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Auditor Report of D B Realty Ltd.

Mar 31, 2023

D B Realty Limited

Report on the Audit of the Standalone Ind AS Financial Statements Qualified Opinion

We have audited the accompanying standalone Ind AS financial statements of D B Realty Limited (“the Company”), which comprise the Standalone Balance Sheet as at March 31, 2023, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flows for the year then ended and notes to the standalone Ind AS financial statements including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “standalone Ind AS financial statements”).

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 described in the Basis for Qualified Opinion section of our report, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Indian Accounting Standards (“Ind AS”) prescribed under section 133 of the Act, of the state of affairs of the Company as at March 31,2023, its profit for the year, other comprehensive income (loss) , changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

1. As stated in Note 43.2D(xiv) to the standalone Ind AS financial statement - measurement of financial guarantees at fair value under ‘Indian Accounting Standard (Ind AS) 109 - Financial Instruments'' is not done:

a. During the year, one of the lenders has invoked the corporate guarantee given by the company on behalf of a related party (principal borrower). As per the communication the total demand is Rs 76,038.97 lacs, which has been contested by the company vide its response to the said communication. As explained to us, the lender had confirmed / acknowledged the amount of Rs 23,636 lacs vide its letter dated March 8, 2021. The company, in its response to the invocation of the corporate guarantee, has made an offer to pay Rs 25,400 lacs as a part of its obligation as a guarantor, further we are informed that the said amount would also be reimbursed to the Company by such related party.

The management based on the market value of the various other primary securities, corporate guarantee and undertaking by the holding company of the related party entity (for whom guarantee was provided) is confident of recovering the amount payable (if any) to the lenders from the said related party and its holding company and accordingly is of the view that provision is not required to be made.

b. Financial guarantees and securities given by the Company on behalf of certain entities (referred as principal borrowers) who have defaulted in their principal payment obligations to the lenders aggregating to Rs 24,547.62 lacs (excluding interest, penal interest and other charges). The loans taken by these entities have also been secured by charge on the underlying assets of the said entities and assets of other related parties. Valuation report of such primary / underlying assets provided as securities by the borrowing companies has not been obtained from an independent valuer. In view of the management, value of such primary / underlying assets provided as securities is greater than the outstanding loans and hence additional liability will not devolve on the Company. In the above amounts, interest and other charges are not included as the same cannot be quantified as the respective borrower/s had disputed the same and also since settlement proposal is in discussion by the respective borrowers with their lenders.

Further, out of Rs. 24,547.62 lacs above, during the year, one of the subsidiary companies (i.e. principal borrower), has entered into one-time settlement with lender equivalent to loans of Rs. 17,736.15 lakhs. The principal borrower has requested the lender for extension of time for the installment due on 31st March 2023, which has been in principle agreed by the lender subject to execution of necessary addendum to settlement agreement, which is in the process of being executed.

c. Further, financial guarantees and securities given by the Company on behalf of certain entities (related parties) who have defaulted in their principal payment obligations to the lenders aggregating to Rs. 35,240.50 lacs (excluding interest, penal interest and other charges). The loans taken by these entities have also been secured by charge on the underlying assets of the said entities and assets of other related parties. As per valuation reports obtained from independent valuer, the value of primary / underlying assets provided as securities by the borrowing companies is greater than the outstanding loans and hence in view of the management no additional liability is expected to devolve on the Company. In the above amounts, interest and other charges are not included as the same cannot be quantified as the respective borrower/s had disputed the same and also since settlement proposal is in discussion by the respective borrowers with their lenders.

Further, out of Rs. 35,240.50 lacs above, subsequent to the year end, one of the entities (i.e. principal borrower), has entered into a one-time settlement with lender equivalent to loans of Rs. 32,000 lakhs. Post completion of the settlement obligations by the said principal borrower, the company''s guarantee obligation / securities would cease to exist.

With reference to above, during the year, Securities Exchange Board of India (SEBI) has issued administrative warning (i.e. impugned order) to the Independent Directors with respect to accounting and disclosure of financial guarantees based on the investigation carried out by SEBI. This order was specifically with respect to matters covered in note 43.2D(xiv)(a) of the standalone Ind AS financial statement and it also extends to other guarantees as well. The said order quantifies the expected credit loss / additional provision with respect to financial guarantees as mentioned in note 43.2D(xiv)(a) of standalone Ind AS financial statements of Rs. 59,130.18 lakhs to be made by the company in accordance with Ind AS 109 - Financial Instruments till 31st March 2021. The company has disputed the said order and in its opinion, no

provision is required to be made based on underlying assets of the various entities and ongoing discussion for settlement of the loans by the respective entities with their lenders. The Company has filed an appeal and application seeking stay against the said impugned order before the Securities Appellate Tribunal (SAT) seeking reliefs including (a) Setting aside the said impugned order and (b) To pass an order stating the effect, implementation and operations of the impugned order. During the year, the said appeal was heard and SAT has passed order against the Company. The Company is exploring further legal remedies and intends to file an appeal against the said order.

Further, during the year, the Company has filed settlement application with SEBI in relation to the above matters where the Company has offered monetary and non-monetary settlement terms.

Furthermore, during the year, the SEBI has issued a show cause notice to the Company and its directors for non-compliance of various provisions related to Securities Contracts (Regulation) Act, 1956 and non-compliance of accounting standard / Indian accounting standards related to guarantee and securities given by the Company to various entities. The Company has duly replied to the said show cause notice.

Considering the above, management view and ongoing dispute (already covered in basis of qualified opinion in para 1(a) above), the potential impact of the non-measurement of financial guarantee as required by ‘Ind AS 109 - Financial Instruments‘ on the profit (excluding other comprehensive income) for the year ended March 31, 2023, and consequently on the total equity as on March 31, 2023, cannot be ascertained.

2. As stated in Note 48 to the standalone Ind AS financial statements and considering the non-evaluation of impairment provision in accordance with Ind AS 109 - Financial Instruments and Ind AS 36 - Impairment of Assets, towards expected credit losses in respect of the loans and advances / deposits totaling to Rs. 1,63,711.06 lacs (disclosed under current financial asset considering repayable on demand) and towards diminution in the value on the Company''s investments totaling to Rs. 42,984.38 lacs, respectively, as on March 31,2023, that were invested in / advanced to certain subsidiaries and other parties which have incurred significant losses and / or have negative net worth as at March 31, 2023 and / or have pending legal disputes with respect to the underlying projects / properties of respective entities, we are unable to comment on the impact of non-provision of impairment (if any) on the profit (excluding other comprehensive income) and classification of the loans and advance under current financial asset for the year ended March 31,2023 and consequently on the total equity as on March 31,2023.

3. Attention is invited to Note 25.5 to the standalone Ind AS financial statements, which mentions that consequent to the ongoing negotiations as regards one-time settlement, the Company has not provided for interest on loan from financial institutions (excluding penal interest, if any) amounting to Rs. 3,270.21. lacs pertaining to year ended March 31,2023 [cumulative unprovided interest of Rs 4,914.39 lacs till March 31, 2023] (these amounts exclude interest related to one-of the lender with whom settlement has been agreed upon during the year). Had this provision for interest on loan been made, profit (excluding other comprehensive income) for the year end would have been lower by the said amount and the balance in other equity would have been lower by cumulative unprovided interest of Rs. 4,914.39 lacs till March 31,2023. The above non provision of interest results in non-compliance with accounting treatment as prescribed by Ind AS 23 Borrowing Cost.

The cumulative impact of the above qualifications cannot be quantified since the cumulative and net impact of the above qualifications is not assessed by the management. Further on account of the above qualifications, the unreserved statement on compliance with Ind AS is also impacted to that extent.

Qualifications listed in para 1(a), 1(b), 2 and 3 have been reported by us in the audit report dated 30th May 2022 for the year ended March 31, 2022.

We conducted our audit in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the standalone Ind AS financial statements under the provisions of the Act and Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the standalone Ind AS financial statements.

Material uncertainty related to going concern

The Company has various debt obligations (excluding corporate guarantee) aggregating to Rs. 99,389.12 lacs within the next 12 months. These obligations are higher than the current assets which are liquid in nature. This could result in significant uncertainty on its ability to meet these debt obligations and continue as going concern. The management is addressing this issue robustly, the Company has entered / negotiating one-time settlement with various lenders, raised funds through issued convertible warrants, entered in development agreement / joint ventures to revive various projects which have significantly high growth potential. The management is confident that they will be able to manage the liquidity position by restructuring the existing terms of borrowings, monetization of non-core assets and mobilization of additional funds. Accordingly, the unaudited standalone financial results are prepared on a going concern basis (Refer Note 53 of the standalone Ind AS financial statements).

Our opinion is not modified in respect of the above matter. Attention was also drawn by us in our audit report dated 30th May 2022 of previous financial year in respect of above matter.

Emphasis of Matter

We draw attention to the following matters in the notes to the standalone Ind AS financial statements:

1. As stated in note 55 of the standalone Ind AS financial statements with respect to security deposits aggregating to Rs 2,257.95 lacs, investments and loans & advances in certain subsidiary companies / entities aggregating to Rs 1,94,262.07 lacs and inventory of construction work in progress of Rs 34,098.04 lacs, we have relied upon management estimates and explanations as regards, various approvals obtained

/ pending, stage of completion, projections of expected cost and revenue, realization of construction work in progress and market value of the underlying developments rights. These estimates are dynamic in nature and are dependent upon various factors such as eligibility of the tenants, changes in the saleable area, acquisition of new Floor Space Index (FSI) and other factors. Changes in these estimates can have a significant impact on the financial results of the company for the year ended March 31,2023, and future periods, however quantification of the impact due to change in said estimates is not practical. Being a technical matter, these management estimates have been relied upon by us.

2. As stated in note 25.6 and 25.7 of the standalone Ind AS financial statements, during the year, the Company has entered into one-time settlement with one of the financial institutions subject to the compliance with the payment terms. As per the said settlement the Company is required to pay Rs. 18,560 lacs (plus interest as per agreed rate) upto 31st January 2025 as per repayment schedule specified therein. Additionally, the write-back / difference (if any) between the original loan amount plus accrued interest upto the date of settlement and the revised amount payable would be accounted in the period in which the condition of settlement arrangement are met. The Company has requested for extension of time for the installment due on 31st March 2023 from the lender which has been in principle agreed by the lender subject to execution of necessary addendum settlement agreement which is in the process of being executed.

3. The Company has recognized net deferred tax assets on changes in fair value of financial instruments aggregating to Rs 9,214.48 lacs in the earlier years. In the opinion of the management, there is a reasonable certainty as regards utilization/reversal (consequent to potential increase in fair value in future) of the said deferred tax assets. As regards the same also refer Note 10.1 of the standalone Ind AS financial statements.

4. With respect to various legal matters our comments are as under:

a. As regards certain allegations made by the Enforcement Directorate against the Company and its two Key Managerial Persons, in a matter relating to Prevention of Money Laundering Act, 2002, this matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage (refer Note 49 to the standalone Ind AS financial statements).

b. As regards attachment order issued by adjudicating authority under Prevention of Money Laundering Act, 2002, by which the Company''s assets aggregating to Rs. 711.48 lacs have been attached on August 30, 2011. Consequently, the adjudicating authority has taken over the bank balance of Rs. 68.93 lacs, two flats having written down value of Rs. 85.72 lacs as on March 31,2023 and Investment in Redeemable Optionally Convertible Cumulative Preference Shares - Series A and Series C made by the Company aggregating to Rs. 556.83 lacs in earlier years. The impact, if any, of its outcome is currently unascertainable (refer Note 51 to the standalone Ind AS financial statements).

c. As stated in note 47A to standalone Ind AS financial statements, following are the Emphasis of Matters in their financial statements for the year ended March 31,2023, of the partnership firms (where Company is a partner), which have not been audited by us:

i. As regards the recoverability of Trade Receivables of Rs. 4,930.33 lacs as on March 31, 2023 which are attached under the Prevention of Money Laundering Act, 2002 and non-provision for expected credit loss based on the management assessment as regards the outcome of the said matter.

ii. Allegations made by the Central Bureau of Investigation (CBI) relating to the 2G spectrum case and regarding attachment order issued by adjudicating authority under Prevention of Money Laundering Act, 2002 and the undertaking given by the Company that it will bear the loss if there is any non / short realization of the attached asset.

These matters are sub-judice and the impact, if any, of its outcome is currently unascertainable.

d. In addition to the above, the Company is a party to various legal proceedings in normal course of business (including cases pending before the Hon''ble National Company Law Tribunal under Insolvency and Bankruptcy Code, 2016) and does not expect the outcome of these proceedings to have any adverse effect on its financial conditions, results of the operations or cash flow. We have relied upon the representation from the in-house legal team as regards the same (refer Note 46.2 to the standalone Ind AS financial statements).

e. As stated in note 58.9 to the standalone Ind AS financial statements, during the previous year, Income tax authority carried out search operation at premises of the Company, firms in which Company is partner and KMP''s and during the earlier year, Central Bureau of Investigation (CBI) has carried out searches on the premises of one of its wholly owned subsidiaries and KMP of the Company. Certain documents [including back-up of accounting software] were taken by the department and CBI. In view of ongoing proceedings, the company is not in a position to ascertain the possible liability, if any.

In respect of matter covered in above para 1,3 and 4 attention were drawn by us in the audit report of the previous financial year.

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements of the current year. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matters described in the Basis for Qualified Opinion, Material Uncertainty Related to Going Concern and Emphasis of Matter (other than those reported below) section above, we have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the standalone Ind AS financial statements section of our report including in relation to these matters.

Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.

Key Audit Matter

How the matter was addressed in the audit

Valuation of Inventory

(Refer Note 2.11 and 13 to the standalone Ind AS financial statements) Inventory consisting of projects under development has an aggregate value of Rs. 34,098.04 lacs as on March 31,2023.

These projects are under initial stages of development and the management estimates that net realizable value of these projects will be greater than the carrying cost based on the approved initial plans, future projections and future prospects of these projects. As on March 31, 2023, there is no significant progress in development activities of these projects.

Considering the materiality of the amount involved and degree of management judgment in valuation, we have identified valuation of inventory as a key audit matter for the current year audit

• Our audit procedure in respect of this area includes:

• Obtained an understanding of management''s process and evaluated design and tested operating effectiveness of controls for valuation of inventories.

• Obtained valuation reports from independent valuer engaged by the management for all the material projects work-in-progress and evaluated the appropriateness of the underlying data, methodology applied by independent valuer and assumption given by the management for inventory valuation.

• Verified, on test check basis, the project related expenditure incurred during the year and analysed the movement of projects work-in-progress during the year. Our audit procedure also includes visits to major projects under inventory work in progress.

• We did not identify any significant exceptions to the management''s assessment as regards to valuation and no adjustment is necessary for the purpose of the valuation.

(Also refer Emphasis of Matter paragraph ‘1'' above)

Information Other than the Standalone Ind AS Financial Statements and Auditor’s Report Thereon

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board''s report including annexure to board report, Business Responsibility and Sustainability Reporting, Corporate Governance and Shareholder''s information, but does not include the standalone Ind AS financial statements, consolidated Ind AS financial statements and our auditor''s report thereon.

Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have concluded that material misstatement with respect to matters described in the basis of qualified opinion section of our report also exist in the other information.

Responsibilities of Management and Those Charged with Governance for the Standalone Ind AS Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including Ind AS prescribed under section 133 of the Act, read with the 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 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor’s Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this standalone Ind AS financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone Ind AS financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (I) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone Ind AS financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

a. We draw attention to Note 47 to the standalone Ind AS financial statements, regarding share of (loss) (net) from investment in three partnership firms, three limited liability partnerships and four association of person aggregating to Rs. (243.75) lacs for the year ended March 31, 2023, included in the standalone Ind AS financial statements, are based on the audited financial statement of such entities. These financial statements have been audited by their respective independent auditors of these entities, whose reports have been furnished to us by the Management and our audit report on the Statement is based solely on such audit reports of the other auditors.

b. During the year, the Board has approved the proposal for amalgamation of Platinumcorp Affordable Builders Private Limited (“Transferor Company”) with one of its subsidiaries, Royal Netra Constructions Private Limited (“Transferee Company”) and their respective shareholders under the scheme of amalgamation. The aforesaid scheme is subject to the approval of NCLT (refer note 6.12 to the standalone Ind AS financial statements).

Our opinion on the standalone Ind AS financial statements and our report on ‘Other Legal and Regulatory Requirements'' below, is not modified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditor''s Report) Order, 2020 (“the Order”) issued by the Central Government of India in terms of section 143(11) of the Act, we give in “Annexure 1”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(2) As required by section 143(3) of the Act, we report that:

a. Except for the possible effects of the matters described in the Basis for Qualified Opinion section above, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid standalone Ind AS financial statements;

b. Except for the possible effects of the matters described in the Basis for Qualified Opinion section above, in our opinion, proper books of account as required by law relating to preparation of the aforesaid standalone Ind AS financial statements have been kept by the Company so far as it appears from our examination of those books and the reports of the other auditors;

c. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this report are in agreement with the books of account maintained for the purpose of preparation of standalone Ind AS financial statements;

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

e. The matters described under the Basis for Qualified Opinion, Material Uncertainty Related to Going Concern and Emphasis of Matter section above, in our opinion, may have an adverse effect on the functioning of the Company;

f. On the basis of the written representations received from the directors as on March 31, 2023, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2023 from being appointed as a director in terms of section 164(2) of the Act;

g. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure 2”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting;

h. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified opinion paragraph above;

i. With respect to the other matter to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, In our opinion and to the best of our information and according to the explanations given to us, the Company has not paid any remuneration to its directors during the year except sitting fees to independent directors and non-executive directors in accordance with the provision of section 197(5) of the Act; and

j. 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

(i) The Company has disclosed the pending litigations & disputes on its financial position in notes 46, 47A to 47F, 49 & 51 to the standalone Ind AS financial statements. Further as per the note 46.2, the Company is a party to various litigation proceeding in normal course of business (including cases pending before the Hon''ble National Company Law Tribunal under Insolvency and Bankruptcy Code, 2016). The amounts / financial impact of these litigations cannot be estimated in the opinion of the management. For the purpose of said reporting, we have relied upon the opinion / confirmation received from the in-house legal team.

(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) As per the management representation provided, we report,

(a) no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company

(b) no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material mis-statement. Also refer note 58.2 of the standalone Ind AS financial statements.

(v) The Company has neither declared nor paid any dividend during the year and hence compliance with section 123 of the Companies Act 2013 does not arise.

(vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from 1st April, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended 31st March, 2023.

For N. A. Shah Associates LLP

Chartered Accountants

Firm Registration No.: 116560W / W100149

Milan Mody

Partner

Membership No.: 103286 UDIN: 23103286BGPZNG6174

Place: Mumbai Date: May 30, 2023


Mar 31, 2021

To the Members of D B Realty Limited

Report on the Audit of the Standalone Ind AS Financial Statements Qualified Opinion

We have audited the accompanying standalone Ind AS financial statements of D B Realty Limited (“the Company”), which comprise the Balance Sheet as at March 31,2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the standalone Ind AS financial statements including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “standalone Ind AS financial statements”).

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 described in the Basis for Qualified Opinion section of our report, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Indian Accounting Standards (“Ind AS”) prescribed under section 133 of the Act, of the state of affairs of the Company as at March 31, 2021, its profit (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

a. As stated in Note 60 to the standalone Ind AS financial statements, regarding non-recognition of financial guarantees aggregating Rs. 350,052.00 lakhs issued to banks/ financial institutions on behalf of various entities at fair value as required under Ind AS 109 - Financial Instruments. In absence of measurement of financial guarantees at fair value, we are unable to comment on the consequential impact on the profit for the year ended March 31, 2021, if any.

b. As stated in Note 51 to the standalone Ind AS financial statements, rega rding non-evaluation of impairment provision in accordance with Ind AS 109 - Financial Instruments and Ind AS 36 - Impairment of Assets, for loans and receivables aggregating Rs. 105,938.22 lakhs and investments aggregating Rs. 206,945.04 lakhs respectively as on March 31, 2021 to certain subsidiaries and other parties which have incurred significant losses and/or have negative net worth as at March 31, 2021. We are unable to comment on the consequential impact of the impairment provision on the profit for the year ended March 31, 2021, if any.

c. As stated in Note 62 to the standalone Ind AS financial statements, regarding the recognition and measurement of its investments in equity instruments of one of its subsidiary company at fair value through other comprehensive income which the Management has not considered as a subsidiary based on its irrevocable designation at inception. Had it been treated as a subsidiary, then as per the Company''s accounting policy, it should be measured at cost, subject to impairment of investment. Consequently, investments in these instruments and other comprehensive income are lower by Rs. 19,196.59 lakhs and Rs. 15,203.70 lakhs (net of tax) respectively as on March 31, 2021, after ignoring the impact of impairment, if any.

d. As stated in Note 22.7 to the standalone Ind AS financial statements, regarding the loan from a financial institution aggregating

Rs. 2,714.23 lakhs (including overdue interest thereon) which is subject to independent confirmation as at March 31, 2021. In the absence of independent confirmation, we are unable to comment on the consequential impact on the profit for the year ended March 31, 2021, if any.

We conducted our audit in accordance with Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our audit of the standalone Ind AS financial statements under the provisions of the Act and Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the standalone Ind AS financial statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 56 to the standalone Ind AS financial statements, which indicates that there is no progress in the development of projects undertaken since last several years and the Company is also incurring cash losses before exceptional items during last three years as well as there have been defaults in repayment of various debts and other obligations. For the year ended March 31, 2021, the Company has incurred a net loss (before tax and exceptional item) of Rs. 7,276.52 lakhs, and has an accumulated loss of Rs. 23,751.34 lakhs (including other comprehensive income) as of that date. The said assumption of going concern is dependent upon the Company''s ability to raise funds through monetization of its non-core assets, mobilization of additional funds and other strategic initiative to meet its obligations. These conditions indicate that a material uncertainty exists

that may cast significant doubt on the Company''s ability to continue as a going concern. However, based on the mitigating factors

as mentioned above, the standalone Ind AS financial statements have been prepared on a going concern basis.

Our opinion is not modified in respect of this matter.

Emphasis of Matter

We draw attention to the following matters in the notes to the standalone Ind AS financial statements:

a. As stated in Note 57 to the standalone Ind AS financial statements, regarding the uncertainties and the Management''s evaluation of the financial impact on the Company due to lockdown and other restrictions imposed by the state government/ municipal corporation on account of COVID-19 pandemic situation, for which a definitive assessment of the impact is highly dependent upon the circumstances as they evolve in the subsequent period.

b. As stated in Note 9.2 to the standalone Ind AS financial statements, regarding security deposits aggregating Rs. 5,908.53 lakhs as on March 31,2021, given to various parties for acquisition of development rights, as explained by the Management, the Company is in the process of obtaining necessary approvals with regard to these properties and that their current market values are significantly in excess of their carrying values and are expected to achieve adequate profitability on substantial completion of such projects.

c. As stated in Note 13.1 to the standalone Ind AS financial statements, regarding status of inventories consisting of projects having aggregate value of Rs. 29,695.73 lakhs as on March 31, 2021 and the opinion framed by the Management about realizable value of the cost incurred, being a technical matter, has been relied upon by us.

d. As stated in Note 52 to the standalone Ind AS financial statements, regarding certain allegations made by the Enforcement Directorate against the Company and its two Key Managerial Persons, in a matter relating to Prevention of Money Laundering Act, 2002, this matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

e. As stated in Note 54 to the standalone Ind AS financial statements, regarding attachment order issued by adjudicating authority under Prevention of Money Laundering Act, 2002, by which the Company''s assets aggregating to Rs. 714.95 lakhs have been attached on August 30, 2011. Consequently, the adjudicating authority has taken over the bank balance of Rs. 68.93 lakhs and Investment in Redeemable Optionally Convertible Cumulative Preference Shares - Series A and Series C of a subsidiary company of Rs. 556.83 lakhs in earlier years. The impact, if any, of its outcome is currently unascertainable.

f. As stated in Note 46(A), 47(ii) and 49 to the standalone Ind AS financial statements, the statutory auditors of the partnership firms, where the Company is one of the partner, have reported the following Emphasis of Matters on their respective audited financial statements for the year ended March 31, 2021:

i. As regards recoverability of Trade Receivables of Rs. 4,930.33 lakhs as on March 31,2021 which are attached under the Prevention of Money Laundering Act, 2002 are good for recovery and non-provision of expected credit losses on account of the undertaking given by the Company that it will bear the loss if the said trade receivables become bad.

ii. Allegations made by the Central Bureau of Investigation (CBI) relating to the 2G spectrum case and regarding attachment order issued by adjudicating authority under Prevention of Money Laundering Act, 2002 and the undertaking given by the Company that it will bear the loss if there is any non / short realization of the attached asset.

These matters are sub-judice and the impact, if any, of its outcome is currently unascertainable.

iii. As regards pending dispute towards liability of property tax of the Firm with Municipal Corporation of Greater Mumbai / Slum Rehabilitation Authority for amount not paid for Rs. 102.35 lakhs and adjustment of amount paid under protest for Rs 33.74 lakhs for the period on or after April 2012.

iv. As regards opinion framed by the firm with respect to utilization of balance of goods and service tax of Rs. 178.24 lakhs, which will be depended on future GST output liability.

v. As regards provision of Rs. 2,078.79 lakhs being made towards cost to be incurred for rectification of defects, if any, on 12 buildings which are yet to be handed over to Slum Rehabilitation Authority (SRA) and certain buildings which are already handed over. Further, after considering the revised time frame for completing the work and handing over the buildings to the SRA, provision for delayed charges of Rs. 647.95 lakhs has been accounted as at March 31, 2021.

vi. As regards disputed income tax demand of Rs. 2,812.51 lakhs and the members'' commitment to reimburse interest / penalty of Rs. 5,584.91 lakhs that could devolve if the matter is decided against the said partnership firm.

vii. As regards order passed by Hon''ble Supreme Court of India confirming Order of Delhi High Court in one of the partnership firm, directing the Airport Authority of India (AAI) to conduct Aeronautical Studies without demolishing the structure of SRA buildings. In the opinion of the Management, the firm is hopeful for favourable outcome for construction activities from AAI and hence, it does not expect any financial outflow in this matter.

viii. There is significant uncertainty regarding completion of the Project in one of the partnership firm based on its management assessment and accordingly, the firm has not recognized revenue till such significant uncertainty exists.

Our opinion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements of the current year. These matters were addressed in the context of our audit of the standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters described in the Basis for Qualified Opinion and Material Uncertainty Related to Going Concern section above, we have determined the matter described below to be the key audit matter to be communicated in our report.

Key Audit Matter How the matter was addressed in the audit

Valuation of Inventory

(Refer Note 2.10 and 13 to the standalone Ind AS financial

Our audit procedures in respect of this area includes:

statements)

Obtained an understanding of management''s process and evalu-

Inventory consisting of projects under development have an

ated design and tested operating effectiveness of controls for valu-

aggregate value of Rs. 29,695.73 lakhs as on March 31,

ation of inventories.

2021.

Obtained valuation reports from independent valuer engaged by

These projects are under initial stages of development and

the management for projects Work-in-progress and evaluated the

the management estimates that net realizable value of

appropriateness of the underlying data, methodology applied by

these projects will be greater than the carrying cost based

independent valuer and assumption given by the management for

on the approved initial plans, future projections and future

inventory valuation.

prospects of these projects. As on March 31, 2021, there

Verified, on test check basis, the project related expenditure in-

is no much progress in development activities of these

curred during the year and analysed the movement of project work-

projects.

in-progress during the year.

Considering the materiality of the amount involved and

Verified, the project site in consideration and obtained an under-

degree of management judgment in valuation, we have

standing that whether site belong to the Company and all approv-

identified valuation of inventory as a key audit matter for the current year audit.

als are taken or not.

Other Information

The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Corporate Governance and Directors'' Report, but does not include the standalone Ind AS financial statements, consolidated Ind AS financial statements and our auditor''s report thereon.

Our opinion on the standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone Ind AS financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Standalone Ind AS Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including Ind AS prescribed under section 133 of the Act, read with the 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 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.

Auditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this standalone Ind AS financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone Ind AS financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether the standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone Ind AS financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter

We draw attention to Note 46 to the standalone Ind AS financial statements, regarding Share of profit (net) from investment in three partnership firms, five limited liability partnerships and two joint ventures aggregating to Rs. 3,801.42 lakhs for the year ended March 31, 2021, included in the standalone Ind AS financial statements, are based on the audited Ind AS financial statements of such entities. These Ind AS financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the standalone Ind AS financial statements, in so far as it relates to the amounts and disclosures included in respect of these entities, and our report in terms of section 143(3) of the Act, in so far as it relates to the aforesaid entities, is based solely on the reports of the other auditors.

Our opinion on the standalone Ind AS financial statements and our report on Other Legal and Regulatory Requirements below, is

not modified in respect of the above matter with respect to our reliance on the reports of the other auditors.

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 section 143(11) of the Act, we give in “Annexure 1”, a statement on the matters specified in paragraphs 3 and 4 of the Order,

to the extent applicable.

(2) As required by section 143(3) of the Act, we report that:

a. We have sought and except for the possible effects of the matters described in the Basis for Qualified Opinion section above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid standalone Ind AS financial statements;

b. Except for the possible effects of the matters described in the Basis for Qualified Opinion section above, 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 and the reports of the other auditors;

c. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this report are in agreement with the books of account;

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

e. The matters described under the Basis for Qualified Opinion, Material Uncertainty Related to Going Concern and Emphasis of Matter section above, in our opinion, may have an adverse effect on the functioning of the Company;

f. On the basis of the written representations received from the directors as on March 31,2021, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of section 164(2) of the Act;

g. With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure 2”;

h. With respect to the other matter to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act:

In our opinion and to the best of our information and according to the explanations given to us, the Company has not paid any

remuneration to its directors during the year;

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 standalone Ind AS financial statements - Refer Note 45 and Note 46A to 49, 52 and 54 on litigations and Contingent Liabilities to the standalone 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; and

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

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No.103523W / W100048

Snehal Shah

Partner

Membership No. 048539

UDIN : 21048539AAAADA3628

Place: Mumbai

Date: June 30 2021


Mar 31, 2018

INDEPENDENT AUDITOR’S REPORT

To the Members of D B Realty Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying Standalone Ind AS Financial Statements of D B Realty Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information, (hereinafter referred to as “Ind AS Financial Statements”).

Management’s Responsibility for the Standalone 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 Standalone Ind AS Financial Statements that give a true and fair view of the financial position (state of affairs), profit or loss (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 (Ind AS) specified under Section 133 of the Act, read with relevant rules issued thereunder. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls and ensuring their operating effectiveness and the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Ind AS Financial Statements, the Management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Standalone Ind AS Financial Statements based on our audit.

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Standalone Ind AS Financial Statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Standalone 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 Standalone Ind AS Financial Statements.

We are also responsible to conclude on the appropriateness of the Management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor''s report to the related disclosures in the Standalone Ind AS Financial Statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

Basis for Qualified Opinion

a. As stated in Note No. 60, regarding non recognition/ re-measurement of financial guarantees aggregating Rs. 456,164.86 lacs issued to banks/ financial institutions on behalf of various entities at fair value as required under Ind AS 109 - “Financial Instruments”. In absence of measurement of financial guarantees at fair value, we are unable to comment on the effects on the loss for the year.

b. As stated in Note No. 51, the Company has not evaluated whether any impairment provision is required for expected credit losses in accordance with Ind AS 109 - ''Financial Instruments'', for loans and advances aggregating Rs. 60,826.93 lacs and Investments aggregating Rs. 27,354.56 lacs, respectively, on March 31, 2018 to certain subsidiaries and associates which have incurred losses and have negative net worth as on March 31, 2018.

c. As stated in Note No. 2(B)(i)(d), the Company has measured its investments in equity instruments of one of its subsidiary company at fair value through other comprehensive income which the Management has not considered as a subsidiary. Had it been treated as a subsidiary, then as per accounting policy, it should be measured at cost. Consequently, investments in these instruments and other equity (other comprehensive income) are higher by Rs. 12,154.65 lacs and Rs. 9,626.48 lacs (net of tax) and deferred tax asset is lower by Rs. 2,528.17 lacs, respectively.

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 described in the Basis for Qualified Opinion paragraph, the aforesaid Standalone Ind AS Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs (financial position) of the Company as at March 31, 2018, its loss (financial performance including other comprehensive income), its cash flows and changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to the following matter in the notes to the Standalone Ind AS Financial Statements:

a. Note 50 (b) regarding no adjustment having been made in the value of inventory, pending outcome of the matter referred by the Company to the Supreme Court.

b. Note No. 7.2 regarding return on investments of Rs. 77,928.49 lacs in preference shares in a subsidiary company as on March 31, 2018. As explained by the Management, such investments are considered strategic and long term in nature and the current market value and future prospects of such investments are significantly in excess of Company''s investment in the investee company.

c. Note No. 9.2 regarding security deposits aggregating Rs. 6,476.33 lacs as on March 31, 2018, given to various parties for acquisition of development rights, as explained by the Management, the Company is in process of obtaining necessary approvals with regard to these properties and that their current market values are significantly in excess of their carrying values and are expected to achieve adequate profitability on substantial completion of such projects.

d. Note No. 13.1 regarding status of inventory consisting of projects having aggregate value of Rs. 30,584.05 lacs as on March 31, 2018 and the opinion framed by the Management about realizable value of the cost incurred, being a technical matter, has been relied upon by us

e. Notes No. 47, 48 and 49 regarding loans and advances aggregating Rs. 4,004.48 lacs and the investments aggregating Rs. 3,839.79 lacs as on March 31, 2018 are under litigation and are sub-judice. Based on the Management''s assessment of the outcome, no adjustments are considered necessary in respect of recoverability of balances. The impact, if any, of the outcome is unascertainable at present.

f. Note No. 52 as regards certain allegations made by the Enforcement Directorate against the Company and its two Key Managerial Persons, in a matter relating to Prevention of Money Laundering Act, 2002. This matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

g. Note No. 54 as regards attachment order issued by adjudicating authority under Prevention of Money Laundering Act, 2002, by which the Company''s assets amounting to Rs. 2,741.56 lacs have been attached on August 30, 2011. Consequently, the adjudicating authority has taken over the bank balance of Rs. 68.93 lacs and Investment in Redeemable Optionally Convertible Cumulative Preference Shares - Series A and Series C of a subsidiary company of Rs. 2,578.24 lacs in earlier years. The impact of the matter, if any, of its outcome is currently unascertainable.

h. Note No. 55 regarding the manner of recognition of the Company''s share in Association of Persons (''AOPs''), such share of profit/loss, as the case may be, are being recognized only when the AOP credits/debits the Company''s account in its books.

i. Note No. 46(A)(i)(ii)(iii) as regards the Audited Financial Statements of a Firm where the Company is one of the partners has following disclosures:

i. As regards recoverability of Trade Receivables of Rs. 2,722.98 lacs, the Partners of the Firm had taken effective steps for recovery and are not expecting any short realization. In the event of shortfall in realization, the same shall increase the debit balance of the Partners.

ii. Allegations made by the Central Bureau of Investigation (CBI) relating to the 2G spectrum case and regarding attachment order issued by adjudicating authority under Prevention of Money Laundering Act, 2002.

These matters are sub-judice and the impact, if any, of its outcome is currently unascertainable.

iii. As regards pending dispute towards liability of property tax of the Firm with Municipal Corporation of Greater Mumbai / Slum Rehabilitation Authority.

iv. As regards non-provision of disputed income tax liability of Rs. 2,911.63 lacs.

j. Note No. 46(B)(ii) regarding order passed by Hon''ble Delhi High Court in one of the Partnership Firm where the Company is a partner directing the Airport Authority of India (AAI) to conduct Aeronautical Studies without demolishing the structure of SRA buildings. In the opinion of the Management, the firm is hopeful for favorable outcome and hence it does not expect any financial outflow in this matter.

Our opinion is not modified in respect of these matters.

Other Matter

Note No. 46 regarding share of loss (net) from investment in three partnership firms, one Limited Liability Partnership and one Joint Venture aggregating Rs. 1,385.75 lacs, included in the Standalone Ind AS Financial Statements, is based on the financial statements of such entities. These financial statements have been audited by the auditors of these entities, whose reports have been furnished to us by the Management and our audit report on the Standalone Ind AS Financial Statements is based solely on such audit reports of the other auditors.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (Auditors'' 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 “Annexure 1”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(2) As required by Section 143(3) of the Act, we report as under to the extent applicable:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except for the matters described in the Basis for Qualified Opinion paragraph,;

b. Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. The Balance Sheet, the Statement of Profit and Loss, Statement of Cash Flow and the 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 matters described in the Basis for Qualified paragraph above, in our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rules issued thereunder;

e. The matters described under 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, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018 from being appointed as a director in terms of Section 164 (2) of the Act;

g. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our separate Report in “Annexure 2”.

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 Standalone Ind AS Financial Statements - Refer Note 45 on Contingent Liabilities and Note 46 to 49, 52 and 54 on litigations to the standalone Ind AS Financial Statements;

(ii) The Company did not have any long-term contracts including derivative contracts for which there could be material foreseeable losses;

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

[Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditor''s Report of even date to the members of D B Realty Limited (''the Company”) on the Standalone Ind-AS Financial Statements for the year ended March 31, 2018]

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. In case of identification and situation of fixed assets, the Company is in process of tagging individual assets based on their specific location.

(b) During the year, fixed assets have been physically verified by the Management as per the regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties recorded as fixed assets in the books of account of the Company are held in the name of the Company, except for the details given below:

(Rs. in lacs)

Land/ Building

Total number of cases

Leasehold/

Freehold

Gross Block as on March 31, 2018

Net Block as on March 31, 2018

Remarks

Sale Office - Pune

1

Freehold

139.45

Company has acquired Development Rights on the said property.

(ii) Inventories comprise of payments for acquisition of lands, tenancy rights, related compensation, contract payments and other expenditure on construction and development of the project of the Company. As explained to us, site visit was carried out during the year by the Management at reasonable intervals. In our opinion, the frequency of verification is reasonable. As informed, no material discrepancies were noticed on physical verification carried out during the year.

(iii) The Company has granted loans, secured or unsecured, to companies, firms, Limited Liability Partnerships and Joint Ventures covered in the register maintained under Section 189 of the Act.

(a) According to the information and explanations given to us and based on the audit procedures conducted by us, we are of the opinion that the terms and conditions of loans granted by the Company to eight parties covered in the register maintained under Section 189 of the Act, (total loan amount granted Rs. 12,707.10 lacs and balance outstanding as on March 31, 2018 is Rs. 6,156.60 lacs are prejudicial to the Company''s interest on account of the fact that the loans have been granted interest free.

(b) The schedule of repayment of principal and payment of interest in respect of such loans has not been stipulated. These loans are repayable on demand and principal and interest thereon have been received whenever demanded by the Company. Thus, we are unable to comment whether the repayments or receipts are regular and report amounts overdue for more than ninety days, if any, as required under paragraph 3(iii)(c) of the Order.

(iv) Based on information and explanation given to us in respect of loans, investments, guarantees and securities, the Company has complied with the provisions of Section 185 of the Act. Further, the provisions of Section 186 the Act are not applicable to the Company as it is engaged in the business of Real Estate development.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and the rules framed there under.

(vi) The Central Government of India has prescribed the maintenance of cost records for the products of the Company under subsection (1) of Section 148 of the Act and the rules framed there under. However, at present the Company does not fall under the criteria for which such records are required to be maintained. Hence, the said rules are not applicable to the Company.

(vii) (a) The Company is not regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, employees'' state insurance, income tax, service tax, value added tax, goods and service tax, cess and other material statutory dues applicable to it, and there have been serious delays in a few cases. As explained to us, the provisions regarding sales tax, customs duty and excise duty are presently not applicable to the Company. and

According to the information and explanations given to us, undisputed dues in respect of provident fund, employees'' state insurance, income tax, sales tax, service tax, value added tax, goods and service tax, cess and any other material statutory dues applicable to it, which were outstanding, at the yearend for a period of more than six months from the date they became payable are as follows:

Name of the statute

Nature of the dues

Amount

Period to which the amount relates

Due Date

Date of Payment

Finance Act, 1994

Service Tax Liability and interest thereon

4.55

April 2010 to March 2012

Various Dates

Not Paid

Finance Act, 1994

Service Tax under Reverse Charge Mechanism

1.04

June 2017

Various Dates

Not Paid

Finance Act, 1994

Krishi Kalyan Cess

0.09

August 2016 to June 2017

Various Dates

Not paid

Finance Act, 1994

Swachh Bharat Cess

0.08

August 2016 to June 2017

Various Dates

Not paid

Finance Act, 1994

Work Contract Tax

0.02

June 2017

July 21, 2017

Not paid

The Maharashtra Value Added Tax Act, 2002

Value Added Tax

0.12

May 2017

June 21, 2017

Not paid

Mumbai Municipal Corporation Act, 1888

Property Tax

368.35

April 2010 to September 2017

Various Dates

Not paid

Wealth Tax Act, 1957

Wealth Tax

9.38

April 2013 to March 2015

Various Dates

Not paid

The Maharashtra Value Added Tax Act, 2002

Value Added Tax

10.06

March 2016

April 21, 2016

Not paid

(b) According to the information and explanation given to us, the dues outstanding with respect to, income tax, sales tax, service tax, value added tax, goods and service tax, on account of any dispute, are as follows:

(Rs. in lacs)

Name of the statute

Nature of dues

Amount

Period to which the amount relates

Forum where dispute is pending

Income Tax Act, 1961

Income Tax

39.14

A.Y 2010-11

Commission of Income Tax (Appeals)

Income Tax Act, 1961

Income Tax

627.95

A.Y 2012-13

Commission of Income Tax (Appeals)

Income Tax Act, 1961

Income Tax

290.44

A.Y 2013-14

Commission of Income Tax (Appeals)

Income Tax Act, 1961

Income Tax

170.55

A.Y 2014-15

Income Tax Appellate Tribunal, Mumbai

Income Tax Act, 1961

Income Tax

1,210.54

A.Y 2015-16

Commission of Income Tax (Appeals)

Finance Act, 1994

Service Tax

5,419.40*

F.Y. 2011-12 to F.Y. 2015-16

Commission of Service Tax

(*Excluding interest and penalty as the case may be)

(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to financial institutions and banks, except for the details given below:

(Rs. In lacs

Sr No

Particulars

Amount of Default as at 31st March, 2018

Period of Default

1

ICICI Bank Limited

Principal

645.98

Since January, 2018

Interest

203.69

Since July, 2017 Onwards

2

Reliance Home Finance Limited

Interest

1,198.47

Since December 2017 Onwards

3

Reliance Commercial Finance Limited

Interest

36.20

Since December 2017 Onwards

(ix) In our opinion and according to the information and explanation given to us, the Company has not raised money by way of initial public issue offer / further public offer (including debt instruments) during the year. However, the Company has obtained term loans and, utilized the same for the purposes for which they were raised.

(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such instance by the Management. However, we are informed that during the financial year 2010-2011, the CBI in its charge sheet filed in connection with irregularities in the allotment of 2G telecom license, has accused certain Directors of the Company (in their capacity as promoters of a telecom licensee Company). Two other Management Personnel of the Company have also been charge sheeted in their capacity as Directors of another Company (Refer Note 54) which is alleged to have paid an amount of Rs. 20,000 lacs as illegal gratification in the same connection. As explained to us, the Company is not directly a party to the allegations and Special Court has passed the order acquitting all the accused via order dated 21.12.2018. However, the matter is sub-judice in the Delhi High Court as on reporting date due to appeal filed by CBI against the order of Special court.

Also, the Company is in receipt of summons from Special Court for Prevention of Money Laundering Act (PMLA), Mumbai as one of the accused in connection with a complaint filed by Enforcement Directorate under ECIR No. ECIR/MBZO/07/2015 and ECIR/MBZO/08/2015. The Hon''ble Court has also now summoned two of the Key Managerial Personnel''s (KMP) of the Company as accused as per the said complaint. The matter in relation to the Company and the KMPs involves certain advances given by the Company in the ordinary course of its business to another company, which was subsequently refunded fully upon cancellation of the understanding (Refer Note 52).

(xi) According to the information and explanations given to us, the Company has not paid / provided for managerial remuneration. Accordingly, paragraph 3(xi) of the Order is not applicable to the Company.

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

(xiii) According to the information and explanation given to us, all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable and the details have been disclosed in the Standalone Ind AS Financial Statements etc., as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Therefore, paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him during the year.

(xvi) According to the information and explanations given to us and based on legal opinion obtained, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934

[Referred to in paragraph 2 under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditor''s Report of even date to the members of D B Realty Limited on the Standalone Ind AS Financial Statements for the year ended March 31, 2018]

Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of D B Realty Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Standalone Ind AS Financial Statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI”) (“the Guidance Note”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing specified under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, 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 over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has in all material respects, an adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No.103523W/W100048

Snehal Shah

Partner

Membership No. 048539

Mumbai: May 28, 2018


Mar 31, 2017

INDEPENDENT AUDITOR’S REPORT

To the Members of D B Realty Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying Standalone Ind AS Financial Statements of D B Realty Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss (including 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 (hereinafter referred to as “Ind AS Financial Statements”).

Management’s Responsibility for the Standalone 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 Standalone Ind AS Financial Statements that give a true and fair view of the financial position (state of affairs), profit or loss (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 under Section 133 of the Act, read with relevant Rules framed there under. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls and ensuring their operating effectiveness and the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Standalone Ind AS Financial Statements based on our audit.

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Standalone Ind AS Financial Statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Standalone 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 Standalone 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 Standalone Ind AS Financial Statements.

Basis for Qualified Opinion

a. As stated in Note 62 regarding non recognition/ re-measurement of financial guarantees aggregating '' 43,238,126,800/- issued to banks/ financial institutions on behalf of various entities at fair value as required under Ind AS 109 - Financial Instruments. In absence of measurement of financial guarantees at fair value, we are unable to comment on the effects on the loss for the reported periods.

b. As stated in Note 54, the Company has not evaluated whether any impairment provision is required for expected credit losses in accordance with Ind AS 109 - ''Financial Instruments'', for loans and advances amounting to '' 6,252,598,617/- as on March 31, 2017 to certain subsidiaries and an associate, which have incurred losses and have negative net worth.

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 described in the Basis for Qualified Opinion paragraph, the aforesaid Standalone Ind AS Financial Statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the state of affairs (financial position) of the Company as at 31st March, 2017, its loss (financial performance including other comprehensive income), its cash flows and changes in equity for the year ended on that date.

We draw attention to the following matter in the notes to the Standalone Ind AS Financial Statements:

a. Note 53(b) regarding no adjustment having been made in the value of inventory, pending outcome of the matter referred by the Company to the Supreme Court.

b. Note 7.2 regarding return on investments of '' 5,613,858,167/- in preference shares in a subsidiary company as on March 31, 2017 as explained by the Management, such investments are considered strategic and long term in nature and the current market value and future prospects of such investments are significantly in excess of Company''s investment in the investee company.

c. Note 9.2 regarding security deposits aggregating '' 1,138,170,442/- as on March 31, 2017, given to various parties for acquisition of development rights, as explained by Management, the Company is in process of obtaining necessary approvals with regard to these properties and that their current market values are significantly in excess of their carrying values and are expected to achieve adequate profitability on substantial completion of such projects.

d. Note 13(i) regarding status of inventory consisting of projects having aggregate value of '' 2,861,992,735/- as on March 31, 2017 and the opinion framed by the Management about realizable value of the cost incurred, being a technical matter, has been relied upon by us.

e. Notes 49, 50, 51, 52 and 53(a) regarding loans and advances aggregating Rs, 577,205,925/- (including amount inventoried Rs, 36,100,000) granted by the Company and the investments aggregating Rs, 384,078,720/- as on March 31, 2017 which are under litigation and are sub-judice. Based on Management''s assessment of the outcome, no adjustments are considered necessary in respect of recoverability of these balances. The impact, if any, of the outcome is unascertainable at present.

f. Note 54 regarding Company''s investments aggregating Rs, 2,585,050,052/- as on March 31, 2017 in certain subsidiaries, associates and jointly controlled entities, which have incurred losses and have negative net worth. As explained to us, these entities are in early stages of real estate development and the investments are considered good and recoverable based on Management''s assessment of the projects under execution.

g. Note 55 as regards certain allegations made by the Enforcement Directorate against the Company and one of its Key Managerial Persons, in a matter relating to Prevention of Money Laundering Act, 2002, this matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

h. Note 63 as regards the status of various ongoing projects, recognition of expense and income and the realizable value of the costs incurred are as per the judgment of Management of the Company and certified by their technical personnel and being of technical nature, have been relied upon by us.

i. Note 57 as regards attachment order issued by adjudicating authority under Prevention of Money Laundering Act, 2002, by which the Company''s assets amounting to Rs, 753,220,671/- have been attached on August 30, 2011. Consequently, the adjudicating authority has taken over the bank balance of Rs, 6,892,967/- and Investment in Redeemable Optionally Convertible Cumulative Preference Shares - Series A & Series C of an entity of Rs, 736,705,009/- in earlier years. This matter is sub-judice and the impact, if any, of its outcome is currently unascertainable.

j. Note 58 regarding the manner of recognition of the Company''s share in Association of Persons (''AOPs''), such share of profit/ loss, as the case may be, are being recognized only when the AOP debits/credits the Company''s account in its books.

k. Note 48(A)(iii)(1) & (2) as regards the Audited Financial Statements of a Firm where the Company is one of the partners has following disclosures:

i. Allegations made by the Central Bureau of Investigation (CBI) relating to the 2G spectrum case and regarding attachment order issued by adjudicating authority under Prevention of Money Laundering Act, 2002.

ii. As regards recoverability of trade receivables of Rs, 366,404,105/-, the partners of the Firm had taken effective steps for recovery and are not expecting any short realization. In the event of shortfall in realisation, the same shall increase the debit balance of the Partners.

These matters are sub-judice and the impact, if any, of its outcome is currently unascertainable.

l. Note 48(B)(ii) as regards order passed by Appellate Committee of Ministry of Civil Aviation in one of the Partnership Firm where the Company is a partner for demolition of the floors beyond the permissible height. The firm is in appeal before the Honourable Delhi High Court against the said order. In the opinion of the Management, the firm is hopeful for favourable outcome and hence it does not expect any financial outflow in this matter.

Our opinion is not modified in respect of these matters.

Other Matter

Notes 48 regarding share of loss (net) from investment in three partnership firms, one Limited Liability Partnerships and one joint venture aggregating Rs, 29,424,159/-, included in the statement, is based on the financial statements of such entities. These financial Statements have been audited by the auditors of these entities, whose reports have been furnished to us by the management and our audit report on the Statement is based solely on such audit reports of the other auditors.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

(1) As required by the Companies (AuditorsRs, 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 “Annexure 1”, a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

(2) As required by Section 143(3) of the Act, we report as under, to the extent applicable:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit except for matters described in the Basis for Qualification and matter stated in sub paragraphs h(iv) below;

b. Except for possible effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

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

d. Except for possible effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant Rules framed there under;

e. The matters described under the Basis of Qualification and under the Emphasis of Matter 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 Act;

g. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, we give our separate Report in “Annexure 2”;

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 Standalone Ind AS Financial Statements - Refer Note 47 on Contingent Liabilities and Notes 49 to 53, 55 and 57 on litigations to the Standalone Ind AS Financial Statements;

(ii) The Company did not have any long-term contracts including derivative contracts. Hence, the question of any material foreseeable losses does not arise;

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

(iv) The Company has provided requisite disclosures in its Standalone Ind AS Financial Statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016. However, we are unable to obtain sufficient and appropriate audit evidence to report on whether the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management. (Refer Note 41 to the Standalone Ind AS Financial Statements)

[Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditor''s Report of even date to the members of D B Realty Limited (“the Company”) on the Standalone Ind AS Financial Statements 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. In case of identification and situation of fixed assets, the Company is in the process of tagging individual assets based on their specific location.

(b) During the year, fixed assets have been physically verified by the Management as per the regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) The title deeds of immovable properties recorded as fixed assets in the books of account of the Company are held in the name of the Company, except for the details given below:

Particulars

Total number of cases

Leasehold/

Freehold

Gross Block as on March 31, 2017

Net Block as on March 31, 2017

Remarks

Sales Office -Pune

1

Freehold

31,812,134

1,590,607

Company has acquired Development Rights on the said property.

(ii) The Inventories comprising of expenditure incurred on acquisition of lands & tenancy rights, development rights, material at site, Transferrable Development Rights and other expenditure on construction and development thereof have been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable. As informed, no material discrepancies were noticed on physical verification carried out during the year.

(iii) The Company has granted loans, secured or unsecured, to companies, firms, Limited Liability Partnerships and Joint Ventures covered in the register maintained under Section 189 of the Act.

(a) According to the information and explanations given to us and based on the audit procedures conducted by us, we are of the opinion that the terms and conditions of aforesaid loans granted by the Company to five parties covered in the register maintained under Section 189 of the Act, (Total loan amount granted of '' 1,671,974,903/- and balance outstanding as on March 31, 2017 is '' 358,650,635/-) are prejudicial to the Company''s interest on account of the fact that the loans have been granted interest free.

(b) The schedule of repayment of principal and payment of interest in respect of such loans has not been stipulated. These loans are repayable on demand and principal and interest thereon have been received whenever demanded by the Company. Thus we are unable to comment whether the repayments or receipts are regular and report on amounts overdue for more than ninety days, if any, as required under paragraph 3(iii)(c) of the Order.

(iv) Based on information and explanation given to us in respect of loans, investments, guarantees and securities, the Company has complied with the provisions of Section 185 of the Act. Further, the provisions of Section 186 of the Act are not applicable to the Company as it is engaged in the business of Real Estate development.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the provisions of Sections 73 to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of products where the maintenance of cost records has been specified by the Central Government under sub-section (1) of Section 148 of the Act and the rules framed there under and we are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(vii) The Company is not regular in depositing with appropriate authorities, undisputed statutory dues including provident fund, employees'' state insurance, income tax, service tax, value added tax, cess and other material statutory dues applicable to it, and there have been serious delays in a few cases. As explained to us, the provisions regarding sales tax, customs duty and excise duty are presently not applicable to the Company.

(a) According to the information and explanations given to us, undisputed dues in respect of provident fund, employees'' state insurance, income tax, service tax, value added tax, cess and any other material statutory dues applicable to it, which were outstanding, at the yearend for a period of more than six months from the date they became payable are as follows:

Name of the statute

Nature of the dues

Amount

Period to which the amount relates

Due Date

Date of Payment

Finance Act, 1994

Service Tax Liability and interest thereon

455,163

April 2010 to March 2012

Various Dates

Not Paid

Wealth Tax Act, 1957

Wealth Tax

937,610

April 2013 to March 2015

Various Dates

Not Paid

Mumbai Municipal Corporation Act, 1888

Property Tax

56,567,197

April 2010 to September 2016

Various Dates

Not paid

The Maharashtra Value Added Tax Act, 2002

Value Added Tax

1,006,642

March 2016

21st April, 2016

Not Paid

(b) According to the information and explanation given to us, the dues outstanding with respect to, income tax, service tax and value added tax on account of any dispute, are as follows:

Name of the statute

Nature of dues

Amount

Period to which the amount relates

Forum where dispute is pending

Income Tax Act, 1961

Income Tax

27,548,990

A.Y 2012-13

ITAT, Mumbai

Income Tax Act, 1961

Income Tax

21,752,440

A.Y 2013-14

Commission of Income Tax (Appeals)

Income Tax Act, 1961

Income Tax

17,055,160

A.Y 2014-15

Commission of Income Tax (Appeals)

(viii) According to the information and explanations given to us, the Company has not defaulted in repayment of loans or borrowings to financial institutions and banks, except for details given below:

Sr

No

Particulars

Amount of Default as at 31st March, 2017 (?)

Period of Default

1

Reliance Capital Limited

Interest

134,745,484

Since January 2017

2

LIC Housing Finance Limited

Principal

306,303,767

Since January 2016

Interest

64,177,300

Since January 2016

3

ICICI Bank Limited

Principal

22,327,330

Since January 2017

Interest

2,633,975

Since January 2017

Interest

2,411,176

Since February 2017

Interest

2,701,770

Since March 2017

4

India bulls Housing Finance Ltd.

Interest

3,228,012

Since March 2017

(ix) In our opinion and according to the information and explanation given to us, the Company has not raised money by way of initial public issue offer/further public offer (including debt instruments) during the year. However, the Company has obtained term loans and, utilized the same for the purposes for which they were raised.

(x) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud by the Company or any fraud on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such instance by the management. However, we are informed that during the financial year 2010-11, the CBI in its charge sheet filed in connection with irregularities in the allotment of 2G telecom license, has accused certain Directors of the Company (in their capacity as promoters of a telecom licensee Company). Two other Management Personnel of the Company have also been charge sheeted in their capacity as Directors of another Company (Refer Note 57) which is alleged to have paid an amount of '' 2,000,000,000 as illegal gratification in the same connection. As explained to us, the Company is not directly a party to the allegations and the matter is sub-judice in the Court of Special Judge (CBI), New Delhi. Also, the Company is in receipt of Summons from Special Court for Prevention of Money

Laundering Act (PMLA), Mumbai as one of the accused in connection with a complaint filed by Enforcement Directorate under ECIR No. ECIR/MBZO/07/2015 & ECIR/MBZO/08/2015. The Hon''ble Court has also now summoned one of the KMP''s of the Company as one of the accused as per the said complaint. The matter in relation to the Company and the KMP involves certain advances given by the Company in the ordinary course of its business to another company, which was subsequently refunded fully upon cancellation of the understanding (Refer Note 55).

(xi) According to the information and explanations given to us, the Company has not paid / provided for managerial remuneration. Accordingly, paragraph 3(xi) of the Order is not applicable to the Company.

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

(xiii) According to the information and explanation given to us, all transactions entered into by the Company with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards.

(xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Therefore, paragraph 3(xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him during the year.

(xvi) According to the information and explanation given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

[Referred to in paragraph 2(g) under ''Report on Other Legal and Regulatory Requirements'' in the Independent Auditor''s Report of even date to the members of D B Realty Limited on the standalone IndAS financial statements for the year ended March 31, 2017]

Report on the Internal Financial Controls over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of D B Realty Limited (“the Company”) as of March 31, 2017 in conjunction with our audit of the standalone IndAS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (“ICAI”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing specified under Section 143(10) of the Act to the extent applicable to an audit of internal financial controls, 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 over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 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 Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

For Haribhakti & Co. LLP

Chartered Accountants

ICAI Firm Registration No.103523W/W100048

Snehal Shah

Partner

Membership No. 48539

Mumbai : June 09, 2017


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' 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 auditors'' 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 company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) in the case of the 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.

Emphasis of Matter

Attention is invited to:

1. Note No. 11.4 of the financial statements regarding return on the investments of Rs. 14,276,960,804 in preference shares of an entity. As explained by the Management, investments in this entity is considered strategic and long term in nature and the current market value and future prospects of these investments are significantly in excess of company''s investment in this entity.

2. Note No. 12.2 of the financial statements regarding security deposits of Rs. 3,575,000,000 given to various related parties for acquisition of development rights. As explained by management, the Company is in process of obtaining necessary approvals with regard to such properties and that the current market values of such properties are significantly in excess of their carrying values and are expected to achieve adequate profitability on substantial completion of their projects.

3. Note No. 12.4 of the financial statements regarding non availability of contract documents in respect of project advances of Rs. 781,945,000 provided by the Company to its two Associate Companies.

4. Note No. 15 of the financial statements regarding the status of the projects and the opinion framed by the Company regarding realizable value of the cost incurred, being a technical matter, relied upon by us.

5. Note No. 21 of the financial statements which includes share of losses (net) from investment in two partnership firms and LLPs (the ''Firms'') aggregating Rs. 11,245,491 and investments in these Firms aggregating Rs. 1,455,037,477 (Refer Note 11 & 14). These are based on financial statements of the firms as audited by other auditors, whose reports have been furnished to us and which have been relied upon by us.

6. Note No. 21.1 of the financial statements regarding share of loss from partnership firms which includes Rs. 1,525,214, which is based on the accounts as approved by only the Company, in its capacity as one of the partners of the firm. These financial statements have not yet been approved by other two partners.

7. Note No. 27 of the financial statements regarding guarantees issued and securities of Rs. 28,973,772,400 provided by the Company to banks and financial institutions on behalf of various entities, which are significant in relation to the net worth of the Company. In the opinion of the Company, these are not expected to result into any financial liability on the Company.

8. The following disclosures in audited financial statements in respect of a partnership firm viz. Dynamix Realty (''Dynamix'') where the Company is one of the partners:

I. Recoverability of debtors, loans granted and interest receivable aggregating Rs. 285,340,266, out of which unsecured loan of Rs. 87,150,000 granted to Companies in which Directors of the Company are interested. (Refer Note 28A (i))

These amounts are considered as good and recoverable as stated in the Note.

II. Allegations made by the Central Bureau of Investigation (CBI) relating to the 2G Spectrum case {Refer Note 28A (ii)} This matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

9. Note No. 29 to 31 of the financial statements regarding matters which are sub-judice. Based on the company''s assessment of the outcome, no adjustments are considered necessary in respect of recoverability of balances as at March 31, 2014 for loans and advances aggregating Rs. 1,657,901,131 and investments of Rs. 312,018,720.

10. Note No. 32 (b) of the financial statements regarding MAT Credit Entitlement of Rs. 37,500,000, which is based on the judgment of management.

11. Note No. 33 of the financial statements regarding the company''s investments aggregating Rs. 408,054,120 in and loans & advances aggregating Rs. 2,625,383,640 to certain subsidiaries, jointly controlled entities and associates, which have incurred losses and also have negative net worth. As explained in the Note, investments in these entities are considered strategic and long term in nature, the entities are in early stage of real estate development and in the opinion of the Company, have current market values of certain properties significantly in excess of carrying values and are expected to achieve adequate profitability on substantial completion of their projects.

12. Note No. 40 of the financial statements regarding attachment order issued by adjudicating authority under Prevention of Money Laundering Act (PML Act), by which the company''s assets amounting to Rs. 521,621,696 have been attached on August 30, 2011. Out of these assets, adjudication authority has taken over the bank balance of Rs. 6,892,967. This matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

13. Note No. 43 of the financial statements regarding manner of recognition of the company''s share in Association of Persons. Our opinion is not qualified in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' 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 referred to in sub-section (3C) of Section 211 of the Act;

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

ANNEXURE TO AUDITORS'' REPORT

[Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' of the Independent Auditors'' Report of even date to the members of DB Realty Limited on the financial statements for the year ended on 31st March, 2014]

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

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

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed off by the Company during the year.

(ii) (a) Inventories comprise of expenditure incurred on acquisition of plot of lands and tenancy rights, development rights

and other expenditure on construction and development thereof. The inventory has been physically verified by the management during the year. In our opinion, the frequency of verification is reasonable.

(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, except for records in respect of payments to tenants, where documentation needs to be considerably strengthened by the Company. No material discrepancies were noticed on physical verification carried out at the end of the year.

(iii) (a) The Company has granted loan to sixteen Companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 5,529,351,993 and the year- end balance was Rs. 3,971,649,275.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are, prima facie, not prejudicial to the interest of the Company. Attention is also invited to Para

11 of Emphasis of Matter in the Auditors'' Report of even date.

(c) These loans (including interest thereon) are repayable on demand and there are no repayment schedules. As informed, the Company has not demanded repayment of any such loans and interest during the year, thus, there has been no default on the part of the parties to whom the money has been lent.

(d) There is no overdue amount of loans granted to Companies, Firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company had taken loans from three Companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 967,141,669 and the year-end balance of loans taken from such parties was Rs. 717,034,789.

(f) In our opinion, the rate of interest and other terms and conditions for such loans are, prima facie, not prejudicial to the interest of the Company.

(g) Since these loans (including interest thereon) are repayable on demand and there is no repayment schedule, the question of repayment being regular, does not arise.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that prelaunch advances of Rs. 44,143,700 from prospective buyers where the Company is in the process of finalizing the term sheets/ agreements, supporting receipts are in accordance with general industry practice; there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods and services. As regards project inventory, the Company needs to strengthen internal controls for (a) tenancy payments/ compensation and (b) project contracting (including proper documentation for comparative quotations and machinery/mobilization advances) to be commensurate with the size of the Company and the nature of its business. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956, that need to be entered into the register maintained under section 301, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rs. five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time. However, in respect of an investment of Rs. 5,054,256,000 made during the year in shares in an entity, due to the nature of such transaction, we are unable to comment upon the prevailing market price.

(vij In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) The Company has appointed internal auditors for the financial year 2013-14 on 14thApril, 2014. Their report is not yet received.

(viii) We have been informed by the Management that the Company has maintained the cost records and accounts, pursuant to the Rules made by the Central Government of India, under clause (d) of sub-section (1) of Section 209 of the Act. However, these records have not been provided to us for our verification.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance,

income-tax, sales-tax, service tax, cess have not been regularly deposited with the appropriate authorities and there has been a slight delay in 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, sales-tax, customs duty, excise duty, cess and other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. The details of such outstandings in respect of service tax are as follows:

Name of the Nature of the dues Amount Period to which the statute (Rs ) amount relates

Finance Act, Service Tax 455,163 2010 to 2012 1994 Liability and interest thereon

Name of the Due Date Date of statute Payment

Finance Act, Various Not paid 1994 Periods

(c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute.

(x) The Company does not have accumulated losses at the end of the financial year. However, the Company has incurred cash losses during the current financial year. It has not incurred cash losses during the preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to financial institutions and banks or debenture holders except for an interest of Rs. 172,808 due for payment on 31st March 2014.

(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 & 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 (xiii) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003 (as amended) 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. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees of Rs. 25,673,772,400 given by the Company, for loans taken by others from banks or financial institutions, are prejudicial to the interest of the Company.

(xvi) In our opinion, except for Rs. 196,134,000, the term loans have been applied for the purpose for which the loans were raised. Out of this, Rs. 1,184,000 are lying in the current account.

(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 the Company has used funds of Rs. 2,322,589,879 raised on short-term basis for long-term investment.

(xviii) According to the information and explanation given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956

(xix) The Company did not have outstanding debentures during the year and hence this clause is not applicable.

(xx) The Company has not raised money by way of public issue during the year.

During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management. However, we are informed that as explained in Note 28, during the financial year 2010-11, the CBI in its charge sheet filed in connection with irregularities in the allotment of 2G telecom license, has accused certain Directors of the Company (in their capacity as promoters of a telecom licensee Company). Two other Management Personnel of the Company have also been charge sheeted in their capacity as Directors of another Company (Refer Note 40) which is alleged to have paid an amount of Rs. 2,000,000,000 as illegal gratification in the same connection. As explained to us, the Company is not directly a party to the allegations and the matter is sub-judice in the Court of Special Judge (CBI), New Delhi.

For Haribhakti & Co. Chartered Accountants Firm Registration No.103523W

Chetan Desai Partner Membership No. 17000

Mumbai: 24th May, 2014


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying fi nancial statements of DB Realty Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profi t and Loss and Cash Flow Statement for the year then ended and a summary of signifi cant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the fi nancial 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 fi nancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fi nancial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the fi nancial 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 Profi t and Loss, of the profi t for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash fl ows for the year ended on that date.

Emphasis of Matter

1. We draw attention to Note No. 37 regarding managerial Remuneration of Rs. 6,000,000 paid by the Company has exceeded the limits specifi ed under Schedule XIII read with Sec 349, 350 & 198 of the Companies Act, 1956. We are informed that the Company will recover the excess remuneration of Rs. 6,000,000 from the relevant Directors during FY 2013-14.

2. We draw attention to Note No. 42 regarding attachment order issued by adjudicating authority under Prevention of Money Laundering Act (PML Act), by which the Company''s assets amounting to Rs. 521,621,696 have been attached on August 30, 2011. This matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

3. We draw attention to Note No. 21 which includes share of losses (net) from investment in partnership fi rms and LLPs (the ‘Firms'') aggregating Rs. 93,097,413 and investments in these Firms aggregating Rs. 2,613,624,756 (Refer Note 11 & 14); are based on fi nancial statements of the fi rms as audited by other auditors whose reports have been furnished to us and which have been relied upon by us.

4. We draw attention to the following disclosures in audited fi nancial statements in respect of a partnership fi rm viz. Dynamix Realty (‘Dynamix'') where the Company is one of the partner :

I. Outstanding receivables of Rs 737,420,341 as at March 31, 2013 from Companies in which Directors of the Company are interested. (Refer Note 30 (A)(i) (1) and (2))

These amounts are considered as good and recoverable as stated in the said disclosure.

II. Allegations made by the Central Bureau of Investigation of India ("CBI") relating to the 2G Spectrum case {Refer Note 27 (A) (iii)}

This matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

5. We draw attention to note number 27, regarding guarantees issued and securities provided aggregating Rs. 24,148,098,400 issued by the Company to banks and fi nancial institutions on behalf of various entities, which are signifi cant in relation to the net worth of the Company at the year end. In the opinion of the Company, these are not expected to result into any fi nancial liability to the Company.

6. We draw attention to note number 35 regarding the Company''s investments aggregating Rs. 2,046,339,120 in and loans and advances aggregating Rs. 3,043,702,747 to, certain subsidiaries, joint controlled entities and associates which have incurred losses and also have negative net worth as at the year end. As explained in the said Note, investments in these entities are considered strategic and long term in nature, the entities are in early stage of real estate development and in the opinion of the Company, have current market values of certain property signifi cantly in excess of carrying values and are expected to achieve adequate profi tability on substantial completion of their projects.

7. We draw attention to Note No. 31 to 33 regarding matters which are sub-judice, based on the Company''s assessment of the outcome, no adjustments are considered necessary in respect of recoverability of balances as at March 31, 2013 for loans and advances aggregating Rs. 1,676,350,333 and investments of Rs. 312,018,720.

8. We draw attention to Note No. 15 of the fi nancial statements regarding the status of the projects and the opinion framed by the Company regarding realizable value of the cost incurred, being a technical matter, relied upon by us.

9. We draw attention to note no 46 w.r.t manner of recognition of Company''s share in Association of Persons. Our opinion is not qualifi ed in respect of the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' 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 specifi ed 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 Profi t 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 Profi t and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956;

e. on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualifi ed 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 AUDITORS'' REPORT

[Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements'' of the Independent Auditors'' Report of even date to the members of DB Realty Limited on the fi nancial statements for the year ended on 31st March, 2013]

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

(b) All the fi xed assets have not been physically verifi ed by the management during the year but there is a regular programme of verifi cation which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verifi cation.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fi xed assets has been disposed off by the Company during the year.

(ii) (a) Inventories comprise of expenditure incurred on acquisition of plot of lands and tenancy rights, development rights and other expenditure on construction and development thereof. The inventory has been physically verifi ed by the management during the year. In our opinion, the frequency of verifi cation is reasonable.

(b) The procedures of physical verifi cation 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, except for records in respect of payments to tenants where documentation needs to be considerably strengthened by the Company and no material discrepancies were noticed on physical verifi cation carried out at the end of the year.

(iii) (a) The Company has granted loan to seventeen companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 5,321,461,703 and the year- end balance of loans granted to such parties was Rs. 4,825,061,807.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company. Attention is invited to Para 6 of Auditors'' Report of even date.

(c) The said loans (including interest thereon) are repayable on demand and there are no repayment schedules. Accordingly, the question of overdue amount does not arise.

(d) There is no overdue amount of loans granted to companies, fi rms or other parties listed in the register maintained under section 301 of the Companies Act, 1956.

(e) The Company had taken loan from two companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 964,832,142 and the year-end balance of loans taken from such parties was Rs. 714,725,262.

(f) In our opinion, the rate of interest and other terms and conditions for such loans are not, prima facie, prejudicial to the interest of the Company.

(g) Since the said loans (including interest thereon) are repayable on demand except for one of the loan taken from a subsidiary and there is no repayment schedule, the question of repayment being regular does not arise. In respect of the loan from a subsidiary, it is repayable after three years from acceptance and hence, the question of repayment being regular does not arise.

iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that prelaunch advances from prospective buyers where the Company is in the process of fi nalizing the term sheets/ agreements, supporting receipts for aggregate consideration of Rs. 45,793,700 are in accordance with general industry practice; there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fi xed assets and with regard to the sale of goods and services. As regards project inventory, the Company needs to strengthen internal controls for (a) tenancy payments/ compensation (as stated in ii (c) above) and (b) project contracting (including proper documentation for comparative quotations and machinery/mobilization advances) to be commensurate with the size of the Company and the nature of its business. During the course of our audit, we have not observed any continuing failure to correct weakness in internal control system of the company.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rs fi ve lakhs have been entered into during the fi nancial year at prices which are reasonable having regard to the prevailing market prices at the relevant time except for certain transactions in respect of (1) aircraft charges of Rs. 10,048,565 (referred to in iv above) awarded to an entity and approved by the Board of Directors where comparable quotations for additional scope of work were not available and in respect of which we are unable to comment.

(vij In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) The Company has an internal audit system, the scope and coverage of which, in our opinion requires to be enlarged to be commensurate with the size and nature of its business.

(viii) We have been informed by the Management regarding the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act. However, the same records have not been provided to us for our verifi cation.

(ix) (a) The Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, service tax, cess and other material statutory dues applicable to it.

(c) According to the information and explanation given to us, there are no dues of income tax, service tax and cess which have not been deposited on account of any dispute.

(x) In our opinion, the accumulated losses of the Company are not more than fi fty percent of its net worth. Further, the Company has not incurred cash losses during the fi nancial year covered by our audit and the immediately preceding fi nancial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to a fi nancial institution and bank. The Company has not issued any debentures 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 & 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 benefi t fund/ society. Therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003 (as amended) 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. Accordingly, the provisions of clause (xiv) of paragraph 4 of the Companies (Auditor''s Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the company, for loans taken by others from banks or fi nancial institutions during the year, are not prejudicial to the interest of the company.

The Company had given guarantees (as referred in Note 27, 28 & 29) on behalf of four non- group entities and the balance of Rs 17,739,848,400 (previous year Rs 15,589,597,000) is subsisting as at the year end. As informed to us, the Board of Directors have approved the same considering the long term business interests of the Company and the same were consented to in writing by the non-promoter group shareholders in those years. Based on approvals/ written consents/ control relationships, the terms and conditions of such guarantees have been regarded as, prima facie not prejudicial to the interests of the Company.

(xvi) In our opinion, the term loans have been applied for the purpose for which the loans were raised.

(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 the Company has used funds raised on short term basis for long term investment. The Company has borrowed loan amounting to Rs. 61 crores which would fall due for repayment six months from the date of acceptance. The Company has invested Rs. 34.74 Crores out of the same in preference shares in one of the company under the same management.

(xviii) According to the information and explanation given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956

(xix) The Company did not have outstanding debentures during the year and hence this clause is not applicable.

(xx) We have verifi ed that the end use of money raised by public issues from the draft prospectus fi led with SEBI, the offer document and as disclosed in the note 45 to the fi nancial statements.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management. However, we are informed that during the fi nancial year 2010-11, the CBI in its charge sheet fi led in connection with irregularities in the allotment of 2G telecom license, has accused the Managing Directors of the Company (in their capacity as promoters of a telecom licensee company – Swan Telecom Pvt Ltd (now known as Etisalat DB Telecom Pvt Ltd)). Two other Key Management Personnel of the Company have also been charge sheeted in their capacity as Directors of another Company (Refer Note 42) which is alleged to have paid an amount of Rs 2,000,000,000 as illegal gratifi cation in the same connection. As explained to us, the Company is not directly a party to the allegations and the matter is sub-judice in the Court of Special Judge (CBI), New Delhi.

For Haribhakti & Co.

Chartered Accountants

Firm Registration No.103523W

Chetan Desai

Partner

Membership No.: 17000

Place: Mumbai

Date: May 18, 2013


Mar 31, 2012

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

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

3. We draw your attention to the followings matters:

a) Managerial Remuneration of Rs. 15,709,677 paid by the Company has exceeded the limits specified under Schedule XIII read with Sec 349, 350 & 198 of the Companies Act, 1956, by Rs. 8,350,386. We are informed that the Company has recovered the excess remuneration from the relevant directors during FY 2012-13.

b) With reference to Note no 38 regarding provisional attachment order issued by adjudicating authority under prevention of Money Laundering Act (PML Act), by which the Company's assets amounting to Rs. 521,621,696 has been attached on August 30, 2011. This matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

c) Share of profit (net) from investment in partnership firms and LLPs (the 'Firms') aggregating Rs. 486,580,981 and investments in these Firms aggregating Rs. 5,752,683,419 (Refer Note 11 & 14); are based on financial statements of the firms as audited by another auditors whose reports have been furnished to us and which have been relied upon by us.

d) The audited financial statements of one of the firms viz. Dynamix Realty ('Dynamix'), include disclosure in respect of :

I. Outstanding receivables of Rs. 697,844,175 as at March 31, 2012 from Companies in which directors of the Company are interested. (Refer Note 27 (A) 1 and 2 ) These amounts are considered as good and recoverable as stated in the said disclosure.

II. Allegations made by the Central Bureau of Investigation of India ("CBI") relating to the 2G Spectrum case {Refer Note 27 (A)(iv)}

This matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

e) With reference to note number 26, regarding guarantees aggregating Rs. 15,589,597,000 issued by the Company to banks and financial institutions on behalf of two entities (in which some of directors of the Company are interested), which are significant in relation to the net worth of the Company at the year end. In the opinion of the Company, these are not expected to result into any financial liability to the Company.

f) With reference to note number 32 regarding the Company's investments aggregating Rs. 2,044,533,140 in and loans and advances aggregating Rs. 3,172,489,420 to, certain subsidiaries, joint controlled entities and associates which have incurred losses and also have negative net worth as at the year end. As explained in the said Note, investments in these entities are considered strategic and long term in nature, the entities are in early stage of real estate development and in the opinion of the Company, have current market values of certain property significantly in excess of carrying values and are expected to achieve adequate profitability on substantial completion of their projects. Accordingly, the said investments and loans and advances are considered good and recoverable by the Company. Further, the Company has invested Rs. 24,117,000 in one of the Joint Ventures. In the absence of financial statements of the said joint venture, we are not able to comment upon its impairment, if any.

g) With reference to note number 28 to 30 regarding matters under litigation and are sub-judice, based on the Company's assessment of the outcome, no adjustments are considered necessary in respect of recoverability of balances as at March 31, 2012 for loans and advances aggregating Rs. 1,640,849,994 and investments of Rs. 312,018,720.

4. Further to the matters referred to in paragraph 3 above, as required by the companies (Auditor's Report) Order, 2003, (as amended), issued by the Central Government of India in terms of sub-section (4A) of Section 227 of 'the Companies Act, 1956' (the 'Act') 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 a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5. Further to our comments in the paragraph 3 and 4 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, 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, Statement of Profit and Loss and Cash Flow statement dealt with by this report are in compliance with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. on the basis of written representations received from the directors as of 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. in our opinion and to the best of our information and according to the explanations given to us, 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 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, 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 Cash Flow statement, of the cash flows for the year ended on that date.

6. The financial Statement of the Company for the year ended March 31, 2011, were audited by another auditor who had expressed an unmodified opinion on those statements on June 8, 2011.

ANNEXURE TO AUDITORS' REPORT

[Referred to in paragraph 4 of the Auditors' Report of even date to the members of DB Realty Limited on the financial statements for the year ended on 31st March, 2012]

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

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us, no substantial part of fixed assets has been disposed of by the Company during the year.

(ii) (a) Inventories comprise of expenditure incurred on acquisition of plot of lands and development thereof. As explained to us, physical verifications were carried out during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, keeping in view the nature of inventory, the procedures of physical verification by way of site visits by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the adequate inventory records have been maintained by the Company, except for records in respect of payments to tenants where documentation needs to be considerably strengthened by the Company. As explained to us, no material discrepancies were noticed on physical verification of inventory by the management.

(iii) In respect of the loans, secured or unsecured, granted or taken by the Company to or from companies, firm or other parties covered in the register maintained under section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has granted loans aggregating Rs. 3,668,971,775 to seventeen parties during the year. At the year end, the outstanding balances of such loans aggregated Rs. 4,160,996,605 to thirteen parties and the maximum amount involved during the year was Rs. 12,076,285,986.

(b) The aforesaid loans are interest free except for loans of Rs. 1,510,017,748. Based on explanations received from the management none of the other terms and conditions is prima facie, prejudicial to the interest of the Company. Attention is invited to Para 3(f) of Auditors' Report of even date.

(c) The said loans (including interest thereon) are repayable on demand and there are no repayment schedules. Accordingly, the question of overdue amount does not arise.

(d) There is no overdue amount in excess of Rs. 1 lakh in respect of loans granted to companies, firms and other persons listed in register maintained under sec 301 of the Companies Act, 1956.

(e) The Company has taken loans from two parties during the year. As at the year end, the outstanding balance of such loans taken from one party aggregated Rs. 86,632,142 and the maximum amount involved during the year was Rs. 1,590,331,873.

(f) According to the information and explanations given to us, the loans are interest free except one loan which is repaid fully during the year and other terms and conditions are, prima facie not prejudicial to the interest of the Company.

(g) Since the said loans (including interest thereon) are repayable on demand and there is no repayment schedule, the question of repayment being regular does not arise.

(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that prelaunch advances from prospective buyers where the Company is in the process of finalizing the term sheets/ agreements, supporting receipts for aggregate consideration of Rs. 47,676,200 are in accordance with general industry practice; adequate internal control systems exist for sale of apartments and for purchase of fixed assets. As regards project inventory, the Company needs to strengthen internal controls for (a) tenancy payments/ compensation (as stated in ii (c) above) and (b) project contracting (including proper documentation for comparative quotations and machinery/mobilization advances) to be commensurate with the size of the Company and the nature of its business. During the course of our audit, we have not observed continuing failure to correct major weakness.

(v) In respect of contracts or arrangements entered in the register maintained in pursuance of section 301 of the Companies Act 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 that need to be entered into the register maintained under section 301 have been so entered.

(b) Where each such transaction is in excess of rupees five lakhs in respect of each party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time except for certain transactions in respect of (1) aircraft charges of Rs. 5,625,300 and (2) civil contract entered of Rs. 25,687,118 (referred to in (iv) above) awarded to an entity and approved by the Board of Directors where comparable quotations for additional scope of work were not available and in respect of which we are unable to comment.

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed there under.

(vii) A firm of chartered accountants has been appointed by the management for carrying out the internal audit. In our opinion, the function needs to be strengthened as regards time frame for reporting, coverage and periodicity of reporting so as to be commensurate with the size of the Company and the nature of its business.

(viii) We have been informed by the Management that proper cost records under clause (d) of sub-section 1 of section 209 of the Companies Act, 1956 have been maintained. However, these records have not been provided to us for our verification.

(ix) According to the information and explanations given to us, in respect of statutory and other dues:

(a) The Company is generally regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, wealth tax, cess and any other material statutory dues as applicable to it with the appropriate authorities during the year.

(b) No undisputed amounts payable in respect of aforesaid were in arrears as at 31st March 2012 for a period of more than six months from the date they became payable except service tax on booking of flats / premises of Rs. 455,163/- has not been deposited with the Government authorities.

(c) According to the information and explanations given to us, no dues are outstanding of income tax, service tax, provident fund, employees' state insurance and cess, for more than six months on account of any dispute.

(x) There are no accumulated losses of the Company as on 31st March 2012. Further, the Company has not incurred cash losses during the financial year covered by audit and in the immediately preceding financial year.

(xi) According to the information and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution and banks. The Company has not issued any debentures during the year.

(xii) According to the information and explanations given to us and based on the documents and records produced before us, the Company has not granted loans & 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 (xiii) of paragraph 4 of the Companies (Auditor's Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. The Company has redeemed surplus funds invested in mutual funds, in respect of which proper records of the transactions and contracts have been maintained and timely entries have beenRs. made therein. All shares, securities and other investments have been held by the Company in its own name.

(xv) The Company had given guarantees (as referred in Note 26) in the earlier years on behalf of two entities and the balance of Rs. 15,589,597,000 is subsisting as at the year end. As informed to us, the Board of Directors has approved this in the past considering the long term business interests of the Company and the same were consented to in writing by the non-promoter group shareholders in those years. Based on approvals / written consents / control relationships, the terms and conditions of such guarantees have been regarded as, prima facie, not prejudicial to the interests of the Company.

(xvi) In our opinion, the term loan has been applied for the purpose for which the loans were raised.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on short term basis have prima facie not been used during the year for long term investment.

(xviii) According to the information and explanation given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have outstanding debentures during the year and hence this clause is not applicable.

(xx) The Management has disclosed the end use of money raised by public issue at Note 39. We have verified the same with monitoring report issued by monitoring agency (Punjab National Bank, Capital Market Service Branch, Mumbai).

(xxi) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the company, noticed or reported during the year, nor have we been informed of such case by the management. However, we are informed that during the previous year, the CBI in its charge sheet filed in connection with irregularities in the allotment of 2G telecom license, has accused the Managing Directors of the Company (in their capacity as promoters of a telecom licensee company – Swan Telecom Pvt Ltd (now known as Etisalat DB Telecom Pvt Ltd)). Two other Key Management Personnel of the Company have also been charge sheeted in their capacity as Directors of another Company (Refer Note 38) which is alleged to have paid an amount of Rs. 2,000,000,000 as illegal gratification in the same connection. As explained to us, the Company is not directly a party to the allegations and the matter is sub-judice in the Court of Special Judge (CBI), New Delhi.

For Haribhakti & Co.

Chartered Accountants

Chetan Desai

Partner

Membership No.: 17000

Place: Mumbai

Date: May 26, 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of DB Realty Limited (the "Company") as at March 31, 2011 and the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the 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.

3. We draw your attention to the following matters more fully described in notes to Schedule 15 (B) to the financial statements:

a) Share of profit (net) from investment in partnership firms (the 'firms'), as is stated in the Profit & Loss account and aggregating Rs. 2,812,282,633, which represents the Company's share of profit (net) from its investments in three firms; and investments in these firms aggregating Rs. 7,339,689,382 (Refer Schedule 6); are based on financial statements of the firms as audited by other auditors whose reports have been furnished to us. (Refer Note 3)

b) The audited financial statements of one of the firms viz. Dynamix Realty ('Dynamix') include disclosures in respect of:

(i) outstanding receivables which include dues aggregating Rs. 4,476,974,912 as at March 31, 2011 from companies in which directors of the Company are interested. (Refer Note 3 (a) (i-ii))

These amounts constitute a significant portion of deployment of Dynamix's funds and are considered as good and recoverable as stated in the said note. Consequently, the Company's investment in Dynamix as at March 31, 2011 aggregating Rs. 6,302,022,746 is considered good of recovery.

(ii) allegations made by the Central Bureau of Investigation of India ('CBI') relating to the 2G Spectrum Case (Refer Note 3(c)).

This matter is sub-judice and the impact, if any, of the outcome is unascertainable at this stage.

c) Note 2 regarding guarantees aggregating Rs. 14,691,700,000, issued by the Company to banks and financial institutions on behalf of two entities (in which some of the directors of the Company are interested), which are significant in relation to the net worth of the Company as at the year end. In the opinion of the Company, these are not expected to result into any financial liability to the Company.

d) Note 8 regarding the Company's investments aggregating Rs. 148,933,200 in and loans and advances aggregating Rs. 5,843,995,961, to certain subsidiaries, jointly controlled entities and associates which have incurred losses and also have negative net worth as at the year end. As explained in the said Note, investments in these entities are considered strategic and long term in nature, the entities are in early stages of real estate development and in the opinion of the Company, have current market values of certain property significantly in excess of carrying values and are expected to achieve adequate profitability on substantial completion of their projects. Accordingly, the said investments and loans and advances are considered good and recoverable by the Company.

e) Notes 4 to 6 regarding matters under litigation. As these matters are sub-judice, based on the Company's assessment of the outcome, no adjustments are considered necessary in respect of recoverability of balances as at March 31, 2011 for loans and advances aggregating Rs. 1,875,757,604 and investments of Rs. 312,018,720.

4. Further to the matters referred to in paragraph 3 above, as required by the Companies (Auditors' Report) Order, 2003 (CARO) issued by the Central Government in terms of section 227 (4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

5. Further to the matters referred to in paragraph 3 above and the Annexure referred to in paragraph 4 above, we report as follows:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

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

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

e. in our opinion and to the best of our information and according to the explanations given to us, 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 conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2011;

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

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

6. On the basis of the written representations received from the Directors as on 31st March, 2011 taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of Section 274(1 )(g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS' REPORT Re: DB Realty Limited (Referred to in Paragraph 4 of our report of even date)

i) Having regard to the nature of the Company's business/activities/result, clauses (vi), (viii), (x), (xii), (xiii), (xviii), (xix), of CARO are not applicable during the year.

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

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

iii) (a) As explained to us, Inventories comprising of expenditure incurred on acquisition of plots of land and development thereof were physically verified during the year by the management at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, keeping in view the nature of inventory, the procedures of physical verification followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanations given to us, the adequate inventory records have been kept maintained by the Company, except for records in respect of payments to tenants where documentation needs to be considerably strengthened by the Company. As explained to us, no material discrepancies were noticed on physical verification of inventory by the management.

iv) In respect of the loans, secured or unsecured, granted or taken by the Company to or from companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us;

(a) The Company has granted loans aggregating Rs. 6,250,937,964 to fifiteen parties during the year. At the year end, the outstanding balances of such loans aggregated Rs. 6,375,512,810 to fifiteen parties and the maximum amount involved during the year was Rs. 9,894,078,513.

(b) The aforesaid loans are interest free except for loans of Rs. 2,214,484,397. Based on explanations received from the management none of the other terms and conditions is prima facie, prejudicial to the interest of the Company. Attention is invited to Para 3(d) of Auditors' Report of even date.

(c) The said loans (including interest thereon) are repayable on demand and there are no repayment schedules except in case of one loan (including interest) of Rs. 503,963,329 for which there is no balance overdue as at year end. Accordingly the question of overdue amount does not arise in other cases.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(d) The Company has taken loans from five parties during the year. As at the year end, the outstanding balance of such loans taken aggregated Rs. 541,643,424 from two parties and the maximum amount involved during the year was Rs. 1,347,024,400.

(e) According to the information and explanations given to us, the loans are interest free except one loan of Rs. 170,293,424 as at year end and other terms and conditions are not, prima facie, prejudicial to the interest of the Company.

(f) Since the said loans (including interest thereon) are repayable on demand and there are no repayment schedules, the question of repayment being regular does not arise.

v) In our opinion and according to the information and explanations given to us, having regard to the explanation that prelaunch advances from prospective buyers where the Company is in the process of finalizing the term sheets / agreements supporting receipts for aggregate consideration of Rs. 55,476,200 are in accordance with general industry practice; adequate internal control systems exist for sale of apartments and for purchase of fixed assets. As regards project inventory, the Company needs to strengthen internal controls for (a) tenancy payments/ compensation (as stated in iii (c) above) and (b) project contracting (including proper documentation for comparative quotations and machinery/mobilisation advances) to be commensurate with the size of the Company and the nature of its business. There were no transactions of sale of services during the year. During the course of our audit, we have not observed continuing failure to correct major weakness.

vi) In respect of contracts or arrangements entered in the register maintained in pursuance of section 301 of the Companies Act 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

i) The particulars of transactions referred to in Section 301 that needed to be entered into the register maintained under such section have been so entered, however, although the said register has been signed, it has not been authenticated by all directors present and required to authenticate.

ii) Where each such transaction is in excess of rupees five lakhs in respect of each party, the transactions have been made at prices which are prima facie reasonable having regard to (1) the prevailing market prices at the relevant time except for certain transactions in respect of aircraft charges of Rs. 65,114,950 and (2) civil contract entered of Rs. 977,384,310 (referred to in v above) awarded to an entity and approved by the Board of Directors where comparable quotations for additional scope of work were not available and in respect of which we are unable to comment.

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

viii) According to information and explanations given to us, in respect of statutory dues:

(a) The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales-tax, Wealth tax, Custom duty, Excise duty, Cess and any other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st March, 2011 for a period of more than six months from the date they became payable.

(c ) There are no dues of sales tax/income tax/customs duty/ wealth tax/ excise duty/service tax and cess, which have not been deposited as on March 31, 2011 on account of any dispute, except in respect of service tax as under:

Name of statute Nature of the dues Amount Period to which Forum where the amount relates dispute is pending

Finance Act, 1994 Service Tax Amount unascertained 1st July 2010 to High Court, Mumbai*

(Refer note 1) E to 31st March 2011 Schedule 15(B))

* We are informed that the Company has applied for the membership of Maharashtra Chamber of Housing Industry ('MCHI') and will be a party to the said dispute along with MCHI, in respect of the said liability.

ix) In our opinion and according to the information and explanations given to us the Company has not defaulted in repayment of dues to a financial institution and banks. The Company has not issued any debentures during the year.

x) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. The company has invested surplus funds in mutual funds, in respect of which proper records of the transactions and contracts have been maintained and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name except in respect of investments in a partnership firm as disclosed in Note 5 to Schedule 6 Investments".

xi) The Company had given guarantees (as referred at Para 3 (ii) of our Report of even date) in the earlier years on behalf of two entities and the balance of Rs. 14,691,700,000 (Previous year Rs. 15,183,445,000) is subsisting as at the year end. As informed to us, the Board of Directors have approved the same in past considering the long term business interests of the Company and the same were consented to in writing by the non-promoter group shareholders in those years. Further, during the year, the Company has given guarantees of Rs. 1,300,000,000 on behalf of a subsidiary (other than wholly owned). Based on approvals / written consents /control relationship, the terms and conditions of such guarantees have been regarded as, prima facie, not prejudicial to the interest of the Company.

xii) In our opinion and according to the information and explanations given to us, an amount of Rs. 251,100,000 (Previous year Rs. 1,248,000,000) out of a term loan was not applied for the purpose for which the loan was obtained. After repayments made during the year, the outstanding balance of loan as at the year-end is Rs. 306,229,178.

xiii) In our opinion and according to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that funds raised on short term basis have, prima facie, not been used during the year for long term investment.

xiv) The Management has disclosed the end use of money raised by public issue at note 18 of Schedule 15 (B).We have verified the same to the extent of utilization by the Company. With respect to utilisation by certain subsidiaries and a jointly controlled entity of a subsidiary, we have relied upon the certificates from the auditors of those entities for the end utilization of the IPO proceeds.

We are informed that the monitoring agency (Punjab National Bank Capital Market Services branch, Mumbai) is to yet to review the utilization of IPO proceeds for the period October 2010-March 2011, although the report for the half year ended September 2010 submitted by the monitoring agency has been considered by the Board of Directors.

xv) No material fraud on or by the Company was noticed or reported during the year. However, we are informed that the CBI in its chargesheet filed in connection with irregularities in the allotment of 2G telecom license, has accused the Managing Director and the erstwhile Managing Director of the Company (in their capacity as promoters of a telecom licensee company - Swan Telecom Pvt. Ltd. (now known as Etisalat DB Telecom Pvt. Ltd.). Two other Key Management Personnel of the Company have also been chargesheeted in their capacity as directors of another company (Refer Note 3 (c) to Schedule 15 (B)) which is alleged to have paid an amount of Rs. 2,000,000,000 as illegal gratification in the same connection. As explained to us, the Company is not directly a party to the allegations and the matter is sub-judice in the Court of Special Judge (CBI), New Delhi.

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No. 117366W)

R. D. Kamat

Partner

(Membership No. 36822)

Mumbai, June 8, 2011.


Mar 31, 2010

1. We have audited the attached Balance Sheet of D B Realty Limited ("the Company") as at March 31, 2010 and the Profitand Loss Account and Cash Flow Statement of the Company for the year ended on THAT date, both 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.

2. 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the 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.

3. As required by the Companies (AUDITORS REPORT) order, 2003 (CARo) issued by the Central Government in terms of Subsection (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the said order.

4. FURTHER to our comments in the Annexure referred to in paragraph 3 above, we REPORT as follows:

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 it appears from our examination of the books;

iii) the Balance Sheet, Profit and 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, the Profit and Loss Account and the Cash Flow Statement dealt with by this REPORT are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

v) without qualifying our opinion, we draw your attention to the following:

a) share of Profit from partnership firms (net) Rs. 2,266,117,928 (Previous year Rs. 2,896,888,424) is based on the financial statements of partnership firms audited by other AUDITORS whose reports have been furnished to us by the MANAGEMENT of the Company and our opinion is based solely on such audited financial statements.

b) Note 1B of Schedule 15(B) regarding guarantees issued to banks and financial institutions on behalf of various entities aggregating Rs. 20,231,695,000 (Previous year Rs. 21,465,565,000) are significant in relation to the net- worth of the Company as at THAT date. In the opinion of the MANAGEMENT, these are Not expected to result into any financial liability.

c) Note 14 of Schedule 15(B) regarding investments aggregating Rs. 385,188,120 (Previous year Rs. 411,132,515) and loans and advances aggregating Rs. 4,650,180,925 (Previous year Rs. 3,111,209,783) in/to certain subsidiaries and associates, which have incurred losses and also have negative net worth. As explained to us, these companies are at the start up stage of their real estate operations and the investments, loans and advances are considered good and recoverable based on assessment by the MANAGEMENT of the projects under execution.

vi) In our opinion and to the best of our information and according to the explanations given to us, 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 conformity with the accounting principles generally accepted in India;

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010

(ii) in the case of the Profitand Loss Account, of the Profit of the Company for the year ended on THAT date and

(iii) in the case of Cash Flow statement, of the cash flows of the Company for the year ended on THAT date.

vii) on the basis of written representations received from the directors as of March 31, 2010 and taken on record by the Board of Directors, None of the directors is disqualified as of March 31, 2010 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 AUDITORS REPORT Re: D B Realty Limited (Referred to in Paragraph 3 of our REPORT of even date)

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

(b) As explained to us, some of the fixed assets were physically verified during the year by the MANAGEMENT in accordance with its programme which is reasonable. No material discrepancies were Noticed by the MANAGEMENT on such verification

(c) The Company has Not made any substantial disposal of fixed assets.

ii) (a) Inventories comprise of expenditure on acquisition of plots of land and development thereof. As explained to us, such plots were physically verified during the year by the MANAGEMENT at reasonable intervals.

(b) In our opinion and according to the information and explanations given to us, keeping in view the nature of inventory, the procedures of physical verification followed by the MANAGEMENT are reasonable and adequate in relation to the size of the Company and the nature of its BUSINESS.

(c) In our opinion, the Company has maintained proper records of its inventories and as explained to us No material discrepancies were Noticed on physical verification.

iii) In respect of the loans, secured or unsecured, granted or taken by the Company to or from companies, firm or other parties covered in the register maintained under Section 301 of the Companies Act, 1956, according to the information and explana- tions given to us;

(a) The Company has granted loans to seventeen parties covered in the register maintained under Section 301 of the Companies Act, 1956. the maximum amount outstanding during the year is Rs. 7,650,510,321 and the year end balance of the loans granted to such parties was Rs. 7,450,090,669.

(b) The aforesaid loans are interest free except for loans of Rs. 3,822,731,432 as at year end. Based on explanations received from the MANAGEMENT None of the other terms and conditions are prima facie, prejudicial to the interest of the Company. Attention is invited to Para 4 (v) (c) of AUDITORS REPORT of even date.

(c) The said loans are repayable on demand and there are No repayment schedules. Hence, the question of overdue amount does Not arise.

(d) There are eight companies covered under the register maintained under Section 301 of the Act from which the Company has taken loans. the maximum amount outstanding during the year is Rs. 2,636,582,590 and the year end balance of the loans taken from such parties was Rs. 1,286,890,000.

(e) According to the information and explanations given to us, the loans are interest free and other terms and conditions are Not, prima facie, prejudicial to the interest of the Company.

(f) Since the said loans are repayable on demand and there are No repayment schedules, the question of repayment being regular does Not arise.

iv) As explained to us, the Company is in the process of strengthening internal controls in respect of purchase of fixed assets and inventory (of land plots/parcels) to be commensurate with the size of the Company and the nature of its BUSINESS. the Com- pany has Not commenced sale of goods/ services from its own projects however, in respect of advances received amounting to Rs. 65,000,000 from customers against on-going projects of the group companies, as explained to us, the Company is in the process of fnalizing the term sheets/ agreements. During the course of our audit, we have Not Observed continuing failure to correct major weaknesses.

v) In respect of contracts or arrangements entered in the register maintained in pursuance of section 301 of the Companies Act 1956, to the best of our Knowledge and belief and according to the information and explanations given to us:

(a) The Particulars of contracts or arrangements referred to Section 301 THAT needed to be entered into the register, maintained under the said section have been so entered;

(b) Where each of such transactions (other than loans Reported under paragraph (iii) above) in excess of rupees five lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.

vi) The Company has Not accepted any Deposits from public during the year, hence, directive issued by Reserve Bank of India and the provisions of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 are Not applicable.

vii) A firm of Chartered Accountants has been appointed by the MANAGEMENT for carrying out internal audit from october 1, 2009. In our opinion, the function is commensurate with the size of the Company and the nature of its BUSINESS.

viii) According to information and explanations given to us, the Central Government has Not prescribed maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 for the activities of the Company and hence the question of maintenance of such accounts and records does Not arise.

ix) According to information and explanations given to us, in respect of statutory and other dues:

(a) the Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Investor education and Protection Fund, employees State Insurance, Income-tax, Sales-tax, Wealth tax, Custom Duty, excise Duty, Cess and any other material statutory dues, as applicable, with the appropriate authorities during the year.

(b) No undisputed amounts payable in respect of aforesaid were in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable except service tax of Rs. 858,991 on rent, Not deposited based on certain judicial precedents.

(c) there are No dues of sales tax/income tax/customs duty/ wealth tax/ excise duty/service tax and cess, which have Not been deposited as on March 31, 2010 on account of any dispute.

x) As the Company has Not completed five years since its incorporation; the paragraph 4(x) of the order is Not applicable.

xi) In our opinion and according to the Information and explanations given to us the Company has Not defaulted in repayment of dues to a financial institution and bank. the Company had borrowed through debentures during the year which were con- verted into equity shares as per its terms of issue.

xii) The Company has Not granted any loans and advances on the basis of security by way of pledge of shares, debentures and any other securities and hence the maintenance of adequate records for this purpose does Not arise.

xiii) The Company is Not a chit fund or a nidhi / mutual benefit fund / society. therefore, the provisions of clause (xiii) of paragraph 4 of the Companies (Auditors REPORT) order, 2003 are Not applicable to the Company.

xiv) In our opinion and according to the information and explanations given to us, the Company is Not a dealer or trader in securi- ties. the Company has invested surplus funds in mutual funds. According to the information and explanations given to us, the Company has maintained proper records of the transactions and contracts in respect of such investments and timely entries have been made therein. All shares, securities and other investments have been held by the Company in its own name except in respect of investments in a partnership firm as disclosed in Note 3 to Schedule 6 "Investments".

xv) The Company had given guarantees (as referred at Para 4 (v) (b) of our REPORT of even date) in the earlier years to entities and the balance of Rs. 15,183,445,000 is still subsisting as at the year end and during the year, the Company has given guar- antees of Rs. 4,448,000,000 to a subsidiary (other than wholly owned) and to a jointly controlled entity. We were explained THAT the Board of Directors have approved the same considering the long term BUSINESS of the Company and the earlier years guarantees have been Consented to in writing by the Non-promoter group shareholders in those years. Based on such approv- als/ written Consents, the terms and conditions of such guarantees have been regarded as, prima facie, Not prejudicial to the interest of the Company.

xvi) In our opinion and according to the information and explanations given to us, out of the term loan of Rs.1,880,000,000 from LIC Housing Finance Limited Rs.1,248,000,000 have been utilised towards part fnancing of other than specifed projects for which the Company has written a letter to the lender for inclusion of such other projects for utilisation and the response from the lender is awaited.

xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, funds raised on short term basis have, prima facie, Not been used during the year for long term investment.

xviii) According to the information and explanations given to us, the Company has Not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix) During the year, the Company issued Unsecured compulsorily convertible debentures and all of them were converted into equity shares as per terms of its issue.

xx) The MANAGEMENT has disclosed the end use of money raised by public issue at Note 15(b) of Schedule 15(B). We have verified the same to the extent of utilization by the Company. With respect to utilisation by certain subsidiaries and a jointly controlled entity of a subsidiary, we have relied upon the end use certificates received from the AUDITORS of those entities. We are informed THAT the monitoring agency (Punjab National Bank, Capital Market Services Branch, Mumbai) is to yet to submit their REPORT.

xxi) To the best of our Knowledge and belief and according to the information and explanations given to us, No material fraud on or by the Company was Noticed or Reported during the year.

For deloitte Haskins& Sells

Chartered Accountants (Registration No. 117366W)

R. D. Kamat Partner (Membership No. 36822) Mumbai, dated May 12, 2010.

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