We were engaged to audit the accompanying financial statements of Pradip Overseas Limited ("the company"), which comprise the Balance Sheet as at 31st March 2015, 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.

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 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 for ensuring 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.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on conducting our audit in accordance with the Standards on Auditing under Section 143(10) of the Act.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. Because of the matters described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion

A. In respect of Trade Receivables amounting to Rs. 930.32 Cr., we have not received balance confirmations from the debtors. There have been defaults on the payment obligations by debtors on the due dates. The Company has created a provision for doubtful debts to the tune of Rs. 262.56 Cr. during the reporting period. The Company has stated that the provision is based on receivables which are older than 36 months, which in our opinion is not commensurate with the size and operation of the Company. In our opinion, the provision made is inadequate and the impact on loss and carrying value of trade receivables could not be ascertained.

B. In respect of Inventories, during the reporting period, the management has not undertaken physical verification of Inventories at periodic intervals. The Company has not maintained adequate inventory records at the factory. In our opinion, the comparative inventory holding levels, in view of steep decline in the turnover as compared to earlier years, are higher and therefore there is a possibility of loss on sale / realization of slow moving / old items. No provision has been made on diminution in the value of old and slow moving inventory. The impact of the above remarks, presently not ascertainable and, therefore, cannot be commented upon.

C. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations, has net capital deficiencies and non fulfillment of commitment of approved CDR package that raises substantial doubts about the Company's ability to continue as a going concern. The financial statement does not include any adjustment that might result from the outcome of this uncertainty. Management plans in regard to this matter are described in note 3.1.4 to the financial statements. The appropriateness of going concern assumption is dependent on the Company's ability to raise adequate finance from alternate means and / or recoveries from debtors to meet its short term and long term obligations as well as to establish consistent business operations.

In the absence of any convincing audit evidences, no positive steps taken by the management, non recovery of Trade Receivables since long, default in payment of the restructured loans forming part of CDR package and financial difficulties faced by the Company due to decrease in business operations, we are unable to determine the possible effects of these multiple uncertainties on the financial statements.

Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. As described in the Basis of Disclaimer of Opinion paragraph, we sought but were unable to obtain 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, except for the matters as referred to in Basis for Disclaimer of Opinion.

c. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account except for the matters as referred to in Basis for Disclaimer of Opinion.

d. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether 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.

e. The matters described in the Basis for Disclaimer of Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f. On the basis of written representations received from the directors as on March 31, 2015 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2015, from being appointed as a director in terms of Section 164(2) of the Act.

g. The reservation relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis of Disclaimer of Opinion paragraph above.

h. 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. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer note 17 to the Financial Statements;

ii. Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether 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;

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

Referred to in Paragraph 1 under the heading of "report on other legal and regulatory requirements" of our report of even date

(i) In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets.

b. As explained to us, all the fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification.

(ii) In respect of its inventories:

a. The management has not conducted physical verification of inventory at reasonable intervals.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are not reasonable and adequate in relation to the size of the Company and the nature of its business. The management has not undertaken physical verification of inventory at periodic intervals during the reporting period.

c. The Company has not maintained proper records of inventory. In the absence of adequate documentation of physical verification of inventory and inventory records, we are unable to determine whether there were any material discrepancies noticed on physical verification of inventories as compared to the book records and whether the same has been properly dealt with in the books of accounts.

(iii) According to the information and explanations given to us, the Company has not granted loans, secured or unsecured to the Companies, firms or other parties covered in register maintained under section 189 of the Act. Accordingly, the provisions of clause (iii) (a) and (iii) (b) of paragraph 3 of the Order are not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchases of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in such internal control system.

(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 Order 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 read with Companies (Cost Records and Audit) Amendment Rules, 2014 prescribed by the Central Government under Section 148 of the Act and are of the opinion that, prima facie, the prescribed cost records have been made and 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) According to the information and explanations given to us in respect of statutory dues:

a) The Company has generally been regular in depositing undisputed statutory dues including provident fund, employees' state insurance, income-tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess to the extent applicable and any other statutory dues with the appropriate authorities. There were no undisputed statutory dues in arrears as on 31st of March, 2015 for a period of more than six months from the date they became payable.

b) There are no amounts payable in respect of income tax, wealth tax, service tax, sales tax, duty of customs, duty of excise or value added tax or cess which have not been deposited on account of any disputes.

c) According to the information and explanations given to us, there were no amounts which were required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder.

(viii) The accumulated losses of the Company at the end of the financial year exceed its net worth. The Company has incurred cash losses during the financial period covered by our audit. The cash losses were also incurred in the immediately preceding financial year.

(ix) Based on our audit procedure and as per the information and explanation given by the management, the Company has defaulted in meeting its scheduled debt service obligations as per the approved Corporate Debt Restructuring proposal. The details of such default are as under:

Bank Name                  Total Amount 
                           Defaulted 
                           (in Cr.)        Date from when 
                                           Default Started

State Bank of India            0.10        31/03/2015

Canara Bank                    0.12        31/03/2015

Indian Overseas Bank           0.05        31/03/2015

Allahabad Bank                 0.08        31/03/2015

Union Bank of India            0.01        31/03/2015

Punjab National Bank           0.02        31/03/2015

State Bank of Patiala          0.02        31/03/2015

Karur Vyasa Bank               0.01        31/03/2015

Bank of India                  0.04        31/03/2015

Laxmi Vilas Bank               0.02        31/03/2015

Total                          0.47

(x) In our opinion and according to the information and explanations given to us, the company has not given any guarantee for the loan taken by others from banks or financial institutions. Accordingly, the provisions of clause (x) of the paragraph 3 of the Order are not applicable to the Company.

(xi) The Company has raised new term loans during the year. In our opinion, the term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

(xii) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

                                         For, Ashok Dhariwal & Co.,

                                            Chartered Accountants,

                                               (Reg. No. 100648W)

                                                             Sd/- 

                                              (CA Ashok Dhariwal)

Place: Ahmedabad                                          Partner

Date : 09/06/2015                           Membership No. 036452