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Auditor Report of Gati Ltd.

Mar 31, 2017

To

The Members of Gati Limited

Report on Standalone Financial Statements

We have audited the accompanying standalone financial statements of Gati Limited (“the Company"), which comprise the Balance sheet as at 31st March, 2017, 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 for the year ended on that date in which are incorporated the returns for the year ended on that date audited by the branch auditor of the Company''s branch in Nepal.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Principles generally accepted in India, including Accounting Standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014 (as amended). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; for safeguarding the assets of the Company; preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

1. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

2. 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.

3. 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 financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2017 and its Profit and its Cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following notes.

1. Note 28 of the financial statements regarding the scheme of arrangement for amalgamation (the Scheme) sanctioned by the Hon''ble Andhra Pradesh High Court by its order dated March 19, 2013. The Scheme permits the company to create a capital reserve to be called special reserve to which shall be credited excess of value of assets over value of liabilities on amalgamation amounting to Rs.555.54 Crores to be utilized to adjust there from any capital losses arising from transfer of assets and certain other losses as specified in the Scheme and as the Board of Directors may deem fit. Accordingly the diminution in value of Investments and irrecoverable loans & advances and dues aggregating to Rs.28.77 Crores required to be debited to the statement of Profit and Loss have been adjusted against Special Reserve which is not in accordance with Accounting Standard (AS) 5 ''Net profit or loss for the period, prior period items and Changes in Accounting Policies'' and Accounting Standard (AS) 13 ''Accounting for Investments''. This has resulted in the profit for the year before tax and profit after tax for the year being higher by Rs.28.77 Crores.

2. Note 31 of the financial statements regarding certain loans and advances to a 100% subsidiary amounting to Rs.19.00 crores in respect of which the management is confident of its recovery.

3. Note 32 of the financial statements regarding non provision for diminution in the value of Investments of Rs.39.92 crores in the share capital of subsidiary Gati Kausar India Limited as in the opinion of management no provision is necessary considering the expected improvement in performance of the subsidiary in near future.

Our opinion is not qualified in respect of these matters.

Report on Other legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 (“the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act,(hereinafter referred to as the “order"), and on the basis of such checks of the books and records of the company as we considered appropriate and according to the information and explanations given to us, we give in Annexure “A", a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

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

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us;

c) The report on the accounts of the branch office of the Company audited under section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report;

d) The standalone financial statements dealt with by this Report are in agreement with the books of account and with returns received from the branch not visited by us;

e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards Specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rule, 2014(as amended);

f) On the basis of the written representations received from the directors as on 31st March 2017, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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, refer to our separate report in Annexure “B".

h) With respect to 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) As detailed in Note 33, 37 and 38(a)(3) of the notes to the standalone financial statements, the Company has disclosed the impact of pending litigation on its financial statements.

ii) The Company did not have any long terms contract including derivative Contracts for which there were any material foreseeable losses.

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

iv) The Company has provided requisite disclosures in its standalone financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and these are in accordance with the books of accounts maintained by the company. Refer to Note 39 to the standalone financial statements.

ANNEXURE "A" TO INDEPENDENT AUDITORS'' REPORT

of even date to the members of Gati Limited, on the standalone Financial Statements for the year ended 31st March, 2017.

Referred to in paragraph 1 under the heading of “Report on Other Legal and Regulatory Requirements" of our report of even date.

1. a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets like land, building, vehicles, plant and equipments, computers etc.

b) We are informed that a test of physical verification of these assets was carried out by the management during the year and no material discrepancies were noticed. The management has informed us that in respect of other fixed assets like furniture and fittings, office equipment, having regard to their numbers and the numerous locations where these exist, maintenance of detailed records and reconciliation of their value in general ledger is not feasible.

c) The titles deeds of immovable properties, as disclosed in the financial statements, are held in the name of the Company except in respect of immovable property situated at Nasik.

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

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

c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were notice on physical verification.

3. The Company has granted unsecured loans and advances to bodies corporate covered in the register maintained under section 189 of the Act.

a) In our opinion, the rate of interest and other terms and conditions on which the loans had been granted to the bodies corporate listed in the register maintained under section 189 of the Act were not, prima facie, prejudicial to the interest of the Company.

b) In the case of the loans granted to the bodies corporate listed in the register maintained under section 189 of the Act, the borrowers have been regular in the principal and interest as stipulated.

c) There are no overdue amounts in respect of the loans granted.

4. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Act, with respect to loans and investments made.

5. In our opinion, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended) as applicable, with regard to the deposits accepted. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, in this regard.

6. The Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Act in respect of any activities of the Company.

7. (a) According to the information and explanation given to us

and records of the Company examined by us, in our opinion the Company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income tax, service tax, custom duty, excise duty, value added tax, cess and any other statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanation given to us, the dues outstanding in respect of income tax, sales tax, service tax, customs duty, excise duty, value added tax and cess on the account of any dispute, are as follows;

Nature of Dues

Amount (In Crores)

Forum where dispute is pending

Service Tax

4.18

Central Excise and Service Tax Appellate Tribunal

8. According to the records of the company examined by us and the information and explanations given to us, the company has not defaulted in repayment of loans or borrowings to any financial institutions or bank or Government during the year. The company has not issued any debentures.

9. The company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Therefore, the provisions of Clause 3(ix) of the said order are not applicable to the company.

10. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such cases by the management during the course of our audit.

11. The company has paid /provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V to the Act.

12. The company is not a Nidhi Company.

13. The transactions with related parties are in compliance with the provisions of Section 177 and 188 of the Act. The details of the related party transactions have been disclosed in the financial statements as required by the applicable Accounting Standards.

14. 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, the provisions of Clause 3 (xiv) of the order are not applicable.

15. The Company has not entered into any non cash transactions with its directors or persons connected with him. Therefore, the provisions of Clause 3 (xv) of the order are not applicable.

16. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

ANNEXURE "B" TO INDEPENDENT AUDITORS'' REPORT

Referred to in paragraph 2(g) of the Independent Auditors'' Report of even date to the members of Gati Limited on the Standalone financial statements for the year ended 31st March, 2017.

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section 143 of the companies Act, 2013.

We have audited the internal financial controls over financial reporting of Gati Limited (“the Company") as of 31st March, 2017 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal controls 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, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the 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 31st March, 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 Institute of Chartered Accountants of India.

For R.S. Agarwala & Co.

Chartered Accountants

Firm Regn. No:-304045E

(R .S. Agarwala)

Camp:- Hyderabad Partner

Date: May 6, 2017 Membership No.005534


Mar 31, 2016

We have audited the accompanying standalone financial statement of Gati
Limited ("the Company"), which comprise the Balance sheet as at 3 I st
March, 2016, 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 for the year
ended on that date in which are incorporated the returns for the year
ended on that date audited by the branch auditor of the Company''s
branch in Nepal.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013 ("the Act") with respect
to the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company in accordance with the Accounting Principles
generally accepted in India, including Accounting Standards specified
under section 133 of the Act, read with rule 7 of the Companies
(Accounts) Rules, 2014 (as amended).This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act; for safeguarding the assets of the Company;
preventing and detecting frauds and other irregularities; selection and
application of appropriate accounting policies; making judgments and
estimates that are reasonable and prudent; and design, implementation
and maintenance of adequate internal financial controls, that were
operating effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatement, whether due to fraud or error.

Auditor''s Responsibility

1. Our responsibility is to express an opinion on these standalone
financial statements based on our audit.

2. 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.

3. 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 financial
statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements.The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company''s preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances.An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of
the accounting estimates made by Company''s Directors, as well as
evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the
explanations given to us, the aforesaid standalone financial statements
give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as
at 3 I st March, 2016 and its Profit and its Cash flows for the year
ended on that date.

Emphasis of Matters

1. Note 30 of the financial statements regarding non provision against
investments and other receivables from the subsidiary Zen Cargo Movers
Pvt. Limited amounting to ?36.22 lakhs and ? 122.61 lakhs respectively
as in the opinion of management no provision is necessary considering
the expected improvement in performance of the subsidiary in near
future.

2. Note 3 I of the financial statements regarding certain loans and
advances to subsidiaries and an associate aggregating to ?2366 lakhs in
respect of which the management is confident of its recovery.

3. Note 32 of the financial statements regarding non provision for
dues ? 1215 lakhs from a body corporate as the management is confident
of its full recovery

4. Note 33 of the financial statements regarding non provision for
diminution in the value of Investments of ? 39.92 crores in the share
capital of subsidiary Gati Kausar India Limited as in the opinion of
management no provision is necessary considering the expected
improvement in performance of the subsidiary in near future.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2016 ("the
Order") issued by the Central Government of India in terms of sub-
section (I I) of section 143 of the Act, (hereinafter referred to as
the "order"), and on the basis of such checks of the books and records
of the company as we considered appropriate and according to the
information and explanations given to us, we give in the Annexure "A",
a statement on the matters specified in paragraphs 3 and 4 of the
Order.

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

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

b) In our opinion, proper books of account as required by law have been
kept by the Company so far as it appears from our examination of those
books and proper returns adequate for the purposes of our audit have
been received from the branches not visited by us;

c) The report on the accounts of the branch office of the Company
audited under section 143(8) of the Act by the branch auditors have
been sent to us and have been properly dealt with by us in preparing
this report;

d) The standalone financial statements dealt with by this Report are in
agreement with the books of account and with returns received from the
branch not visited by us;

e) In our opinion, the aforesaid standalone financial statements comply
with the Accounting Standards Specified under Section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rule, 2014(as amended);

f) On the basis of the written representations received from the
directors as on 3 I st March 2016, and taken on record by the Board of
Directors, none of the directors is disqualified as on 3 1st March,
2016, from being appointed as a director in terms of section 164(2) of
the Act.

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

h) With respect to other matters to be included in the Auditor''s Report
in accordance with Rule I I 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) As detailed in Note 35, 37 and 40(a)(3) of the notes to the
standalone financial statements, the Company has disclosed the impact
of pending litigation on its financial statements.

ii) The Company did not have any long terms contract including
derivative contracts for which there were any material foreseeable
losses.

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

Referred to in paragraph I under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date.

1. a) The company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets like
land, building, vehicles, plant and equipments, computers etc.

b) We are informed that a test of physical verification of these assets
was carried out by the management during the year and no material
discrepancies were noticed.The management has informed us that in
respect of other fixed assets like furniture and fittings, office
equipment, having regard to their numbers and the numerous locations
where these exist, maintenance of detailed records and reconciliation
of their value in general ledger is not feasible.

c) The titles deeds of immovable properties, as disclosed in the
financial statements, are held in the name of the Company except in
respect of immovable properties situated at Nasik and Delhi.

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

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

c) The Company is maintaining proper records of inventory and no
material discrepancies between physical inventory and book records were
notice on physical verification.

3. The Company has granted unsecured loans and advances to bodies
corporate covered in the register maintained under section 189 of the
Act.

a) In our opinion, the rate of interest and other terms and conditions
on which the loans had been granted to the bodies corporate listed in
the register maintained under section 189 of the Act were not, prima
facie, prejudicial to the interest of the Company.

b) In the case of the loans granted to the bodies corporate listed in
the register maintained under section 189 of the Act, the borrowers
have been regular in the principal and interest as stipulated.

c) There are no overdue amounts in respect of the loan granted to a
body corporate listed in the register maintained under section of 189
of the Act.

4. In our opinion and according to the information and explanations
given to us, the company has complied with the provisions of section
185 and 186 of the Act, with respect to loans and investments made.

5. In our opinion, the Company has complied with the directives issued
by the Reserve Bank of India and the provisions of Sections 73 to 76
and other relevant provisions of the Act and the Companies (Acceptance
of Deposits) Rules, 2014 (as amended) as applicable, with regard to the
deposits accepted.According to the information and explanations given
to us, no order has been passed by the Company Law Board or National
Company Law Tribunal or Reserve Bank of India or any Court or any other
Tribunal, in this regard.

6. The Central Government has not prescribed maintenance of cost
records under sub- section (I) of section 148 of the Act in respect of
any activities of the Company.

7. (a) According to the information and explanation given to us and
records of the Company examined by us, in our opinion the Company is
regular in depositing undisputed statutory dues including provident
fund, employees'' state insurance, income tax, service tax, custom duty,
excise duty, value added tax, cess and any other statutory dues as
applicable with the appropriate authorities.

(b) According to the information and explanation given to us, the dues
outstanding in respect of income tax, sales tax, service tax, customs
duty, excise duty, value added tax and cess on the account of any
dispute, are as follows;

Nature of dues Amount (in crores) Forum where dispute
is pending

Income Tax 28.52 Commissioner (Appeals)

Service Tax 2.87 Central Excise and
Service Tax Appellate
Tribunal

8. According to the records of the company examined by us and the
information and explanations given to us, the company has not defaulted
in repayment of loans or borrowings to any financial institutions or
bank or Government during the year.The company has not issued any
debentures.

9. The company has not raised any moneys by way of initial public
offer, further public offer (including debt instruments) and term
loans. Therefore, the provisions of Clause 3(ix) of the said order are
not applicable to the company.

10. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
material fraud by the company or on the Company by its officers or
employees, noticed or reported during the year, nor have we been
informed of any such cases by the management during the course of our
audit.

I I. The company has paid /provided for managerial remuneration in
accordance with the requisite approvals mandated by the provisions of
section 197 read with schedule V to the Act.

12. The company is not a Nidhi Company.

13. The transactions with related parties are in compliance with the
provisions of Section 177 and 188 of the Act. The details of the
related party transactions have been disclosed in the financial
statements as required under Accounting Standard (AS) 18, Related Party
Disclosures specified under Section 133 of the Act, read with Rule 7 of
the Companies (Accounts) Rules, 2014.

14. 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, the provisions of Clause 3 (xiv) of
the order are not applicable.

15. The Company has not entered into any non cash transactions with
its directors or persons connected with him.Therefore, the provisions
of Clause 3 (xv) of the order are not applicable.

16. The Company is not required to be registered under Section 45-IA
of the Reserve Bank of India Act, 1934.

For R.S. Agarwala & Co.

Chartered Accountants Firm''s

Regn. No.: 304045E

R.S.Agarwala

Camp: Hyderabad Partner

Date:April 27,2016 Membership No.: 005534


Mar 31, 2015

We have audited the accompanying standalone financial statements of Gati Limited ("the Company"), which comprise the Balance Sheet as at 31 March 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information for the year ended on that date in which are incorporated the returns for the year ended on that date audited by the branch auditor of the Company''s branch in Nepal.

Management''s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements, that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies(Accounts) Rules, 2014 (as amended). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

1. Our responsibility is to express an opinion on these standalone financial statements based on our audit.

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

3. 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 financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2015, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following notes:

(a) Note 28 of the financial statements regarding the scheme of arrangement for amalgamation (the Scheme) sanctioned by the Hon''ble Andhra Pradesh High Court by its order dated March 19, 2013. The Scheme permits the company to create a capital reserve to be called special reserve to which shall be credited excess of value of assets over value of liabilities on amalgamation amounting to Rs. 555.54 crores to be utilized to adjust therefrom any capital losses arising from transfer of assets and certain other losses as specified in the Scheme and as the Board of Directors may deem fit. Accordingly the irrecoverable advances to Gati ship Limited of Rs. 23.84 crores net of Rs. 30.22 Lacs realized on sale of 12.10 Lacs equity shares of Gati ship Limited has been adjusted to special reserve which is not in accordance with Accounting Standard (AS) 5 ''Net profit or loss for the period, prior period items and Changes in Accounting Policies'' and Accounting Standard (AS) 13 ''Accounting for Investments''. This has resulted in the profit for the period before tax and profit after tax for the period being higher by Rs. 23.84 crores.

(b) Note 30 of the financial statements regarding non provision against investment and other receivables from the subsidiary Zen Cargo Movers Pvt. Limited amounting to Rs.36.22 Lacs and Rs. 147.61 Lacs respectively as in the opinion of management no provision is necessary considering the expected improvement in performance of the subsidiary in near future.

(c) Note 31 of the financial statements regarding certain loans and advances to subsidiaries and an associate aggregating to Rs.23.66 crores in respect of which the management is confident of its full recovery.

(d) Note 32 of the financial statements regarding non provision for dues of Rs.12.15 crores from a body corporate as the management is confident of its full recovery.

- Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2015 ("the Order") issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by Section143(3) of the Act, we report that:

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

b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from the branches not visited by us;

c. The report on the accounts of the branch office of the Company audited under Section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report;

d. the standalone financial statements dealt with by this report are in agreement with the books of account and with the returns received from the branch not visited by us;

e. In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);

f. On the basis of the written representations received from the directors as on 31 March 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2015 from being appointed as a director in terms of Section164(2) of the Act;

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

i. As detailed in Note 36, 40 and 41(a)(iii) of the notes to the standalone financial statements, the Company has disclosed the impact of pending litigation on its financial statements.

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

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

Annexure to the Independent Auditor''s Report of even date to the members of Gati Limited on Financial Statements for the year ended 31st March 2015

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets like land, building, vehicles, plant and equipments, computers etc. We are informed that a test physical verification of these assets was carried out by the management during the year and no material discrepancies were noticed. The management has informed us that in respect of other fixed assets like furniture and fittings, office equipments, having regard to their numbers and the numerous locations where these exist, maintenance of detailed records and reconciliation of their value in general ledger is not feasible

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

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

(c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) The Company has granted unsecured loans and advances to companies, firms or other parties covered in the register maintained under Section 189 of the Act. There are no stipulations as to the dates for repayment of principle and interest.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) In our opinion, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 73to 76 and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended) as applicable, with regard to the deposits accepted. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal, in this regard.

(vi) To the best of our knowledge and belief, the Central Government has not specified maintenance of cost records under sub-section (1) of Section 148 of the Act, in respect of Company''s products/ services. Accordingly, the provisions of clause 3(vi) of the Order are not applicable.

(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-

tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year- end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess on account of any dispute, are as follows:

Nature of dues Amount (in crores) Forum where dispute is pending

Income Tax 56.35 Commissioner (Appeals)

Service Tax 2.84 Central Excise and Service Tax Appellate Tribunal

( c) The Company has transferred the amount required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder within the specified time.

(viii) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(ix) In our opinion, the Company has not defaulted in repayment of dues to any financial institution or bank or to debenture-holders during the year.

(x) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

(xi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xii) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For R.S. Agarwala & Co. Chartered Accountants Firm''s Regn. No.: 304045E

R.S. Agarwala Camp: Hyderabad Partner Date: 28th April 2015 Membership No.: 005534


Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of Gati 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 die Nine months period then ended, and a summary of significant accounting policies and other explanatory information in which is incorporated die audited accounts of die branch in Nepal as audited by other auditors.

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 widi the Accounting Standards referred to in section 211 (3C) of the Companies Act, 1956 ("the Act"). This responsibility includes die design, implementation and maintenance of internal control relevant to die 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 widi the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require diat we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whedier die financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about die amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including die assessment of the risks of material misstatement of die financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to die Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in die 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 die accounting estimates made by die 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 die best of our information and according to the explanations given to us, die financial statements give the information required by die Act in the manner so required and give a true and fair view in conformity widi the accounting principles generally accepted in India:

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

(b) in die case of die Statement of Profit and Loss, of the profit for the period ended on that date; and

(c) in die case of the Cash Flow Statement, of the cash flows of the Company for the period ended on that date.

Emphasis of matters:

We draw attention to the following notes:

(a) Note 28 of the financial statements regarding the scheme of arrangement for amalgamation (die Scheme) sanctioned by the Hon''ble Andhra Pradesh High Court by its order dated March 19,2013. The Scheme permits the company to create a capital reserve to be called special reserve to which shall be credited excess of value of assets over value of liabilities on amalgamation amounting to Rs. 555.54 Crores to be utilized to adjust there from any capital losses arising from transfer of assets and certain odier losses as specified in the Scheme and as the Board of Directors may deem fit. Accordingly the diminution in value of Investments and irrecoverable advances and dues aggregating to Rs.215.57 Crores required to be debited to die statement of Profit and Loss have been adjusted against Special Reserve which is not in accordance with Accounting Standard (AS) 5 ''Net profit or loss for the period, prior period items and Changes in Accounting Policies'' and Accounting Standard (AS) 13 ''Accounting for Investments''. This has resulted in die profit for the period before tax and profit after tax for die period being higher by Rs. 215.57 Crores.

(b) Note 31 of die financial statements regarding non provision against investments and other receivables from the subsidiary Gati Kausar India Limited amounting to Rs.3522.72 lakhs and Rs. 263.80 lakhs respectively as in the opinion of management no provision is necessary considering die expected improvement in performance of the subsidiary in near future.

(c) Note 32 of the financial statements regarding non provision against investments and other receivables from the subsidiary Zen Cargo Movers Pvt. Limited amounting to Rs.36.22 lakhs and Rs. 147.61 lakhs respectively as in the opinion of management no provision is necessary considering die expected improvement in performance of the subsidiary in near future.

(d) Note 33(a) of die financial statements regarding non provision for dues of Rs. 13.90 crores from a body corporate as the management is confident of its full recovery.

(e) Note 33(b) of die financial statements regarding certain loans and advances to subsidiaries and an associate aggregating to Rs.21.55 crores in respect of which die management is confident of its full recovery.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

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

2. As required by section 227(3) of the Act, we report diat

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 it appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from branches not visited by us. The Branch Auditor''s Reports have been forwarded to us and appropriately dealt with.

c) the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from branches not visited by us;

d) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in section 21 I (3C) of the Act; as referred in Emphasis of Matters paragraph (a) above, the accounting treatment as per the Scheme sanctioned by the Court order overrides the relevant provisions of the Accounting Standard(AS) 5, Accounting Standard (AS 13) and

e) On the basis of the 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 section 274 (I) (g) of the Act.

Annexure To Auditors'' Report

Referred to in paragraph I under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date

1. (a) The Company has maintained records showing full particulars including quantitative details and situation of fixed assets like land, building, vehicles, plant and equipment''s, computers etc. We are informed that a test physical verification of these assets was carried out by the management during the period and no material discrepancies were noticed. The management has informed us that in respect of other fixed assets like furniture and fittings, office equipment''s, having regard to their numbers and the numerous locations where these exist, maintenance of detailed records and reconciliation of their value in general ledger is not feasible

(b) During the period the Company has not disposed off a substantial part of its fixed assets.

2. Physical verification was conducted by the management in respect of inventories at reasonable intervals. The company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. The procedures followed by the management for such physical verification are in our opinion, reasonable and adequate in relation to the size of the company and the nature of its business.

3. The Company has not granted or taken during the period any loans secured or unsecured from companies, firms or other parties covered in

the register maintain under Sec 301 of the Companies Act 1956.

4. There is an adequate internal control system commensurate with the size and nature of the Company''s business for the purchase of inventories, fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal control system, nor we have been informed of any such instance.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance of Section 301 of the Act, 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 entered into the register in pursuance of Section 301 of the Act, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has complied with the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and rules

framed there under with regard to deposits accepted from the public.

7. The in-house internal audit department of the company conducts internal audit regularly. The internal audit system is commensurate with the size and nature of Company''s business.

8. The Central Government has not prescribed the maintenance of Cost records under Section 209 (l)(d) of the Companies Act, 1956 in respect of any activities of the Company.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, wealth tax, service tax, customs duty and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of tax dues as at March 31,2014 which have not been deposited on account of a dispute are as under.

Nature of Dues Amount ('' In lacs) Forum where pending

Income tax 27.15 Commissioner (Appeals)

Service tax 287.46 Central Excise & Service Tax Appellate Tribunal

10. The Company has no accumulated losses as at March 31,2014 and has not incurred any cash losses in the financial period ended on that date or in the immediately preceding financial period.

11. According to the records of the Company examined by us and die information and explanations given to us, there are no defaults and delays as at the balance sheet date in repayment of dues to bank and other financial institution.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statue applicable to chit fund / nidhi/ mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, die Company is not a dealer or trader in shares, securities, debentures and other investments. The Investments in shares & Securities are held by the company in its own name.

15. In our opinion, and according to the information and explanation given to us, the terms and conditions on which die company has given guarantee for loans taken by others from banks or financial institutions, are not prima facie prejudicial to the interest of the company.

16. In our opinion, and according to die information and explanations given to us, on an overall basis the term loans have been applied for die purpose for which they were obtained.

17. On die basis of an overall examination of the balance sheet of the Company, in our opinion and according to die information and explanations given to us, funds raised on short-term basis, have not been used for die long-term investment.

18. The company has not made any preferential allotment of shares during the period.

19. There are no secured debentures issued during die period.

20. The company has not raised any money by public issue during the period.

21. During the course of our examination of the books and records of the Company, carried out in accordance with die 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 die Company, noticed or reported during die period, nor we have been informed of such cases by the management,



For R.S. Agarwala & Co.

Chartered Accountants

Firm Regn No:-304045E



(R.S.Agarwala)

Camp : Secunderabad Partner

Date: May 6, 2014 MembershipNo.005534


Jun 30, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Gati Limited. ("the Company"), which comprise the Balance Sheet as at June 30, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information in which is incorporated the audited accounts of the branch in Nepal as audited by other auditors.

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 section 2II(3C) 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 misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 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 June 30, 20I3;

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

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

Emphasis of matters:

We draw attention to the following notes:

(a) Note 29 of the financial statements regarding the scheme of arrangement for amalgamation (the Scheme) sanctioned by the Hon''ble Andhra Pradesh High Court by its order dated March I9, 20I3. The Scheme permits the company to create a capital reserve to be called special reserve to which shall be credited excess of value of assets over value of liabilities on amalgamation amounting to Rs. 555.54 Crores to be utilized to adjust therefrom any capital losses arising from transfer of assets and certain other losses as specified in the Scheme and as the Board of Directors may deem fit. Accordingly the loss of Rs. 64 Crores on sale of investment in 40 lakh equity shares of the Subsidiary Gati Ship Limited required to be debited to the statement of Profit and Loss has been adjusted against Special Reserve which is not in accordance with Accounting Standard (AS) I3 ''Accounting for Investments''. This has resulted in the profit before tax and profit after tax for the year being higher by Rs. 64 Crores and Rs. 63.50 Crores respectively.

(b) Note 3I of the financial statements regarding non provision against investments and other receivables from the subsidiary Gati Kausar India Limited amounting to Rs. 3522.46 lakhs and Rs. 40.6I lakhs respectively as in the opinion of management no provision is necessary considering the expected improvement in performance of the subsidiary in near future.

(c) Note 32 of the financial statements regarding non provision against investments and other receivables from the subsidiary Zen Cargo Movers Pvt. Limited amounting to Rs. 36.22 lakhs and Rs. I35.55 lakhs respectively as in the opinion of management no provision is necessary considering the expected improvement in performance of the subsidiary in near future.

(d) Note 35 of the financial statements regarding dues of Rs. 26.60 crores from National Aviation Company India Ltd. (now Air India Ltd.) and legal expenses Rs. I.02 Crores included in Short term loans & advances disputes in respect of which have been referred for arbitration before the Arbitral Tribunal. In the opinion of the management no provision is necessary in this behalf considering the pendency of the matter before the Arbitral Tribunal, the legal advice received by the company and the outcome of which can not presently be determined.

Our opinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government in terms of section 227(4A) 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 it appears from our examination of those books and proper returns adequate for the purpose of our audit have been received from branches not visited by us;

c) the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account and with the returns received from branches not visited by us;

d) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in section 2II (3C) of the Act; as referred in Emphasis of Matters paragraph (a) above, the accounting treatment as per the Scheme sanctioned by the Court order overrides the relevant provisions of the Accounting Standard I3 (AS I3) and

e) On the basis of the written representations received from the directors as on June 30, 20I3, and taken on record by the Board of Directors, none of the directors is disqualified as on June 30, 20I3, from being appointed as a director in terms of section 274 (I) (g) of the Act.

1. (a) The Company has maintained records showing full particulars including quantitative details and situation of fixed assets like land, building, vehicles, plant and equipments, computers etc. We are informed that a test physical verification of these assets was carried out by the management during the year and no material discrepancies were noticed. The management has informed us that in respect of other fixed assets like furniture and fittings, office equipments, having regard to their numbers and the numerous locations where these exist, maintenance of detailed records and reconciliation of their value in general ledger is not feasible.

(b) During the year the Company has not disposed off a substantial part of its fixed assets.

2. Physical verification was conducted by the management in respect of inventories at reasonable intervals. The company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. The procedures followed by the management for such physical verification are in our opinion, reasonable and adequate in relation to the size of the company and the nature of its business.

3. The Company has not granted or taken during the year any loans secured or unsecured from companies, firms or other parties covered in the register maintain under Sec 301 of the Companies Act 1956.

4. There is an adequate internal control system commensurate with the size and nature of the Company''s business for the purchase of inventories, fixed assets and for the sale of goods and services. During the course of our audit no major weakness has been noticed in the internal control system, nor we have been informed of any such instance.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance of Section 301 of the Act, 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 entered into the register in pursuance of Section 301 of the Act, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The Company has complied with the provisions of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and rules framed there under with regard to deposits accepted from the public.

7. The in-house internal audit department of the company conducts internal audit regularly. The internal audit system is commensurate with the size and nature of Company''s business.

8. The Central Government has not prescribed the maintenance of Cost records under Section 209 (l)(d) of the Companies Act, 1956 in respect of any activities of the Company.

9. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, wealth tax, service tax, customs duty and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of tax dues as at June 30, 2013 which have not been deposited on account of a dispute are as under.

Nature of Dues Amount (Rs. In lacs) Forum where pending

Income tax 635.32 Commissioner (Appeals)

Service tax 363.88 Central Excise & Service Tax Appellate Tribunal

10. The Company has no accumulated losses as at June 30, 2013 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, there are no defaults and delays as at the balance sheet date in repayment of dues to bank and other financial institution.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The provisions of any special statue applicable to chitfund/nidhi/mutual benefit fund/ societies are not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. The Investments in shares & Securities are held by the company in its own name.

15. In our opinion, and according to the information and explanation given to us, the terms and conditions on which the company has given guarantee for loans taken by others from banks or financial institutions, are not prima facie prejudicial to the interest of the company.

16. In our opinion, and according to the information and explanations given to us, on an overall basis the term loans have been applied for the purpose for which they were obtained.

17. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, funds raised on short-term basis, have not been used for long-term investment.

18. The company has not made any preferential allotment of shares during the year.

19. There are no secured debentures issued during the year.

20. The company has not raised any money by public issue during the year.

21. 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 we have been informed of such cases by the management.

For R.S. Agarwala Co.

Chartered Accountants

Firm Regn No.: 304045E

Camp: Secunderabad R. S. Agarwala

Date : July 31, 2013 Partner

Membership No.005534


Jun 30, 2012

We have audited the attached Balance Sheet of Gati Ltd as at 30th June, 2012, the annexed Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, in which are incorporated the audited accounts of the branch in Nepal as audited by other auditors.

1. 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 misstatements. An audit also 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. As required by the Companies (Auditors' 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 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we enclose in the Annexure hereto a statement on the matters specified in paragraphs 4 & 5 of the said Order.

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

ii) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examinations of the books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us. The Branch Auditor's Reports have been forwarded to us and appropriately dealt with.

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 and returns from the branches.

iv) In our opinion, the Statement of Profit and Loss, the Balance Sheet and the Cash Flow statement comply with the accounting standards referred to in section 211 (3C) of the Companies Act, 1956.

v) On the basis of written representation received from the directors as on 30th June, 2012 and taken on record by the Board of Directors none of the directors is disqualified as on 30th June, 2012 from being appointed as a director under section 274( I) (g) of the Companies Act, 1956.

vi) Without qualifying our opinion attention is drawn to:

Note 30(a) regarding pending dispute with National Aviation Company of India Limited ( NACIL) and claims & counter claims made in this behalf. Further Rs 2659 lacs due from NACIL are included in loans and advance pending realization. According to the legal opinion received by the company no liability is contemplated to arise and no provision is necessary in these accounts in this behalf. We are unable to express an opinion in the matter.

vii) Attention is drawn to note 30(d) regarding excess remuneration paid to the Managing Director and erstwhile Whole-time Director aggregating to Rs 224.67 lacs which is subject to the approval of the Central Government and the shareholders Subject to para (vii)

viii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes and accounting policies thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of Balance Sheet of the state of affairs of the Company as at 30th June, 2012.

b) In the case of Statement of Profit and Loss, of the profits of the Company 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.

1. The Company has maintained records showing full particulars including quantitative details and situation of fixed assets like land, building, vehicles, plant and machinery, computers etc. We are informed that a test physical verification of these assets was carried out by the management during the year and no material discrepancies were noticed. The management has informed us that in respect of other fixed assets like furniture and fittings, office equipments, having regard to their numbers and the numerous locations where these exist, maintenance of detailed records and reconciliation of their value in general ledger is nor feasible.

2. During the year the Company has disposed off a substantial part of its fixed assets in terms of Business T ransfer Agreements for transfer of its Express Distribution supply chain and shipping divisions. However, in our opinion this does not effect the going concern status of the Company.

3. Physical verification was conducted by the management in respect of inventories at reasonable intervals. The Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. The procedures followed by the management for such physical verification are in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

4. (a) The Company has during the year granted unsecured loans to two subsidiaries, which are covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year aggregate to Rs.912.16 lacs and the year end balances to Rs.912.16 lacs. There are no stipulations as to the dates for repayment of principal and interest. However interest is being charged thereon.

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

(c) Company has during the year taken unsecured loans from one subsidiary which is covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs 91.43 lacs and year end balance R9I.43 lacs.

5. There is an adequate internal control system commensurate with the size and nature of the Company's business for the purchase of inventories, fixed assets and for the sale of services. During the course of our audit no major weakness has been noticed in the internal control system, nor we have been informed of any such instance.

6. (a) To the best of our knowledge and belief and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance of Section 301 of the Act, 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 entered into the register in pursuance of Section 301 of the Act, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

7. The Company has complied with the provision of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed thereunder with regard to deposits accepted from the public.

8. The Company has appointed a firm of Chartered Accountant at Coast- to- Coast Division to do the internal audit regularly. The in-house internal audit department of the company conducts internal audit at other places. The internal audit system is commensurate with the size and nature of Company's business.

9. The Central Government has not prescribed the maintenance of Cost records under Section 209 (I )(d) of the Companies Act, 1956 in respect of any activities of the Company.

10. (a) According to the information and explanations given to us and the records of the Company examined by us in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, wealth tax, service tax, customs duty and other material statutory dues as applicable with the appropriate authorities. However there has been delays in a few cases in depositing the dues during the year.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no statutory dues as at the year end which have not been deposited on account of a dispute.

11. The Company has no accumulated losses as atjune 30,2012 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

12. According to the records of the Company examined by us and the information and explanations given to us, there are no defaults as at the balance sheet date in repayment of dues to bank.

13. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

14. The provisions of any special statue applicable to chitfund /nidhi/ mutual benefit fund/ societies are not applicable to the company.

15. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. The investments in shares, securities, debentures etc are held by the Company in its own name.

16. In our opinion, and according to the information and explanation given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions, are not prima facie prejudicial to the interest of the Company.

17. In our opinion, and according to the information and explanations given to us, on an overall basis the term loans have been applied for the purpose for which they were obtained.

18. On the basis of an overall examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, funds raised on short-term basis, have not been used for the long-term investment.

19. The company has not made any preferential allotment of shares during the year.

20. There are no secured debentures issued during the year.

21. The company has not raised any money by public issue during the year.

22. 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 we have been informed of such cases by the management.

For R.S. Agarwala Co.

Chartered Accountants

Firm Regn No.: 304045E

Camp: Secunderabad R. S. Agarwala

Date : August 9,2012 Partner

Membership No.F-5534


Jun 30, 2010

We have audited the attached Balance Sheet of Gati Ltd as at 30th June 2010, the annexed Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on the date, in which are incorporated the audited accounts of the Coast-to-Coast Division and the branch in Nepal as audited by other auditors.

1. 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 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 also 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. As required by the Companies (Auditors 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 and on the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we enclose in the Annexure hereto a statement on the matters specified in paragraphs 4 & 5 of the said Order.

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

ii) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examinations of the books and proper returns adequate for the purpose of our audit have been received from the branches not visited by us. The Branch Auditors Reports have been forwarded to us and appropriately dealt with.

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 and returns from the branches.

iv) In our opinion, the Profit and Loss Account, the Balance Sheet and the Cash Flow statement comply with the accounting standards referred to in section 211 (3C) of the Companies Act, 1956.

v) On the basis of written representation received from the directors as on 30th June, 2010 and taken on record by the Board of Directors none of the directors is disqualified as on 30th June, 2010 from being appointed as a director under section 274(1) (g) of the Companies Act, 1956.

vi) Reference is invited to the following notes on accounts :

a) Note 3 regarding pending dispute with National Aviation Company of India Limited (NACIL) and claims & counter claims made in this behalf. Further Rs.2659 lakhs due from NACIL are included in loans and advances pending realisation. According to the legal opinion received by the company no liability is contemplated to arise and no provision is necessary in these accounts in this behalf. We a r e unable to express an opinion in the matter.

b) Note 7 regarding remuneration paid to the Managing Director and Whole-Time Director aggregating to Rs.127.79 lakhs which is subject to the approval of the Central Government and the share holders.

Subject to para (vi)

vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes and accounting policies thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

b) In the case of Profit and Loss Account, of the profits of the Company 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.

Annexure to Auditors Report Referred to in paragraph 3 of our reports of even date.

1. The Company has maintained records showing full particulars including quantitative details and situation of fixed assets like land, building, vehicles, plant and machinery, computers etc. We are informed that a test physical verification of these assets was carried out by the management during the year and no material discrepancies were noticed. The management has informed us that in respect of other fixed assets like furniture and fittings, office equipments, having regard to their numbers and the numerous locations where these exist, maintenance of detailed records and reconciliation of their value in general ledger is nor feasible.

2. During the year the Company has not disposed off a substantial part of its fixed assets.

3. Physical verification was conducted by the management in respect of inventories at reasonable intervals. The Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. The procedures followed by the management for such physical verification are in our opinion, reasonable and adequate in relation to the size of the Company and the nature of its business.

4. (a) The Company has during the year granted unsecured loans to two subsidiaries, which are covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year aggregate to Rs.916 lakhs and the year end balances to Rs.915 lakhs. There are no stipulations as to the dates for repayment of principal and interest. However interest is being charged thereon.

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

(c) As informed the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act.

5. There is an adequate internal control system commensurate with the size and nature of the Companys business for the purchase of inventories, fixed assets and for the sale of services. During the course of our audit no major weakness has been noticed in the internal control system, nor we have been informed of any such instance.

6. (a) To the best of our knowledge and belief and according to the information and explanations given to us, the particulars of contracts or arrangements that need to be entered into the register in pursuance of Section 301 of the Act, 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 entered into the register in pursuance of Section 301 of the Act, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

7. The Company has complied with the provision of Sections 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the rules framed thereunder with regard to deposits accepted from the public.

8. The Company has appointed a firm of Chartered Accountant at Coast- to- Coast Division to do the internal audit regularly. The in- house internal audit department of the company conducts internal audit at other places. The internal audit system is commensurate with the size and nature of Companys business.

9. The Central Government has not prescribed the maintenance of Cost records under Section 209 (1)(d) of the Companies Act, 1956 in respect of any activities of the Company.

10. (a) According to the information and explanations given to us and the records of the Company examined by us in our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income-tax, wealth tax, service tax, customs duty and other material statutory dues as applicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no statutory dues as at the year end which have not been deposited on account of a dispute.

11. The Company has no accumulated losses as at June 30, 2010 and has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

12. According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

13. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

14. The provisions of any special statue applicable to chitfund / nidhi/ mutual benefit fund/ societies are not applicable to the company.

15. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. The investments in shares, securities, debentures etc are held by the Company in its own name.

16. In our opinion, and according to the information and explanation given to us, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions, are not prima facie prejudicial to the interest of the Company.

17. In our opinion, and according to the information and explanations given to us, on an overall basis the term loans have been applied for the purpose for which they were obtained.

18. On the basis of an over all examination of the balance sheet of the Company, in our opinion and according to the information and explanations given to us, funds raised on short-term basis, have not been used for the long-term investment.

19. The company has not made any preferential allotment of shares during the year.

20. There are no secured debentures issued during the year.

21. The company has not raised any money by public issue during the year.

22. 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 we have been informed of such cases by the management.

For R.S. Agarwala & Co.

Chartered Accountants

Firms Regn. No.: 304045E

Camp : Secunderabad R.S. Agarwala

Date : August 18, 2010 Partner

Membership No.F-5534

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