Auditor Report of NRC Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of NRC Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information for the year then ended.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these 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 thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the fi nancial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the fi nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

(a) The Company has incurred loss in the current year as well as in the preceding year and the accumulated losses as at the year-end has exceeded its entire net worth and on reference to the Board for Industrial and Financial Reconstruction; it has been declared a sick industrial Company. The financial statements have, however, been prepared by the management on a going concern basis as explained in note 19.4(a). This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can operate as a going concern and the extent of the effect of the resultant adjustments to the accumulated losses, assets and liabilities as at the year-end and losses for the year which is presently not ascertainable.

(b) The Company has not carried out impairment test as required by Accounting Standard (AS) 28 'Impairment of Assets', particularly in respect of Buildings and Plant and Equipment as explained in note 19.4(b).We are unable to express an opinion as to when and to what extent the carrying value of Buildings and Plant & Equipment would be recovered because of lock-out and continuing theft of certain machinery parts. The impact whereof on the loss for the year, accumulated losses, assets and liabilities as at the year-end is presently not ascertainable.(Also refer clause no.12 of Companies (Auditor's Report) Order, 2015 statement annexed with the report)

(c) The accounts of certain Banks, Loans & Advances, Other non- current assets, Trade payables, Other liabilities and lenders are also subject to confirmations, reconciliations and adjustments, if any, having consequential impact on the loss for the year, accumulated losses, assets and liabilities as at the year-end, the amounts whereof are presently not ascertainable (Refer note no. 19.6 (a) of the financial statements)

(d) Liability as may arise towards interest/compound interest/penalty/ on delayed/non- payment to certain Trade Payables /statutory dues/ Promoter Contribution/ Lenders/ Mesne profit liability is presently not ascertainable and therefore not provided for. (Refer note no. 20.6(b) of the financial statements).

(e) The remuneration payable to the Managing Director for the period December, 2008 to January, 2011 amounting to Rs. 224.27 lacs was subject to Central Government approval, out of which approval for only Rs. 82.15 Lacs was granted. For the balance amount paid of Rs. 142.10 Lacs, the Company has applied to the Central Government for waiver of its recovery and is hopeful of receiving the same in due course. (Refer Note no. 19(5) of the financial statements)

(f) Non provisioning of Liability towards Mesne profit aggregating to Rs. 529.36 lacs in respect of premises taken on lease and vacated in terms of the Supreme Court order received during the financial year 2013-14.(Refer note no. 19(1) (III) of the financial statements)

(g) We further report that without considering the matter referred in para (b) to (f) above, the effect of which could not be determined, had the observation made by us in para (f) above been considered, the loss before tax for the current year would have been Rs. 1,663.24 lacs. (as against reported loss of Rs. 1,133.88 lacs), Reserves and Surplus (accumulated losses) would have been Rs. 62,967.17 lacs (as against reported losses of Rs.62,437.81 lacs) and trade payables would have been Rs. 17,338.00 lacs. (as against reported figure of Rs. 16,808.64 lacs)

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 fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India of the state of affairs of the Company as at 31st March, 2015 and its loss and its cash fl ows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 of the Order, to the extent applicable.

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

(a) Subject to what is stated in the Basis of Qualified Opinion para (c) and (d) above, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) Subject to what is stated in the Basis of Qualified Opinion para (b) to (f) above and para 1 (a), 2 (b) and 6 of the Order, 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 aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014except for the effects of the matter described in the Basis for Qualified Opinion paragraph (b), (d) and (f) above;

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

(f) Considering the re-schedulement of redemption of Zero Percent Secured Redeemable non-convertible Debentures approved in CDR package in January, 2008 and on the basis of the written representations received from the Directors as on 31st March, 2015 taken on record by the Board of Directors. We report that none of the directors is disqualified as on 31st March, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.

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

I. The Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note 19(1) (I) (a) to the financial statements.

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

III. There is no amount required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE REFERRED TO IN PARAGRAPH "REPORT ON OTHER LEGAL AND REGUALTORY REQUIREMENTS" OF OUR REPORT TO THE MEMBERS OF "THE COMPANY"FOR THE YEAR ENDED 31st MARCH, 2015

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of our audit, we state that:

1. a) The Company's fixed assets records need to be updated to show full particulars, including quantitative details and situation of fixed assets.

b) The Company has not carried out physical verification of its fixed assets during the year. As explained, discrepancies as may be noticed on physical verification will be dealt with in the books of account as and when the assets will be physically verified.

2. a) No physical verification has been carried out during the year or in the recent past. b) The inventory records are required to be updated.

3. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Act. Accordingly the provisions of clause (iii) of the Order are not applicable to the Company.

4. 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 nature of its business for the purchase of fixed assets and for the sale of services. During the course of our audit, no major weaknesses have been noticed in the aforesaid internal control system.

5. No deposits within the meaning of directives issued by RBI (Reserve Bank of India) and Sections 73 to 76 or any other relevant provisions of the Act and rules framed there under have been accepted by the Company.

6. As explained to us, due to lock out and stoppage of production in the plant, the cost records have not been maintained

7. a) The Company is not regular in depositing the undisputed statutory dues including Provident Fund, Employees' State Insurance, Income-Tax, sales-tax, wealth tax, Service Tax, duty of customs, duty of excise, Value Added Tax, Cess and other statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed statutory dues outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable except the following :

Particulars Rs. In lacs

Tax Deducted at Source (TDS) 110.92

Professional Tax 80.04

Employees State Insurance (ESI) 98.79

Provident Fund 25.40

Sales tax 7.03

Work Contract Tax 2.00

Service tax 33.12

Also refer point (d) of Basis of Qualified opinion reported above.

b) According to the records of the Company and information and explanations given to us by the management, the details of disputed duty of excise, duty of customs, Service Tax, Income Tax, Wealth Tax and Cess which have not been deposited are as under:

Name of the Statute Nature of Forum where dispute Dues is pending

The Central Excise Excise duty Supreme Court Act, 1944

High Court, Mumbai

Customs, Excise, Service Tax Appellate Tribunal, Mumbai

Commissioner (Appeals)

Asst. Commissioner

The Central Excise Service Tax Customs, Excise, Act, 1944 Service Tax Appellate Tribunal, Mumbai

The Maharashtra Water Cess Assessing authority, Irrigation Act,1976 -MPCB, Mumbai

The Income tax Act, Income Tax Income Tax 1961 Commissioner (Appeals)-Thane

Name of the Statute Rs. In lacs Period to which it relates

Tae Central Excise Act,1944 1,539.43 1986 to 2009

11.47

1121.64

68.66

274.92

The Central Excise Act,1944 105.02 2005 to 2009

17,073 2005 to 2013

2145.60 Assessment Year 2008-09 to 2011-12

c) There is no amount required to be transferred to investor education and protection fund in accordance with relevant provisions of the Companies Act and rules made there under.

8. The Company's accumulated losses as at 31st March, 2015 exceeds fi fty percent of its net worth and has incurred cash losses during the fi nancial year ended on that date and also in the immediately preceding financial year.

9. After considering what was approved in the Corporate Debt Restructuring package in the year January, 2008 and considering that loans from a bank have already been assigned to a body corporate, the Company has defaulted in repayment of dues to banks and the details are as under :

Nature of Dues Period of Default Rs. In Lacs

Principal amount 12-68 months 19,229.69

Interest thereon 12-68 months 10,120.46

10. During the year, the Company has not given any guarantee for loans taken by others from the bank or financial institution.

11. According to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company for the purpose for which they were obtained.

12. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, no material fraud on or by the Company has been noticed or reported during the course of our audit. We have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management except continuing theft of certain parts of Plant & Machinery in the factory, the amount whereof has not been ascertained, for which the Company has lodged FIRs with relevant authorities and also filed the claims with insurance company.

For LODHA & CO.

Chartered Accountants

Firm Registration No: 301051E

A.M. Hariharan

Place: Mumbai Partner

Date : May 27, 2015 Membership No. 38323

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Mar 31, 2014

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

Management''s Responsibility for the Financial Statements:

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

Auditors'' Responsibility:

Our responsibility is to express an opinion on these 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 the 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 the internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualifi ed Opinion

(a) The Company has incurred loss in the current year as well as in the preceding year and the accumulated losses as at the year-end has exceeded its entire net worth and on reference to the Board for Industrial and Financial Reconstruction; it has been declared a sick industrial Company. The fi nancial statements have, however, been prepared by the management on a going concern basis as explained in note 20.4(a). This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can operate as a going concern and the extent of the effect of the resultant adjustments to the accumulated losses, assets and liabilities as at the year-end and losses for the year which is presently not ascertainable.

(b) The Company has not carried out impairment test as required by Accounting Standard (AS) 28 ''Impairment of Assets'', particularly in respect of Buildings and Plant and Equipment as explained in note 20.4(b).We are unable to express an opinion as to when and to what extent the carrying value of Buildings and Plant & Equipment would be recovered because of lock-out at the plant, the impact whereof on the loss for the year, accumulated losses, assets and liabilities as at the year-end is presently not ascertainable.

(c) The accounts of certain Banks, Loans & Advances, Other non- current assets, Trade payables, Other liabilities and lenders are also subject to confi rmations, reconciliations and adjustments, if any, having consequential impact on the loss for the year, accumulated losses, assets and liabilities as at the year-end, the amounts whereof are presently not ascertainable (Refer note no. 20.7 (a) of the fi nancial statements)

(d) Liability as may arise towards interest/compound interest/penalty/ on delayed/non-payment to certain Trade Payables /statutory dues/ Promoter Contribution/ Lenders/ Mesne profi t liability is presently not ascertainable and therefore not provided for. (Refer note no. 20.7(b) of the fi nancial statements).

(e) The remuneration paid/ payable to Managing Director for the year amounting to Rs. 161.02 lacs (Rs. 665.02 lacs from 19.12.2008 to 31.03.2014) out of which Rs. 131.87 lacs for the period April 2013 to Jan 2014 was approved by

shareholders and balance Rs. 29.33 lacs is pending for the approval of the shareholders is subject to the approval of Central Government.. The Company, as explained, is taking necessary steps for getting the approvals. Should the approvals not be received, the extent of the effect of the resultant adjustments to the accumulated losses and liabilities as at the year-end and losses for the year which is presently not ascertainable.

(f) Liability towards Mesne profi t aggregating to Rs. 529.36 lacs in respect of lease premises has not been provided for in terms of the Supreme Court order received during the year. (Refer note no. 20(1) (III) of the fi nancial statements)

(g) We further report that without considering the matter referred in para (b) to (e) above, the effect of which could not be determined, had the observation made by us in para (f) above been considered, the loss before tax for the current year would have been Rs. 2990.17 lacs (as against reported loss of Rs. 2460.81acs), Reserves and Surplus (accumulated losses) would have been Rs. 35,990.77 lacs (as against reported losses of Rs.35,461.41) and trade payables would have been Rs. 16,593.06lacs (as against reported fi gure of Rs. 16,063.70)

Qualifi ed Opinion:

In our opinion and to the best of our information and according to the explanations given to us, except of the matters described in Basis for Qualifi ed Opinion paragraph, the fi nancial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

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

(b) in the case of the Statement of Profi t and Loss, of the loss for the year ended on that date; and

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

Report on Other Legal and Regulatory Requirements:

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

2. As required by Section 227(3) of the Act, we report that:

(a) Subject to what is stated in the Basis of Qualifi ed Opinion para (c), (d) and (e) above, 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) Subject to what is stated in the Basis of Qualifi ed Opinion para (b) to (f) 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, Statement of Profi t and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Statement of Profi t and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act except for the effects of the matter described in the Basis for Qualifi ed Opinion paragraph (b), (d) and (f) above;

(e) Considering the re-schedulement of redemption of Zero Percent Secured Redeemable non- convertible Debentures approved in CDR package in January, 2008 and on the basis of the written representations received from the Directors as on 31st March, 2014 taken on record by the Board of Directors. We report that none of the directors is disqualifi ed as on 31st March, 2014 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE TO THE MEMBERS OF THE NRC LIMITED

On the basis of such checks as we considered appropriate and according to the information and explanations given to us during the course of audit, we state that:

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

b) The Company has not carried out physical verifi cation of its fi xed assets during the year. As explained, discrepancies as may be noticed on physical verifi cation will be dealt with in the books of account as and when the assets will be physically verified

c) During the year, no substantial part of fixed assets has been disposed off by the Company

2. (a) The inventory has not been physically verified by the management during the year and / or at the close of the year due to lock out at the plant

(b) The procedures of physical verifi cation of inventory as usually followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. However, no physical verifi cation as mentioned in para 2(a) above has been carried out during the year.

(c) The inventory records are required to be updated. Besides, during the year, the carrying value of inventories has been fully provided for.

3. (a) The Company has not taken such loans from any fi rm or other parties covered under Section 301 of the Act. Therefore provisions of clauses (b), (c) and (d) of the order are not applicable to the Company

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of fi xed assets and for the sale of services, subject to what is stated in para 7 below. During the course of our audit, no major weaknesses have been noticed in the aforesaid internal control system.

5. According to the information and explanations provided by the management, we are of the opinion that there are no contracts or arrangements that need to be entered into the register required to be maintained under Section 301 of the Act

6. The Company has not accepted any public deposits within the meaning of Section 58A and 58AA or any other relevant provisions of the Act and rules framed there under

7. No internal audit has been carried out during the year.

8. As explained to us, due to lock out and stoppage of production in the plant, the cost records have not been maintained.

9. a) The Company is not regular in depositing the undisputed statutory dues including Provident Fund, Employees'' State Insurance, Income Tax, Service Tax, Value Added Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, there are no undisputed statutory dues outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable except the following :

Particulars I Rs. In lacs

Tax Deducted at Source (TDS) including interest & penalty 130.20

Professional Tax 79.01

Employees State Insurance (ESI) 86.61

Provident Fund 40.24

Sales tax 7.03

Work Contract Tax 2.00

Service tax 20.00

Also refer point (d) of Basis of Qualifi ed opinion reported above.

b) According to the records of the Company and information and explanations given to us by the management the details of disputed Excise Duty Custom Duty Service Tax, Income Tax, Wealth Tax and Cess which have not been deposited are as under:

Nature of Forum where dispute is Name of the Statute Dues pending

The Central Excise duty Supreme Court Excise Act, 1944

High Court, Mumbai Customs, Excise, Service Tax Appellate Tribunal, Mumbai

Commissioner (Appeals)/ Asst. Commissioner

The Central Service Tax Customs, Excise, Service Excise Act, 1944 Tax Appellate Tribunal, Mumbai

The Maharashtra Irriga- Water Cess Assessing authority, -MPCB, tion Act,1976 Mumbai

The Income tax Act, 1961 Income Tax Income Tax Commissioner (Appeals)-Thane



Name of the Statute Period to which it Rs. In lacs relates

The Central Excise Act, 1944 1,539.43

11.47 1986 to 2009

1121.64

68.66

274.92

The Central Excise Act, 1944 105.02 2005 to 2009

The Maharashtra Irriga- 17,073 2005 to 2013 tion Act,1976

The Income tax Act, 1961 2145.60 Assessment Year 2008-09 to 2011-12

There are no disputed dues of Sales tax, Wealth tax and Custom duty that have not been deposited

10. The Company''s accumulated losses as at 31st March, 2014 exceeds fi fty percent of its net worth and has incurred cash losses during the fi nancial year ended on that date and also in the immediately preceding fi nancial year

11. After considering what was approved in the Corporate Debt Restructuring package in the year January, 2008 and considering that loans from a bank have already been assigned to a body corporate, the Company has defaulted in repayment of dues to banks are as under :

Nature of Dues Period of Default Rs. In Lacs

Principal amount 12-56 months 23,476.21

Interest thereon 12-56 months 10,254.99

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

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

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

15. During the year, the Company has not given any guarantee for loans taken by others from the bank or fi nancial institution.

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

17. Based on the information and explanations given to us and on overall examination of the Balance Sheet of the Company, in our opinion, since the funds raised of Rs. 23,476.21 Lacs have become overdue and are classifi ed as short term borrowings, have been utilized for long term investments.

18. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Act.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money by public issue during the year or in the recent past.

21. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, no material fraud on or by the company has been noticed or reported during the course of our audit. We have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management except theft of certain parts of Plant & Machinery in the factory, the amount whereof has not been ascertained, for which the Company has lodged FIRs with relevant authorities and also fi led the claims with insurance company.

For LODHA & COMPANY Chartered Accountants Firm Registration No. 301051E A.M. Hariharan Place: Mumbai Partner Date: 19th Nov, 2014 Membership No. 38323

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Mar 31, 2012

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

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 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 (Auditor's Report) Order, 2003 issued by the Central Government of India in terms of sub section (4A) of Section 227 of the Companies Act, 1956 (hereinafter referred to as the 'Act'), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

(a) The Company has incurred loss in the current year as well as in the preceding period and the accumulated losses as at the year end has exceeded its entire net worth and on reference to the Board for Industrial and Financial Reconstruction; it has been declared a sick industrial Company. The financial statements have, however, been prepared by the management on a going concern basis as explained in note 21.4(a). This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can operate as a going concern, the extent of the effect of the resultant adjustments to the accumulated losses, assets and liabilities as at the year end and losses for the year which is presently not ascertainable.

(b) The Company has not carried out impairment test as required by Accounting Standard (AS) 28 'Impairment of Assets', particularly in respect of factory building. Plant and Equipment and Spare parts inventories as explained in note 21.4(b). We are unable to express an opinion as to when and to what extent the carrying value of Building and Plant & Equipment would be recovered in view of the suspension of all manufacturing activities, the impact whereof on the loss for the year, accumulated losses, assets and liabilities as at the year end is presently, not ascertainable.

(c) The accounts of certain Trade receivable. Trade payable and lenders are also subject to confirmations, reconciliations and adjustments, if any, having consequential impact on the loss for the year, accumulated losses, assets and liabilities as at the year end, the amounts whereof are presently not ascertainable (also refer note no. 21.7 (a) of the financial statements)

(d) Liability as may arise towards interest/compound interest/penalty/ on delayed/non payment to certain Trade Payables /statutory dues has not been ascertained and not provided for. (Refer note no. 21(1)(i)(g) of the financial statements)

5. (a) Subject to what is stated in para 4 (c) and (d) above, 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) Subject to what is stated in para 4 (b),(c) and (d) above, 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

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

(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to section 211 (3C) of the Act except as stated in Para 4(b) above;

(e) Considering the re schedulement of redemption of Zero Percent Secured Redeemable non convertible Debentures approved in CDR Package in January 2008 and on the basis of written representations received from Directors as on 31st March, 2012 and taken on record by the Board of Directors. We report that none of the Directors is disqualified as on 31st March, 2012 from being appointed as a Director of the Company in terms of Section 274(1 )(g) of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements subject to what is stated in para 4 above, the effect of which on the financial statements could not be determined and read together with note no. 21.5 regarding remuneration of Rs.134.55 lacs payable to Managing Director , which has been disapproved on procedural grounds and other accompanying notes to the financial statements give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case ofthe Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

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

(c) in the case ofthe Cash Flow Statement, ofthe Cash Flows for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDITORS' REPORT OF EVEN DATE

TO THE MEMBERS OF NRC LIMITED ON THE FINANCIAL STATEMENTS FOR THE YEAR

ENDED 31ST MARCH 2012

On the basis of such checks as we considered appropriate and in terms of information and explanations given to us during the course of audit, we state that:

1 (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. During the year, the Company has not carried out physical verification of fixed assets. explained, discrepancies as may be noticed on physical verification will be dealt with in the books of account as and when the assets will be physically verified. The phased programme of verification is considered reasonable having regard to the size of the Company and nature of its fixed assets.

(b) No substantial part of fixed assets has been disposed off by the Company during the year.

2 (a) The inventory has not been physically verified by the management at reasonable intervals during the year and/or at the close of the year due to lock out at the plant.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business. However, no physical verification as mentioned in para 2(a) above have been carried out during the year.

(c) The Company has maintained proper records of inventory. As explained, discrepancies as may be noticed on physical verification will be dealt with in the books of account as and when the inventories will be physically verified.

3 During the year the Company has not taken / granted any loans, secured or unsecured, from / to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4 In our opinion and according to the information and explanations given to us and having regard to the fact that some of the items purchased are of a special nature in respect of which suitable alternative source do not exist for obtaining comparable quotations, there are adequate internal control procedures 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. During the course of our audit, no major weaknesses have been noticed in the aforesaid internal control system.

5 According to the information and explanations given to us, there are no contracts or arrangements that need to be entered in to the register maintained under the Section 301 of the Act.

6. The Company has not accepted any deposits within the meaning of the Section 58A, 58AA or any other relevant provisions of the Act and rules framed there under.

7. The Company'sinternal audit system needs to be strengthened in asmuch asscope needs to be expanded in the areas such as Contingent liabilities, review of trade receivables, advances etc. and frequency of audit needs to be increased to be commensurate with the size and nature of its business.

8. As explained to us, due to lock out and stoppage of production in the plant, the cost records have not been maintained.

9. (a) The Company is not regular in depositing the undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Cess and other material statutory dues applicable to it with the appropriate authorities except Investor taucation and Protection tuna, bales lax, value Added lax, service lax, customs Duty and Excise Duty, Wealth Tax. According to the information and explanations given to us, there are no undisputed statutory dues outstanding as at 31st March, 2012 fora period of more than six months from the date they became payable except the following:

Particulars Rs. In lacs

Tax Deducted at Source (TDS) 141.11

Professional Tax 75.20

Water Cess 49.80

Employees State Insurance (ESI) 80.13

(b) According to the records ofthe Company and information and explanations given to us by the management, the details of disputed Excise Duty, Custom Duty, Service Tax, Income Tax, Wealth Tax and Cess which have not been deposited are as under:

Name ofthe Nature of Forum where Rs. in lacs Period to Statute Dues dispute is pending which it relates

Supreme Court 1924.86

High Court, Mumbai 11.47

Customs, Excise, 1070.05

The Central Excise Excise Service Tax Appellate Act, 1944 duty Tribunal, Mumbai ) 1986 to 2009 Commissioner 107.41 (Appeals)/ Asst. Commissioner 183.93 Customs, Excise, 105.02 2005 to 2009

The Central Excise Service Service Tax Appellate Act, 1944 Tax

Tribunal,Mumbai

The Maharashtra Water Assessing authority, 14790.00 2005 to 2012 Irrigation Act, 1976 Cess MPCB, Mumbai

Income Tax Appellate 339.76 Assessment Tribunal, Mumbai Year 2005 06

The Income tax Income Income Tax 1828.70 Assessment Act. 1961 Tax Commissioner Year 2007 08 (Appeals) Thane and to 2009 10 Mumbai

There are no disputed dues of Sales tax, Wealth tax and Custom duty that have not been deposited.

10. The Company's accumulated losses as at 31st March, 2012 exceeds fifty percent of its net worth and have incurred cash losses during the financial year ended on that date and as also in the immediately preceding financial period.

11. After considering what was approved in the Corporate Debt Restructuring package in the year January 2008, the Company has defaulted in repayment of dues to banks as under:

Nature of Dues Period of Default Rs. In Lacs

Principal amount 12 32 months 9,432.94

Interest thereon 12 32 months 4,322.17

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

13. In our opinion, the Company is not a chit fund or a nidhi /mutual benefit fund/ society. Therefore, clause 4(xiii) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments. Therefore, clause 4(xiv) of the Companies (Auditor's Report) Order 2003 is not applicable to the Company.

15. During the year, the Company has not given any guarantee for loans taken by others from the bank or financial institution.

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

17. Based on the information and explanations given to us and on an overall examination of the balance sheet of the Company, in our opinion, shortterm funds raised have not been utilized for long term investment.

18. During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19. The Company has not issued any debenture during the year or in the recent past.

20. The Company has not raised any money by way of public issue during the year or in the recent past.

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

For LODHA & CO.

Firm Registration No. 301051E Chartered Accountants

A.M. HARIHARAN

Partner

Mumbai, Membership No.38323

Date : May 23, 2012

---

Sep 30, 2009

1. We have audited the attached Balance Sheet of NRC Limited as at 30th September 2009, the Profit and Loss Account annexed thereto and also the Cash Flow Statement for the fifteen months period ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 (hereinafter referred to as the Act), we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

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

(a) The Company has incurred loss in the current period as well as in the preceding period and the accumulated losses as at the period end have exceeded its entire net worth and on reference made to the Board for Industrial and Financial Reconstruction, it has been declared a sick industrial company. The accounts have, however, been prepared by the management on a going concern basis as explained in note 4(a) in Schedule 23. This being a technical matter and in view of uncertainty, we are unable to express an opinion as to whether the Company can operate as a going concern, the extent of the effect of the resultant adjustments to the accumulated losses, assets and liabilities as at the period end and losses for the period which is presently not ascertainable.

(b) The Company has not carried out impairment test as required by Accounting Standard (AS) 28 Impairment of Assets, particularly in respect of factory building and Plant and Machinery as explained in note 4(b) in Schedule 23. We are unable to express an opinion as to when and to what extent the carrying value of Building and Plant & Machinery would be recovered in view of the suspension of all manufacturing activities, the impact whereof on the loss for the period, accumulated losses, assets and liabilities as at the period end is presently, not ascertainable.

(c) The accounts of certain Debtors, Creditors and lenders are subject to confirmations/ , reconciliations, and adjustments, if any, having consequential impact on the loss for the period, accumulated losses, assets and liabilities as at the period end, the amounts whereof are presently not ascertainable (Refer note 6 of Schedule 23).

(d) We are unable to express an opinion as to when and to what extent an amount of Rs. 2,7Qp lacs due from an associate company for sale of investments would be recovered-jn^yiew of what is stated by the management regarding delay in realising the amount in note 5 of Schedule 23.

(e) Liability as may arise towards interest/compound interest/penalty on delayed/ non-payment to certain sundry creditors/statutory dues has not been ascertained. (Refer note 1 (g) in Schedule 23.)

5. (a) Subject to what is stated in para 4 (c) and (e) above, 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) Subject to what is stated in para 4 (c) and (e) above, 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 and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

(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 section 211(3C) of the Act except as stated in Para 4(b) above;

(e) On the basis of written representations received from Directors as on 30th September, 2009 and taken on record by the Board of Directors, wherever applicable, we report that none of the Directors is disqualified as on 30th September, 2009 from being appointed as a Director of the Company in terms of Section 274(1 )(g) of the Act;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements subject to what is stated in para 4 above, the effect of which on the financial statements could not be determined and read together with notes appearing in Schedule 22 & 23 of Significant Accounting Policies and Notes to Accounts and other notes appearing elsewhere in the financial statements give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 30th September, 2009;

(b) in the case of the Profit and Loss Account, of the Loss for the fifteen months period ended on that date; and

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

ANNEXURE REFERRED TO IN PARAGRAPH 3 OF AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF NRC LIMITED ON THE FINANCIAL STATEMENTS FOR THE 15 MONTHS ENDED 30th SEPTEMBER 2009

On the basis of such checks as we considered appropriate and in terms of information and explanations given to us during the course of audit, we state that:

1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. There is a phased programme of physical verification of all physical assets over a period of three years based on which physical verification of certain fixed assets was carried out during the period. The phased programme of verification is considered reasonable having regard to the size of the Company and nature of its fixed assets. The discrepancies noticed on such verification have been dealt with in inese financial statements.

(b) No substantial part of fixed assets has been disposed off by the Company during the period.

2. (a) The inventory has been physically verified by the management at reasonable intervals during the period and / or at the close of the period. Inventory lying with third parties and in-transit as on 30th September, 2009 have been verified with reference to confirmations and subsequent receipt of the goods.

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

(c) The Company is maintained proper records of inventory. The discrepancies notified on physical verification of inventory as compared to book records were not material and have been properly dealt with in the books of account.

3. During the period, the Company has not granted / taken any loans, secured or unsecured to / from the Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4. In our opinion and according to the information and explanations given to us and having regard to the fact that some of the items purchased are of a special nature in respect of which suitable alternative sources do not exist for obtaining comparable quotations, there are adequate internal control procedures 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. During the course of our audit, no major weaknesses have been noticed in the aforesaid internal control system.

5. According to the information and explanations given to us, there are no contracts or arrangements that need to be enteied in to the register maintained under the Section 301 of the Act.

6. The Company has not accepted any deposits within the meaning of the Section 58A, 58AA or any other relevant provisions of the Act and rules framed there under.

7. In our opinion, the company has on adequate internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Company in respect of products where pursuant to the Order issued by the Central Government, the maintenance"oncost records have been presented under section 209(1 )(d) of the Act and are of the opinion that, prima facie, the proscribed accounts and the records have been made and maintained. We are however not required to make a detailed examination of the records with a view to determine whether they are accurate or complete.

9. (a) The Company is not regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Cess and other material statutory dues applicable to it with the appropriate authorities except Investor Education and Protection Fund, Sales Tax, Value Added Tax, Service Tax, Customs Duty and Excise Duty, Wealth Tax. According to the information and explanations given to us, there are no undisputed statutory dues outstanding as at 30th September, 2009 for a period of more than six months from the date they became payable except:

(Amount Rs. In lakhs)

TDS 43.14

Professional Tax 14.43

Water Cess 10.08

Employers Contribution to Provident Fund 51.52 Employees State Insurance 9.84

(b) According to the records of the Company and information and explanations given to us by the management, the details of disputed Excise Duty, Custom Duty, Service Tax, Income Tax, Wealth Tax and Cess which have not been deposited are as under:

Nature of Dues Forum where dispute is pending Amount Period (Rs. in lakhs)

Excise duty Supreme Court, High Court, 3542.29 1986 to 2009 CESTAT, Commissioner (Appeals)/ Mumbai

Service Tax Supreme Court / Commissioner 55.26 2005 to 2009

Water Cess Assessing authority, 68.47 2005 MPCB, Mumbai

Wealth Tax Commissioner of 24.21 A.Y. 2006-07 Income Tax (Appeals)

There are no disputed dues of Sales tax that have not been deposited.

10. The Companys accumulated losses as at 30th September, 2009 exceeds fifty percent of its net worth and have incurred cash losses during the financial period ended on that date and as also in the immediately preceding financial year.

11. After considering what was approved in Corporate Debt Restructuring package, the Company has during the period defaulted in repayment of dues to financial institutions and banks as per details below :

Sr. Nature of Dues Period of Amount of Default No. Default (Rs. in Lacs)



a) PNB Short Term Loan 6 months 1668.00

b) Interest on Loan from Banks 3 months 1229.64 and Financial Institutions

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

13. In our opinion, the Company is not a chit fund or a nidhi /mutual benefit fund/ society. Therefore, clause 4(xiii) of the Companies (Auditors Report) Order 2003 is not applicable to the Company.

14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.

15. During the period, the Company has not given any guarantee for loans taken by others from the bank or financial institutions.

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

17. Based on the information and explanations given tp us and on an overall examination of the balance sheet of the Company, in our opinion, short term funds raised have not been utilized for long term investment.

18. During the period, the Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

19. The Company has not issued any debenture during the period. Securities have been created in respect of debentures issued in earlier years.

20. The Company has not raised any money by way of public issue during the period or in recent past.

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

For LODHA & CO. Chartered Accountants

R. P. BARADIYA Mumbai, Partner

Date: 05.02.2010 Membership No.44101