INDEPENDENT AUDITORS’ REPORT

To,

The Members of

Sir Shadi Lal Enterprises Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Sir Shadi Lal Enterprises Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit

& Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statement

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 and presentation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. 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 there under. 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 misstatements.

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

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

Emphasis of matter

1. “Other Operating Revenue include reimbursement of Society Commission Rs.1,60,30,339/- relating to erstwhile “UNN Sugar Unit” of the company, for the season 2012-13, which is being persued for recovery/adjustment, as stated in Note No. 3.8 of the aforesaid Financial Statement.

2. Attention is invited to note no. 3.9 to Financial Statement regarding potential sickness of the Company. The Company, over the last few years, has been incurring losses, due to which its net worth has been completely eroded. At the close of financial year ended on 31.03. 2014, the Company has become Sick Industrial Company under provision of Sick Industrial Company (Special Provisions) Act, 1985. This fact was reported to BIFR, consequently the Company has been registered under BIFR on 03.02.2016 as Case no. 23/2016.

3. The Company has not maintained accounts on “Accrual Basis” to the extent:

i) of Rs.17,25,35,188/- as stated in Note No. 3.5 of the aforesaid Financial Statement in respect of interest on late payment of cane price, and

ii) as stated in Note No. 3.7 of the aforesaid Financial Statement in respect of liability (not determined by the company) towards bonus relating to financial year 2014-15 in accordance with revised Bonus Notification dated 1st January, 2016.

Basis for Qualified Opinion

1. As stated in Note No. 3.1 provision for bad & doubtful debts has been short provided by Rs. 1,50,37,693/-. Had this provision been made the profit for the year would have been lower to that extent.

2. As stated in Note No. 3.3 of the aforesaid financial statement, the method for arriving cost of sugar production has been changed this year, resulting in increase in value of closing stock of sugar by Rs. 2,45,03,240/-. Had there been no deviation in method of arriving cost of production of sugar, the profit for the year would have been lower by Rs. 2,45,03,240/- and deficit appearing under the head “Reserves & Surplus” would have been higher to that extent.

3. As stated in Note No. 3.6 of the aforesaid Financial Statement, the Company has decided that in deviation of past practice, to book the value of the closing stock of Bagasse at the close of the year by Rs. 1,06,61,786/-. Had there been no deviation the profit for the year would have been lower to that extent and deficit appearing under the head “Reserves & Surplus” would have been higher to that extent in the Balance Sheet.

4. In view of carry forward losses and also that the company has become a sick company, the Deferred Tax Asset Rs. 68,81,11,332/-, which was provided in earlier years, in absence of virtual certainty about future profitability, the recovery of which is uncertain, in our opinion, the decision of management in continuing the carry forward of the aforesaid Deferred Tax Asset, in terms of Accounting Standard-22, is not desirable. Had the impact of aforesaid Deferred Tax Asset been reversed, the deficit appearing under “Reserves & Surplus” would have been Rs. 1,25,02,67,430/- as against the reported figure of Rs. 56,21,56,098/- in the balance sheet.

As stated in Note No.3.10 to the Financial Statements, the management has however decided, not to account for the effect of Deferred Taxation for the current year.

5. The aggregate impact of aforesaid para 1-4 results in increase in profit for the year by Rs.5,02,02,719/-. Had the aforesaid adjustments not been made by the company the figure of profit for the year Rs.2,01,20,944/- would have been converted into a loss for the year to Rs. 3,00,81,775/ and the deficit appearing under the head “Reserves & Surplus” would have been higher by Rs. 73,83,13,051/- in the Balance Sheet.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements, except for the effect of matters stated in the Basis for Qualified Opinion paragraph above, give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2016, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

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

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

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

c) the Balance Sheet, the Profit and Loss Statement, 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, 2014, except as stated herein above.

e) on the basis of the written representations received from the directors as on March 31, 2016, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of Section 164 (2) of the Act.

f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

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

i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements, (Refer Note No. 2.30 of the Financial Statements);

ii) The Company did not have any long-term contracts including derivative contracts for which there were any foreseeable losses; and

iii) There has been no delay in transferring amounts, required to be transferred, to investor Education and Protection fund by the company.

i. a) The Company has maintained proper records showing

Report of even date on the financial statements of Sir Shadi Lal Enterprises Limited for the year ended on 31st March, 2016:

full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b) The Company’s programme of physical verification of all its fixed assets once in three years, is in our opinion, reasonable having regard to the size of the Company and the nature of its fixed assets. We are informed that in accordance with the programme, no physical verification of fixed assets was carried out during the year under report.

c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are stated to be held in the name of the Company. The original Title Deeds were not produced to us for our verification and we were told that same are deposited as security with IFCI.

ii. a) During the year, the inventories have been physically verified by the management except material sent for job work and lying with third party. In our opinion, the frequency of verification is reasonable.

b) The discrepancies noticed on physical verification between the physical stocks and the book records were not material, however, the discrepancies noticed have been properly accounted for in the books of account.

iii. 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 3 (iii) (a) to (C) of the Order are not applicable to the Company and hence not commented upon.

iv. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 with respect to loans, investments, guarantees, and security.

v. According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year, therefore, the provisions of clause (v) of paragraph 3 of the CARO 2016, are not applicable to the Company.

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

vii. a) According to the information & explanations given to us and on the basis of our examination of the records of the Company, there is no undisputed amounts payable in respect of provident fund, employees’ state insurance, income-tax, value added tax, wealth-tax, service-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date of becoming payable.

b) According to the records of the Company and the information and explanations given to us, there are no amounts in respect of income-tax, value added tax, sales tax,wealth-tax, service-tax, customs duty, excise duty and cess, which have not been deposited with the appropriate authorities on account of any dispute, other than mentioned in ‘Annexure-1’ to this report.

viii. In our opinion and according to the information and explanations furnished to us by the management of the company, the Company has defaulted in repayment of dues payable to State Bank of India. Balance due to State Bank of India since the beginning of the year Rs.60,35,45,834/- was not paid during the year, however the Company is regular in payment of interest on said loan.

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

x. According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

xi. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act.

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

xiii. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

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

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

We have audited the internal financial controls over financial reporting of Sir Shadi Lal Enterprises Limited (“the Company”) as of 31 March, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

“Annexure B” to Independent Auditors’ Report of even date on the financial statements of Sir Shadi Lal Enterprises Limited

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

Management’s Responsibility for Internal Financial Controls

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

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For BASANT RAM & SONS

Chartered Accountants

(Firm Regn. No. 000569N)

H. K. Chadha

Place : New Delhi Partner

Dated : 28th May, 2016 Membership No. 6470