INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF MVL LTD 1. Report on the Financial Statements

We have audited the accompanying financial statements of MVL Limited (‘the Company’), which comprise the Balance Sheet as at March 31, 2016, and the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

2. 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 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 the 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 the frauds and other irregularities; selection and application of appropriate accounting policies; making judgment and estimates that are reasonable and prudent; and design, implementation and maintenance of internal financial control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3. Auditors 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 misstatement.

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

4. Basis for Qualified Opinion

Reference is invited to

a) Note No. 39 in respect of non provision of interest with retrospective effect from 01.04.2014 (vide Board Resolution dated 17.02.2015) on loans from banks and financial institutions declared as Non Performing Account (NPA). As a result of non provision of said interest of Rs.40,96,85,873/- (previous year 32,39,14,890) payable during the year on the said NPA Accounts : -

- Revenue from operation has been understated by Rs. 18,99,09,679/- (previous year Rs. 26,14,60,650/-) arising out of percentage of completion (POC) method of accounting, due to non-capitalization of interest directly attributable to project work-in-progress.

- Loss from operation has been understated by Rs. 21,97,75,894 (previous year Rs.6,24,54,240/-)

b) Note No. 40 regarding non provision of advances to group companies considered doubtful of recovery and the lonee companies do not have the capacity / net-worth to repay the principal / or the interest charged thereon.

5. Qualified Opinion

In our opinion and to the best of our information and according to the explanation given to us, except for possible effects of

the matters described in paragraph , 4 above - the basis of qualified opinion , the financial statements give a true and fair

view :-

a) In the case of the Balance sheet, of the state of affairs of the company as at 31^st March 2016;

b) In the case of statement of Profit and Loss of the loss for the year ending on 31^st March, 2016.

c) In the case of the Cash Flow Statement, of the Cash flow for the year ending on 31^st March, 2016.

6. Emphasis matters

Attention is invited to:-

a) Note No. 49 of the accompanying financial statements there exists material uncertainty over the realisability of certain loans and advances claimed as given/advanced for purchase/acquisition of land, rights, projects or properties which are pending either for transfer of property or refund of advances aggregating Rs. 6817.72 lacs as on 31.3.2016 , (previous year Rs. 11780.53 lacs). Out of these advances we are unable to ascertain whether the outstanding advances are fully recoverable/adjustable, since the same are outstanding/remained unadjusted for long. In the absence of some of confirmations and valid supporting agreements, we are unable to ascertain the impact, if any, that may arise on any future date, in case any of these advances are subsequently determined to be doubtful for recovery.

b) Note No. 50 in respect of purchase of commercial space and included as part of inventory/ WIP of the value of Rs.

3886.02 lacs. In view of non- registration of title of the said property in the name of the company, we are unable to comment about the authenticity of the title of the said commercial space acquired during the year.

c) Note No. 37 in respect of non availability of confirmations in respect of some debit and/or credit balances. In the absence of such confirmations, any provision to be made for the adverse variation in carrying amounts of these balances, are not quantified, as well as the quantum of adjustment if any, required to be made remain unascertained.

Our opinion is not qualified in respect of these matters.

7. Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors report) Order, 2016 (“The Order”) issued by the central government of India in terms of subsection 11 of section 143 of the Act, We give in the annexure ‘A’ statement on the matter specified in paragraphs 3 & 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, 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 comply with the Accounting Standards referred to in section 133 of the Companies Act, 2013, read with rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of written representations received from the directors as on March 31, 2016, and 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 sub section (2) of section 164 of the Companies Act, 2013.

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 included in the auditor’s report and to best of our information and according to the explanation given to us.

1) The company has disclosed the impact of pending litigation on its financial position in its financial statement.

2) The company has made provision, as required under the applicable law or Accounting Standards, for material foreseeable losses, if any, on long term contracts including derivative contracts.

3) There has been no delay in transferring amounts, required to be transferred, to the investor’s education and protection fund by the company.

Annexure ‘A’ to the Independent Auditors’ Report

The Annexure referred to in paragraph 1 under “Report on Other Legal and Regulatory requirements” section of our report of even date

(i) In Respect of its Fixed Assets:

a) The company is maintaining records showing particulars, including quantitative details and situation of fixed assets;

b) Major items of fixed assets were physically verified during the year by the management in accordance with a regular program of verification which, in our opinion, provides for physical verification of the fixed assets at reasonable intervals. No material discrepancies were noticed on such verification.

c) The title deeds of immovable properties are held in the name of the company.

(ii) In Respect of its inventory:

a) The inventory includes land, material at site and project work in progress which is inclusive of other direct and indirect costs. As explained to us, inventories of building materials are physically verified by the management at reasonable intervals.

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

c) In our opinion and according to the information and explanations given to us, the company has maintained proper records of its inventories of building material. No material discrepancies were noticed on verification, between physical stocks and book records..

(iii) In respect of unsecured loans, granted to the companies, firms or other parties covered in the registrar maintained u/s 189

of the Companies Act 2013 according to the explanation and information given to us;.

a) The company has granted loans to their group companies, as at the year end, the outstanding balance of such loan was Rs. 2815.94 Lacs and the maximum outstanding at any time during the year was Rs. 2849.58 Lacs. In our opinion loans to their group companies are prima facie prejudicial to the interest of the company.

b) No interest is charged on loan of Rs. 56.51 to one of the group company.

c) Since the loan is repayable on demand and there is no stipulation for repayment, regularity of payments cannot be commented upon.

d) As per the information and explanation given to us, the company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

e) Since the company has not taken any loans, secured or unsecured provisions of clause 4 (iii) (e), (f) & (g) of the company (Auditors Report) Order 2016 are not applicable.

(iv) According to information and explanations given to us,

a) The provision of section 185 are not applicable, since the company has not advanced any loan to directors

b) Loans and Advances / guarantee provided to related parties are detailed under note no. 46 and 47 of financial statements, loans covered under part ‘C’ of note no. 47 are not in accordance with sub clause 5 of section 186 of Companies Act, 2013.

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

(vi) According to the information and explanations given to us the Central Government has not prescribed maintenance of cost

records under sub-section (1) of section 148 of the Companies Act’2013.

(vii) (a) According to the information and explanations given to us undisputed amounts in respect of dues including provident

fund, investor education and protection fund, employee state insurance , income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and any other material statutory dues as applicable which were outstanding as at 31st March 2016 for a period of more than 6 months from the date they became payable, are Rs. 203.35 Lacs (Previous year Rs. 260.04 Lacs) as on the balance sheet date.

(b) According to the information and explanations given to us following dues have not been admitted as payable on account of disputes /appeals pending with appropriate authorities:-

*The above figures are exclusive of interest if any payable thereon.

(c) Based on the information and explanations obtained, the company has no liability or requirement to transfer any amount to Investor Education & Protection Fund in accordance with the relevant provisions of the Act and the Rules thereunder.

(viii) According to the information and explanations give to us and in our opinion, the Company has overdue amounting to Rs. 329.62 crores (previous year Rs. 156.22 crores) including unprovided interest on NPA accounts from 01.04.2014 due to the Banks and Financial institutions. These defults have been continuing from different dates begining from July, 2012. However, the Company has made an application for one time settlement/restructuring of loan and proposals are under consideration. The Company has no liability for debentures.

(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) and term loans during the year.

(x) We have not noticed or reported any fraud by the company or any fraud on the Company by its officers or employees during the year

(xi) The managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(xii) As this is not a nidhi company, the provision in respect thereof are not applicable

(xiii) According to the information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 where ever applicable and the details have been disclosed in the Financial Statements etc., as required by the applicable accounting standards

(xiv) According to the information and explanations given to us, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review.

(xv) According to the information and explanations given to us, the company has not entered into any non-cash transactions with directors or persons connected with him and the provisions of section 192 of Companies Act, 2013 have been complied with;

(xvi) This clause of the Caro 2016 is not applicable to the Company as the company is not a required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

ANNEXURE ‘B’ TO THE INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF MVL LIMITED

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

We have audited the internal financial controls over financial reporting of MVL Limited (“the Company”) as of March 31, 2016 in conjunction with our audit 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 internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for my /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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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 March 31, 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 ARUN KISHORE & COMPANY

CHARTERED ACCOUNTANTS

( ICAI FRN : 001898 N)

Sd/-

Place : New Delhi CA ARUN KISHORE

Date : 3^rd June, 2016 PARTNER

[Membership No. 10770]