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N K Industries Ltd.

BSE: 519494 Sector: Industrials
NSE: NKIND ISIN Code: INE542C01019
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VOLUME 816
52-Week high 82.40
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P/E 19.05
Mkt Cap.(Rs cr) 29
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OPEN 48.00
CLOSE 47.35
VOLUME 816
52-Week high 82.40
52-Week low 30.35
P/E 19.05
Mkt Cap.(Rs cr) 29
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

N K Industries Ltd. (NKIND) - Auditors Report

Company auditors report

TO THE MEMBERS OF N.K INDUSTRIES LIMITED Report on the Standalone Financial Statements

We have audited the accompanying Standalone Ind AS Financial Statements of M/s N.KINDUSTRIES LIMITED ("the Company") which comprise the Balance Sheet as at March312018 the Statement of Profit and Loss (including the statement of Other ComprehensiveIncome) the Statement of Cash flows the Statement of Changes in Equity for the year thenended and a summary of the significant accounting policies and other explanatoryinformation. (herein after referred to as "Standalone Ind AS financialstatements").

Management's Responsibilityforthe 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 ofthese Standalone Ind AS Financial Statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified underSection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Standalone IndAS Financial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

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

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

We conducted our audit of the Standalone Ind AS financial statements in accordance withthe Standards on Auditing as specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Financial Statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Financial Statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone Ind AS Financial Statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial control relevant to theCompany's preparation of the Standalone Ind AS Financial Statements that give a true andfair 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 andthe reasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS Financial Statements.

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

Basis of Qualified Opinion

1. The Company had entered into financial arrangement with National Spot Exchange Ltd(NSEL) through trading and Clearing Member N.K. Proteins Private Ltd (erstwhile N. K.Proteins Limited (NKPL) (Group Company) by way of purchase and sales of various goods upto financial year 2012-13. The trade payables and trade receivables arising out of thetransactions through National Spot Exchange Limited (NSEL) from the concerns other thanthe group concerns are subject to confirmations by the respective parties andreconciliations/adjustments if any. Further NSEL has suspended the trading on31.07.2013 as per the directions issued by the Government of India Ministry of ConsumerAffairs. NSEL has filed recovery proceedings against the group company NKPL and alsoagainst the company and the said proceedings are pending as on date. Further the Homedepartment Government of Maharashtra has issued a notification under the MaharashtraProtection of Interest of Depositors (in financial establishments)-Act 1999 (MPID Act)attaching the Land Building & Plant & Machinery of the company located at KadiGujarat. The company has challenged the notification by Home department of Maharashtrabefore Hon'ble High Court of Gujarat. The Hon'ble Gujarat High Court had disposed

off the application of the Company vides its order dated 29th March 2017.The company had preferred a Special Leave Petition before the Hon'ble Supreme Court ofIndia. The Hon'ble Supreme Court of India had disposed off the Special Leave Petition on17th April 2017 with a observation to file an application before Hon'bleBombay High Court Mumbai and as informed by the management the company has filedpetition before the Hon'ble Bombay High Court in June 2017. Besides the above the companyhas also filed its objections against the attachment notification before the DesignatedSpl MPID Court Mumbai. In view of the fact that the matter is subjudice we are unable toquantify the final liability and its impact if any on the loss of the company for theyear under review. (Refer Note no 32 of Standalone Financial Statements).

2. The Directorate of Enforcement Government of India has initiated proceedingsagainst the company under section 5(1) of the prevention of Money Laundering Act 2002along with group company NKPL and by virtue of the provisional attachment order dated10/03/2015 attached the assets of the company comprising of Land building plant andmachinery situated at Survey Nos.719 720 721 732/1 732/2 733 741 743 744 745Kadi Thol Road Village Kadi Kasba taluka- Kadi District Mehsana-382715 Gujarat. Asexplained to us The Company has preferred an appeal before the Hon'ble Appellate Tribunalunder the Prevention of Money laundering Act 2002. However matter is subjudice we areunable to quantify the liability and its impact if any on the loss of the company for theyear under review. (Refer Note no 33 of Standalone Financial Statements).

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid Standalone Ind AS Financial Statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2018 and its loss total comprehensive incomethe changes in equity and its cash flows for the year ended on that date.

OTHER MATTER

The Comparative financial information of the Company for the year ended 31st March 17and the transition date opening balance sheet as at 1 April 2016 included in thesestandalone Ind AS financial statements are based on the previously issued statutoryfinancial statements prepared in accordance with the Companies (Accounting Standards)Rules 2006 audited by us and our reports for the years ended 31 March 2017 and 31 March2016 dated 08th May 2017 and 21st May2016 respectively expressed an unmodified opinion onthose standalone financial statements as adjusted for the differences in the accountingprinciples adopted by the Company on transition to the Ind AS which have been audited byus.

Our opinion is not modified in respect of these matters.

Emphasis of Matters

1. We draw attention to Note 29 to the Standalone Financial Statements and according tothe same the company is having accumulated losses of Rs 315.78 Crores as at 31.3.2018and the net worth of the company is negative However The Company is making sincereefforts for the revival of the Business & the management is confident to recover thelosses through improved profitability in foreseeable future. Therefore no provision forthe impairment has been made and accounts for the year have been prepared on "goingconcern basis."

2. Attention is invited to note 34 of the Standalone Financial Statements which statesthat the Income Tax Department had

carried out survey u/s 133 of the Income tax Act 1961(the IT Act) on the company alongwith other group companies during FY 2013-14 and had ordered a special audit of the booksof the company u/s 142(2A) of the IT Act 1961 for AY 2011-12 & A.Y 12-13. Thedepartment had raised a demand of Rs 133 Crores (Rs 6.63 Crores for A.Y 10-11 Rs57.07

crores for A.Y 11-12 Rs 60.33 Crores for A.Y 12-13 Rs 7.97 Crores for A.Y2013-14& Rs. 0.86 Crores for A.Y2014-

15) on the company for the aforesaid assessment years and the said demand has beendisputed by the company and the company has initiated appellate proceedings beforeappropriate authorities. The said amount has been shown as contingent liability under NoteNo. 24 of the notes forming part of accounts. Further Income tax department has passed anattachment order on 22.04.2015 & 14.08.15 by which it has attached properties of thecompany in pursuant to a demand the details of the properties attached which are in thename of company is as under:

• 803 Manas Complex Opp Star Bazaar Nr Jodhpur Cross road. Satellite Ahmedabad380015.

• 603 Manas Complex Opp Star Bazaar Nr Jodhpur Cross road. Satellite Ahmedabad380015.

• Land situated at Survey Nos.719 720 721 732/1 732/2 733 741 743 744745 Kadi Thol Road Village Kadi Kasba taluka- Kadi District Mehsana-382715.

• Factory Building Situated at survey No 745 Kadi Thol Road Village Kadi Kasba taluka- Kadi District Mehsana-382715

3. Attention is invited to note 26 of the Standalone Financial Statements and accordingto which a Search & Seizure action U/S 132 of the Income Tax Act took place on24.2.99. The Income Tax department had raised demand of ' 33.12 Crores vide the blockassessment Order dt. 30.4.2001. In case of the Company the Hon'ble Income Tax AppellateTribunal ( ITAT) Ahmedabad has subsequently given partial relief to the extent of ' 28.84Crores. The company had preferred an appeal before the Hon'ble High Court of Gujaratagainst the order of Hon'ble ITAT Ahmedabad. The Hon'ble Gujarat High Court vide itsorder dated 20th June 2016 had given partial relief on some of the grounds andhad also dismissed some of the grounds of the company. Against the grounds dismissed byHon'ble High Court of Gujarat the company had further preferred an appeal before Hon'bleSupreme Court of India and the Hon'ble Supreme Court of India vide order dated 16th January2017 had dismissed the appeal of the Company. The Company had already provided an amountof ' 2.88 Crore against the grounds dismissed by Hon'ble ITAT Ahmedabad during F.Y2002-03 as well as ' 1.27 Crores was provided in the books of accounts for the Assessmentyear in question for the interest payable up to 31-03-2005 during F.Y 2004-05. However inview of the management and on the basis of the Judgment of the Hon'ble Gujarat High Courtthe amount provided/paid by the company towards total demand shall result in refund to thecompany. Pending effect of the various orders of adjudicating authorities by the IncomeTax Department the Company is yet to provide final entries in its books of accounts evenduring the year under review. In view of non availability of order of the appeal effectsfrom the Income Tax Department we are unable to opine on the same.

4. Attention is invited to note 36 of the Standalone Financial Statements and accordingto which the Sales Tax Department has completed the assessment proceedings for variousassessment years and raised demand of ' 5554.43 Lakhs for the earlier financial years. Thecompany has not made any provision for the above demand raised by the sales tax authorityin its books of accounts as in view of the Management the said demand shall not withstandbefore the Appellate Authorities and the company has already preferred an appeal beforethe appellate authority which is still pending. In view of the above the said amount hasbeen shown as contingent liability under Note No. 24 of the notes forming part ofaccounts.

5. Attention is invited to Note 41 of the Standalone Financial Statements which statesthat the balance confirmation from the suppliers customers as well as to various loans oradvances given have been called for but the same are awaited till the date of audit.Thus the balances of receivables trade payables as well as loans and advances have beentaken as per the books of accounts submitted by the company and are subject toconfirmation from the respective parties.

6. As per the information obtained from the website of the Ministry of CorporateAffairs (MCA) a suit has been filed against the company and its officers u/s 383A(1A)372A(9) 58A(6)(A)(I) of the Companies Act 1956 for the year 2016. As informed by themanagement the company is having basic information about such suit filed as reflected onthe website of the MCA. However the company does not have any communication of suchproceedings against the company and its officers. As the matter is still subjudice we areunable to quantify the final liability and its impact if any on the company and itsofficers. (Refer Note No 37 of the standalone financial statements)

Our opinion is not qualified on the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein the Annexure-"A" a statement on the matters specified in paragraphs 3 and 4of the Order.

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

(a) We have sought and except for the matters described in the Basis for QualifiedOpinion paragraph obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.

(b) Except for the possible effects of the matter described in the Basis for QualifiedOpinion paragraph above in our opinion proper books of account as required by law havebeen 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 including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.

(d) The matter described under the Emphasis of Matters paragraph above in our opinionmay have an adverse effect on the functioning of the Company

(e) In our opinion the aforesaid Standalone Ind AS Financial Statements comply withthe Indian Accounting Standards specified under Section 133 of the Act read with relevantRules issued thereunder

(f) On the basis of the written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in termsof Section 164 (2) of the Act.

(g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B" and

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

i. The Company has disclosed the impact of pending litigations on its financialposition in its Financial Position as referred to in Note no.24 to the Standalone Ind ASFinancial Statements.

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

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

FOR PARIKH & MAJMUDAR CHARTERED ACCOUNTANTS FRNNO 107525W

(C.A Dr Hiten Parikh)

Place : AHMEDABAD PARTNER

Date : 28.04.2018 M.No.40230

ANNEXURE A-TO THE INDEPENDENT AUDIT REPORT

REFERRED TO IN PARAGRAPH "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENT OF OURREPORT OF EVEN

DATE TO THE MEMBERS OF N.K.INDUSTRIES LIMITED:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of

fixed assets with effect from 1st April 2008 onwards.

(b) According to the information and explanations given to us the fixed assets areverified by the management during the year in a phased periodical manner which in ouropinion is reasonable having regard to the size of the Company and nature of its assets.No material discrepancies were noticed on such verification.

(c) According to the information and explanation given to us and the records examinedby us and based on the examination of the conveyance deeds provided to us we report thatthe title deeds comprising of the immovable properties of land and building which arefreehold are held in the name of the company as at the balance sheet date except thefollowing properties whose titles have not been still conveyed in the name of the companyhaving total carrying value of ' 18.86 Lakhs as at 31st March2018.

(' In lakhs)

Sr. Description of the property No. Status of ownership Carrying

value

1. Premises located at Thirthjal Complex Ahmedabad Title of the property is in the name of the director and yet not conveyed in the name of the company. As stated by the Management as the cooperative society in which the property is held does not allow the company to hold the assets in its name. 5.38
2. Land situated at Sr. No. 719 Vil kadi Taluka Kadi Dist. Mehsana in the State of Gujarat In the subject land Registered power of attorney of the land in question is in the name of Shri Ashwin Patel CFO on behalf of the company and necessary stamp duty has been fully paid yet titles are to be conveyed in the name of the company. 5.49
3. Land situated at Sr. No. 720 Vil kadi. Taluka Kadi Dist. Mehsana in the State of Gujarat Unregistered Agreement to sale in the name of the company. Competent authority has ordered for payment of premium which is yet to be paid. Titles are not conveyed in the name of the company. 1.85
4. Land situated at Sr. No. 721 Vil kadi. Taluka Kadi Dist. Mehsana in the State of Gujarat In the subject land Registered power of attorney of the land in question is in the name of Shri Ashwin Patel CFO on behalf of the company and necessary stamp duty has been fully paid yet titles are to be conveyed in the name of the company. 3.19
5. Land situated at Sr. No. 741 Vil kadi. Taluka Kadi Dist. Mehsana in the State of Gujarat In the subject land no agreement entered with the company. However unregistered power of attorney is in the name of Mr Kamlesh Patel on behalf of the company. The titles have not been conveyed in the name of the company. 2.93
6. Land situated at Sr. No. 742 Vil kadi. Taluka Kadi Dist. Mehsana in the State of Gujarat In the subject land no agreement entered with the company. However unregistered power of attorney is in the name of Mr Kamlesh Patel on behalf of the company. The titles have not been conveyed in the name of the company.

(ii) As explained to us the inventories have been physically verified by themanagement at reasonable intervals during the year. The discrepancies noticed onverification between physical stocks and the books of accounts are not material.

(iii) During the year the company has granted loans secured or unsecured to Companiesfirms limited liability partnerships or other parties covered in the register maintainedunder section 189 of the Companies Act 2013. (the Act).

a) During the year the Company has granted interest bearing loan two subsidiarycompanies covered in the register maintained u/s 189 of the Companies Act2013(the Act)The loans granted during the earlier financial years to the parties covered in theregister maintained u/s 189 of the Companies Act 2013 (the Act) are interest free. Theterms of arrangements do not stipulate any repayment schedule and the loan is repayable ondemand. Accordingly paragraph 3(iii)(b) of the Order is not applicable to the company inrespect of repayment of the principal amount.

b) In respect of the said loans there are no overdue amounts

(iv) On the basis of Information and explanations given to us and also In view of thelegal opinion obtained from an expert the company has broadly complied with theprovisions of Section 185 and 186 with respect to the investment made & LoansGiven.(Please refer the note no.27b of the notes forming parts of the financialstatements).

(v) The Company has not accepted any deposits from the public during the year and doesnot have any unclaimed deposits as at March 312018 and therefore the provisions of theClause 3(v) of the order are not applicable to the company.

(vi) We have broadly reviewed the books of accounts maintained by the company inrespect of products where pursuance to the rules made by the Central Government of Indiathe maintenance of Cost records has been prescribed under sub section (1) of section 148of Companies Act 2013 and we are of the opinion that prima facie the prescribed accounts& records have been maintained. We have however not made a detailed examination ofthe records.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of

the Company amounts deducted/ accrued in the books of account in respect of undisputedstatutory dues including provident fund ESIC income-tax sales tax Goods & Servicetax value added tax duty of customs duty of excise service tax cess and othermaterial statutory dues have been generally regularly deposited during the year by theCompany with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund ESIC income tax sales tax Goods & Servicetaxvalue added tax duty of customs duty of excise service tax cess and other materialstatutory dues were in arrears as at 31 March 2018 for a period of more than six monthsfrom the date they became payable.

(b) According to the information and explanations given to us there are no materialdue of duty of excise service tax Goods & Service Tax and duty of customs whichhave not been deposited with the appropriate authorities on account of any dispute.However according to the information and explanations given to us the following dues ofincome tax sales tax & value added tax have not been deposited by the company onaccount of disputes.

Name of the statue Nature of Dues Amount (?) (Net of payment) Financial year to which the amount relates From where the dispute is pending
Income Tax Act1961 Corporate Tax 663.83 Lakhs FY 2009-10 Commissioner of Income Tax(Appeals) -IX
Income Tax Act1961 Corporate Tax 5543 Lakhs FY 2010-11 Income Tax Appellate Tribunal Ahmedabad
Income Tax Act1961 Corporate Tax 6033 Lakhs FY 2011-12 The Company is in Process of filing Appeal with Income Tax Appellate Tribunal Ahmedabad
Income Tax Act1961 Corporate Tax 797.60 Lakhs FY 2012-13 Commissioner of Income Tax(Appeals) -IX
Income Tax Act1961 Corporate Tax 41.66 Lakhs FY 2005-06 Commissioner of Income Tax(Appeals) -IX
Income Tax Act1961 Corporate Tax 86.00 Lakhs FY 2013-14 Commissioner of Income Tax(Appeals) -IX
Income Tax Act1961 Corporate Tax (Penalty) 2625.03 Lakhs FY 2010-11 Commissioner of Income Tax(Appeals) -IX
Guj. Sales Tax Sales Tax 130.88 Lakhs F.Y 2008-09 Joint. Commissioner of Commercial Tax Appeal-I Ahmedabad
Guj. Sales Tax Sales Tax 5423.55 Lakhs (Net of payments) F.Y 1989-90 199091 1997-98 to 2001-02 & 2006-07 Sales Tax Tribunal / Commercial Tax Officer
Guj. Sales Tax Sales Tax 3080.51 Lakhs FY 2013-14 The Company is in process of filing the appeal with competent authority.

(viii) According to information & explanations given to us The company does nothave any borrowings from Banks Financial institutions Government or debenture holdersduring the year Accordingly paragraph 3 (viii) of the Order is not applicable.

(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

(x) According to the information and explanations given to us no fraud by the Companyor on the Company by its officers or employees has been noticed or reported during thecourse of our audit.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

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

FOR PARIKH & MAJMUDAR CHARTERED ACCOUNTANTS FRNNO 107525W

(C.A Dr Hiten Parikh)

Place : AHMEDABAD PARTNER

Date : 28.04.2018 M.No.40230

Annexure B to the Independent Auditor's Report off Even Date on the FinancialStatements of N.K. Industries Limited Report on the Internal Financial Controls overFinancial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act2013 ("the Act")

We have audited the internal financial controls over financial reporting of M/s N.KINDUSTRIES LIMITED ("the Company") as of 31 March 2018 in conjunction with ouraudit of the financial statements of the Company for the year ended on that date.Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

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

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

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements. InherentLimitations of Internal Financial Controls over Financial Reporting

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

Opinion

In our opinion to the best of our information & according to the explanationsgiven to us the Company has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at 31st March 2018 based onthe internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

FOR PARIKH & MAJMUDAR CHARTERED ACCOUNTANTS FRNNO 107525W

(C.A Dr Hiten Parikh)

Place : AHMEDABAD PARTNER

Date : 28.04.2018 M.No.40230