Auditor Report of Gayatri Sugars Ltd.

Mar 31, 2025

We have audited the Financial Statements of Gayatri Sugars Limited ("the Company"), which
comprise the Balance Sheet as at 31st March, 2025, and the Statement of Profit and Loss
(including Other Comprehensive Income), the Statement of Changes in Equity and the Statement
of Cash Flows for the year then ended, and notes to the Financial Statements, including a
summary of significant accounting policies and other explanatory information (hereinafter
referred to as "the Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us,
except for the effect of the matter described in the Basis for Qualified Opinion section of our
report below, the aforesaid Financial Statements give the information required by the Companies
Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with
the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies
(Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting
principles generally accepted in India, of the state of affairs of the Company as at 31st March
2025, and the profit and other comprehensive income, changes in equity and its cash flows for
the year ended on that date.

Basis for Qualified Opinion

As stated in note 29.16 to the accompanying Financial Statements, regarding the High Court
dismissing the writ petition filed by the Company challenging the levy of electricity duty by
the State Government on the consumption of electricity by captive generating units, the subse¬
quent dismissal of special leave petition by the Honorable Supreme Court and the pending
matter before the Board for Industrial and Financial Reconstruction being abated. As stated in
the said note, the Company has treated the estimated duty amount aggregating to '' 283.99
Lakhs as a contingent liability and no provision has been made in respect of the same.

In view of the above, we are unable to comment on the ultimate outcome of the matter and the
consequential impact if any on these Financial Statements.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under
section 143(10) of the Companies Act, 2013. Our responsibilities under those SAs are further
described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of
our report. We are independent of the Company in accordance with the Code of Ethics issued
by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements
that are relevant to our audit of the Financial Statements under the provisions of the Companies
Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the Code of Ethics. We believe that the audit evi¬
dence we have obtained is sufficient and appropriate to provide a basis for our qualified audit
opinion on the Financial Statements.

Emphasis of Matters

(Note Nos. referred hereunder are with reference to respective Notes forming part of the Finan¬
cial Statements)

We draw attention to the following matters :

i) As stated in Note No. 29.14, the petition filed by IFCI Limited before Debt Recovery
Tribunal (DRT) for recovery of Sugar Development Fund (SDF) dues, is pending for
disposal/ withdrawal for detailed reasons stated in the said note.

Our Opinion is not modified in respect of the above matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most signifi¬
cance in our audit of the Ind AS financial statements of the current period. These matters were
addressed in the context of our audit of the Ind AS financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. We
have determined that there are no key audit matters to communicate in our report.
Information Other than the Financial Statements and Auditor''s Report Thereon
The Company''s Board of Directors is responsible for the preparation of the other information.
The other information comprises the information included in the Management Discussion and
analysis, Boards Report including annexures to Board''s Report, Business Responsibility Report,
Corporate Governance, and Shareholder''s Information, but does not include the Financial State¬
ments and our auditor''s report thereon.

Our opinion on the Financial Statements does not cover the other information and we do not
express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this
regard.

Responsibilities of Management and those Charged with Governance for the Financial State¬
ments

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, total
comprehensive income, changes in equity and cash flows of the Company in accordance with
the Ind AS and other accounting principles generally accepted in India. This responsibility also
includes maintenance of adequate accounting records in accordance with the provisions of the
Act for the safeguarding of 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.

In preparing the Financial Statements, the Board of Directors is responsible for assessing the
Company''s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Board of Directors
cither intends to liquidate the Company or to cease operations or has no realistic alternative
but to do so.

The Board of Directors is also responsible for overseeing the Company''s financial reporting
process.

Auditor''s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a
whole are free from material misstatement, whether due to fraud or error and to issue an auditor''s
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a

guarantee that an audit conducted in accordance with SAs will always detect a material mis¬
statement when it exists. Misstatements can arise from fraud or error and are considered mate¬
rial if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Financial Statements,
whether due to fraud or error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of
the Companies Act, 2013, we are also responsible for expressing our opinion on whether
the company has adequate internal financial controls system in place and the operating
effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company''s
ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor''s report to the related disclosures
in the Financial Statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditor''s
report. However, future events or conditions may cause the Company to cease to
continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the financial statements of the current
period and are therefore the key audit matters. We describe these matters in our auditor''s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the

Central Government of India in terms of sub-section (11) of section 143 of the Companies

Act, 2013, we give in the "Annexure A" a statement on the matters specified in paragraphs

3 and 4 of the Order, to the extent applicable.

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

a) We have sought and except for the possible effects of the matter described in the
Basis of Qualified Opinion Paragraph Above, obtained all the information and expla¬
nations which to the best of our knowledge and belief were necessary for the purposes
of our audit.

b) Except for the possible effects of the matter described in the Basis of Qualified Opin¬
ion Paragraph above, 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) Except for the possible effects of the matter described in the Basis of Qualified Opin¬
ion Paragraph above, the Balance Sheet, the Statement of Profit and Loss including
other Comprehensive Income, the Statement of Changes in Equity and the statement
of Cash Flow dealt with by this Report are in agreement with the books of account.

d) Except for the possible effects of the matter described in the Basis of Qualified Opin¬
ion Paragraph above, in our opinion, the aforesaid Financial Statements comply with
Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies
(Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on 31st
March 2025 taken on record by the Board of Directors, none of the directors is dis¬
qualified as on 31st March 2025 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 report¬
ing of the Company and the operating effectiveness of such controls, refer to our
separate Report in "Annexure B".

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. As stated in Note No. 29.2 of the Financial Statements, the Company has disclosed
the impact of pending litigations on its financial position in its 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 were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.

iv. (a)The management has represented that, to the best of it''s knowledge and belief,
other than as disclosed in the notes to the accounts, no funds have been advanced
or loaned or invested (either from borrowed funds or share premium or any other
sources or kind of funds) by the company to or in any other person(s) or entity(ies),
including foreign entities ("Intermediaries"), with the understanding, whether
recorded in writing or otherwise, that the Intermediary shall, whether, directly or
indirectly lend or invest in other persons or entities identified in any manner
whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide
any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The management has represented, that, to the best of it''s knowledge and belief,
other than as disclosed in the notes to the accounts, no funds have been received
by the company from any person(s) or entity(ies), including foreign entities
("Funding Parties"), with the understanding, whether recorded in writing or
otherwise, that the company shall, whether, directly or indirectly, lend or invest
in other persons or entities identified in any manner whatsoever by or on behalf of
the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security
or the like on behalf of the Ultimate Beneficiaries; and

(c) Based on audit procedures which we considered reasonable and appropriate in
the circumstances, nothing has come to the notice that has caused them to believe
that the representations under sub-clause (i) and (ii) contain any material
misstatement.

v. The company has not declared or paid any dividend during the year in contravention
of the provisions of section 123 of the Companies Act, 2013.

vi. Based on our examination which included test checks, the company has used an
accounting software for maintaining its books of account which has a feature of recording
audit trail (edit log) facility and the same has operated throughout the year for all
relevant transactions recorded in the software. Further, during the course of our audit
we did not come across any instance of audit trail feature being tampered with.

3) 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.

For M O S & Associates LLP

Chartered Accountants

Firm''s Registration No.001975S/S200020

Sd/-

Oommcn Mani

Place : Hyderabad Partner

Date : 29th May, 2025 Membership No. 234119

UDIN: 25234119BMTETU8444

---

Mar 31, 2024

We have audited the Financial Statements of Gayatri Sugars Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2024, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the Basis for Qualified Opinion section of our report below, the aforesaid Financial Statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2024, and the profit and other comprehensive income, changes in equityand its cash flows for the year ended on that date. Basis for Qualified Opinion

As stated in note 28.16 to the accompanying Financial Statements, regarding the High Court dismissing the writ petition filed by the Company challenging the levy of electricity duty by the State Government on the consumption of electricity by captive generating units, the subsequent dismissal of special leave petition by the Honorable Supreme Court and the pending matter before the Board for Industrial and Financial Reconstruction being abated. As stated in the said note, the Company has treated the estimated duty amount aggregating to Rs. 283.99 Lakhs as a contingent liability and no provision has been made in respect of the same.

In view of the above, we are unable to comment on the ultimate outcome of the matter and the consequential impact if any on these Financial Statements.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those SAs are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Financial Statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Financial Statements. Emphasis of Matters

(Note Nos. referred hereunder are with reference to respective Notes forming part of the Financial Statements)

We draw attention to the following matters :

i) As stated in Note No. 28.14,the petition filed by IFCI Limited before Debt Recovery Tribunal (DRT) for recovery of Sugar Development Fund (SDF) dues, is pending for disposal/ withdrawal for detailed reasons stated in the said note.

Our Opinion is not modified in respect of the above matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements for the year ended 31st March, 2024. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be key audit matters to be communicated in our report.

S.No.	Key Audit Matter	Audit Process
1.	Going Concern Refer to note 28.15 (B) to these Financial Statements. Historically, the Company has been loss-making and has been dependent on the continuous support of the promoters. Accumulated losses shown in the Balance Sheet totalled Rs. 16,388.67 Lakhs as at 31st March, 2024. We included the going concern assumption as a key audit matter as it relies on existing cash inflows and revenue growth generating sufficient cashflows to cover necessary expenditures.	In assessing the appropriateness of the going concern assumption used in preparing the financial statements, our procedures included, amongst others: Assessing the cash flow requirements of the Company over 12 months from 31st March, 2024 based on estimated budgets and forecasts. Understanding what forecast expenditure is committed and what could be considered discretionary. Considering the liquidity of existing assets on the balance sheet date. Considering the terms of the loans and trade finance facilities and the amount available for drawdown. Considering potential downside scenarios and the resultant impact on available funds.

Information Other than the Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and analysis, Boards Report including annexures to Board''s Report, Business Responsibility Report, Corporate Governance, and Shareholder''s Information, but does not include the Financial Statements and our auditor''s report thereon.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and those Charged with Governance 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,total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for the safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; makingjudgments 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.

In preparing the Financial Statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company''s financial reporting process. Auditor''s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the

Central Government of India in terms of sub-section (11) of section 143 of the Companies Act,

2013, we give in the ''''Annexure A" a statement on the matters specified in paragraphs 3 and 4

of the Order, to the extent applicable.

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

a) We have sought and except for the possible effects of the matter described in the Basis of Qualified Opinion Paragraph Above, obtained 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 possible effects of the matter described in the Basis of Qualified Opinion Paragraph above, 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) Except for the possible effects of the matter described in the Basis of Qualified Opinion Paragraph above, the Balance Sheet, the Statement of Profit and Loss including other Comprehensive Income, the Statement of Changes in Equity and the statement of Cash Flow dealt with by this Report are in agreement with the books of account.

d) Except for the possible effects of the matter described in the Basis of Qualified Opinion Paragraph above, in our opinion, the aforesaid Financial Statements comply with Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on 31st March, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2024 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".

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. As stated in Note No. 28.2 of the Financial Statements, the Company has disclosed the impact of pending litigations on its financial position in its 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. (a) The management has represented that, to the best of it''s knowledge and belief, other than

as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The management has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(c) Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has come to the notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material misstatement.

v. The company has not declared or paid any dividend during the year in contravention of the provisions of section 123 of the Companies Act, 2013.

vi. Based on our examination which included test checks, the company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with.

3) 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.

For M O S & Associates LLP

Chartered Accountants

Firm''s Registration No.001975S/S200020

Sd/-

Oommen Mani

Place : Hyderabad Partner

Date : 25th April, 2024 Membership No. 234119

UDIN: 24234119BKALFD5521

---

Mar 31, 2023

We have audited theFinancial Statements of Gayatri Sugars Limited ("the Company"), which comprise the Balance Sheet as at 31st March,2023, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the Financial Statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in the Basis for Qualified Opinion section of our report below, the aforesaid Financial Statements give the information required by the Companies Act, 201 3 ("the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2023, and the profit and other comprehensive income, changes in equityand its cash flows for the year ended on that date. Basis for Qualified Opinion

As stated in note 27.16 to the accompanying Financial Statements, regarding the High Court dismissing the writ petition filed by the Company challenging the levy of electricity duty by the State Government on the consumption of electricity by captive generating units, the subsequent dismissal of special leave petition by the Honorable Supreme Court and the pending matter before the Board for Industrial and Financial Reconstruction being abated. As stated in the said note, the Company has treated the estimated duty amount aggregating to '' 283.99 Lakhs as a contingent liability and no provision has been made in respect of the same.

In view of the above, we are unable to comment on the ultimate outcome of the matter and the consequential impact if any on these Financial Statements.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(1 0) of the Companies Act, 201 3. Our responsibilities under those SAs are further described in the Auditor''s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Financial Statements under the provisions of the Companies Act, 201 3 and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on theFinancial Statements.

Emphasis of Matters

(Note Nos. referred hereunder are with reference to respective Notes forming part of the Financial Statements)

We draw attention to the following matters :

i) As stated in Note No. 27.14,the petition filed by IFCI Limited before the Debt Recovery Tribunal (DRT) for recovery of Sugar Development Fund (SDF) dues, is pending for disposal/ withdrawal for detailed reasons stated in the said note.

Our opinion is not modified in respect of the above matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements for the year ended 31st March 2023. These matters were addressed in the context of our audit of the Standalone Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be key audit matters to be communicated in our report.

S.No.	Key Audit Matter	Audit Process
1.	Restructuring of Sugar Development Fund (SDF) Term Loan: Refer to note 27.14 to these Financial Statements. The company entered into Tripartite Agreement (TPA) for the Restructuring of the SDF Loan with GOI and the nodal agency (IFCI) on 18th August 2022. Pursuant to the said restructuring, the entire additional interest due on the loan shall be waived in full and the balance interest shall be capitalised along with the principal, there shall be a moratorium period of 24 months and during the moratorium period, simple interest @4.65%P.A. shall be accrued. The entire loan including the accrued interest during the moratorium period is to be paid in 60 equal monthly instalments commencing from 20th June 2024. Given the significant impact of the restructuring i.e.,capitalised the accrued interest of Rs.1,654.15 lakhs with the principal amount of Rs.1,991.60 lakhs and waiver of additional/penal interest of Rs.938.24 lakhs in the audited financial statements for the year ended 31st March, 2023 this is considered as the key audit matter.	We have done the following audit procedures: i. Verified the guidelines issued by the Ministry of Consumer Affairs, Food and Public Distribution. ii. Verified the Administrative Approval (AA) granted to the company and terms thereon entered. iii. Verified the Tripartite Agreement (TPA), entered for restructuring of the SDF loan. iv. Examined the calculations of the management for the waiver of penal interest and accrued interest to be capitalised.
2.	Going Concern: Refer to note 27.15 to these Financial Statements. Historically, the Company has been loss-making and has been dependent on the continuous financial support of the promoters. Accumulated losses shown in the BalanceSheet totalled Rs.1 7,092.61 Lakhs as at 31st March, 2023. We included the going concern assumption as a key audit matter as it relies on existing cash inflows and revenue growth generating sufficient cashflows to cover necessary expenditures.	In assessing the appropriateness of the going concern assumption used in preparing the financial statements, our procedures included, amongst others: Assessing the cash flow requirements of the Company over 12 months from 31st March 2023 based on estimated budgets and forecasts. Understanding what forecast expenditure is committed and what could be considered discretionary. Considering the liquidity of existing assets on the balance sheet date.

Considering the terms of the loans and trade finance facilities and the amount available for drawdown. Considering potential downside scenarios and the resultant impact on available funds.

Information Other than the Financial Statements and Auditor''s Report Thereon

The Company''s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and analysis, Boards Report including annexures to Board''s Report, Business Responsibility Report, Corporate Governance, and Shareholder''s Information, but does not include the Financial Statements and our auditor''s report thereon.

Our opinion on the Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. .

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of Management and those Charged with Governance 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, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for the safeguarding of 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.

In preparing the Financial Statements, the Board of Directors is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company''s financial reporting process. Auditor''s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditor''s Report) Order, 2020 ("the Order"), issued by the Central

Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we

give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the

Order, to the extent applicable.

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

a) We have sought and except forthe possible effects of the matter described in the Basis of Qualified Opinion Paragraph Above, obtained 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 possible effects of the matter described in the Basis of Qualified Opinion Paragraph above, 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) Except for the possible effects of the matter described in the Basis of Qualified Opinion Paragraph above, the Balance Sheet, the Statement of Profit and Loss including other Comprehensive Income, the Statement of Changes in Equity and the statement of Cash Flow dealt with by this Report are in agreement with the books of account.

d) Except for the possible effects of the matter described in the Basis of Qualified Opinion Paragraph above, in our opinion, the aforesaid Financial Statements comply with Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors as on 31st March, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2023 from being appointed as a director in terms of Section 1 64(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".

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. As stated in Note No. 27.2 of the Financial Statements, the Company has disclosed the impact of pending litigations on its financial position in its 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. (a) The management has represented that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The management has represented, that, to the best of it''s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and

(c) Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has come to the notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material misstatement.

v. The company has not declared or paid any dividend during the year in contravention of the provisions of section 123 of the Companies Act, 2013.

3) 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.

For M O S & Associates LLP

Chartered Accountants

Firm''s Registration No.001975S/S200020

Sd/-

Oommen Mani

Place : Hyderabad Partner

Date : 23^rd May 2023 Membership No. 234119

UDIN: 23234119BGXRYZ3785

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Mar 31, 2017

INDEPENDENT AUDITOR''S REPORT

To the Members of Gayatri Sugars Limited Report on the Financial Statements

We have audited the accompanying financial statements of Gayatri Sugars Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the 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 prescribed under section 133 of the Act.

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.

In conducting 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 of the financial statements 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 the 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 and fair view in order to design audit procedures that are appropriate in the circumstances. 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 financial statements.

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

Basis for Qualified Opinion

Attention is drawn to Note 33 of the financial statements regarding the High Court dismissing the writ filed by the Company challenging the levy of electricity duty by the State Government on consumption of electricity by captive generating units, the subsequent dismissal of special leave petition by the Hon''ble Supreme Court, and the pending matter before the Board for Industrial and Financial Reconstruction (BIFR) being abated. As stated in the said note, the Company has treated the estimated duty amount aggregating ''Rs,283.99lakhs as a Contingent liability.

In view of the above, we are unable to comment on the ultimate outcome of the matter and the consequential impact, if any, on these financial statements.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis of Qualified Opinion paragraph above, the aforesaid 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, of the state of affairs of the Company as at March 31, 2017, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to the following notes in to the financial statements:

(i) Note 34 of the financial statements, which indicates that as at March 31, 2017 the accumulated losses amounting to Rs, 12,804.58 lakhs have completely eroded the net-worth of the Company and, the current liabilities exceeded the current assets as on that date. These conditions along with other matters as set forth in Note 34 of the financial statements, including dependence on continuous support from its promoters, indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern and therefore it may be unable to realize its assets and discharge its liabilities in the normal course of business. The Board for Industrial and Financial Reconstruction (BIFR) declared the Company as a sick industrial company under section 3 (o) of SICA, 1985 vide its order in October, 2016. Consequently, the case filed by the Company under the BIFR stands abated. We have been informed that based on its discussions with several lenders/Banks, the Company has decided not to initiate the corporate insolvency resolution process under the Insolvency and Bankruptcy Code 2016, before the NCLT.

These financial statements have been prepared on a going concern basis for the reasons stated in the said Note.

(ii) Note 37 of the financial statements in respect of the remuneration paid to Executive Director, reappointed during the year (designated as Managing Director w.e.f. August 29, 2016), in excess of the limits specified in Schedule V of the Companies Act, 2013 by Rs, 38.45 lakhs. The said appointment and payment/provision of remuneration was approved by the shareholders in the Annual General Meeting held on September 26, 2016. The Company has sought the necessary approval from Central Government, whose response is pending.

Our opinion is not modified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act, based on our audit we report that:

a) We have sought and, except for the matter described in the Basis for Qualified Opinion paragraph above, obtained 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 possible effects of the matter described in the Basis for Qualified Opinion paragraph above, 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, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) Except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid financial statements comply with the Accounting Standards prescribed under section 133 of the Act.

e) The going concern matter described in sub-paragraph (i) under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f) On the basis of the written representations received from the directors as on March 31, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.

g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

h) 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 A". Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.

i) 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, as amended, 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;

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.

iv. The Company has provided requisite disclosures in the financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8^th November, 2016 of the Ministry of Finance, during the period from 8^th November 2016 to 30^th December 2016. Based on audit procedures performed and the representations provided to us by the Management we report that the disclosures are in accordance with the books of account maintained by the Company.

2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

ANNEXURE "A" TO THE INDEPENDENT AUDITOR''S REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting 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 Gayatri Sugars Limited ("the Company") as of March 31, 2017 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.

Auditor''s 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 the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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 qualified 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.

Basis for Qualified opinion

According to the information and explanations given to us and based on our audit, material weaknesses have been identified as at March 31, 2017 relating to inadequate internal financial controls over financial reporting in respect of certain reconciliations between various accounting systems and period end adjustments as fully described in Note 38 to the financial statements, and Management''s assessment of estimating potential liability relating to a disputed matter as described in Note 33 to the financial statements.

A ''material weakness'' is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company''s annual or interim financial statements will not be prevented or detected on a timely basis.

Qualified opinion

In our opinion, to the best of our information and according to the explanations given to us, except for the possible effects of the material weaknesses described in Basis for Qualified Opinion paragraph above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of March 31, 2017, 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.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements of the Company for the year ended March 31, 2017, and these material weaknesses did not affect our opinion on the said financial statements of the Company, except in respect of the qualification relating to the Management''s assessment of estimating potential liability relating to a disputed matter, in respect of which, we have issued a qualified opinion on the financial statements of the Company.

(Referred to in paragraph 2 under ''Report on Other Legal and Regulatory Requirements'' section

of our report of even date)

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

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us, we report that, the title deeds, comprising all the immovable properties of land and buildings, are held in the name of the Company as at the balance sheet date. Immovable properties of land whose title deeds have been pledged as security for loans are held in the name of the Company based on the confirmations directly received by us from lenders.

(ii) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable, except in respect of the guarantees amounting to Rs, 90 lakhs given to a party on behalf of cane suppliers for financing arrangements which owing to the brought forward losses is in excess of the limits specified under Section 186 of the Act. However, the Management is of the view that such guarantees are within the limits specified in Section 186.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year.

(vi) The The maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended, prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, 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, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues applicable to it to the appropriate authorities, except for dues relating to Cane Development Council Fund and Income Tax. .

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues in arrears as at March 31, 2017 for a period of more than six months from the date they became payable, except as given below:

	Name of the statute	Nature of Dues	Period to which the amount relates	Amount involved Rs,in lakhs
	Income Tax Act, 1961	Dividend Distribution Tax	2006-07	8.03

(c) There are no dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Value Added Tax as on March 31, 2017 on account of disputes except as given below.

Name of the statute	Nature of Dues	Forum where Dispute is pending	Period to which the amount relates	Amount involved Rs, in lakhs
Central Excise Act, 1944	Excise Duty (excluding interest and penalty)	Customs Excise and Service Tax Appellate Tribunal	Various periods covering the period 2006 to 2010	58.53
		Customs Excise and Service Tax Appellate Tribunal	Various years covering the period 2008 to 2013	80.28

The entire amount of disputed dues aggregating to '' 138.81 lakhs as above, has been stayed for recovery by the relevant authorities.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government and dues to debenture holders, except as under:

Lender Name	Principal Rs, in lakhs	Period of default (in days)	Interest Rs,in lakhs	Period of default (in days)
Bank of Baroda - Term loan	166.67	19-78	15.88	1-60
Andhra Bank-Harvesting Equipment Term loan	23.59	32	1.42	1-60
Andhra Bank-Excise Duty Term loan	52.75	25-84	15.81	1-60
Union Bank of India -Excise Duty Term loan	22.61	20-79	9.74	1-60
Bank of Baroda -Excise Duty Term loan	29.03	14-73	9.45	1-60
State Bank of India -Excise Duty Term loan	24.18	1-60	9.16	1-60
Punjab National Bank -Excise Duty Term loan	4.99	16-44	0.40	1
Andhra Bank - Soft loan	36.40	2-61	22.30	1-60
Union Bank of India -Soft loan	22.35	2-61	13.38	1-60
Bank of Baroda -Soft loan	20.00	2-61	12.46	1-60
State Bank of India -Soft loan	16.70	1-60	12.96	1-60
Punjab National Bank -Soft loan	3.43	3-32	2.01	1-32
Andhra Bank - Corporate loan	39.60	2-61	21.24	1-60
Bank of Baroda -Corporate loan	21.75	1-60	13.55	1-60
State Bank of India -Corporate loan	12.10	31-59	12.61	1-60
Punjab National Bank -Corporate loan	3.73	15-43	1.87	1-32
IFCI - Sugar Development Fund Term Loan	1,394.12	134-1230	933.08	134-1230

(ix) In our opinion and according to the information and explanations given to us, the terms loans have been applied by the Company during the year for the purposes for which they were raised, other than temporary deployment pending application of proceeds. No moneys were raised by way of initial public offer or further public offer.

(x) 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 by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid managerial remuneration to the Executive Director, reappointed during the year (designated as Managing Director w.e.f. August 29, 2016), in excess of the limits specified in Schedule V of the Companies Act, 2013 by Rs,38.45 lakhs. The said payment/ provision of remuneration was approved by the shareholders in the Annual General meeting held on September 26, 2016. The Company has sought the necessary approval from Central Government, whose response is pending.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.

(xiii)In our opinion and according to the information and explanations given to us, and having regard to our comments in paragraph (xi) above, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013 are not applicable.

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

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm''s Registration No. 008072S)

Sumit Trivedi

Place: Hyderabad Partner

Date: 29^th May, 2017 Membership No. 209354

---

Mar 31, 2016

To the Members of Gayatri Sugars Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Gayatri Sugars Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2016, 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 prescribed under Section 133 of the Act, as applicable.

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 and the Order under Section 143 (11) of the Act.

We conducted our audit of the financial statements 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 the 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 and fair view in order to design audit procedures that are appropriate in the circumstances. 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 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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, of the state of affairs of the Company as at 31^st March, 2016, and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

We draw attention to Note 31 to the financial statements, which indicates that as at March 31, 2016 the accumulated losses amounting to Rs. 13,884.97 lakhs have completely eroded the net-worth of the Company and, the current liabilities exceeded the current assets as on that date. These conditions along with other matters as set forth in Note 31, including dependence on continuous support from its promoters, indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern. The Company has made a reference to the Board for Industrial and Financial Reconstruction (BIFR) and shall be submitting a Scheme for revival / rehabilitation to BIFR. These financial statements have been prepared on a going concern basis for the reasons stated in the said Note.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. 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 purposes 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 Statement of Profit and Loss, 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 prescribed under Section 133 of the Act, as applicable.

e) The going concern matter described under the Emphasis of Matter paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

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 A". Our report expresses a qualified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.

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 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.

2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

ANNEXURE "A" TO THE INDEPENDENT AUDITOR''S REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Gayatri Sugars 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 the 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.

Auditor''s 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 the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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 qualified 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.

Qualified opinion

According to the information and explanations given to us and based on our audit, material weakness has been identified as at March 31, 2016 in the Company relating to inadequate internal financial controls over financial reporting in respect of certain reconciliations between various accounting systems, fully described in Note 33 to the financial statements.

A ''material weakness'' is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company''s annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion, to the best of our information and according to the explanations given to us, except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company has maintained, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as of 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. We have considered the material weakness identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements of the Company for the year ended March 31, 2016, and the material weakness does not affect our opinion on the said financial statements of the Company.

ANNEXURE "B" TO THE INDEPENDENT AUDITOR''S REPORT

(Referred to in paragraph 2 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

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

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us, we report that, the title deeds, comprising all the immovable properties of land and buildings, are held in the name of the Company as at the balance sheet date. Immovable properties of land whose title deeds have been pledged as security for loans are held in the name of the Company based on the confirmations directly received by us from lenders.

(ii) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

(iv) The Company has not granted any loans, made investments or provided guarantees and hence reporting under clause (iv) of the Order is not applicable.

(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year.

(vi) The maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended, prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, 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, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues applicable to it to the appropriate authorities, except for dues relating to Cane Development Council Fund and Income Tax.

(b) There were no undisputed amounts payable in respect of Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, cess and other material statutory dues in arrears as at March 31, 2016 for a period of more than six months from the date they became payable, except as given below:

Name of the statute	Nature of Dues	Period to which the amount relates	Amount involved Rs. in lakhs
Income Tax Act, 1961	Dividend Distribution Tax	2006-07	8.03

(c) There are no dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty and Value Added Tax as on March 31, 2016 on account of disputes except as given below.

Name of the statute	Nature of Dues	Forum where Dispute is pending	Period to which the amount relates	Amount involved Rs. in lakhs
Central Excise Act, 1944	Excise Duty (excluding interest and penalty)	Customs Excise and Service Tax Appellate Tribunal	Various periods covering the period 2006 to 2010	58.53
		Customs Excise and Service Tax Appellate Tribunal	Various years covering the period 2008 to 2013	80.28

The entire amount of disputed dues aggregating to Rs. 138.81 lakhs as above, has been stayed for recovery by the relevant authorities.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government and dues to debenture holders, except for payment of Right to Recompense Interest claims (Refer Note 32(b)(i) of the Financial statements) and the following:

Lender Name	Principal Rs. in lakhs	Period of default (in days)	Interest Rs.in lakhs	Period of default (in days)
IFCI - Sugar Development Fund Loan	995.80	134-864 days	574.92	134-864 days
Bank of Baroda Term Loan	666.67	11-105 days	189.95	11-87 days
Andhra Bank Harvesting Term Loan	23.17	42 days	8.20	11-105 days
Andhra Bank Excise duty Term Loan	—	—	38.87	8-104 days
Union Bank of India Excise Duty Term Loan	—	—	66.56	13-86 days
State Bank of India Excise Duty Term Loan	—	—	52.63	2-80 days
Bank of Baroda Excise Duty Term Loan	—	—	49.34	11-87 days
Punjab National Bank Excise Duty Term Loan	—	—	1.04	21 days
Andhra Bank Soft Loan	—	—	64.33	11-107 days
Union Bank of India Soft Loan	—	—	28.74	13-61 days
State Bank of India Soft Loan	—	—	33.44	2-49 days
Bank of Baroda Soft Loan	—	—	30.40	11-48 days
Punjab National Bank Soft Loan	—	—	6.03	17-113 days
Andhra Bank Corporate Loan	—	—	57.91	11-115 days
State Bank of India Corporate Loan	—	—	24.19	2-33 days
Bank of Baroda Corporate Loan	—	—	33.07	11-48 days
Punjab National Bank Corporate Loan	—	—	2.64	25-86 days

(ix) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were raised, other than temporary deployment pending application of proceeds. No moneys were raised by way of initial public offer or further public offer.

(x) 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 by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, the Company has paid managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the Order is not applicable.

(xiii)In our opinion and according to the information and explanations given to us the Company is in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of Section 192 of the Companies Act, 2013 are not applicable.

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

For DELOITTE HASKINS & SELLS

Chartered Accountants

(Firm''s Registration No. 008072S)

Sumit Trivedi

Place: Hyderabad Partner

Date: May 20, 2016 Membership No. 209354

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Mar 31, 2015

We have audited the accompanying financial statements of GAYATRI SUGARS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the 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 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 misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the 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 audit or considers internal financial control relevant to the Company's preparation of the 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 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.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date.

Emphasis of Matters

We draw attention to the following matter in the Notes to the financial statements:

Note 30 relating to the accumulated losses amounted to Rs. 1,253,287,646 which has completely eroded the net-worth of the Company as on that date. The Company had also made reference to the Board for Industrial and Financial Reconstruction (BIFR) on August 5, 2013, under Section 23 of Sick Industrial Companies (Special Provisions) Act, 1985. The Company incurred a loss of Rs. 623,771,436 during the year ended March 31, 2015 and the current liabilities exceeded its current assets by Rs. 1,060,886,507. These conditions, along with other matters as set forth in the said Note, including dependence on continuous support from its promoters to make it economically viable, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. These financial statements have been prepared on a going concern basis for the reasons stated in the said Note.

Our opinion is not qualified in respect of this matter.

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 Section 143(11) 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) We have sought and obtained all the information and explanations which to the best of 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 the Company 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 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.

(e) The going concern matter described under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

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

(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 23. 1(a), 23.1 (b) and 23.1 (c) to the 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.

ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report of even date)

(i) Having regard to the nature of the Company's business / activities / results during the year, clauses (v) of paragraph 3 of the Order is not applicable to the Company

(ii) In respect of its fixed assets:

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

(b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(iii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by the Management 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 were 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 and no material discrepancies were noticed on physical verification.

(iv) 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 Companies Act, 2013.

(v) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended and prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, 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) The accumulated losses of the Company at the end of the financial year are not less than fifty percent of its net worth and the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(viii) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities except for dues relating to Cane Development Council Fund and Income-tax.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March, 2015 for a period of more than six months from the date they became payable, except as given below:

Name of the statute Nature of Dues Period to Amount which the involved amount relates Rs.

Income Tax Dividend 2006-07 802,523

Act, 1961 Distribution Tax

(c) There were no dues of Income-tax, Sales Tax, Wealth Tax, Service Tax and Customs Duty Excise Duty and Cess which have not been deposited as on 31st March, 2015 on account of disputes except as given below:

Name of the Nature of Period to which Forum where statute Dues the amount relates pending



Central Excise Excise Duty Various periods Central Excise Act, 1944 (excluding interest covering the period and Service Tax and penalty) 2006 to 2010 Appellate Tribunal

Various years Central Excise covering the period and Service Tax 2008 to 2013 Appellate Tribunal

Andhra Pradesh Value 2011-12 and Appellate Value Added Tax Added Tax 2012-13 Deputy Act, 2005 Commissioner



Name of the Amount statute involved Rs.

Central Excise 5,853,521 Act, 1944



80,28,148



Andhra Pradesh 1,107,079 Value Added Tax Act, 2005

Out of the total disputed dues aggregating to Rs. 14,988,748 as above, Rs. 6,960,600 has been stayed for recovery by the relevant authorities.

(d) There are no amounts that are due to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made thereunder.

(ix) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions and banks except for payment of Right to Recompense Interest claims (Refer Note 31(a) of the financial statements) and the following:

Lender Name Principal Number of Period of Rs. Installments delay (in days)

Union Bank of India Vehicle Loan 175,161 11 2-64 days

IFCI - Sugar Development Fund Loan 59,748,000 3 133-498 days

Bank of Baroda Term Loan 38,888,885 7 18-86 days

Andhra Bank Harvesting Term Loan - - -

Andhra Bank Excise duty Term Loan - - -

Union Bank of India - - - Excise Duty Term Loan

State Bank of India - - - Excise Duty Term Loan

Bank of Baroda - - - Excise Duty Term Loan

Punjab National Bank - - - Excise Duty Term Loan



Lender Name Interest Number of Period of delay Rs. Installments (in days)

Union Bank of India Vehicle Loan 15,986 11 2-64 days

IFCI - Sugar Development Fund Loan 21,727,538 3 133-498 days

Bank of Baroda Term Loan 25,482,339 11 2-90 days

Andhra Bank Harvesting Term Loan 762,572 11 9-103 days

Andhra Bank Excise duty Term Loan 10,160,713 11 8-89 days

Union Bank of India 4,717,565 9 4-50 days Excise Duty Term Loan

State Bank of India 4,043,705 10 1-18 days Excise Duty Term Loan

Bank of Baroda 3,975,120 9 2-44 days Excise Duty Term Loan

Punjab National Bank 888,635 8 1-44 days Excise Duty Term Loan

(x) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interests of the Company.

(xi) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

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

For DELOITTE HASKINS & SELLS Chartered Accountants (Firm's Registration No. 008072S)

Ganesh Balakrishnan Place: Hyderabad Partner Date: April 27, 2015 Membership No. 201193

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Mar 31, 2014

We have audited the accompanying financial statements of GAYATRI SUGARS LIMITED ("the Company") which comprise the Balance Sheet as at 31stMarch, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Management is responsible for 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 Standards notified under the Companies Act, 1956 ("the Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13thSeptember, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control 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 our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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 the 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 and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, 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 qualified audit opinion.

Basis for Qualified Opinion

The Company was paying interest on Working Capital received from the Banks at a concessional rate under Corporate Debt Restructuring (''CDR'') scheme as per the Reserve Bank of India Guidelines pursuant to which the Banks had a Right of Recompense (''ROR'') i.e. interest rate concession given earlier to the Company will have to be compensated by the Company at the end of the scheme. Upon expiry of the CDR time period, the respective banks have raised a demand of Rs. 84,000,000 towards ROR and the Company''s proposal for payment of interest claims partly in cash and balance in the form of redeemable preference shares was not agreed by the banks. The Company has paid Rs.8,400,000 till March 31, 2014. As the Company was incurring losses for past few years and there was no cash surplus, the Company was pursuing with the banks for waiver of balance amount of Rs. 75,600,000. Subsequently, the bankers have agreed for extension of time for payment of the balance ROR claim up to March 2015 or earning of profit whichever is earlier (Refer Note 32 in the financial statements). No provision for the said liability has been made in the books which constitutes a departure from the Accounting Standard 1 "Disclosure of Accounting Policies", referred to in Section 211(3C) of the Companies Act 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13thSeptember 2013 of the Ministry of Corporate Affairs). Had the Company made provision for the said unpaid claims, Finance Cost and Net Loss would have been higher by Rs.75,600,000 (March 31, 2013: Rs.75,600,000) and shareholders'' funds would have been reduced by Rs.75,600,000 (March 31, 2013: Rs.75,600,000) and the Loss per Share would be higher by Rs.1.73 (March 31, 2013: Rs.1.73). This matter was also qualified in our report on the financial statements for the year ended 31st March, 2013.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Emphasis of Matter

We draw attention to the following notes to the financial statements:

(i) Note 31 relating to accumulated losses amounting to Rs.606,201,701 as at 31st March, 2014, resulting in the substantial erosion of the net-worth of the Company as on that date and the Company''s reference to the Board for Industrial and Financial Reconstruction on August 5, 2013 under Section 23 of Sick Industrial Companies (Special Provisions) Act, 1985. The Company incurred a loss of Rs.228,729,923 during the year ended 31st March 2014 and the current liabilities exceeded its current assets by Rs. 584,680,821. These conditions, along with other matters as set forth in the said Note, including its dependence on continuous support from its promoters to make it economically viable, indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern. These financial statements have been prepared on a going concern basis for the reasons stated in the said Note.

(ii) Note 33 regarding the payment of remuneration to the Executive Director reappointed during the year, which is in excess of the limits specified in Schedule XIII, to the Companies Act, 1956 by Rs.3,699,000 and in respect of which the Company is in the process of taking approval from the Central Government.

Our report is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required under provisions of Section 227(3) of the Act, we report that:

(a) We have obtained 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 effects of the matter described in the Basis for Qualified Opinion paragraph above, 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 and the Cash Flow Statement 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 above, in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13thSeptember, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of written representations received from the directors as on 31st March, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch, 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

(Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

i) Having regard to the nature of the Company''s business/activities/ results during the year, clauses (vi), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of paragraph 4 of the Order are not applicable to the Company.

ii) 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) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) None of the fixed assets was disposed during the year. iii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by the Management 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 were 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 and no material discrepancies were noticed on physical verification.

iv) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956.

v) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and the sale of goods and services. During the course of audit, we have not observed any major weakness in such internal control system.

vi) To the best of our knowledge and belief and according to the information and explanations given to us, there are no contracts or arrangements that needed to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956.

vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determining whether they are accurate or complete.

ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities except for dues relating to Cane Development Council Fund and Income-tax.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March, 2014 for a period of more than six months from the date they became payable, except as given below:

Name of the Nature of Dues Period to which Amount statute the amount relates involved Rs.

Income Tax Act, Dividend 2006-07 802,523 1961 Distribution Tax

(c) There were no dues of Income-tax, Sales Tax, Wealth Tax, Service Tax and Customs Duty, Excise Duty and Cess which have not been deposited as on 31 March, 2014 on account of disputes except as given below:

Name of the Nature of Period to which statute Dues the amount relates

Central Excise Various years covering Excise Act, 1944 Duty the period (excluding 2006 to 2010 interest and Various years covering penalty) the period 2008 to 2013

Andhra Pradesh Value 2011-12 and Value Added Added 2012-13 Tax Act, 2005 Tax



Name of the Statute Forum where Amount pending involved Rs.

Central Central Excise 5,853,521 Excise Act, 1944 and Service Tax Appellate Tribunal

Central Excise 8,028,148 and Service Tax Appellate Tribunal

Andhra Pradesh Value Appellate Deputy 1,107,079 Added Tax Act, 2005 Commissioner

Out of the total disputed dues aggregating to Rs. 14,988,748 as above, Rs. 6,960,600 has been stayed for recovery by the relevant authorities.

x) Subject to the consequential effects of our qualification reported in the paragraph "Basis for Qualified Opinion" of our Audit Report of even date, the accumulated losses of the Company at the end of the financial year are more than fifty percent of its net worth and the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

xi) According to the records of the Company examined by us and the information and explanations given to us, the Company has defaulted in repayment of dues to the bank as at the balance sheet date. Also refer Note No 32 forming part of the financial statements, for default in payment of Right of Recompense interest claims. Such delays have been summarized as given below:

Amount in Rs. Lender Name Principal Number of Period of Instalments delay (in days)

Indian Overseas 8,474,000 3 42-90 Days Bank-I

Indian Overseas 12,375,000 9 17-139 Days Bank-II

Union Bank of 9,052,942 1 78 Days India - I

Union Bank of 4,876,471 1 78 Days India - II

Union Bank of 1,929,412 1 78 Days India – III

Andhra Bank - I 40,000,000 4 2-89 Days

Andhra Bank - II 1,314,748 1 77 Days

Union Bank of India 156,891 11 3-61 Days Vehicle Loan

IFCI- Sugar 19,916,000 1 133 Days Development Fund Loan

Andhra Bank - - - Harvesting Term Loan

Bank of Baroda - - -

Lender Name Interest Number of Period of Instalments delay (in days)

Indian Overseas Bank-I 632,289 3 13-170 Days

Indian Overseas Bank-II 1,276,029 9 17-108 Days

Union Bank of India - I 648,264 1 85 Days

Union Bank of India - II 358,087 1 85 Days

Union Bank of India – III 141,512 1 85 Days

Andhra Bank - I 3,331,454 9 3-136 Days

Andhra Bank - II 47,526 1 78 Days

Union Bank of India Vehicle Loan 34,289 11 3-61 Days

IFCI- Sugar Development Fund Loan 6,667,768 1 133 Days

Andhra Bank Harvesting Term Loan 938,946 12 29-333 Days

Bank of Baroda 8,150,420 4 1-48 Days

xii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks are not,prima facie, prejudicial to the interests of the Company.

xiii) In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

xiv) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis aggregating approximately Rs.485,817,989 have been used for long-term investments.

xv) 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 DELOITTE HASKINS & SELLS Chartered Accountants (Firm''s Registration No.008072S)

Ganesh Balakrishnan Partner Hyderabad, May 26, 2014 Membership No.201193

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Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of GAYATRI SUGARS LIMITED ("the Company") which comprise the Balance Sheet as at 31 March, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Management is responsible for 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 Standards referred to in Section 211(3C) of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that 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 our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. 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 the disclosures in the financial statements. 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. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, 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 qualified audit opinion.

Basis for Qualified Opinion

The Company was paying interest on Working Capital received from the Banks at a concessional rate under Corporate Debt Restructuring (''CDR'') scheme as per the Reserve Bank of India, guidelines pursuant to which the Banks had a Right of Recompense (''ROR'') i.e. interest rate concession given earlier to the Company will have to be compensated by the Company at the end of the scheme. Upon expiry of the CDR time period, the respective banks have raised a demand of Rs. 84,000,000 towards ROR and the Company''s proposal for payment interest claims partly in cash and balance in the form of redeemable preference shares was not agreed by the banks during the year. The Company has paid Rs. 8,400,000 till 31 March, 2013. As the Company was incurring losses for past few years and there was no cash surplus, the Company is pursuing with the banks for waiver of balance amount of Rs. 75,600,000. The management is confident of getting waiver for the payment of the said demand and accordingly no provision has been made in the books which constitutes a departure from the Accounting Standard 1 "Disclosure of Accounting Policies" referred to in Section 211(3C) of the Act. Had the Company made provision for the said unpaid claims, Finance Cost, Other current liabilities and net loss would have been increased by Rs. 75,600,000 and shareholders'' funds would have been reduced by Rs. 75,600,000.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid 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:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March, 2013;

(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date and

(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Emphasis of Matter

We draw attention to Note 32 in the financial statements which indicates that the Company incurred a loss of Rs.135,192,123 during the year ended 31 March 2013 and as of that date the accumulated losses amounting to Rs. 377,471,778 has substantially eroded the net-worth of the Company and the Company''s current liabilities exceeded its current assets by Rs.496,857,408. These conditions, along with other matters as set forth in the said Note, indicate the existence of a material uncertainty that may cast significant doubt about the Company''s ability to continue as a going concern. These financial statements have been prepared on a going concern basis for the reasons stated in the said.

Our opinion is not qualified in respect of this matter

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required under provisions of Section 227(3) of the Act, we report that:

(a) We have obtained 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 effects of 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 and the Cash Flow Statement 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 above, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of written representations received from the directors as on 31 March, 2013 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2013 from being appointed as a director in terms of Section 274(1) (g) of the Act.

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT (Referred to in paragraph 1 under ''Report on Other Legal and Regulatory Requirements'' section of our report of even date)

i) Having regard to the nature of the Company''s business/activities/results during the year ended, clauses 4(vi), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of the Order are not applicable to the Company.

ii) 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) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

iii) In respect of its inventories:

(a) As explained to us, the inventories were physically verified during the year by the Management 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 were 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 and no material discrepancies were noticed on physical verification.

iv) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

In respect of unsecured loans, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has taken unsecured loan aggregating Rs. 412,435,273 from one party during the year. At the year-end, the outstanding balance of such loans taken aggregated Rs. 493,372,271 (One Party) and the maximum amount involved during the year was Rs. 493,372,271 (One Party).

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie, not prejudicial to the interests of the Company.

(c) The payments of principal amounts in respect of such loans are regular as per stipulations.

v) In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.

vi) In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered into the Register maintained under section 301 of the Companies Act, 1956.

vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

viii) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determining whether they are accurate or complete.

ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it, with the appropriate authorities except Income-tax.

(b) There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 March, 2013 for a period of more than six months from the date they became payable, except as given below :

Statute Nature of Dues Period to which Amount the amount relates involved Rs.

Income Tax Act, Dividend 2006-07 802,523 1961 Distribution Tax

(c) There were no dues of Income-tax, Sales Tax, Wealth Tax, Service Tax and Customs Duty which have not been deposited as on 31 March, 2013 on account of disputes except Excise Duty as under:

Name of the Nature of Amount Period to which Forum where statute the dues (in Rs.) the amount relates pending

Central Excise 5,853,521 Various years covering Central Excise Excise Act, 1944 Duty the period and Service Tax 2006 to 2010 Appellate Tribunal

x) Subject to the consequential effects of our comments in paragraph "basis for qualified opinion" of the Independent Auditors'' Report, the accumulated losses of the Company at the end of the financial year are more than fifty percent of its networth and the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

xi) According to the records of the company examined by us and the information and explanation given to us, the company has defaulted in repayment of dues to the bank as at the balance sheet date. Also refer note no 33 for default in payment of Right of Recompense interest claims. Such delays have been summarized below indicating the Average number of delays and the amount involved :

Amount in Rs.

Lender Total Number of Amount of Average Amount Installments each delay in Involved installment number of days

Principal

Yes Bank Limited 72,916,667 10 7,291,667 105

Indian Overseas Bank-I 33,816,000 12 2,818,000 61

Indian Overseas Bank-II 16,500,000 12 1,375,000 61

Union Bank of India - I 36,211,768 4 9,052,942 136

Union Bank of India - II 9,505,884 4 4,876,471 136

Union Bank of India - III 7,717,648 4 1,929,412 136

Andhra Bank - I 40,000,000 4 10,000,000 79

Andhra Bank - II 6,000,000 4 1,500,000 163

Union Bank of India Vehicle Loan 208,560 12 17,380 50



Amount in Rs.

Lender Total Number of Average Average Amount Installments monthly delay in Involved interest number of days

Interest

Yes Bank Limited 39,374,627 12 3,281,219 61

Indian Overseas Bank-I 4,752,942 12 396,079 61

Indian Overseas Bank-II 3,620,461 12 301,705 61

Andhra Bank Harvesting TL 1,724,763 12 143,730 47

Union Bank of India - I 6,012,143 12 501,012 92

Union Bank of India - II 3,220,480 12 268,373 91

Union Bank of India - III 1,277,080 12 106,423 91

Andhra Bank - I 10,271,785 12 855,982 87

Andhra Bank - II 971,920 12 80,993 92



xii). In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks are not prima facie prejudicial to the interests of the Company.

xiii). In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

xiv) In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have been used during the year for long- term investment to the extent of Rs.496,857,408.

xv) 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 DELOITTE HASKINS & SELLS

Chartered Accountants

Registration No.008072S



Ganesh Balakrishnan

Partner

Hyderabad, May 27, 2013 Membership No.201193

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Mar 31, 2012

1. We have audited the attached Balance Sheet of GAYATRI SUGARS LIMITED ("the Company") as at 31st March, 2012, the Statement of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. Th ese financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

(a) we have obtained all the information and explanations which to the best of 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 the Company 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 Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956;

In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1 956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

(ii) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

5. On the basis of the written representations received from the Directors as on 31st March, 2012 taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31 st March, 2012 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS' REPORT

(Referred to in paragraph 3 of our report of even date)

(i) Having regard to the nature of the Company's business / activities, clause 4 (vi), (x), (xii),

(xiii), (xiv), (xviii), (xix) and (xx) of CARO are not applicable.

(ii) 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) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were 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 and no material discrepancies were noticed on physical verification.

(iv) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has taken interest free unsecured loan aggregating Rs. 1,35,00,000 from one party during the year. At the year-end, the outstanding balance of such loans taken aggregated Rs. 8,09,36,998 (One Party) and the maximum amount involved during the year was Rs. 9,06,00,000 (One Party).

(b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The payments of principal amounts in respect of such loans are regular as per stipulations.

(v) 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 with regard to purchases of inventory and fixed assets and the sale of goods. During the course of our audit, we have not observed any major weakness in such internal control system.

(vi) According to the information and explanations given to us there are no contracts or arrangements that needs to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956.

(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of Sugar and Distillery units and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income- tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and other material statutory dues applicable to it, with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-Tax, Wealth Tax, Custom Duty, Excise Duty and other material statutory dues in arrears as at 31st March, 2012 for a period of more than six months from the date they became payable, except as given below:

Nature Period to which Amount Statute of dues the amount involved relates (Rs.)

Income Dividend 2006-07 802,523 Tax Act, Distribution 1961 Tax

(c) There were no dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty which have not been deposited as on 31st March, 2012 on account of disputes.

(x) According to the records of the company examined by us and the information and explanation given to us, the company has defaulted in repayment of dues to the financial institution as at the balance sheet date. Such delays have been summarized below indicating the Average number of delays and the amount involved :

Amount in

Lender Total Amount Number of Amount of Average delay Involved installments each installment in number of days

Principal

Yes Bank Limited 87,500,000 12 7,291,667 36

Indian Overseas Bank-I 33,816,000 12 2,818,000 50

Indian Overseas Bank-II 16,500,000 12 1,375,000 50

Andhra Bank- Harvesting TL 2,547,890 1 2,547,890 44

State Bank of India-EDTL 13,596,000 12 1,133,000 32

Bank of Baroda- EDTL 13,050,000 12 1,087,500 38

Andhra Bank-EDTL 9,192,000 12 766,000 51

PNB-EDTL 4,200,000 12 350,000 13

Union Bank of India-I 36,201,592 4 9,050,398 71

Union Bank of India-II 19,515,768 4 4,878,942 81

Union Bank of India-III 7,717,684 4 1,929,421 66

Andhra Bank-I 40,000,000 4 10,000,000 55

Andhra Bank-II 6,000,000 4 1,500,000 55

Union Bank of India-EDTL 8,100,000 12 675,000 37

Andhra Bank-EDTL 6,456,000 12 538,000 73

Interest

Yes Bank Limited 45,577,112 1 4,143,374 35

Indian Overseas Bank-I 9,382,992 11 852,999 39

Indian Overseas Bank-II 5,472,451 11 497,496 39

Andhra Bank-Harvesting TL 1,212,308 7 173,187 41

Union Bank of India-I 9,876,108 1 897,828 35

Union Bank of India-II 5,307,618 1 482,511 34

Union Bank of India-III 2,085,486 12 173,791 32

Andhra Bank-I 15,904,757 12 1,325,396 37

Andhra Bank-II 1,591,464 12 132,622 31

(xi) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks are not prima facie prejudicial to the interests of the Company.

(xii) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

(xiii) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long- term investment.

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

For DELOITTE HASKINS & SELLS

Chartered Accountants Registration No.008072S

Ganesh Balakrishnan

Place: Hyderabad Partner

Date: May 9, 2012 Membership No.201193

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Gayatri Sugars Limited ("the Company") as at 31st March, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by the Management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a-reasonable basis for our opinion.

3. As required by the Companies (Auditors - Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows:

(a) we have obtained all the information and explanations which to the best of 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 the Company so far as it appears from our examination of those books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956;

(e) in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31s1 March, 2010;

(ii) in the case of the Profit and Loss Account, of the loss of the Company for the year ended on that date and

(iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

5. On the basis of the written representations received from the Directors as on 31s1 March, 2010 taken on record by the Board of - Directors, we report that, none of the Directors is disqualified as on 31s1 March, 2010 from being appointed as a director in terms of Section 274(1)(g)ofthe Companies Act, 1956.

ANNEXURE TO THE AUDITORS REPORT

(Referred to in paragraph 3 of our report of even date)

(i) Having regard to the nature of the Companys business/activities, clause 4 (vi), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of CARO are not applicable.

(ii) 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) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

(iii) In respect of its inventory:

(a) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals.

(b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In oik opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

(iv) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under, Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(a) The Company has taken loans aggregating Rs.50,650,000 from two parties during the year. At the year end, the outstanding balance of such loans taken aggregated Rs.228,252,133 (Five Parties) and the maximum amount involved during the year was Rs.228,252,133 (Five Parties).

(b) The rate of interest and other- terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company.

(c) The payments of principal amounts and interest in respect of such loans are regular as per stipulations.

(v) 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, with regard to purchases of inventory and fixed assets and the sale of goods. During the course of our audit, we have not observed any major weakness in such internal control system.

(vi) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

(a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.

(b) Where each of such transaction is in excess of Rs.5 lakhs in respect of any party, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time except in respect of certain purchases for which comparable quotations are not available and in respect of which we are unable to comment.

(vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956 in respect of Sugar and Distillery units and are of the opinion that prima facie the prescribed accounts and records vhave been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company.

(ix) According to the information and explanations given to us in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable

- to it, with the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Income-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable, except as given below.

Nature Period to which Amount Statute of dues the amount involved relates (Rs.)

Income Dividend 2006-07 802,523 Tax Act, Distribution 1961 Tax

(c) There were no dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess which have not been deposited as on 31st March, 2010 on account of disputes.

(x) The accumulated losses of the Company at the end of the financial year are more than fifty percent of its net worth and the Company has not incurred cash losses in the current financial year and has incurred cash losses in the immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks and debenture holders.

(xii) In our opinion and according to the information and explanations given to us, the terms and conditions of the guarantees given by the Company for loans taken by others from banks are not prima facie prejudicial to the interests of the Company.

(xiii) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

(xiv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short- term basis have been used during the year for long- term investment.

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

For DELOITTE HASKINS & SELLS

Chartered Accountants Registration No.008072S

Ganesh Balakrishnan

Partner Membership No.201193

Place: Hyderabad

Date :29th May 2010