against the reported net deficit of Rs. 2,592.72 lacs.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters (i) and (ii) and effect of the matter (iii) described in the Basis for Qualified Opinion paragraph, 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 Statement of Profit and Loss, 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 ("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 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- Id) In our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, except for the matter described in the Basis for Qualified Opinion paragraph; (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.

ANNEXURE TO THE AUDITOR''S REPORT

Referred to in our report of even date to the members of Cimmco Limited as at and for the year ended March 31,2013

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no disposal of a substantial part of fixed assets during theyear.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during year.

(b) 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 and no material discrepancies were noticed on such physical verification.

(iii) (a) According to the information and explanations given to us, 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 Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon. (b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon. (iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas. (v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies

Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon. (vi) The Company has not accepted any deposit from the public within the purview of Section 58A, 58AA or any other relevant provisions of the

Companies Act, 1956 and the rules framed there under. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1 )(d) of the Companies Act, 1956, related to the manufacture of wagons and engineering products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same. (ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees''state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been slight delay in a few cases. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees''state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstandina at the vear end, for a period of more than six months from the date thev became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows :

Name of the Statute Nature of Dues Amount (Rs. in lacs)

TheCentral Excise Act, 1944 Incorrect availment 370.15 of CENVAT credit, non-payment of excise duty etc.

The Customs Act, 1962 Differential Customs Duty, Penalty for non realization of 32.17 export proceeds

The Rajasthan Sales Tax Act/ Differential Sales Tax 1,864.24 Central Sales Tax Act, 1956

The Foreign Trade Penalty for nonfulfillment 6,452.00 Developments Regulation of export obligations Act, 1992

Name Period to which Forum where the amount relates dispute is pending

The Customs Act, 1962 Various At various Appellant Authorities, High Court, Supreme Court

The details are not readily available

The Customs Act, 1962 1982-1983 Deputy

1987-1988 Commissioner, Jaipur

1989-1990

1996-2001

The Customs Act, 1962 Various Director General of Foreign Trade

(x) The Company''s accumulated tosses at the end of the financial year are more than fifty percent of its net worth after considering the consequential effects of the matters stated in Basis of Qualified opinion in the audit report. The Company has incurred cash tosses in the current financial year but had not incurred any cash losses in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank orfinancial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) 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.

(xviii) The Company has not made any preferential allotment of shares during the year to parties or Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through public issue during the year.

(xxi) 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 report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI&CO.LLP

Firm Registration No.:301003E

Chartered Accountants

per RKAGRAWAL

Place :Kolkata Partner

Date: May 20,2013 Membership No.: 16667

---

Mar 31, 2012

1. We have audited the attached Balance Sheet of Cimmco Limited ('the Company') as at March 31,2012 and also the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto.ThesefinancialstatementsaretheresponsibilityoftheCompany's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides areas on cable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (as amended) ('the Order') 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. 4. Further to our comments in the Annexure referred to above, 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 purposes 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 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 dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v. On the basis of the written representations received from the directors, as on March 31,2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as a director in terms of clause (g) of sub- section (1) of Section 274 of the Companies Act, 1956.

vi. Without qualifying our opinion, attention is drawn to Note No. 13.2A on the financial statements regarding certain claims of Rs. 4899.34 lacs (net of Rs. 150 lacs received under a guarantee given by the Company) which have been considered good of recovery since the management, based on the current status of negotiation is hopeful to recover these claims in full and accordingly no adjustments are considered necessary in these financial statements;

vii. Attention is drawn to Note No. 32 on the financial statements regarding non provision against demand of Rs. 1800 lacs plus interest thereon (amount unascertainable) made by Asset Reconstruction Company (India) Limited (ARCIL), as the management feels that no liability exists there against after ARCIL has invoked its security of pledged shares. The impact, if any, of the above non provision is presently unascertainable, pending receipt of a "No Due Certificate" from ARCIL;

The above matter hadal so caused us to qualify your audit opinion on the financial statements for the period ended March 31,2011.

viii. In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of our observation in Para vii above, the said accounts, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conform it 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 31,2012;

b) in the case of the Statement of Profit and Loss, 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 don that date.

ANNEXURE TO THE AUDITORS'REPORT

Referred to in our report of evened ate to the members of Common Limited as at and for the year ended March 31,2012

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

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verifying the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no disposal of substantial part of fixed assets during the year.

(ii) (a) The management they conducted physical verification of in ventory at reasonable in tervals during the year.

(b) 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 and nonmaterial is crepancies were notice don such physical verification.

(iii) (a) According to the information and explanations given to us, 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 Companies Act, 1956. Therefore, the provisions of clauses 4(iii)(b)to(d)of the Order , are not applicable.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clauses 4(f) and (g) of the Order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the items purchased are of special nature and suitable alternative sources do not exist for obtaining comparable quotations thereof, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas and we have also not observed any continuing failure to correct major weakness in the internal control system of the Company.

(v) In our opinion and as informed to us, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 oftheCompaniesAct,1956.

(vi) The Company has not accepted any deposits from the public during the year.

(vii) During the year, no internal audit was carried out and, accordingly, wearer unable to comment on the in tern laud it system.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, related to the manufacture of wagons and engineering products and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been slight delays in a few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the earned, for period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of the statue Nature of dues Amount (Rs.in lacs)

The Central Excise Act, 1944 Incorrect a ailment 370.15 of CENVAT credit, non-payment of excise duty etc.

The Customs Act, 1962 Differential customs duty, penalty for non realization of 61.17 export proceeds

The Rajasthan Sales Tax Act / Differential sales tax 1,864.24 Central Sales Tax Act, 1956

The Income Tax Act, 1961 Disallowance of 2,661.00 certain tax benefits

The Foreign Trade Penalty for non fulfillment 6,423.00

Development & Regulation of export obligations Act, 1992



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

The Central Excise Various At various Appellant

Act,1944 Authorities, High Court, Supreme Court

The Customs Act,1962 The details are not readily available

The Rajasthan Sales 1982-1983 Deputy Tax Act,1956 1987-1988 Commissioner, Jaipur

1989-1990

1996-2001

The Income Tax Act,1956 2007-2008 Income Tax Appellate Tribunal

The Foreigh Trade Various Director General of Development & Regulation Foreign Trade Act,1992

(x) Without considering the consequential effects, if any, of the matter stated in Para vii of our report whose impact is presently unascertainable, the Company's accumulated losses at the end of the financial year are less than fifty per cent of its net worth and it has not incurred cash losses in the current and immediately preceding financial period.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial in situation, bank or debendure holders.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause4(xiv)of the Order are not applicable.

(xv) 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.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which the loans were obtained.

(xvii) 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.

(xviii) The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained underSection301 oftheCompaniesAct,1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through public issue during the year.

(xxi) 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 report that no fraud on or by the Company has been noticed or reported during the year.

For S.R. BATLIBOI&CO.

Firm Registration No.: 301003E

Chartered Accountants

per RKAGRAWAL

Place: Kolkata Partner

Date: April 28,2012 Membership No.: 16667

---

Jun 30, 2010

We have audited the attached Balance Sheet of Cimtnco Limited (previously known as Cimmco Birla Limited) as at 30,th June,2010 and also the Profit & Loss Account and Cash Flow Statement for the period 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 our audit.

We conducted our audit in accordance with the 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

2. We report that:

The Company has written back an amount ofRs.1473.05 lakhs out of the amount payable to secured creditor based on in principle approval received from them and the same has been credited to extraordinary item (Refer note no. 13(Bj(ll) of Schedule 21). However, the receipt of a formal sanction for the same is awaited.

3. Further to our comments in the Annexure referred to in paragraphs 1 and 2 above, 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 purposes 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, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards as referred to in Section 211(3C) of the Companies Act, 1956.

(v) On the basis of written representations received from the directors, as on 30" June 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th June,2010 from being appointed as a director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act,1956;

Had the observation made in para 2 above been considered profit after tax would have been Rs. 54209.59 lakhs as against the reported figure of Rs. 55682.64 lakhs, debit balance in Profit & Loss Account would have been Rs.4577.84 lakhs as against reported figure of Rs.3104.79 lakhs, Secured Loan would have been Rs.15892.05 lakhs as against the reported figure ofRs. 14419 lakhs.

Subject to the foregoing, in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with notes thereon, giye 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 generally accepted in India:

a) In the case of Balance Sheet, of the state of affairs of the Company as at 30,h June,2010;

b) In the case of Profit & Loss Account, of the profit of the Company for the period ended on that date; and

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

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 1 of our report of even date)

i) a) The records maintained by the Company in respect of its fixed assets are proper except in so far as the Fixed Assets Register does not contain the year of purchase of asset items, cumulative amount of depreciation and the written down value of each asset.

b) The Company has carried out the physical verification of the assets during the period in accordance with a phased programme. The system of verification was found to be adequate and no material discrepancies were noticed on such verification.

c) As per information and explanations and records made available to us, no substantial part of the fixed assets has been disposed off during the period to affect the going concern of the Company.

ii) a) The Company has carried out the physical verification of inventory during the period under audit except for the stock lying at the bonded warehouse.

b) The procedures of physical verification of inventory followed by the Company are reasonable and adequate in relation to the size of the Company and its nature of business.

c) The Company is maintaining proper records of inventory and no material discrepancies have been noticed on physical verification.

iii) In our opinion and on the basis of explanations and information received, the Company has neither granted nor taken any loans, secured or unsecured, to and from companies, firms or other parties as covered in the Register maintained under Section 301 of the Companies Act,1956. Accordingly, the provisions of clauses 4 (iii) (a) to (g) of the Order are not applicable.

iv) The internal control system are commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. As explained to us and as per information received there has been no continuing failure to correct major weaknesses in the internal control system.

v) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to Section 301 of the Companies Act, 1956, have been entered in the Register required to be maintained under the Section. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the Company has complied, except non filing of return of deposit as at 31.03.2010, with the provisions of Section 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted. As informed to us, no Order has been passed by the Company Law Board, National Company Law Tribunal, R.B.I., any other Court or any other Tribunal in this regard.

vii) The Company does not have any internal audit system.

viii) Cost records and accounts are not required to be maintained under Section 209(1 )(d) of the Companies Act, 1956 in respect of products of the Company.

ix) (a) According to the records and information and explanations given to us, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities for the liabilities accrued during the period under audit. However, the undisputed statutory dues payable for a period of more than six months from the date they became payable as at 30th June, 2010 are as given below :

Nature of dues Rs. Provident Fund 1,57,301

The Company has unpaid dues aggregating of Rs.61,367/- relating to Investor Education and Protection Fund as on 30th June, 2010.

However the Company has since deposited the arrear Provident Fund dues of Rs.1,57,301/-

(b) According to the records and information and explanations given to us, the following dues in respect of Excise Duty, Sales Tax, Income Tax and Custom Duty have not been deposited with the appropriate authorities on account of any dispute :

Name of Nature of Amount Forum where Dispute the Statue Dues (Rs.) is pending

Central Excise Excise Duty 29.94.482 Deputy Commissioner/ Act Appellate Authority

19,68,680 High Court, Delhi

126,28.496 High Court. Gwalior

2,24,15,000 Supreme Court

Sales Tax Act Orissa Sales 36,76,432 Assistant Commissioner; Tax Appellate Authority

MP Sales 13,07,644 High Court, Gwalior Tax

Income Tax Act Income Tax 16,00,000 Appellate Authority

Customs Act Customs Duty 36,66,535 Appellate Authority

x) The Companys accumulated losses at the end of period are more than 50% of its net worth and the Company has not incurred any cash loss in the current financial period. However in the immediately preceding financial year the Company has incurred cash loss.

xi) According to the available information and explanation received the Company has not defaulted in repayment of dues to a Financial Institution or Bank or Debenture holders during the period.

xii) According to the information and explanations given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xiiij The Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the said Order are not applicable to the Company.

xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments.

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

xvi) In our opinion, on the basis of information and explanations given to us, no term loan has been taken by the Company during the period.

xvii) On the basis of information and explanations given to us and on an overall examination of the financial statements of the Company, no funds raised during the period on short- term basis have been used for long-term investment.

xviii) The Company has made preferential allotment of shares during the period which is in accordance with the Rehabilitation Scheme sanctioned by BIFR on 11.3.2010 under Sick Industrial Companies (Special Provisions) Act,1985 at a premium decided by the order. The allottee of these shares are covered in the register maintained under Section 301 of the Companies Act,1956,

xix) The Company has paid back the entire outstanding of debentures during the period under audit in terms of the sanctioned scheme. Thus there is no security or charge pending to be created.

xx) The Company has not raised any money through public issue during the period.

xxi) During the course of our examination of the books, and records of the Company, carried out in accordance with the auditing standards generally accepted in India and on the basis of inforrhition and explanations provided by the management, we have neither come across any instance of fraud on or by th^Company, noticed or reported during the course of our audjt nor we have been informed of any such case by the management.

For L. B. Jha&Co.

Chartered Accountants

Firms Registration No. 301088E

(S. B. PATI) Place : New Delhi Partner

Dated : 30th August, 2010 Membership No. 95080