Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Andrew Yule & Company Limited (‘‘the Company”), which comprise the balance sheet as at 31 March 2018, the statement of profit and loss (including other comprehensive income) and the statement of cash flows and the statement of changes in equity for the year ended and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder. 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 standalone Ind AS 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 standalone Ind AS 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 thereunder.

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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS financial statements that give a true and 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 operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the 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 standalone Ind AS 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.

Basis for Qualified Opinion

No provision has been considered in the financial statement in respect of investments in Katras Jherriah Coal Company Limited amounting to Rs.6.95 lakh and New Beerbhoom Coal Company Limited amounting to Rs.12.27 lakh.

Due to non-provision of the above amount in the accounts, the reported profit of the Company has been overstated by Rs.19.22 lakh and the value of non-current investment has been overstated by the same amount and the provision has been understated by Rs.19.22 lakh.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except the matter described in the Basis for qualified opinion paragraph, the aforesaid standalone Ind AS financial statements 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 including the Ind AS, of the financial position of the Company as at 31 March, 2018, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Other Matters

Principal outstanding amount of West Bengal Sales Tax Loan of Rs.250 Lakhs has been repaid during the year towards full and final settlement. Interest amounting to Rs.530.44 Lakhs been written back in the books pending confirmation from West Bengal Sales Tax Department.

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 give in the Annexure A, a statement on the matters specified in the paragraph 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 ,except for the matter described in the Basis for Qualified Opinion Paragraph all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

[b] except for the matter described in the Basis for Qualified Opinion Paragraph 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 statement of profit and loss, the statement of cash flows and the statement of changes in equity dealt with by this Report are in agreement with the books of account;

[d] except for the effects of the matter described in the Basis for Qualified Opinion Paragraph ,in our opinion ,the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with relevant rule issued there under;

[e] the matter described in the Basis for Qualified Opinion paragraph above, in our opinion , has an adverse effect on the profit of the Company.

[f] Section 164[2] of the Companies Act,2013 regarding disqualification of the Director is not applicable to the Company being a government company vide notification no.G.S.R463[E] dated 05th June 2015.

[g] 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 C”; and

[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] the Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements — Refer Note 36 to the standalone Ind AS financial statements;

[ii] the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

[iii] there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company; and

[3] As required by section 143(5) of the Act the directions and sub-directions issued by the Comptroller &Auditor General Of India , we give our comments, action taken and the impact on the Standalone Financial Statement.

[i] [a] The Company is maintaining proper records showing full particulars, including quantitative details and situation of its fixed assets.

[b] As explained to us ,Fixed assets have been physically verified by the management at regular intervals and as informed to us ,no material discrepancies were noticed on such verification.

[c] As per records of the Company and according to the information and explanations given to us, the Title Deeds of immovable properties are held in the name of the Company except two properties situated at Kolkata , the title deeds of which have been lost and a General Diary has been lodged by the Company with Burrabazar Police Station on 25 th May, 2017.

[ii] According to the information and explanations given to us, the inventories have been physically verified during the year at reasonable intervals by the management .The discrepancies noticed on verification between the physical inventories and book records were not material in relation to the operation of the Company and the same have been properly dealt with in the books of account.

[iii] [a] According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured loans, during the year.

[b] However the outstanding amount due from Yule Electrical Limited arising out of making statutory payment by parent company amounting to Rs.3.29 lakh.

[iv] According to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans and investments made and guarantees given by it.

[v] According to the information and explanations given to us, the Company has not accepted any deposits from the public during the year within the meaning of sections 73 to 76 or any other relevant provisions of the Act and the rules framed there under to the extent notified.

[vi] We have broadly reviewed the cost records maintained by the Company relating to all products of the Company. However, we have not made a detailed examination of the records with a view to determine whether they are accurate or complete since cost audit for the year 2018-19 is yet to be completed.

[vii] [a] As per records of the Company and according to the information and explanations given to us, the Company is generally regular in depositing undisputed applicable statutory dues including Provident Fund, Employees’ State Insurance, Income Tax, Sales Tax, Service Tax, Goods and Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and any other statutory dues to the appropriate authorities and there are no undisputed amount payable in respect of the same which were in arrear as on 31^st March, 2018 for a period of more than six months from the date the same became payable.

[b] According to the information and explanations given to us, the Company has not deposited the following dues on account of disputes with the appropriate authority.

[viii] According to the information and explanations given to us and based on our examination of the books and records of the Company , we report that the Company has not defaulted in repayment of dues to financial institutions and banks.

[ix] According to the information and explanations given to us and based on our examination of the books and records of the Company, we report that the term loan has been applied for the purpose for which the same was obtained.

[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 given to us and based on our examination of the books and records of the Company, we report that the Company has paid or provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

[xii] According to the information and explanations given to us, the Company is not a Nidhi Company Accordingly, clause 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 books and records of the Company, we report that 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 standalone financial statement as required by the applicable accounting standards.

[xiv] According to the information and explanations given to us and based on our examination of the books and records of the Company, we report that the Company has not made any preferential allotment/private placement of shares or fully or partly convertible debentures during the year except shares allotted to the government of India and Bank of Baroda on conversion of their loans in the Equity Shares. Accordingly, Clause 3(xiv) of the Order is not applicable.

[xv] According to the information and explanations given to us and based on our examination of the books and records of the Company, we report that the Company has not entered into any non-cash transactions with directors or persons connected with him during the year. Accordingly, Clause 3 (xv) of the Order is not applicable.

[xvi] The Company is not required to be registered under section 45-1A of the Reserve Bank Of India Act ,1934.

We have audited the internal financial controls over financial reporting of Andrew Yule & Company Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Respective Board of Directors of the Holding Company and its subsidiary companies, which are companies incorporated in India, are 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”) issued by ICAI 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 Ind AS 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 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 31 March 2018, 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 ICAI.

For U. S. Saha & Co.

Chartered Accountants

Firm Registration No.309037E

(U. S. SAHA, FCA)

Place : Kolkata Partner

Date : 30th May, 2018 Membership No.015491