Sadbhav Engineering Ltd.

To The Members of Sadbhav Engineering Limited

Report on the Ind AS Standalone Financial Statements

We have audited the accompanying standalone financial statements of Sadbhav EngineeringLimited ("the Company") which comprise the Balance Sheet as at 31st March2017 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and Statement of change in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.

Management's Responsibility for the Ind AS 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 Ind AS standalone financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand change in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Ind AS standalone financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Ind AS standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS of the financialposition of the Company as at 31st March 2017 and its financial performance includingother comprehensive income its cash flows and change in equity for the year ended on thatdate.

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 ofthe Act we give annexure a statement on the matters specified in paragraphs 3 and 4 ofthe Order to the extent applicable.

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 bestof 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 theCompany 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 Statementdealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid Ind AS standalone financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial control over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure-A"

(g) 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 in our opinionand 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 financialposition in its financial statements - Refer Note 43 (A) to the financial statements.

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

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

(iv) The Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8th November 2016 to 30th December 2016 and these are in accordance with the booksof accounts maintained by the Company. Refer to Note 62 to the standalone Ind AS financialstatements.

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31st March 2017 wereport that:

1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.

(b) As explained to us all the fixed assets have been physically verified by themanagement during the year in a phased periodical manner which in our opinion isreasonable having regard to the size of the Company and nature of its assets. No materialdiscrepancies were noticed on such physical verification.

(c) Based on our audit procedures and according to the information and explanationsgiven to us the title deeds of immovable properties are held in the name of the Company.

2. As explained to us inventories have been physically verified by the management atregular intervals during the year and there were no material discrepancies noticed onphysical verification of inventory as compared to the book records.

3. (a) The company has granted loans to two subsidiary companies covered in theregister maintained u/s 189 of the Act. The terms and conditions of the loans granted arenot prejudicial to the Company's interest.

(b) The borrower has been regular in the payments of the interest as stipulated. Theterms of arrangements do not stipulate any repayment schedule and the loans are repayableon demand except interest free term loan of Rs. 7795.63 lakhs which is repayable aftereleven years from the date of term loan agreement dated 22nd October 2014.

(c) There are no overdue amounts of more than ninety days in respect of the loansgranted to the bodies corporate listed in the register maintained u/s 189 of the Act.

4. In our opinion and according to the information and explanations given to us TheCompany has complied with the provision of Section 185 and 186 of the Act in respect ofloans investment guarantees and securities.

5. The Company has not accepted any deposits from the public within the meaning ofSection 73 to 76 and other relevant provisions of the Act and rules framed thereunder.

6. We have broadly reviewed the cost records maintained by the company pursuant to theCompanies (Cost Records and Audit) Rules 2014 prescribed by the Central government underSection148(1) of the Act and are of the opinion that prima facie the prescribed costrecords have been maintained. We have however not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.

7. (a) According to the records of the Company the Company is regular in depositingwith appropriate authorities undisputed statutory dues including Provident Fund EmployeesState Insurance Income Tax Sales Tax Wealth Tax Service Tax Customs Duty ExciseDuty cess and other material statutory dues applicable to it. According to theinformation and explanations given to us no undisputed amounts payable in respect of theaforesaid dues were outstanding as at 31st March 2017 for a period of more than sixmonths from the date of becoming payable except Labour cess of Rs. 137.73 lakhs.

(b) The disputed statutory dues aggregating to Rs. 24470.57 lakhs that have not beendeposited on account of matters pending before appropriate authorities are as under:

8. Based on our audit procedures and according to the information and explanationsgiven to us we are of the opinion that the Company has not defaulted in repayment of duesto financial institutions banks government and dues to debenture holders.

9. In our opinion and according to the information and explanations given to us theterm loans obtained by the Company were prima facie applied for the purposes for whichthe loans were obtained. The Company has not raised any money by way of initial publicoffer or further public offer (including debt instruments) during the year.

10. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per the information and explanations given bythe management we report that no material fraud by the Company or any fraud on theCompany by its officers or employees has been noticed or reported during the year.

11. In our opinion and according to the information and explanations given to usmanagerial remuneration has been paid in accordance with the requisite approvals mandatedby the provisions of the section 197 read with Schedule V to the Companies Act.

12. In our opinion the Company is not a Nidhi Company therefore the provision ofclause xii of paragraph 3 of the Order are not applicable to the Company.

13. 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 section 177 and 188 of the Act where applicable and the details of suchtransaction have been disclosed in the standalone Ind AS financial statements as requiredby the applicable accounting standard.

14. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Hence thereporting requirement of paragraph 3(xiv) of the Order are not applicable to the Company.

15. 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 any non-cashtransaction with directors or persons connected with them. Accordingly paragraph 3(xv) ofthe order is not applicable.

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

Annexure - A

To the Independent Auditor's Report of Even Date on the Ind AS Financial Statements ofSadbhav Engineering Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of SadbhavEngineering Limited ("the Company") as of March 31 2017 in conjunction with ouraudit of the Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining 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.

Auditors' 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 ICAI. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively 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 Ind AS 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 internal financial controls system overfinancial 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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Ind AS financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of management and directors of the company; and

(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the Ind AS financial statements.

Inherent Limitations 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

Our opinion 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 March 31 2017 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.