Auditor Report of Mawana Sugars Ltd.

Mar 31, 2018

Report on the Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Mawana Sugars Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Standalone Ind AS Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act., read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

In our opinion and to the best of our information and according to the explanations given to us, the standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, its profit including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

We draw attention to Note 40 in the standalone Ind AS financial statements regarding remuneration paid in excess of limits approved by the Central Government to its former directors/Managing Director/Whole Time Director (including the former MD/WTD where the department has declined the request of the Company and the application is being filed for reopening) pending approval by the Central Government and more fully described therein. Our opinion is not qualified in respect of this matter.

Other Matter

The comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as at April 01, 2016 included in these standalone Ind AS financial statements, are based on the previously issued statutory financial statements prepared in accordance with the accounting principles generally accepted in India, including the Companies (Accounting Standards) Rules, 2006 (as amended) specified under Section 133 of the Act, read with the Companies (Accounts) Rules, 2014 audited by the predecessor auditor whose report for the year ended March 31, 2017 expressed an modified opinion on those standalone financial statements dated June 9, 2017 and report for the year ended March 31, 2016 dated May 10, 2016 expressed an unmodified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS, which have been audited by us.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s report) Order, 2016 (“the Order”) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

(a) We have sought and 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 as required by law have been kept by the Company so far as it appears from our examination of those books;

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

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

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

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure 2” to this report;

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements -Refer Note 31(c) to the standalone Ind AS financial statements;

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

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

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

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

(i)(b)The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to program certain fixed assets were physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were identified on such verification.

(i)(c) According to the information and explanations given by the management, the title deeds of immovable properties included in fixed assets are held in the name of Company.

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

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

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

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

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

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

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

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

Nature of Statute	Nature of Dues	Amount (Rs. Million)	Amount Paid under protest (Rs. Million)	Period to which the Amount relate	Forum where dispute is pending
Sales Tax Laws	Sales Tax	6.36	-	2009-10 to 2013-14	High Court
		48.63	2.55	2006-07, 2012-13, 2013-14	Appellate Authority upto Commissioner''s level
Central Excise Laws	Service Tax	9.41	0.03	2005-2006 to 2014-15	Appellate Authority upto Commissioner''s level
	Excise Duty	10.75	-	2007-08 to 2014-15	High Court
		31.57	-	2007-08 to 2009-10	Customs Excise and Service Tax Appellate Tribunal (CESTAT)
		93.82	0.55	1994-95 to 1996-97, 1998-99, 1999-00, 2001-02 and 2004-05 to 2016-17	Appellate Authority upto Commissioner''s level
		1.04	-	1999-00 to 2002-03	Supreme Court

(viii) According to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowings to financial institutions, banks and Government except in case of one bank where the negotiation for one time settlement was going on and the payment of installments could not be made till the settlement was arrived at. As such, during the year, there was delay to the extent of Rs 28.20 million for less than 60 days till the settlement made. Such settlement has been made in the month of June, 2017. The Company did not have any due amount of such borrowings at the year-end. The Company did not have any outstanding debentures during the year.

(ix) In our opinion and according to the information and explanations given by the management, the Company has utilized the monies raised by way of term loans for the purposes for which they were raised. According to the information and explanations given by the management, the Company has not raised any money by way of initial public offer / further public offer and debt instruments hence, not commented upon.

(x) We have been informed that frauds pertaining to earlier years have been detected in Company''s sugar units at Mawana Sugar Works and Nanglamal Sugar Complex where some employees (who have already left the service of the Company) have embezzled aggregate sum of Rs. 29.78 million by forging documents and wrongfully withdrawing payment. FIR has been filed against these employees and necessary legal action in this regard has been initiated to recover the money. No dues are payable to these employees as on date as per books of accounts. (Refer Note 46 of the financial statements).

(xi) According to the information and explanations given by the management, we report that managerial remuneration is in excess of the limits and approvals prescribed under Section 197 of the Act, read with Schedule V thereto to the following personnel and our report includes an Emphasis of Matter in this respect:

Managerial position	Amount involved (in excess of the limit prescribed) (Rs. Million)	Amount due for recovery as at Balance sheet date (Rs. Million)	Financial year ended	Steps taken by Company for securing refund
Mr. Siddharth Shriram (Former Chairman & Managing Director)	7.04	7.04	12 months ended 30.09.2013 & 15 months ended 31.12.2014	Department has declined the request for application of excess remuneration and application is being filed for reopening by the Company
Mr. Rajendra Khanna (Former Whole Time Director)	6.61	6.61	15 months ended 31.12.2014	Department has declined the request for application of excess remuneration and application is being filed for reopening by the Company
Mr. Sunil Kakria (Former Managing Director)	17.33	17.33	October 1, 2012 to July 31, 2013	Department has declined the request for application of excess remuneration and application is being filed for reopening by the Company
Mr. Ashwani Kumar Mehra (Former Whole Time Director)	18.56	18.56	October 1, 2012 to July 31, 2014	Department has declined the request for application of excess remuneration and application is being filed for reopening by the Company

Further, According to the information and explanations given by the management, we report that remuneration of the whole time director for the period from August 2015 to March 2018 is in excess of the limits applicable under Section 197 of the Act, read with Schedule V thereto, by Rs 4.66 million. We are informed by the management that the Company had filed an application with the Central Government, seeking waiver of excess remuneration paid. Our report includes an Emphasis of Matter in this respect.

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

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

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

(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in Section 192 of Companies Act, 2013.

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

ANNEXURE 2 TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF MAWANA SUGARS LIMITED

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

We have audited the internal financial controls over financial reporting of Mawana Sugars Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company''s Management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting with reference to these standalone financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing as specified under Section 143(10) of the Companies Act, 2013, to the extent 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 with reference to these standalone financial statements 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 over financial reporting with reference to these standalone financial statements and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting with reference to these standalone financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls over financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting With Reference to these Standalone Financial Statements

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

Inherent Limitations of Internal Financial Controls Over Financial Reporting With Reference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls over financial reporting with reference to these standalone financial statements, 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 with reference to these standalone financial statements to future periods are subject to the risk that the internal financial control over financial reporting with reference to these standalone financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls over financial reporting with reference to these standalone financial statements and such internal financial controls over financial reporting with reference to these standalone financial statements were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components 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 S.R. Batliboi & CO. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E/E300005

per Anil Gupta

Partner

Membership Number: 87921

Place of Signature: New Delhi

Date: May 23, 2018

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Mar 31, 2017

TO THE MEMBERS OF MAWANA SUGARS LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of MAWANA SUGARS LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section134(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 prescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

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

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

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

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

of the standalone financial statements.

We believe that the audit evidence obtained by us, is sufficient and appropriate to provide a basis for our qualified audit opinion on the standalone financial statements.

Basis for Qualified Opinion

Attention is invited to note 48 of the standalone financial statements which explains the basis on which the Company has deducted the loan waiver amount consequent to restructuring of loans in computation of Minimum Alternate Tax (MAT) under the provisions of Section 115JB of the Income-tax Act, 1961.

In our opinion, the aforesaid position of deducting the waiver of loan for capital purposes while computing book profits under MAT, in the absence of any express provisions under the Act and limited jurisprudence, may lead to litigation and hence the same should not be reduced while computing book profits under MAT. Consequent to the above, provision for current tax for the year ended March 31, 2017, is lower by Rs. 136.75 million, profit after tax and shareholders'' funds for the year are higher by the like amount

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid 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 March 31, 2017, and its profit and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the standalone financial statements:

a. Attention is invited to note 1(B) of the Standalone Financial Statements regarding the Company being registered with Board for Industrial and Financial Reconstruction in September 2013 consequent to it becoming a “Sick Industrial Company” in terms of the provisions of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions), Act, 1985 (repealed w.e.f. December 1, 2016), as the Company''s net worth had been eroded and the Company had incurred cash losses during the prior periods and its current liabilities were in excess of current assets. However, during the current year, the Company has generated profits, has restructured a major portion of its outstanding debts and sold off its Titawi unit on a slump sale basis as detailed in the aforesaid note, which has resulted in positive net worth. As such, the financial statements have been prepared by the Management of the Company on a going concern basis.

b. Attention is invited to note 39(i) of the Standalone Financial Statements which sets out the position regarding remuneration paid in excess of remuneration approved by the Central Government to its former Chairman and Managing Director for which a refund of Rs.7.04 million required in terms of Section 197(9) of the Companies Act, 2013 has not been obtained by the Company.

c. Attention is invited to note 39(ii) of the Standalone Financial Statements which sets out the position regarding remuneration paid in excess of remuneration approved by the Central Government to its former whole time director for which a refund of Rs.6.61 million required in terms of Section 197(9) of the Companies Act, 2013 has not been obtained by the Company.

d. Attention is invited to note 39(iii) of the Standalone Financial Statements which states that remuneration paid to whole time director amounting to Rs.2.89 million is subject to the approval of the Central Government under the provisions of the Companies Act, 2013.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act, based on our audit, we report, to the extent applicable, that:

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

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

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

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards prescribed under section 133 of the Act.

e) The going concern matter described in sub-paragraph

(a) under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

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

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements. Refer Note 28(a) and (c) to the standalone financial statements.

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. Refer Note 44 to the standalone financial statements.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company. Refer Note 45 to the standalone financial statements.

iv. The Company has provided requisite disclosures in the standalone financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8th November, 2016 of the Ministry of Finance, during the period from 8^th November 2016 to 30^th December 2016. Based on audit procedures performed and the representations provided to us by the management we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management. Refer Note 47 to the standalone financial statements.

2. As required by the Companies (Auditor''s Report) Order, 2016 (“the Order”) issued by the Central Government in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified in paragraphs 3 and 4 of the Order.

ANNEXURE “A” TO THE INDEPENDENT AUDITOR’S REPORT (Referred to in clause (h) of paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

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

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

Management’s Responsibility for Internal Financial Controls

The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the

Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on the internal control over financial reporting criteria established by the respective 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.

ANNEXURE “B” TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

(i) In respect of its fixed assets :-

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

(b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) With respect to immovable properties of land and buildings that are freehold, according to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed / transfer deed / conveyance deed provided to us, we report that, the title deeds of such immovable properties are held in the name of the Company as at the balance sheet date.

(ii) As explained to us, the inventories (excluding good in transit) were physically verified during the year by the management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) In our opinion and according to the information and explanations given to us, during the current year the Company has not granted any loans, made investments or provided guarantee under the provisions of Section 185 and 186 of the Companies Act, 2013.

(v) According to the information and explanations given to us, the Company has not accepted any deposits during the year.

(vi) The maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

S. No	Name of the Statute	Nature of dues	Amount involved (Rs. Millions)	Amount Paid under Protest (Rs. Millions)	Period to which the amount relates (various years covering the period)#	Forum where dispute is pending
1	Sales Tax Laws	Sales Tax	6.36 45.13	0.14	2009-10 to 2013-14 2006-07, 2012-13 & 2013-14	High Court Appellate Authority upto Commissioner''s level
2	Income Tax Laws	Income Tax	30.28	30.28	1998-99	High Court
3	Central Excise Laws	Excise Duty Service Tax	10.35 31.57 1.04 91.26 17.91	0.55 0.03	2007-08 to 2014-15 2007-08 to 2009-10 1999-00 to 2002-03 1994-95 to 1996-97, 1998-99, 1999-00, 2001-02 and 2004-05 to 2016-17 2005-06 to 2014-15	High Court Customs Excise and Service Tax Appellate Tribunal (CESTAT) Supreme Court Appellate Authority upto Commissioner''s level Appellate Authority upto Commissioner''s level

The following matters which have been excluded from the above table have been decided in favour of the Company but the department has preferred appeal at higher level:

S. No	Name of the Statute	Nature of dues	Amount involved (Rs. Million)	Period to which the amount relates #	Forum where dispute is pending
1	Income-tax laws	Income-tax	306.42	2001-02	Income-tax Appellate Tribunal (ITAT)

# Period in respect of income tax represents assessment year.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government, except as under;-

Particulars	Amount of default in repayment (Rs. Millions)		Period of default
	Principal	Interest
State Bank of Mysore*	4.78	-	1-1312 Days
Financial Institution
RABO*	275.05	143.18	1-1184 Days

Further, the Company has not issued any debenture during the year.

Particulars	Amount of default in repayment (Rs. Millions)		Period of default
	Principal	Interest
Banks
SBH	396.47	198.29	1-1339 Days
PNB*	778.93	385.64	1-1324 Days
Axis*	589.70	381.70	1-1153 Days

(vii) According to the information and explanations given to us,

in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-tax, Sales tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues applicable to it with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty Value Added Tax, cess and other material statutory dues in arrears as at March 31, 2017 for a period of more than six months from the date they became payable.

(c) The details of dues of Income-tax, Sales Tax, Service Tax and Excise Duty which have not been deposited as on March 31, 2017 on account of disputes are given below :

*The aforesaid dues have been paid/settled during the year and there are no outstanding defaults as at March 31, 2017. Refer Note 4 to the financial statements.

(ix) The Company has not raised money by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause (ix) of the CARO

2016 Order is not applicable.

(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid managerial remuneration in excess of the limits and approvals prescribed under section 197 read with Schedule V to the Companies Act, 2013 to the following managerial personnel:

Managerial Position	Excess amount of remuneration paid/ provided (Rs. Millions)	Financial year ending	Treatment of the excess remuneration in the respective year financial statements	Steps taken by the Company for securing refund
Mr. Siddharth Shriram (Former Chairman & Managing Director)	7.04	12 Months Ended 30.09.2013 & 15 Months Ended 31.12.2014	Shown as Recoverable under Loans & Advances	Approval is pending from the Central Government
Mr.Rajendra Khanna (Former Whole Time Director)	6.61	15 Months Ended 31.12.2014	Shown as Recoverable under Loans & Advances	Approval is pending from the Central Government

Also, the remuneration amounting to Rs 2.89 million (previous period Rs. 1.08 Million) paid to Whole Time Director (WTD) (w.e.f. August 13, 2015) up to March 31, 2017 is subject to the approval of the Central Government under the provisions of the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable

(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause

(xiv) of CARO 2016 is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year, the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013 are not applicable.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For A. F. Ferguson & Co.

Chartered Accountants

(Firm''s Registration No. 112066W)

Manjula Banerji

Date : June 09, 2017 Partner

Place: New Delhi (Membership No. 086423)

---

Dec 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of MAWANA SUGARS LIMITED ("the Company"), which comprise the Balance Sheet as at December 31,2014, the Statement of Profit and Loss and the Cash Flow Statement for the fifteen months then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ("the Act") (which are deemed to be applicable as per Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and 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 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 the 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 aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the fifteen months period ended on that date and

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

Emphasis of Matter

1. Attention is invited to note 1(B) of the financial statements regarding the Company being registered with Board for Industrial and Financial Reconstruction in September 2013 consequent to it becoming a "Sick Industrial Company" in terms of the provisions of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions), Act, 1985, as the Company''s net worth has been fully eroded and the Company has incurred cash losses during the current period and prior periods and its current liabilities are far in excess of current assets. However, the financial statements have been prepared by the Management of the Company on a going concern basis for the reasons stated in the said note.

2. Attention is invited to note 42 of the financial statements which sets out the position regarding remuneration paid in excess of remuneration approved by the Central Government to its chairman and managing director (ceased to be a director w.e.f from July 31,2014) for which a refund of Rs 7.04 million required in terms of Section 197(9) of the Companies Act, 2013 has not yet been obtained by the Company for the reason stated in the said note.

3. Attention is invited to note 38 of the financial statements. As stated in the note, remuneration paid to whole time director (ceased to be a director w.e.f close of business hours of December 31,2014) amounting to Rs 8.25 million is subject to the approval of the Central Government under the provisions of Companies Act, 2013.

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 for the fifteen months period ended December 31,2014, to the extent the same are applicable to the Company.

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 purposes of our audit.

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

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

d. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards notified under the Act (which are deemed to be applicable as per Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014).

e. Since the provisions of Section 274(1) (g) of the Act are not in effect from April 1, 2014, the reporting requirement under Section 227(3) (f) of the Act is not applicable as of the balance sheet date.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT (Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

Having regard to the nature of the Company''s business/activities/results during the period, clauses (xiii) and (xiv) of paragraph 4 of the Order are not applicable to the Company.

(i) In respect of its fixed assets:

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

(b) As explained to us, the Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. However, refer to our comments under paragraph 1 of "Emphasis of Matter" section of our report of even date.

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956 during the period the said section was applicable.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods. There is no sale of services during the year. During the course of our audit we have not observed any major weakness in such internal control system.

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

(a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered for the period the said Section was applicable.

(b) Where each of such transaction is in excess of Rs. 5 lakhs in respect of any party, the transactions have been made at prices which are, prima facie, reasonable having regard to the prevailing market prices at the relevant time.

(vi) During the period the provisions of sections 58A and 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the acceptance of deposits from the public were applicable, according to the information and explanation given to us, the Company has not accepted any deposits from the public during the period.

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

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

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

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

There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at December 31,2014 for a period of more than six months from the date they became payable.

(b) There are no disputed dues of Wealth Tax, Cess and Customs Duty which have not been deposited on account of any dispute.

The details of dues of Sales Tax, Income-tax, Service Tax and Excise Duty which have not been deposited as at December 31,2014 on account of disputes are given below:

S. Name of the Nature Amount Amount Period to which No Statute No of involved Paid the amount dues (Rs. under relates Million) Protest (various (Rs. covering the Million) period)#

1 Sales Sales 6.36 - 2009-10 to 2013-14 Tax Laws tax 80.84 10.64 1976-77, 1977-78 , 1983-84 to 1996-97, 1998-99 to 2000-01, 2003-04, 2004-05, 2006-07 and 2011-12

2.53 - 1978-79 & 1979-80

2 Income Income 30.28 30.28 1994-95 and 1998-99 Tax Laws Tax

3 Central Excise 9.69 - 2007-08 to 2012-13 Excise Duty Laws 132.54 0.4 2005-06 to 2011-12 1.04 - 1999-2000to2002-03

125.69 0.68 1981-82 to 1984-85 1994-95 to 2001-02 2003-04, 2004-05 2012-13. 2013-14 and 2014-15 Service 0.19 - 2006-07 Customs Tax 7.54 0.02 2005-06 to 2009-10



S Name of the Statute Forum where No dispute is pending

1. Sales Tax Laws High Court Appellate Authority upto Commissioner''s level Tribunal

2 Income Tax Laws High Court

3 Central Excise Laws High Court

Customs Excise and Service Tax Appellate Tribunal (CESTAT) Supreme Court

Appellate Authority upto Commissioner''s level Customs Excise and Service Tax Appellate Tribunal (CESTAT) Appellate Authority upto Commissioner''s level

# Period in respect of income tax represents assessment year.

The following matters which have been excluded from the above table have been decided in favour of the Company but the department has preferred appeal at higher level:

S. Name of the Nature of dues Amount Period to which the Statute No involved amount relates # (Rs. Million)

1 Central Excise Excise Duty 0.21 1996-97 Laws

2 Income tax Laws Income tax 306.42 2001-02

S. Name of the Statute Forum where dispute is pending Customs Excise and Service Income tax Appellate Tribunal (CESTAT) Income Tax Appellate Tribunal (ITAT)

# Period in respect of income tax represents assessment year.

(x) The accumulated losses of the Company at the end of the financial year i.e December 31,2014 are not less than fifty percent of its net worth and the Company has incurred cash losses during the fifteen months period ended December 31, 2014 and the immediately preceding financial year ended September 30, 2013.

(xi) According to the records of the Company examined by us and the information and and explanations given to us, the Company, during the year, has not defaulted in repayment of dues to financial institutions and has not issued debentures.

During the year ended December 31, 2014, the Company has defaulted in repayment of following loans to banks:

Lender Amount Period of Delays (Rs. Million) up to December 31,2014 (in days)

Banks (including interest) 1376.46 0-518 days

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4 (xii) of the Order, is not applicable.

(xiii) According to the information and explanations given to us, the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions.

(xiv) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.

(xv) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that short term funds of Rs. 5,681.49 million have been used for long term purposes.

(xvi) According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956, during the period the said Section was applicable.

(xvii) As the Company has not issued any debentures during the year, paragraph 4 (xix) of the Order, is not applicable.

(xviii) As the Company has not raised any money by way of public issue during the year, paragraph 4(xx) of the Order, is not applicable.

(xix) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For A.F. Ferguson & Co. Chartered Accountants (Firm Registration No. 112066 W)

Jaideep Bhargava 18th February, 2015 Partner New Delhi (Membership No. 090295)

---

Mar 31, 2011

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

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

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to 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 purposes of our audit;

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

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

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

(v) without qualifying our opinion, we draw attention to note 17 of schedule 11 relating to accounting for sugar cane purchase liability for the sugar season 2007-08 at Rs. 110 per quintal instead of State Advised Price of Rs. 125 per quintal fixed by the Uttar Pradesh State Government. Pending completion of legal proceedings in the matter, the effect thereof on these accounts cannot be determined at this stage;

(vi) various matters arisen/arising out of the reorganization arrangement of DCM Limited will be settled and accounted for as and when the liabilities/benefits are finally determined as stated in note 14 of schedule 11. The effect of these on the accounts has not been determined by the Company;

The matter referred to in paragraph (vi) above, to the extent covered here above, was also subject matter of qualification in our audit report on the financial statements for the year ended September 30,2009.

(vii) Subject to our comment in paragraph (vi) above and their consequential effect which could not be determined, on the loss for the eighteen months ended March 31, 2011 and year ended September 30,2009 and on the debit balance in profit and loss account as at March 31, 2011 and as at September 30, 2009, in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2011;

b. in the case of the Profit and Loss Account, of the loss of the Company for the eighteen months period ended on that date and

c. in the case of the Cash Flow Statement, of the cash flows of the Company for the eighteen months period ended on that date.

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

ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph '3' of our report of even date)

Having regard to the nature of the Company's business/activities/result, clauses (xiii) and (xiv) of Companies (Auditor's Report) Order, 2003 (hereinafter referred to as the Order) are not applicable.

(i) In respect of its fixed assets:

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

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

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

(ii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the period by the Management at reasonable intervals.

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

(c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iii) According to the information and explanations given to us the Company has during the period neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(v) According to the information and explanations given to us and having regard to the view taken by the Company that the transactions, which are subjected to the provisions of sub-section (6) of section 299 of the Companies Act, 1956 ("the Act"), are not required to be entered in the register maintained in pursuance of section 301 of the Act, there were no transactions during the period that were required to be entered in this register. Notwithstanding the Company's view regarding the provisions of sub-section (6) of section 299 of the Act in respect of certain transactions, exceeding the value of Rs. 5 lakhs entered into during the period with parties listed under the provisions of sub- section (3) of section 301 of the Act, these have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year.

(vii) In our opinion, the internal audit functions carried out during the period by the firms of Chartered Accountants appointed by the Management has been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under section 209(1) (d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determining whether they are accurate or complete.

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

(a) The Company has been regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income- tax, sales tax, wealth tax, customs duty, excise duty, cess and other material statutory dues applicable to it and has generally been regular in depositing undisputed statutory dues including tax deducted at source with the appropriate authorities. We are informed that there are no undisputed statutory dues as at the end outstanding for a period of more than six months from the date they became payable.

(b) There are no disputed dues of wealth tax, cess and customs duty which have not been deposited on account of any dispute.

The details of dues of sales tax, income-tax, service tax and excise duty which have not been deposited as at March 31,2011 on account of disputes are given below:

Name of Nature of Amount Amount the Statute dues involved paid under (Rs.Million) protest (Rs.Million)

Sales Tax Sales tax 5.27 2.03 Laws

3.03 0.34

186.81 20.11

Income Tax Income Tax 0.85 0.55 Laws 0.86 0.74 509.72 -

Central Excise Duty 0.10 - Excise 61.24 - Laws 68.96 40.13

Service Tax 0.05 0.02 0.23 -



Name of Nature of Period to which Forum where dispute the Statute dues the amount rel is pending ates (various years covering Sales Tax Sales tax 1986-87, 1989-90 High Court Laws 1978-79,1979-80, Sales Tax Tribunal 1987-88

1976-77, 1977-78, Appellate Authority upto 1983-84 to Commissioner's level 1996-97,1998-99 (0200-01, 2003- 04, 2004-05, 2006-07 and 2009 -10 Income Tax Income Tax 1994-95 High Court 2001-02 Income-tax Appellate Laws 1998-99,2001-02, Tribunal Appellate 2008-09,2009-10 Authority upto Commissioner's level

Central Excise Duty 1999-2000 to High Court Excise 2003-03 Laws 2000-01,2005-06 Customs Excise and to 2008-09 Service Tax Appellate Tribunal (CESTAT) Appellate Authority upto Commissioner's level Service Tax 2005-06,2006-07 Customs Excise and Service Tax Appellate Tribunal (CESTAT 2006-07 and 2008-09 Appellate Authority upto Commissioner's level # Period in respect of income tax represents assessment year.

The following matters which have been excluded from the above table have been decided in favour of the Company but the department has preferred appeal at higher level:

S. Name of Nature of Amount Period to which the amount No the Statute dues involved relates (Rs. Million)

1 Sales Tax Sales tax 3.13 2001-02 Laws

2 Income Tax Income Tax 0.55 2005-06 and 2006-07 Laws (Tax Collec ted at Source)

3 Central Excise Duty 69.13 1992-93 to 1997-98 Excise Laws 0.21 1996-97

S. Name of Forum where dispute is No the Statute pending

1 Sales Tax Supreme Court Laws

2 Income Tax High Court Laws

3 Central High Court Excise Laws Customs Excise and Service Tax Appellate Tribunal (CESTAT)

(x) According to the information and explanations given to us, without considering the items mentioned in paragraph 4(b) of our main report, the effect of which has not been determined and after considering the Capital Reserve of Rs. 991.46 million as part of free reserves for the purposes of computing net worth basis a legal opinion obtained by the Company in this regard (refer note 23 of schedule 11), the accumulated losses of the Company at the end of the financial period i.e. March 31,2011 are less than

fifty percent of its net worth. The Company has not incurred cash losses in the financial period ended March 31, 2011 and had incurred cash losses in the immediately preceding financial year ended September 30, 2009.

(xi) According to the records of the Company examined by us and the information and explanations given to us, the Company, during the year, has not defaulted in repayment of dues to financial institutions and has not issued debentures.

The Company has defaulted in repayment of dues to banks during the period and Rs. 31.04 million remains unpaid as at March 31,2011, which has been repaid subsequent to the period end:

(Rs. in million) Lender Amount Period of delay (in days)

Banks 29.17 1 - 30 3.28 31 - 60 135.86 61 - 90

(xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4 (xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us, the Company has not given any guarantees during the period for loans taken by others from banks or financial institutions.

(xiv) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

(xv) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that short term funds of Rs. 755.60 million have been used to finance operating losses.

(xvi) As the Company has not made any preferential allotment of shares during the period, paragraph 4(xviii) of the Order is not applicable.

(xvii) As the Company has not issued any debentures during the period, paragraph 4 (xix) of the Order is not applicable.

(xviii) As the Company has not raised any money by way of public issue during the period, paragraph 4(xx) of the Order, is not applicable.

(xix) To the best of our knowledge and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the period.

For A.F. FERGUSON & CO. Chartered Accountants (Registration No. 112066 W)

MANJULA BANERJI Partner Membership No. 086423

Place: New Delhi Date :30th May, 2011

---

Sep 30, 2009

1. We have audited the attached balance sheet of Mawana Sugars Limited as at September 30, 2009 and also the profit and loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

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

c) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

d) in our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors and taken on record by the Board of Directors, we report that none of the directors is disqualified as on September 30, 2009 from being appointed as a director in

terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

f) without qualifying our opinion, we draw attention to note 19 of schedule 12 relating to accounting for sugar cane purchase liability for the sugar season 2007-08 at Rs. 110 per quintal instead of State Advised Price of Rs. 125 per quintal fixed by the Uttar Pradesh State Government. Pending completion of legal proceedings in the matter, the effect thereof on these accounts cannot be determined at this stage.

g) various matters arisen/arising out of the reorganization arrangement of DCM Limited wili be settled and accounted for as and when the liabilities/benefits are finally determined as stated in note 14. The effect of these on the accounts has not been determined by the Company.

The matter referred to in paragraph (g) above, to the extent covered here above, was also subject matter of qualification in our audit report on the financial statements for the eighteen months ended September 30,2008.

Subject to our comment in paragraph (g) above and their consequential effect which could not be determined, on the loss for the year ended September 30, 2009 and eighteen months ended September 30,2008 and on the debit balance in profit and loss account as at September 30,2009 and as at September 30, 2008, in our opinion and to the best of our information and according to explanations given to us, said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the balance sheet, of the state of affairs of the Company as at September 30,2009;

(ii) in the case of the profit and loss account, of the loss of the Company, for the year ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF THE AUDITORS REPORT TO THE MEMBERS OF MAWANA SUGARS LIMITED ON THE ACCOUNTS FOR THE YEAR ENDED SEPTEMBER 30, 2009

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

(b) As explained to us, the Company has a programme of physically verifying all its fixed assets once in a period of three years, and in accordance therewith, fixed assets were physically verified by the management during the current year. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such verification were not material and have been properly dealt with in the books of account.

(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

ii) (a) During the year, the inventories have been physically verified by the management. In our opinion, the frequency of verification is reasonable.

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

(c) On the basis of our examination of the records of inventories, we are of the opinion that the Company is maintaining proper records of inventories. The discrepancies noticed on physical verification of inventories as compared to book records were not material and have been properly dealt with in the books of account.

iii) According to the information and explanations given to us, the Company has, during the year, not granted any loans, secured or unsecured to companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraphs 4 (iii) (b), (c) and (d) of the Order are not applicable.

According to the information and explanations given to us, the Company has, during the year, not taken any loan, secured or unsecured from companies, firms and other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, paragraphs 4 (iii) (f) and (g) of the Order are not applicable.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchases of inventories and fixed assets and with regard to the sale of goods. There are no sale of services during the year. Further, on the basis of our examination and according to the information and explanations given to us, we

have neither come across nor have been informed of any instance of major weaknesses in the aforesaid internal control procedures.

v) According to the information and explanations given to us and having regard to the view taken by the Company that the transactions, which are subjected to the provisions of sub- section 6 of section 299 of the Companies Act, 1956 (the Act), are not required to be entered in the register maintained in pursuance of Section 301 of the Act, there were no transactions during the year that were required to be entered in this register. Notwithstanding the Companys view regarding the provisions of sub-section 6 of section 299 of the Act in respect of certain transactions, exceeding the value of Rs. 5 lacs entered into during the year with parties listed under the provisions of sub-section 3 of Section 301 of the Act, these have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. As per the information and explanations given to us, no order on the Company has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other tribunal with regard to fixed deposits.

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

viii) We have broadly reviewed the books of account maintained by the Company in respect of products where pursuant to the Rules made by the Central Government, the maintenance of cost records has been prescribed under section 209(1 )(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

ix) (a) According to the information and explanations given to us and the records of the Company examined by us, the Company has been regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income- tax, sales tax, wealth tax, customs duty, excise duty, cess and other material statutory dues applicable to it and has generally been regular in depositing undisputed statutory dues including tax deducted at source with the appropriate authorities. We are informed that there are no undisputed statutory dues as at the year end outstanding for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no disputed dues of wealth tax, cess and customs duty which have not been deposited on account of any dispute!

The details of dues of sales tax, income-tax, service tax and excise duty as at September 30, 2009 which have not been deposited on account of disputes are as follows: -

S. Name of Nature of Amount Amount No the Statute dues involved paid under (Rs.Million) protest (Rs.Million)

1. Sales Tax Laws Sales tax 5.27 2.03

3.03 0.34

194.21 20.57

2 Income Tax Laws Income Tax 0.85 0.55 0.86 0.74

3 Central Excise Excise Duty 19.37 Laws

87.58 40.31

Service Tax 0.53



Central Excise Laws

Name of the Stalute Period to which the amount Forum where dispute relates (various years covering is pending the period)#

Sales Tax Laws 1986-87,1989-90 High Court 1978-79,1979-80, 1987-88 Sales Tax Tribunal and 1994-95

1976-77,1977-78 ,1983-84 to Appellate Authority upto 2000-01, 2003-04, 2004-05, Commissioners level

2006-07 and 2009-10

Income Tax Laws 1994-95 High Court 2001 -02 Income-tax Appellate Tribunal

Central Excise Laws 1998-99, 2000-01, 2005-06 Customs Excise and Service and 2007-08 Tax Appellate Tribunal ( CESTAT) 1981-82 to 1984-85,1990-91 to Appellate Authority upto 1992-93,1994-95 to 1998-99, Commissioners level 2000-01,2001-02, and 2005-06, to 2008-09 2003-04, 2004-05 to 2006-07 Appellate Authority upto and 2008-09 Commissioners level

# Period in respect of income tax represents assessment year.

The following matters which have been excluded from the above table have been decided in favour of the Company but the department has preferred appeal at higher level:

S. Name of Nature of Amount Period to which the amount No the Statute dues involved relates (Rs. Million)

1. Sales Tax Laws Sales tax 3.13 2000-01

2.59 2004-05

2 Income Tax Laws Income Tax 0.55 2005-06 and 2006-07 (Tax Collected at Source)

3 Central Excise Duty 69.13 1992-93 to 1997-98 Excise Laws 0.78 1996-97 and 2000-01 to 2002-03



Name of the Statute Forum where dispute is pending

Sales Tax Laws Supreme Court High Court

Income Tax Laws High Court

Central Excise Laws High Court Customs Excise and Service Tax Appellate Tribunal (CESTAT)

x) According to the information and explanations given to us, without considering the items mentioned in paragraph 4(g) of our main report, the effect of which has not been determined, the Companys accumulated losses at the year end i.e. September 30,2009, are less than fifty percent of its net worth. However, the Company has incurred cash losses during the year ended September 30, 2009 and in the immediately preceding financial period ended September 30, 2008.

xi) According to the records of the Company examined by us and the information and explanations given to us, the Company, during the year, has not defaulted in repayment of dues to financial institutions and banks. The Company has not issued debentures during the year.

xii) As the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities, paragraph 4(xii) of the Order is not applicable.

xiii) As the Company is not a chit fund or nidhi/mutual benefits funds/ society, paragraph 4(xiii) of the Order are not applicable to the Company.

xiv) As the Company is not dealing or trading in shares, securities, debentures and other investments, paragraph 4(xiv) of the Order is not applicable.

xv) According to the information and explanations given to us, the Company has not given any guarantees during the year for loans taken by others from banks or financial institutions.

xvi) In our opinion and according to the information and explanations given to us, the term loans taken during the year have been applied for the purpose for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that during the year short term funds have not been used to finance long term investments.

xviii) During the year, the Company has issued 43,83,561 equity shares on a preferential basis to a party covered in the register maintained under Section 301 of the Act. In our opinion and as per the information and explanations given to us the price at which the equity shares have been issued are not prejudicial to the interest of the Company.

xix) During the year, since the Company has not issued any debentures, paragraph 4(xix) of the Order is not applicable.

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

xxi) Based upon the audit procedures performed and information and explanations given by the management, we report that, no fraud on or by the Company has been noticed or reported during the course of our audit for the year ended September 30,2009.

For A.F. FERGUSON & CO.

Chartered Accountants

MANJULA BANERJI Place : New Delhi Partner

Date : 23.12.2009 Membership No. 086423