Auditor Report of Modipon Ltd.

Mar 31, 2025

We have audited the Financial Statements of MODIPON LIMITED
(''the Company''), which comprise the Balance Sheet as at March
31,2025, the Statement of Profit and Loss for the year (including
Other Comprehensive Income), the Statement of Cash Flows
and the Statement of Changes in Equity for the year ended and
notes to the Financial Statements, including material accounting
policies and other explanatory information (hereinafter referred
to as "Financial Statements").

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 section of our
report, the aforesaid financial statements give the information
required by the Companies Act, 2013 ("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 March 31, 2025, the Loss and Total
Comprehensive Loss, Changes in Equity and its Cash Flows for
the year ended on that date.

Basis for Qualified Opinion

I. Balance confirmation certificates were not obtained by the
Company from creditors, loans and advances given/received,
house/shop security depositors, in-operative current
accounts with banks and loan account with Punjab National
Bank (PNB). Consequent adjustments required, if any, has
not been carried out in the financial results.

II. (a) The Company has not provided interest of R 1000.54

Lakhs up to March 31, 2008 on overdue amounts
payable to a supplier resulting in understatement of
liabilities and debit balance of reserve and surplus by R
1000.54 Lakhs each; and

(b) The amount of interest to be provided for in the books
of account for the period April 1, 2008 to March 31st,
2025 has not been ascertained.

III. The amount of interest to be provided for in the books of
account, if any, for the period April 1, 2007 to March 31,
2025 to Small and Micro Enterprise has not been ascertained.

IV. During the year ended March 31, 2009, the Company has
sold 65,743 sq.yds of its vacant land at Modi Nagar for R
1021.15 Lakhs (original cost R 1.95 Lakhs) for which the
approval of bank is pending.

V. During the year 2011-12, the Company has given physical
possession of its vacant 59 (46 as on March 31, 2015)
houses located at Modi Nagar, Uttar Pradesh to a lender i.e.,
Ashoka Mercantile Limited (AML), a related party, (balance
outstanding of loan taken from AML as on March 31,
2015 as per books of account: secured loan R 882.29 Lakhs
and unsecured loan R 1125.57 Lakhs) for use without any
charges/rent/security deposit and no lease rent agreement
has been entered into with AML. The Company contends
that the temporary possession of houses for use without
charges was given to AML as security only as the Company
was unable to repay the loans taken from AML.

VI. The Punjab National Bank (PNB) had approved one time
settlement of its outstanding dues of R 1900 lakhs vide its
approval letters dated April 02, 2014 and April 12, 2014
respectively. In terms of the settlement, OTS amount of
R 1710 lakhs (Net of upfront payment of R 190 lakhs) was
to be paid by the company in four quarterly installments
with interest during financial year 2014-15. However, the
company was able to manage the payment of R 630 lakhs up

to March 31, 2015 and at the request of the Company, PNB
condone the delay and revived the OTS vide its letter dated
July 02, 2015 requiring the Company to make payment of
residual OTS amount of R 1270 lakhs by March 31, 2016
and total interest on OTS payment @ 10.25% (simple) by
June 30, 2016. The Company has paid R 1270 lakhs up to
December 31st, 2018 along with interest of Rs 2,59,62,100/.
The company has already made provision of interest on
account of delayed payment of OTS of Rs 94,43,358/- in
their books up to 30th September 2018 and booked balance
amount of interest in the quarter ending 31 December 2018.

VII. (a) The Punjab National Bank has initiated the proceeding
against the company under section 7 of the Insolvency and
Bankruptcy Code, 2016 before the NCLT, Allahabad Bench
and other Proceeding before DRT-II and recovery Officer,
DRT- II, New Delhi due to non-fulfillment of oTs Terms/
conditions vide OTS letter dated July 02, 2015 issued by PNB.

Further as per Debts Recovery Tribunal-II, Delhi an order dated
30 July, 2018, has been passed in favor of the company and
directed PNB to accept R 65 lakhs as outstanding principal of
OTS plus R 2,59,62,100/- as interest @10.25% as per revived
OTS vide its letter dated July 02, 2015 on delayed payment
up to 15 March, 2018 which was later on accepted and paid
by the company in terms of the DRAT order.

During the pendency of the appeal, PNB has encashed
the said amount of R 65 Lacs towards principal OTS and
R 2,59,62,100/- towards interest in term of the order of Debts
Recovery Appellate Tribunal (DRAT), New Delhi. Further, the
DRAT has reserved the order on 27.12.2018 in the said
matter and not pronounced till the date of our reporting,
as a result the company has not considered any liability in
its books in addition to the dues already settled as per DRT
order dated 30 July, 2018.

During the pendency of order before DRAT, the PNB has
revived OTS vide letter dated 25.03.2019 against payment
of R 459.62 lacs on the following terms & conditions:

Terms & conditions:

1. The proceeds of FDRs amounting to R 65 lacs and
R 259.62 lacs kept with us will be appropriated
simultaneously on conveying approval of revival of OTS.

2. R 135 lacs will be deposited within one week of receipt
of this sanction letter.

3. The party to undertake to pay commercial tax liability as
demanded by the Commercial Tax Authority.

4. No Dues Certificate will be issued, Bank''s charge on the
security/tittle deeds will be released only after receipt of
OTS amount in full and on clearance of commercial tax
liability as stated above. (Satisfactory proof/letter from
the competent authority in this regard to be submitted).

The company has already deposited balance of OTS
amount of R 65 lacs plus delayed period interest of R
259.62 lacs with the bank in terms of DRT & DRAT orders
and further R 135 lacs over and above original OTS
amount deposited by the company in terms of revived
OTS vide letter dated 25.03.2019 within one week of
receipt of letter.

In respect of commercial tax liability the company has
filed an appeal against the order of Commissioner of
Commercial Tax before Hon''ble High Court of Allahabad
through Punjab National Bank and the Court has
directed vide order dated 26.11.2018 that the operation
and effect of the impugned order dated 08.08.2018
passed by the Commercial Tax Tribunal, Ghaziabad in
Appeal no 1353 of 2013, shall remain stayed subject
to the applicant depositing 50% of the commercial
tax liability imposed on it and furnish security for the
balance amount other than cash or bank guarantee to
the satisfaction of the tribunal within a period of three
weeks from the date of direction.

The company deposited Commercial Tax of Rs 54.94 lacs
out of Commercial Tax liability of Rs 183.90 lacs along
with interest of Rs 3.07 lacs for the period starting
from 18.12.2018 to 02.05.2019 as on 03.05.2019 in
compliance with order dated 26.11.2018 of the Hon''ble
High Court of Allahabad and communicated the same to
PNB vide letter dated 03.05.19.

Further, PNB vide letter dated 04.05.2019 requested
the company to submit No Dues Certificate from tax
authorities after paying the commercial tax liability to
bank for compliance of OTS Sanction within 3 days
else OTS will be declared as failed. Since the company
failed to reply to the same, PNB vide letter dated
04.07.2019 informed that the tax authorities have
declared OTS revival as failed and PNB is resuming all
recoveries as usual. Further, DRAT allowed appeal of PNB
on 20.08.2019. The Company filed Writ Petition in the
Delhi High Court against order of the DRAT. The Hon''ble
Delhi High Court vide its order dated 24.10.2019, stayed
the DRAT and NCLT proceedings filed by the PNB till the
next date of hearing which was listed on 19th February,
2020. On 19th February, 2020 interim order dated 24th
October, 2019 was made absolute during the pendency
of the Writ Petition. The next date of hearing in the
matter is 20.08.2025. Further, NCLT matter has been
dismissed on 22.09.2023 due to non-appearance on
behalf of financial creditor (PNB), the matter has been
dismissed for non -prosecution.

(b) The outstanding liability in the books of the company
is higher than the OTS amount by R 183.90 lakhs and
in the absence of any documentary evidences from the
management as well as PNB, we are unable to quantify
the amount of interest on the amount of R183.90 lakhs;
the amount of R183.90 lakhs is over and above the loan
amount on account of the sales tax liability on PNB on
account of the auction held by the bank for old plant
and machinery of the company.

The above matter is subjudice before Hon''ble High Court
of Allahabad for further hearing.

VIII. The Commissioner Central Excise & Service Tax, Kamla Nehru
Nagar CGO, Complex 2 Ghaziabad vide its memorandum
order No.31/COMM/CX/GZB/2017-18 dated 31.01.2018 had
ordered for payment of

a. Amount of central excise duty of R 44,92,663/-

b. Amount of interest of R 6,56,116/-

c. Amount of penalty of R 6,56,116/-
for the period from 1994 to 1997.

The company has not made provision of the said amount
& further interest thereon in its books till 31st March,2025,
due to which profit is understated by R 66,16,146.19 plus
interest.

Further the company has filed appeal against the order of
Commissioner Central Excise & Service Tax, Kamla Nehru
Nagar CGO, Complex 2 Ghaziabad before custom excise &
service tax appellate tribunal, Allahabad.

IX. (a). The amounts paid by the Ashoka Mercantile Limited

(AML), a related party, to Abu Dhabi Commercial Bank
(ADCB) on account of One Time Settlement (OTS) of
dues of the bank was accounted for in the books of the
Company to the extent of OTS amount paid to the ADCB
by AML and the balance amount of R 153.92 Lakhs is
still lying unallocated under unsecured loans in view of
pending successful implementation of OTS of the dues
of PNB as the settlement of assigned dues with AML is
linked to the OTS of dues with PNB.

(b) The amount paid to Karnataka Bank by Ashoka
Mercantile Limited (AML), a related party, during the
year ended March 31, 2012, on account of OTS of
dues of the bank was accounted for in the books of
the Company to the extent of OTS amount paid to the
Karnataka Bank by AML and the balance amount of R
339.20 Lakhs is still lying unallocated under unsecured
loans in view of pending successful implementation o
OTS of the dues of PNB as the settlement of dues with
AML is linked to the OTS of dues with PNB.

(c) The part payment made to Bank of Baroda by Ashoka
Mercantile Limited (AML), a related party, during the yea
ended March 31,2013 on account of OTS of dues of the
bank was accounted for in the books of the company to
the extent of OTS amount paid to the Bank of Baroda
by AML and the Company and the balance amount of R
232.04 Lakhs is still lying unallocated under unsecurec
loans in view of pending successful implementation o
OTS of the dues of PNB as the settlement of dues with
AML is linked to the OTS of dues with PNB.

The effect if any, on the income/expenditure of the
company on final OTS with PNB cannot be ascertained.

X. The company has 1 5% redeemable cumulative preference
shares of Rs 100 each. Preference shares due for redemption
since 31st March 1996.

We conducted our audit of the financial statements in
accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Companies Act, 2013. Ou
responsibilities under those Standards are further described
in the Auditor''s Responsibilities for the Audit of the Financia
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) togethei
with the independence requirements that are relevant to
our audit of the financial statements under the provisions
of the Companies Act, 2013 and the Rules made thereunder
and we have fulfilled our other ethical responsibilities ir
accordance with these requirements and the ICAI''s Code o
Ethics. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audi
opinion on the financial statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 35 in the financial statements, which
indicates that the financial statements of the Company for the
year ended March 31,2025 have not been prepared on a going
concern basis since the Company has closed its manufacturing
operations since May 19, 2007 (closure of factory w.e.f
September 8, 2007) on account of huge losses incurred and sale
of entire plant & machinery during the year ended March 31
2010. Our opinion is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professiona
judgment, were of most significance in our audit of the financia
statements of the current period. These matters were addressed
in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do nol
provide a separate opinion on these matters. In addition to the
matters described in the Basis for Qualified Opinion section anc
Material Uncertainty Related to Going Concern section, we have
determined the matters described below to be the key audi
matters to be communicated in our report:

The key audit matters	How our audit addressed the key audit matter
Evaluation of uncertain tax positions
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes.	Our audit procedures include the following substantive procedures: • Obtained understanding of key uncertain tax positions; • Obtained details of completed tax assessments and demands for the year ended March 31, 2025 from management; and • We along with our internal tax

The key audit matters	How our audit addressed the key audit matter
Refer Notes 2(i), 2(o)(ii) and 33 to the Financial Statements	o Discussed with appropriate senior Wmanagement and evaluated management''s underlying key assumptions in estimating the tax provisions; and
	o Assessed management''s estimate of the possible outcome of the disputed cases.

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

The Company''s management and Board of Directors are
responsible for the other information. The other information
comprises the information included in the Company''s annual
report, but does not include the financial statements and our
auditors'' 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.

Management''s Responsibilities for the Financial Statements

The Company''s Board of Directors is responsible for the matters
stated in section 134(5) of the Act with respect to the preparation
of these financial statements that give a true and fair view of
the financial position, financial performance including other
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 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.

In preparing the financial statements, management 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 management either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.

The Board of Directors are 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.

Materiality is the magnitude of misstatements in the financial
statements that, individually or in aggregate, makes it probable
that the economic decisions of a reasonably knowledgeable
user of the financial statements may be influenced. We consider
quantitative materiality and qualitative factors in (i) planning the
scope of our audit work and in evaluating the results of our work;
and (ii) to evaluate the effect of any identified misstatements in
the financial statements

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 Act, we give
in the Annexure A, a statement on the matters specified in
the paragraph 3 and 4 of the order.

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

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

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

c. The Balance Sheet, the 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. In our opinion the aforesaid financial statements comply
with the IND AS section 133 of the Act.

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

g. With respect to the matter to be included in the
Auditors'' Report under section 197(16) of the Act:

In our opinion and according to the information and
explanations given to us, the remuneration paid by the
Company to its directors during the current year is in
accordance with the provisions of Section 197 of the
Act.

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 - Refer Note 33 to the financial
statements;

ii) The Company did not have any long-term contracts
including derivative contracts for which there were
any material 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 its knowledge and belief, no funds
(which are material either individually or in
the aggregate) 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 or entity, including foreign entity
("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 its knowledge and belief, no funds
(which are material either individually or in
the aggregate) have been received by the
Company from any person or entity, including
foreign entity ("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.

C) Based on the audit procedures that have been
considered reasonable and appropriate in
the circumstances, nothing has come to our
notice that has caused us to believe that the
representations under sub-clause (i) and (ii) of
Rule 11(e), as provided under (a) and (b) above,
contain any material misstatement.

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

vi) Based on our examination, which include test
checks, the company has used accounting software
for maintaining its books of account for the financial
year ended 31st March 2025 which do not has a
feature of recording audit trail (edit log) facility.

For B. M. Chatrath & Co. LLP

Chartered Accountants,
FRN: E300025

Sd/-

CA. Sunil Kumar Jha

Place : New Delhi Partner

Date : May 30, 2025 Membership No.543805

UDIN: 25543805BMJRGE6341

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Mar 31, 2024

We have audited the accompanying Standalone financial statements of MODIPON LIMITED (''the Company''), which comprise the Balance Sheet as at March 31,2024, 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 ended on that date, and a summary of significant accounting policies and other explanatory information (hereinafterreferred to as "the Standalone financial statements").

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 section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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 March 31,2024, the loss and total comprehensive loss, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

I. Balance confirmation certificates were not obtained by the Company from creditors, loans and advances given/received, house/shop security depositors, in-operative current accounts with banks and loan account with Punjab National Bank (PNB). Consequent adjustments required, if any, has not been carried out in the financial results.

II. (a) The Company has not provided interest of Rs. 1000.54

Lakhs up to March 31,2008 on overdue amounts payable to a supplier resulting in understatement of liabilities and debit balance of reserve and surplus by Rs. 1000.54 Lakhs each; and

(b) The amount of interest to be provided for in the books of account for the period April 1, 2008 to March 31, 2024 has not been ascertained.

III. The amount of interest to be provided for in the books of account, if any, for the period April 1,2007 to March 31,2024 to Small and Micro Enterprise has not been ascertained.

IV. During the year ended March 31, 2009, the Company has sold 65,743 sq.yds of its vacant land at Modinagar for Rs. 1021.15 Lakhs (original cost Rs. 1.95 Lakhs) for which the approval of bank is pending.

V. During the year 2011-12, the Company has given physical possession of its vacant 59 (46 as on March 31, 2015) houses located at Modinagar, Uttar Pradesh to a lender i.e., Ashoka Mercantile Limited (AML), a related party, (balance outstanding of loan taken from AML as on March 31, 2015 as per books of account: secured loan Rs. 882.29 Lakhs and unsecured loan Rs. 1125.57 Lakhs) for use without any charges/rent/security deposit and no lease rent agreement has been entered into with AML. The Company contends that the temporary possession of houses for use without charges was given to AML as security only as the Company was unable to repay the loans taken from AML.

VI. The Punjab National Bank (PNB) had approved one time settlement of its outstanding dues of Rs. 1900 Lakhs vide its approval letters dated April 02, 2014 and April 12, 2014 respectively. In terms of the settlement, OTS amount of Rs. 1710 Lakhs (Net of upfront payment of Rs.190 Lakhs) was to be paid by the Company in four quarterly installments with interest during financial year 2014-15. However, the Company was able to manage the payment of Rs. 630 Lakhs up to March 31, 2015 and at the request of the Company,

PNB condone the delay and revived the OTS vide its letter dated July 02, 2015 requiring the Company to make payment of residual OTS amount of Rs. 1270 Lakhs by March 31, 2016 and total interest on OTS payment @ 10.25% (simple) by June 30, 2016. The Company has paid Rs. 1270 Lakhs upto December 31, 2018 along with interest of Rs 2,59,62,100/. The Company has already made provision of interest on account of delayed payment of OTS of Rs 94,43,358/- in their books upto September 30, 2018 and booked balance amount of interest in the quarter ending December 31,2018.

VII. (a) The Punjab National Bank has initiated the proceeding against the Company under section 7 of the Insolvency and Bankruptcy Code, 2016 before the NCLT, Allahabad Bench and other Proceeding before DRT-II and recovery Officer, DRT- II, New Delhi due to non-fulfillment of oTs Terms/ conditions vide OTS letter dated July 02, 2015 issued by PNB.

Further as per Debts Recovery Tribunal-II, Delhi an order dated July 30, 2018, has been passed in favor of the Company and directed PNB to accept Rs. 65 Lakhs as outstanding principal of OTS plus Rs. 2,59,62,100/- as interest @10.25% as per revived OTS vide its letter dated July 02, 2015 on delayed payment upto March15, 2018 which was later on accepted and paid by the Company in terms of the DRAT order.

During the pendency of the appeal, PNB has encashed the said amount of Rs. 65 Lakhs towards principal OTS and Rs. 2,59,62,100/- towards interest in term of the order of Debts Recovery Appellate Tribunal (DRAT), New Delhi. Further, the DRAT has reserved the order on December 27, 2018 and later on allowed the appeal of PNB. Further The Hon''ble Delhi High Court vide its order dated October 24, 2019, stayed the DRAT and NCLT proceedings filed by the PNB till the next date of hearing, as a result the Company has not considered any liability in till its books in addition to the dues already settled as per DRAT order dated July 30, 2018.

During the pendency of order before DRAT, the PNB has revived OTS vide letter dated March 25, 2019 against payment of Rs. 459.62 Lakhs on the following terms & conditions:

Terms & conditions:

1) The proceeds of FDRs amounting to Rs. 65 Lakhs and Rs. 259.62 Lakhs kept with us will be appropriated simultaneously on conveying approval of revival of OTS.

2) Rs. 135 Lakhs will be deposited within one week of receipt of this sanction letter.

3) The party to undertake to pay commercial tax liability as demanded by the Commercial Tax Authority.

4) No Dues Certificate will be issued, Bank''s charge on the security/tittle deeds will be released only after receipt of OTS amount in full and on clearance of commercial tax liability as stated above. (Satisfactory proof/letter from the competent authority in this regard to be submitted).

The Company has already deposited balance of OTS amount of Rs.65 Lakhs plus delayed period interest of Rs. 259.62 Lakhs with the bank in terms of DRT & DRAT orders and further Rs.135 Lakhs over and above original OTS amount deposited by the Company in terms of revived OTS vide letter dated March 25, 2019 within one week of receipt of letter.

In respect of commercial tax liability the Company has filed an appeal against the order of Commissioner of Commercial Tax before Hon''ble High Court of Allahabad through Punjab National Bank and the Court has directed vide order dated November 26, 2018 that the operation and effect of the impugned order dated August 08, 2018 passed by the Commercial Tax Tribunal, Ghaziabad in Appeal no 1353 of 2013, shall remain stayed subject to the applicant depositing 50% of the commercial tax liability imposed on it and furnish security for the balance amount other than cash or bank guarantee to the satisfaction of the tribunal within a period of three weeks from the date of direction.

The Company deposited Commercial Tax of Rs 54.94 Lakhs out of Commercial Tax liability of Rs 183.90 Lakhs along with interest of Rs 3.07 Lakhs for the period starting from December 18, 2018 to May 02, 2019 as on May 03, 2019 in compliance with order dated November 26, 2018 of the Hon''ble High Court of Allahabad and communicated the same to PNB vide letter dated May 03, 2019.

Further, PNB vide letter dated May 04, 2019 requested the Company to submit No Dues Certificate from tax authorities after paying the commercial tax liability to bank for compliance of OTS Sanction within 3 days else OTS will be declared as failed. Since the Company failed to reply to the same, PNB vide letter dated July 04, 2019 informed that the tax authorities have declared OTS revival as failed and PNB is resuming all recoveries as usual. Further, DRAT allowed appeal of PNB on August 20, 2019. The Company has filed Writ Petition in the Delhi High Court against order of the DRAT. The Hon''ble Delhi High Court vide its order dated October 24, 2019, stayed the DRAT and NCLT proceedings filed by the PNB till the next date of hearing which was listed on February 19, 2020. On February 19, 2020 interim order dated October 24, 2019 was made absolute during the pendency of the writ petition. On the last date of hearing i.e., January 18, 2024, counsel for the bank has filed its counter affidavit and Company will file its rejoinder, if any, before the next date of hearing is August 21,2024. Further, NCLT matter has been dismissed on the last date of hearing dated September 22, 2023 due to nonappearance on behalf of financial creditor (PNB), the matter has been dismissed for non -prosecution.

(b) The outstanding liability in the books of the Company is higher than the OTS amount by Rs. 183.90 Lakhs and in the absence of any documentary evidence from the management as well as PNB, we are unable to quantify the amount of interest on the amount of Rs.183.90 Lakhs; the amount of Rs.183.90 Lakhs is over and above the loan amount on account of the sales tax liability on PNB on account of the auction held by the bank for old plant and machinery of the Company.

The above matter is sub-judice before Hon''ble High Court of Allahabad for further hearing.

VIII. The Commissioner Central Excise & Service Tax,Kamla Nehru Nagar CGO, Complex 2 Ghaziabad vide its memorandum order No.31/COMM/CX/GZB/2017-18 dated January 31, 2018 had ordered for payment of

a. Amount of central excise duty of Rs. 44,92,663/-

b. Amount of interest of Rs. 6,56,116/-

c. Amount of penalty of Rs. 6,56,116/-for the period from 1994 to 1997.

The Company has not made provision of the said amount & further interest thereon in its books till March 31,2024, due to which profit is understated by Rs. 58,04,895 plus interest.

Further the Company has filed appeal against the order of Commissioner Central Excise & Service Tax, Kamla Nehru Nagar CGO, Complex 2 Ghaziabad before custom excise & service tax appellate tribunal, Allahabad.

IX. (a) The amounts paid by the Ashoka Mercantile Limited

(AML), a related party, to Abu Dhabi Commercial Bank (ADCB) on account of One Time Settlement (OTS) of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the ADCB by AML and the balance amount of Rs. 153.92 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of assigned dues with AML is linked to the OTS of dues with PNB.

(b) The amount paid to Karnataka Bank by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2012, on account of OTS of

dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the Karnataka Bank by AML and the balance amount of Rs. 339.20 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB.

(c) The part payment made to Bank of Baroda by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31,2013 on account of OTS of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the Bank of Baroda by AML and the Company and the balance amount of Rs. 232.04 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB. The effect if any, on the income/expenditure of the Company on final OTS with PNB cannot be ascertained.

X. The Company has 15% redeemable cumulative preference shares of Rs 100 each. Preference shares due for redemption since 31st March 1996.

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards 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 independence requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Companies Act, 2013 and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 35 in the standalone financial statements, which indicates that the standalone financial statements of the Company for the year ended March 31, 2024 have not been prepared on a going concern basis since the Company has closed its manufacturing operations since May 19, 2007 (closure of factory w.e.f. September 8, 2007) on account of huge losses incurred and sale of entire plant & machinery during the year ended March 31, 2010. Our opinion is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment,were of most significance in our audit of the financial statements of the current period. 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. In addition to the matters described in the Basis for Qualified Opinion section and Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report:

The key audit matters	How our audit addressed the key audit matter
Evaluation of uncertain tax positions
The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes.	Our audit procedures include the following substantive procedures: • Obtained understanding o1 key uncertain tax positions; • Obtained details of completed tax assessments and demands for the year ended March 31, 2024 from management; and

Refer Notes 2(i), 2(o)(ii) and 33 to the Standalone Financial Statements		• We along with our internal tax experts- o Discussed with appropriate senior management and evaluated management''s underlying key assumptionsin estimating the tax provisions; and
		o Assessed management''s estimate of the possibleoutcome of the disputed cases.

Information Other than the Standalone Financial Statements and Auditor''s Report thereon

The Company''s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company''s annual report, but does not include the standalone financial statements and our auditors'' report thereon.

Our opinion on the standalone 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 standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone 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.

Management''s Responsibilitiesfor the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other 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 safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are 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.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements

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 Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.

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

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

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

c. The Balance Sheet, the 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. In our opinion the aforesaid financial statements comply with the IND AS section 133 of the Act.

e. On the basis of written representations received from the directors as on March 31, 2024 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2024 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 matter to be included in the Auditors'' Report under section 197(16) of the Act:

In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act.

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 tothe best of our information and according to the explanations given to us:

i) The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 33 to the Standalone financial statements;

ii) The Company did not have any long-term contracts including derivative contracts for which there were any material 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 its knowledge and belief, no funds (which are material either individually or in the aggregate) 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 or entity, including foreign entity ("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 its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("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.

C) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v) The Company has not declared or paid any dividend during the year in contravention of the provision of Section 123 of Companies Act, 2013.

vi) Based on our examination, which include test checks, the Company has used accounting software for maintaining its books of account for the financial year ended March 31, 2024 which do not has a feature of recording audit trail(edit log) facility.

For B. M. Chatrath & Co. LLP

Chartered Accountants, FRN:E300025

Sd/-

CA. Sunil Kumar Jha

Place : New Delhi Partner

Date : May 29, 2024 Membership No.543805

UDIN: 24543805BKCCC02501

---

Mar 31, 2023

We have audited the accompanying Standalone financial statements of MODIPON LIMITED (''the Company''), which comprise the Balance Sheet as at 31st March 2023, 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 ended on that date, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Standalone financial statements").

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 section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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 March 31, 2023, the profit and total comprehensive profit, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

I. Balance confirmation certificates were not obtained by the Company from creditors, loans and advances given/received, house/shop security depositors, in-operative current accounts with banks and loan account with Punjab National Bank (PNB). Consequent adjustments required, if any, has not been carried out in the financial results.

II. During the quarter ended 30th June 2019, the Company has transferred amount of Rs.8.85/- Lakhs to Statement of Profit or Loss, which represents administration & consultancy expenses pertaining to the financial year ended as on 31^st March 2019. The Company has not re-stated the comparative figures for prior periods items to correct the materiality of prior period errors retrospectively as required as per IND AS 8, ''Accounting Policies, Changes in Accounting Estimates and Errors''. Due to the same, Loss of current financial year is being overstated by Rs 8.85/- Lakhs.

III. (a) The Company has not provided interest of Rs. 1000.54

Lakhs up to March 31, 2008 on overdue amounts payable to a supplier resulting in understatement of liabilities and debit balance of reserve and surplus by Rs. 1000.54 Lakhs each; and

(b) The amount of interest to be provided for in the books of account for the period April 1, 2008 to March 31^st, 2023 has not been ascertained.

IV. The amount of interest to be provided for in the books of account, if any, for the period April 1, 2007 to March 31^st, 2023 to Small and Micro Enterprise has not been ascertained.

V. During the year ended March 31, 2009, the Company has sold 65,743 sq.yds of its vacant land at Modinagar for Rs. 1021.15 Lakhs (original cost Rs. 1.95 Lakhs) for which the approval of bank is pending.

VI. During the year 2011-12, the Company has given physical possession of its vacant 59 (46 as on March 31, 2015) houses located at Modinagar, Uttar Pradesh to a lender i.e., Ashoka Mercantile Limited (AML), a related party, (balance outstanding of loan taken from AML as on March 31, 2015 as per books of account: secured loan Rs. 882.29 Lakhs and unsecured loan Rs. 1125.57 Lakhs) for use without any charges/rent/security deposit and no lease rent agreement has been entered into with

AML. The Company contends that the temporary possession of houses for use without charges was given to AML as security only as the Company was unable to repay the loans taken from AML.

VII. The Punjab National Bank (PNB) had approved one time settlement of its outstanding dues of Rs. 1900 lakhs vide its approval letters dated April 02, 2014 and April 12, 2014 respectively. In terms of the settlement, OTS amount of Rs. 1710 lakhs (Net of upfront payment of Rs. 190 lakhs) was to be paid by the company in four quarterly installments with interest during financial year 2014-15. However, the company was able to manage the payment of Rs. 630 lakhs up to March 31, 2015 and at the request of the Company, PNB condone the delay and revived the OTS vide its letter dated July 02, 2015 requiring the Company to make payment of residual OTS amount of Rs. 1270 lakhs by March 31, 2016 and total interest on OTS payment @ 10.25% (simple) by June 30, 2016. The Company has paid Rs. 1270 lakhs upto December 31st, 2018 along with interest of Rs 2,59,62,100/-. The company has already made provision of interest on account of delayed payment of OTS of Rs 94,43,358/- in their books upto 30^th September 2018 and booked balance amount of interest in the quarter ending 31^st December 2018.

VIII. (a) The Punjab National Bank has initiated the proceeding against the company under section 7 of the Insolvency and Bankruptcy Code, 2016 before the NCLT, Allahabad Bench and other Proceeding before DRT-II and recovery Officer, DRT- II, New Delhi due to non-fulfillment of OTS Terms/conditions vide OTS letter dated July 02, 2015 issued by PNB.

Further as per Debts Recovery Tribunal-II, Delhi an order dated 30 July, 2018, has been passed in favor of the company and directed PNB to accept Rs. 65 lakhs as outstanding principal of OTS plus Rs. 2,59,62,100/- as interest @10.25% as per revived OTS vide its letter dated July 02, 2015 on delayed payment upto 15 March, 2018 which was later on accepted and paid by the company in terms of the DRAT order.

During the pendency of the appeal, PNB has encashed the said amount of Rs. 65 Lacs towards principal OTS and Rs. 2,59,62,100/- towards interest in term of the order of Debts Recovery Appellate Tribunal (DRAT), New Delhi. Further, the DRAT has reserved the order on 27.12.2018 in the said matter. Further The Hon''ble Delhi High Court vide its order dated 24.10.2019, stayed the DRAT and NCLT proceedings filed by the PNB till the next date of hearing, as a result the company has not considered any liability in till its books in addition to the dues already settled as per DRAT order dated 30th July, 2018

During the pendency of order before DRAT, the PNB has revived OTS vide letter dated 25.03.2019 against payment of Rs. 459.62 lacs on the following terms & conditions:

Terms & conditions:

1) The proceeds of FDRs amounting to Rs. 65 lacs and Rs. 259.62 lacs kept with us will be appropriated simultaneously on conveying approval of revival of OTS.

2) Rs. 135 lacs will be deposited within one week of receipt of this sanction letter.

3) The party to undertake to pay commercial tax liability as demanded by the Commercial Tax Authority.

4) No Dues Certificate will be issued, Bank''s charge on the security/tittle deeds will be released only after receipt of OTS amount in full and on clearance of commercial tax liability as stated above. (Satisfactory proof/letter from the competent authority in this regard to be submitted).

The company has already deposited balance of OTS amount of Rs.65 lacs plus delayed period interest of Rs. 259.62 lacs with the bank in terms of DRAT & DRT orders and further Rs.135 lacs over and above original OTS amount deposited

by the company in terms of revived OTS vide letter dated 25.03.2019 within one week of receipt of letter.

In respect of commercial tax liability the company has filed an appeal against the order of Commissioner of Commercial Tax before Hon''ble High Court of Allahabad through Punjab National Bank and the Court has directed vide order dated

26.11.2018 that the operation and effect of the impugned order dated 08.08.2018 passed by the Commercial Tax Tribunal, Ghaziabad in Appeal no 1353 of 2013, shall remain stayed subject to the applicant depositing 50% of the commercial tax liability imposed on it and furnish security for the balance amount other than cash or bank guarantee to the satisfaction of the tribunal within a period of three weeks from the date of direction.

The company deposited Commercial Tax of Rs 54.94 lacs out of Commercial Tax liability of Rs 183.90 lacs along with interest of Rs 3.07 lacs for the period starting from 18.12.2018 to

02.05.2019 as on 03.05.2019 in compliance with order dated 26.11.2018 of the Hon''ble High Court of Allahabad and communicated the same to PNB vide letter dated 03.05.19.

Further, PNB vide letter dated 04.05.2019 requested the company to submit No Dues Certificate from tax authorities after paying the commercial tax liability to bank for compliance of OTS Sanction within 3 days else OTS will be declared as failed. Since the company failed to reply to the same, PNB vide letter dated 04.07.2019 informed that the tax authorities have declared OTS revival as failed and PNB is resuming all recoveries as usual. Further, DRAT allowed appeal of PNB on 20.08.2019. The Company filed Writ Petition in the Delhi High Court against order of the DRAT. The Hon''ble Delhi High Court vide its order dated 24.10.2019, stayed the DRAT and NCLT proceedings filed by the PNB till the next date of hearing which is listed on 19th February, 2020. On 19^th February, 2020 interim order dated 24th October, 2019 was made absolute during the pendency of the writ petition. On the last date of hearing i.e., 29.03.2023, Counsel for the Bank seeks time again and granted four weeks'' time to file and rejoinder if any, to be filed before the next date of hearing is 14.08.2023.

(b) The outstanding liability in the books of the company is higher than the OTS amount by Rs. 183.90 lakhs and in the absence of any documentary evidence from the management as well as PNB, we are unable to quantify the amount of interest on the amount of Rs.183.90 lakhs; the amount of Rs.183.90 lakhs is over and above the loan amount on account of the sales tax liability on PNB on account of the auction held by the bank for old plant and machinery of the company.

The above matter is sub-judice before Hon''ble High Court of Allahabad for further hearing.

IX. The Commissioner Central Excise & Service Tax, Kamla Nehru Nagar CGO, Complex 2 Ghaziabad vide its memorandum order No.31/COMM/CX/GZB/2017-18 dated 31.01.2018 had ordered for payment of

a. Amount of central excise duty of Rs. 44,92,663/-

b. Amount of interest of Rs. 6,56,116/-

c. Amount of penalty of Rs. 6,56,116/-

for the period from 1994 to 1997.

The company has not made provision of the said amount & further interest thereon in its books till 31^st March,2023, due to which profit is understated by Rs. 58,04,895 plus interest.

Further the company has filed appeal against the order of Commissioner Central Excise & Service Tax, Kamla Nehru Nagar CGO, Complex 2 Ghaziabad before custom excise & service tax appellate tribunal, Allahabad.

X. (a). The amounts paid by the Ashoka Mercantile Limited (AML), a related party, to Abu Dhabi Commercial Bank (ADCB) on

account of One Time Settlement (OTS) of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the ADCB by AML and the balance amount of Rs. 153.92 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of assigned dues with AML is linked to the OTS of dues with PNB.

(b) The amount paid to Karnataka Bank by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2012, on account of OTS of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the Karnataka Bank by AML and the balance amount of Rs. 339.20 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB.

(c) The part payment made to Bank of Baroda by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2013 on account of OTS of dues of the bank was accounted for in the books of the company to the extent of OTS amount paid to the Bank of Baroda by AML and the Company and the balance amount of Rs. 232.04 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB.

The effect if any, on the income/expenditure of the company on final OTS with PNB cannot be ascertained.

XI. The company has 15% redeemable cumulative preference shares of Rs 100 each. Preference shares due for redemption since 31st March 1996.

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards 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 independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Companies Act, 2013 and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Material Uncertainty Related to Going Concern

We draw attention to Note 35 in the standalone financial statements, which indicates that the standalone financial statements of the Company for the year ended March 31, 2023 have not been prepared on a going concern basis since the Company has closed its manufacturing operations since May 19, 2007 (closure of factory w.e.f. September 8, 2007) on account of huge losses incurred and sale of entire plant & machinery during the year ended March 31, 2010. Our opinion is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. 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. In addition to the matters described in the Basis for Qualified Opinion section and Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report:

The key audit matters	How our audit addressed the key audit matter
Evaluation of uncertain tax positions
The Company has material	Our audit procedures include the
uncertain tax positions	following substantive procedures:
including matters under	• Obtained understanding of key
dispute which involves	uncertain tax positions;
significant judgment to	• Obtained details of completed tax
determine the possible	assessments and demands for the
outcome of these	year ended March 31, 2023 from
disputes.	management; and
Refer Notes 2(i), 2(o)(ii)	• We along with our internal tax
and 33 to the Standalone	experts-
Financial Statements	o Discussed with appropriate senior management and evaluated management''s underlying key assumptions in estimating the tax provisions; and o Assessed management''s estimate of the possible outcome of the disputed cases.

Information Other than the Standalone Financial Statements and Auditor''s Report thereon

The Company''s management and Board of Directors are responsible for the other information. The other information comprises the information included in the Company''s annual report, but does not include the standalone financial statements and our auditors'' report thereon.

Our opinion on the standalone 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 standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone 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.

Management''s Responsibilities for the Standalone Financial Statements

The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance including other 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 safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management 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 management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are 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.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements

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 Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.

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

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

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

c. The Balance Sheet, the 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. In our opinion the aforesaid financial statements comply with the IND AS section 133 of the Act.

e. On the basis of written representations received from the directors as on March 31, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023 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 matter to be included in the Auditors'' Report under section 197(16) of the Act:

In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act.

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

i) The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 33 to the Standalone financial statements;

ii) The Company did not have any long-term contracts including derivative contracts for which there were any material 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 its knowledge and belief, no funds (which are material either individually or in the aggregate) 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 or entity, including foreign entity ("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 its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("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.

C) Based on the audit procedures that have been considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under subclause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

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

vi) Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, accordingly, reporting under Rule 11 (g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

For B. M. Chatrath & CO LLP

Chartered Accountants, FRN: E300025

Sd/-

CA. Sunil Kumar Jha

Place : New Delhi Partner

Date : 29th May, 2023 Membership No.543805

UDIN: 23543805BGXTWU2401

---

Mar 31, 2018

Report on the Financial Statements

We have audited the accompanying standalone Ind AS financial statements of MODIPON LIMITED (‘the Company’), which comprise the Balance Sheet as at 31st March 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash flows and the Statement of Changes in Equity for the year then ended and a summary of significant accounting policies and other explanatory information (herein after referred to as “Standalone Ind AS financial statements”).

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

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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.

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 standalone Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the 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 standalone Ind AS financial statements.

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

Basis for Qualified Opinion

1. Balance confirmation certificates were not obtained by the Company from creditors, loans and advances given/received, house/shop security depositors, in-operative current accounts with banks and loan account with Punjab National Bank (PNB).

Consequent adjustments required, if any, has not been carried out in the financial results. [Refer Note No. 36]

2. (a) The Company has not provided interest of $ 1000.54 Lakhs up to March 31, 2008 on overdue amounts payable to a supplier resulting in understatement of liabilities and debit balance of reserve and surplus by $ 1000.54 Lakhs each; and

(b) The amount of interest to be provided for in the books of account for the period April 1, 2008 to March 31, 2018 has not been ascertained. [Refer Note No. 35(c)]

3. The amount of interest to be provided for in the books of account, if any, for the period April 1, 2007 to March 31, 2018 to Small and Micro Enterprise has not been ascertained. [Refer Note No. 40]

4. During the year ended March 31, 2009, the Company has sold 68,042 sq.yds. of its vacant land at Modinagar for $ 1021.15 Lakhs (original cost $ 1.95 Lakhs) for which the approval of bank is pending. [Refer Note No. 42(b)]

5. During the year 2011-12, the Company has given physical possession of its vacant 59 (46 as on March 31, 2015) houses located at Modinagar, Uttar Pradesh to a lender i.e. Ashoka Mercantile Limited (AML), a related party, (balance outstanding of loan taken from AML as on March 31, 2015 as per books of account: secured loan $ 882.29 Lakhs and unsecured loan $ 1125.57 Lakhs) for use without any charges/rent/security deposit and no lease rent agreement has been entered into with AML. The Company contends that the temporary possession of houses for use without charges was given to AML as security only as the Company was unable to repay the loans taken from AML. [Refer notes to Note No. 45]

6. (a) The Punjab National Bank (PNB) had approved one time settlement of its outstanding dues of Rs. 1900 lacs vide its approval letters dated April 02, 2014 and April 12, 2014 respectively. In terms of the settlement, OTS amount of $ 1710 lakhs (Net of upfront payment of $ 190 lakhs) was to be paid by the company in four quarterly installments with interest during financial year 2014-15. However, the company was able to manage the payment of $ 630 lakhs up to March 31, 2015 and at the request of the Company, PNB condone the delay and revived the OTS vide its letter dated July 02, 2015 requiring the Company to make payment of residual OTS amount of $ 1270 lakhs by March 31, 2016 and total interest on OTS payment @ 10.25% (simple) by June 30, 2016. The Company has paid $ 1205 lakhs upto March 31, 2018 and balance 65 lakhs along with outstanding interest remain to be paid. [Refer notes to Note No. 43(b)]

(b) The company has again requested vide letter dated 9th June 2017 to discharge its residual OTS liability of Rs. 65 lakhs and also requested for waiver of interest component on OTS settlements.

(c) The Company has also requested for assignment of the debt in favour of one of the NBFC company at the time of full and final settlement of outstanding residual amount and overdue interest (OTS of Rs 100 lakhs and interest of Rs 255 lakhs up to 31st May 2017) and Lender Punjab National Bank has requested to the company to convey the details of the NBFC company for assignment of debts so as to enable the bank to inform the same to its competent authority for the approval. Further, several letters regarding the approval of NBFC have been sent by the Company. PNB Bank vide its letter dated 01.02.2018 informed the company, that the request for revival of OTS was unacceptable and further asked to repay the bank dues.

(d) The outstanding liability in the books of the company is higher than the OTS amount by Rs. 183.90 lakhs. However, interest on OTS amount has been provided @ 10.25% p.a. amounting to $ 7.35 lakhs for the year ended on March 31^st 2018.

(e) In the absence of any documentary evidences from the management as well as PNB, we are unable to quantify the amount of interest on the amount of $ 183.90lacs; the amount of $ 183.90lacs is over and above the loan amount on account of the sales tax liability on PNB on account of the auction held by the bank for old plant and machinery of the company.

7. (a). The amounts paid by the Ashoka Mercantile Limited (AML), a related party, to Abu Dhabi Commercial Bank (ADCB) on account of One Time Settlement (OTS) of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the ADCB by AML and the balance amount of $ 153.92 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of assigned dues with AML is linked to the OTS of dues with PNB. [Refer notes to Note No. 43(d)]

(b) The amount paid to Karnataka Bank by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2012, on account of OTS of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the Karnataka Bank by AML and the balance amount of $ 339.20 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB. [Refer notes to Note No. 43(c) (i)]

(c) The part payment made to Bank of Baroda by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2013 on account of OTS of dues of the bank was accounted for in the books of the company to the extent of OTS amount paid to the Bank of Baroda by AML and the Company and the balance amount of $ 232.04 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB. [Refer notes to Note No. 43(c) (ii)]

The effect if any, on the income/expenditure of the company on final OTS with PNB cannot be ascertained.

8. The company has 15% redeemable cumulative preference shares of Rs 100 each. Preference share due for redemption since 31st March 1996.”

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 paragraphs in the ‘Basis for Qualified Opinion,, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS.

Emphasis of Matter

The above financial results of the Company for the year ended March 31, 2018 has not been prepared on a going concern basis since the Company has closed its manufacturing operations since May 19, 2007 (closure of factory w.e.f. September 8, 2007) on account of huge losses incurred and sale of entire plant & machinery during the year ended March 31, 2010. [Refer Note No. 37]

Our opinion is not qualified in respect ofthis matter. Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS,

a) In the case of the Balance Sheet ,of the state of affairs of the Company as at 31 March 2018;

b) In the case of the Statement of Profit & Loss including other comprehensive income, of the loss for the year ended on that date;

c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date; and

d) In the case of the Statement of Changes in Equity, of the change in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

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

(a) We have sought and obtained 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 and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards speci-fled under Section 133 of the Act, read with rules issued thereunder;

(e) on the basis of the written representations received from the directors as on 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164 (2) of the Act;

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

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

i. On the basis of written representations received from the management of the Company, the Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note No.35 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;

Annexure ‘A’ To the Independent Auditors’ Report

The Annexure referred to in independent Auditors’ Report to the members of the Company on the standalone Ind AS financial statements for the year ended March 31, 2018; we report that:

i) In respect of fixed assets:

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

b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified at periodic intervals. In accordance with this programme for the year, no material discrepancies were noticed on such verification. In our opinion, such periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

c) On the basis of written representation received from the management of the Company, the title deeds of immovable properties held in the name of the Company are mortgaged with the Banks for securing the long term borrowings and credit limits raised by the Company. Following title deeds have not been provided to us:

(Amount in $ Lakhs)

Net book value of immovable property as on March 31, 2018 (A)	Title deeds available (B)	Title deed not available (A-B)
17.44	14.78	2.66

ii) On the basis of information and explanation provided by the management, the Company does not hold any inventory therefore the provisions of paragraph 3 (ii) (a) to (b) are not applicable to the Company.

iii) According to the information and explanation given to us, the Company had not granted loans, secured or unsecured, to any of the Companies, Arms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Therefore, the provisions of paragraph 3(iii) (a) to (c) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the Company.

iv) According to the information and explanation given to us, the Company has complied with the provisions of section 186 of the Companies Act, 2013 in respect of Investments made.

v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

vi) On the basis of available information and explanation provided to us, the Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Amendment Rules, 2014 dated December 31, 2014 to the current operations carried out by the Company. Accordingly, the provisions of paragraph 3(vi) of the Companies (Auditor’s Report) Order, 2016 are not applicable to the Company.

vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Income tax, Sales tax, Service tax, duty of Customs, duty of Excise, Value Added Tax, Cess and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities, According to the information and explanations given to us following undisputed amounts payable in respect of Income tax, Sales tax, Service tax, duty of Customs, duty of Excise, Value Added Tax, Cess and other material statutory dues were in arrears as at 31st March, 2018 for a period of more than six months from the date they became payable:

Name of the Statute	Nature of Dues	Amount ($ in Lakhs)
Sales Tax Laws	Sales Tax Payable-Branch	1.49
Sales Tax Laws	1% State Development Tax	.01
Sales Tax Laws	12%U.P.Trade Tax	2.83
Sales Tax Laws	2.5%U.P.Trade Tax	.01
Sales Tax Laws	3% Central Sales Tax	.06
Sales Tax Laws	Sales Tax	.01
Sales Tax Laws	8% U.P.Trade Tax	.01
Sales Tax Laws	Turnover Tax	.01
Sales Tax Laws	Vat Collection 4%	.02
Central Excise Laws	Excise Duty From Amount Payable	82.60
Income Tax Laws	Income Tax Deducted At Source	47.60
	Total	134.65

(b) According to the records of the Company examined by us and the information and explanations given to us, there were no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax, except the following, which have not been deposited on account of any dispute:

The Following are the particulars of above Dues on account of Sales Tax, duty of Excise, duty of Customs, Water Tax and Income Tax etc. as at March 31, 2018 that have been disputed by the Company in Appeals pending before the Appellate Authorities

Name of the Statute	Nature of Dues	Amount (In Lacs $)	Period to which amount relates	Forum where dispute is pending
Sales Tax Laws	Sales Tax	94.22 1428.88 1010.75	2004-05 2005-06 2006-07	Commissioner (Appeal)
Sales Tax Laws	Sales Tax	1.41	1991-92	High Court
Sales Tax Laws	Sales Tax	12.43	2007-08	Addl. Commissioner
Customs Law	Custom Duty	74.66	1982-83	Asst. Commissioner
	Custom Duty	19.39	2002-03	Appellate Tribunal
The Uttar Pradesh Water Supply and Sewerage (Amendment ) Act, 1999	Water Tax	7.11	1997-98 & 1998-99	Additional Civil Judge
Central Excise Law	Excise Duty	115.75	1983-84	High Court
Income tax Act,1961	Non -Deduction of TDS	107-71 109.84	2006-07 to 200809	High Court ITAT/ Commissioner(A)
Civil Suit	Trade payables	95.08	2008-09	Delhi High Court
Civil Suit	Trade payables	18.13	2009-10	District Court, Saket, Delhi

viii) In our opinion and according to the information and explanation given to us, the details of default in respect of dues to a bank are as under:

(a) The Punjab National Bank (PNB) had approved one time settlement of its outstanding dues of $ 1900 lacs vide its approval letters dated April 02, 2014 and April 12, 2014 respectively. In terms of the settlement, OTS amount of $ 1710 lakhs (Net of upfront payment of $ 190 lakhs) was to be paid by the company in four quarterly installments with interest during financial year 2014-15. However, the company was able to manage the payment of $ 630 lakhs up to March 31, 2015 and at the request of the Company, PNB condone the delay and revived the OTS vide its letter dated July 02, 2015 requiring the Company to make payment of residual OTS amount of $ 1270 lakhs by March 31, 2016 and total interest on OTS payment @ 10.25% (simple) by June 30, 2016. The Company has paid $ 1205 lakhs upto March 31, 2018 and balance $ 65 lakhs along with outstanding interest remain to be paid.

(b). The company has again requested vide letter dated 9th June 2017 to discharge its residual OTS liability of $ 65 lakhs and also requested for waiver of interest component on OTS settlements.

(c) The Company has also requested for assignment of the debt in favour of one of the NBFC company at the time of full and final settlement of outstanding residual amount and overdue interest (OTS of $ 100 lakhs and interest of $ 255 lakhs up to 31st May 2017) and Lender Punjab National Bank has requested to the company to convey the details of the NBFC company for assignment of debts so as to enable the bank to inform the same to its competent authority for the approval. Further, several letters regarding the approval of NBFC have been sent by the Company. PNB Bank vide its letter dated 01.02.2018 informed the company, that the request for revival of OTS was unacceptable and further asked to repay the bank dues.

(d) The outstanding liability in the books of the company is higher than the OTS amount by $ 183.90 lakhs. However, interest on OTS amount has been provided @ 10.25% p.a. amounting to $ 7.35 lakhs for the year ended on March 31^st 2018.

(e) In the absence of any documentary evidences from the management as well as PNB, we are unable to quantify the amount of interest on the amount of $ 183.90 lacs ; the amount of $183.90 lacs is over and above the loan amount on account of the sales tax liability on PNB on account of the auction held by the bank for old plant and machinery of the company.

Further, No Debentures have been issued by the company during the year, therefore provisions of this clause is not applicable to the company.

ix) The Company did not raise any money by the way of initial public or further public offer (including debt instruments) during the year. However, the term loans taken during the year were applied for the purpose for which the same has been raised.

x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi) The Company has paid/provided managerial remuneration in accordance with provisions of section 197 read with Schedule V to the Companies Act, 2013 as applicable to the Company.

xii) The Company is not a Nidhi Company and hence, the provisions of paragraph 3(xii) of the Order are not applicable to the Company.

xiii) During the course of our examination of the books and records of the Company, all transactions entered with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 and the details have been disclosed in the financial statements etc, as required by the applicable accounting standards.

xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of paragraph 3(xiv) of the Order are not applicable to the Company.

xv) The Company has not entered into any non-cash transactions with 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-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of paragraph 3(xvi) of the Order are not applicable to the Company.

Annexure ‘B’ to the Independent Auditors’ Report of even date on the financial statement of Modipon Limited

Report on the Internal Financial Controls 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 Modipon Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the standalone Ind AS 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 (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

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

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

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

Meaning of Internal Financial Controls Over Financial Reporting

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

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Opinion

According to the information and explanation given to us, the Company has not established its internal financial controls over financial reporting on criteria based on or considering the essential components of internal control stated in Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company has adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2018.

We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements of the Company, and disclaimer does not affect our opinion on the financial statements of the Company.

For B. M. Chatrath & Co. LLP

Chartered Accountants,

FRN: E300025

Sd/-

CA. Sunil Kumar Jha

Place : New Delhi Partner

Date : 28^th May 2018 Membership No.543805

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Mar 31, 2016

INDEPENDENT AUDITOR''S REPORT

To The Members of Modipon Limited Report on the Financial Statements

We have audited the accompanying financial statements of Modipon Limited (“the Company"), which comprise the Balance Sheet as at March 31, 2016, 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 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.

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 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 qualified audit opinion.

Basis for Qualified Opinion

1. Balance confirmation certificates were not obtained by the Company from creditors, loans and advances given/received, house/shop security depositors, in-operative current accounts with banks and loan account with Punjab National Bank (PNB). Consequent adjustments required, if any has not been carried out in the financial results. [Refer Note No. 24]

2. (a) The Company has not provided interest of Rs, 1000.54 Lakhs up to March 31, 2008 on overdue amounts payable to a supplier resulting in understatement of liabilities and debit balance of reserve and surplus by Rs, 1000.54 Lakhs each; and

(b) the amount of interest to be provided for in the books of account for the period April 1, 2008 to March 31, 2016 has not been ascertained. [Refer Note No. 23(d)]

3. The amount of interest to be provided for in the books of account, if any, for the period April 1, 2007 to March 31, 2016 to Small and Micro Enterprise has not been ascertained. [Refer Note No. 28]

4. During the year ended March 31, 2009, the Company has sold 68,042 sq.yds. of its vacant land at Modinagar for Rs, 1021.15 Lakhs (original cost Rs,1.95 Lakhs) for which the approval of bank is pending. [Refer Note No. 30(b)]

5. During the year 2011-12, the Company has given physical possession of its vacant 59 (46 as on March 31, 2015) houses located at Modinagar, Uttar Pradesh to a lender i.e. Ashoka Mercantile Limited (AML), a related party, (balance outstanding of loan taken from AML as on March 31,

2015 as per books of account: secured loan Rs, 882.29 Lakhs and unsecured loan Rs,1125.57 Lakhs) for use without any charges/rent/security deposit and no lease rent agreement has been entered into with AML. The Company contends that the temporary possession of houses for use without charges was given to AML as security only as the Company was unable to repay the loans taken from AML. [Refer note to Note No. 32(c)]

6. (a) In the earlier years, Punjab National Bank (PNB) had approved one time settlement of its outstanding dues of Rs, 1900 lacs vide its approval letters dated April 02,

2014 and April 12, 2014. The company had paid Rs, 930 lacs till June 30, 2015. However as the Company could not make payment as per agreed terms of OTS, hence application of revival of OTS was again approved by PNB vide its letter dated July 02, 2015. The agreed revise payments terms are as under:

- Rs, 200 lacs by September 30, 2015

- Rs, 200 lacs by December 31, 2015 and

- Rs, 570 lacs by March 31, 2016.

- The entire amount of interest @ 10.25% (Simple) along with expenses of Rs, 5.54 lacs are to be paid by June 30, 2016.

Further from July 01, 2015, the company has paid Rs, 870 lacs till March 31, 2016 and balance OTS amount of Rs, 100 lacs remain to be paid/cleared.

Since the Company is unable to fulfil the agreed terms of OTS, we are unable to comment on the implication of same on the financials of the Company.

(b) The outstanding liability in the books of the company is higher than the OTS amount by Rs,183.90 lacs. However, interest on OTS amount has been provided as per the agreement amounting to Rs, 91.89 lacs for the year ended March 31, 2016.

(c) Had the interest been provided as per original terms on the principal amount the interest for the year ended on March 31, 2016 would have been higher by Rs, 491.15 lacs (Rs, 1867.45. lacs for the period April 01, 2009 to March 31, 2016).(Refer Note 31(b)).

7. As stated in note [31(d)(i) and (ii)], the amounts paid by the assignee i.e. Ashoka Mercantile Limited (AML), a related party, to Abu Dhabi Commercial Bank (ADCB) on account of One Time Settlement (OTS) of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the ADCB by AML and the balance amount of Rs, 153.92 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of assigned dues with AML is linked to the OTS of dues with PNB.

8. As stated in note [31(c)(i)], the amount paid to Karnataka Bank by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2012, on account of OTS of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the Karnataka Bank by AML and the balance amount of Rs, 339.20 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of PNB as the settlement of dues with AML is linked to the OTS of dues with PNB.

9. As stated in note [31(c)(ii)], the part payment made to Bank of Baroda by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2013 on account of OTS of dues of the bank was accounted for in the books of the company to the extent of OTS amount paid to the Bank of Baroda by AML and the Company and the balance amount of Rs, 232.04 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of pNB as the settlement of dues with AML is linked to the OTS of dues with pNB.

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 paragraphs in the Basis for Qualified Opinion,, 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, 2016, its profit and cash flows for the year ended on that date.

Emphasis of Matter

The above financial results of the Company for the year ended March 31, 2016 has not been prepared on a going concern basis since the Company has closed its manufacturing operations since May 19, 2007 (closure of factory w.e.f. September 8, 2007) on account of huge losses incurred and sale of entire plant & machinery during the year ended March 31, 2010. [Refer Note No. 25]

Our opinion is not qualified in respect of this matter.

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 March 31, 2016, its profit and cash flows for the year ended on that date.

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 specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) In our opinion there are no financial transactions or matters that may have adverse effect on the functioning of the Company.

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

(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".

(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. On the basis of written representations received from the management of the Company, the Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note No. 23(vi) to the financial statements.

ii. The Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any on long-term contracts.

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 of India 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 AUDITORS'' REPORT OF EVEN DATE ON THE FINANCIAL STATEMENT OF MODIPON LIMITED

Report on the Internal Financial Controls 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 Modipon Limited (“the Company") as of March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Management''s Responsibility for Internal Financial Controls

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

Auditors'' Responsibility

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

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

Meaning of Internal Financial Controls Over Financial Reporting

A Company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Opinion

According to the information and explanation given to us, the Company has not established its internal financial controls over financial reporting on criteria based on or considering the essential components of internal control stated in Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company has adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2016.

We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements of the Company, and disclaimer does not affect our opinion on the financial statements of the Company.

ANNEXURE ''B'' TO THE INDEPENDENT AUDITORS'' REPORT

The Annexure referred to in independent Auditors'' Report to the members of the Company on the financial statements for the year ended March 31, 2016; we report that:

i) In respect of fixed assets:

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

b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified at periodic intervals. In accordance with this programme for the year, no material discrepancies were noticed on such verification. In our opinion, such periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

c) On the basis of written representation received from the management of the Company, the title deeds of immovable properties held in the name of the Company are mortgaged with the Banks for securing the long term borrowings and credit limits raised by the Company. Following title deeds have not been provided to us:

(Amount in Rs, Lakhs)

Net book value of	Title deeds	Title deed not
immovable property as on March 31, 2016 (A)	available (B)	available (A-B)
17.44	14.78	2.66

ii) On the basis of information and explanation provided by the management, the Company does not any inventory therefore the provisions of paragraph 3 (ii) (a) to (b) are not applicable to the Company.

iii) (a) to (c) According to the information and explanation given to us, the Company had not granted loans, secured or unsecured, to any of the Companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Therefore, the provisions of paragraph 3(iii) (a) to (c) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company.

iv) According to the information and explanation given to us, the Company has complied with the provisions of section 186 of the Companies Act, 2013 in respect of Investments made.

v) The Company has not accepted any deposits from the public. Accordingly, the provisions of paragraph 3(v) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company.

vi) On the basis of available information and explanation provided to us, the Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Amendment Rules, 2014 dated December 31, 2014 to the current operations carried out by the Company. Accordingly, the provisions of paragraph 3(vi) of the Companies (Auditor''s Report) Order, 2016 are not applicable to the Company.

vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Income tax, Sales tax, Service tax, duty of Customs, duty of Excise, Value Added Tax, Cess and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities, According to the information and explanations given to us following undisputed amounts payable in respect of Income tax, Sales tax, Service tax, duty of Customs, duty of Excise, Value Added Tax, Cess and other material statutory dues were in arrears as at 31st March, 2016 for a period of more than six months from the date they became payable:

Name of the Statute	Nature of Dues	Amount (Rs, in Lakhs)
Sales Tax Laws	Sales Tax Payable-Branch	1.49
Sales Tax Laws	1% State Development Tax	.01
Sales Tax Laws	12%U.P.Trade Tax	2.83
Sales Tax Laws	2.5%U.P.Trade Tax	.01
Sales Tax Laws	3% Central Sales Tax	.06
Sales Tax Laws	Sales Tax	.01
Sales Tax Laws	8% U.P. Trade Tax	.01
Sales Tax Laws	Turnover Tax	.01
Sales Tax Laws	Vat Collection 4%	.02
Central Excise Laws	Excise Duty From Amount payable	82.60
Income Tax Laws	Income Tax Deducted At Source	47.60
	Total	134.65

(b) According to the records of the Company examined by us and the information and explanations given to us, there were no dues of income tax or sales tax or service tax or duty of customs or duty of excise or value added tax, except the following, which have not been deposited on account of any dispute:

The Following are the particulars of above Dues on account of Sales Tax, duty of Excise, duty of Customs, Water Tax and Income Tax as at March 31, 2016 that have been disputed by the Company in Appeals pending before the Appellate Authorities

Name of the Statute	Nature of Dues	Amount (In Lacs Rs,)	Period to which amount relates	Forum where dispute is pending
Sales Tax Laws	Sales Tax	94.22 1428.88 1010.75	2004-05 2005-06 2006-07	Commissioner (Appeal)
Sales Tax Laws	Sales Tax	1.41	1991-92	High Court
Sales Tax Laws	Sales Tax	12.43	2007-08	Addl. Commissioner
Customs Law	Custom Duty	74.66	1982-83	Asst. Commissioner
	Custom Duty	19.39	2002-03	Appellate Tribunal
The Uttar pradesh Water Supply and Sewerage (Amendment) Act, 1999	Water Tax	7.11	1997-98 & 1998-99	Additional Civil Judge
Central Excise Law	Excise Duty	115.75	1983-84	High Court
Income tax Act,1961	Non -Deduction of TDS	107-71 109.84	2006-07 to 2008-09	High Court ITAT/ Commissioner (A)
Civil Suit	Trade payables	95.08	2008-09	Delhi High Court
Civil Suit	Trade payables	18.13	2009-10	District Court, Saket, Delhi

(c) On the basis of information and explanations given to us by the management, no amount was required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under.

viii) In our opinion and according to the information and explanation given to us, the details of default in respect of dues to a bank are as under:

(a) In the earlier years, punjab National Bank (pNB) had approved one time settlement of its outstanding dues of Rs, 1900 lacs vide its approval letters dated April 02, 2014 and April 12, 2014. The company had paid Rs, 930 lacs till June 30, 2015. However as the Company could not make payment as per agreed terms of OTS, hence application of revival of OTS was again approved by pNB vide its letter dated July 02, 2015. The agreed revise payments terms are as under:

- Rs, 200 lacs by September 30, 2015

- Rs, 200 lacs by December 31, 2015 and

- Rs, 570 lacs by March 31, 2016.

- The entire amount of interest @ 10.25% (Simple) along with expenses of Rs, 5.54 lacs are to be paid by June 30, 2016.

Further from July 01, 2015, the company has paid Rs, 870 lacs till March 31, 2016 and balance OTS amount of Rs, 100 lacs remain to be paid/cleared.

Since the Company is unable to fulfill the agreed terms of OTS, we are unable to comment on the implication of same on the financials of the Company.

(b) The outstanding liability in the books of the company is higher than the OTS amount by Rs, 183.90 lacs. However, interest on OTS amount has been provided as per the agreement amounting to Rs, 91.89 lacs for the year ended March 31, 2016

(c) Had the interest been provided as per original terms on the principal amount the interest for the year ended on March 31, 2016 would have been higher by Rs, 491.15 lacs (Rs, 1867.45 lacs for the period April 01, 2009 to March 31, 2016).

Further, No Debentures have been issued by the company during the year, therefore provisions of this clause is not applicable to the company.

ix) The Company did not raise any money by the way of initial public or further public offer (including debt instruments) during the year. However, the term loans taken during the year were applied for the purpose for which the same has been raised.

x) According to the information and explanations given to us, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi) The Company has paid/provided managerial remuneration in accordance with provisions of section 197 read with Schedule V to the Companies Act, 2013 as applicable to the Company.

xii) The Company is not a Nidhi Company and hence, the provisions of paragraph 3(xii) of the Order are not applicable to the Company.

xiii) During the course of our examination of the books and records of the Company, all transactions entered with the related parties are in compliance with sections 177 and 188 of Companies Act, 2013 and the details have been disclosed in the financial statements etc, as required by the applicable accounting standards.

xiv) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of paragraph 3(xiv) of the Order are not applicable to the Company.

xv) The Company has not entered into any non-cash transactions with 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-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of paragraph 3(xvi) of the Order are not applicable to the Company.

For S.R. Dinodia & Co. LLP.

Chartered Accountants,

Regn. No. 001478N/N500005

Sd/-

(Sandeep Dinodia)

place : New Delhi Partner

Date: 28th May, 2016 M. No. 083689

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Mar 31, 2014

We have audited the accompanying financial statements of Modipon Limited ("the Company") which comprise the Balance Sheet as at March 31, 2014, and the Statement of Profit and Loss and 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

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") read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. 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 of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors'' 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 entity''s internal control. An audit also includes evaluating the appropriateness of 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.

Basis for Qualified Opinion

1. Balance confirmation certificates were not obtained by the Company from creditors, house/shop security depositors and fixed deposits with bank including interest accrued on these deposits and of inoperative current accounts with banks etc. since September 30, 2007 and consequently adjustments required, if any, has not been carried out in the financialresults{Note no. 18(B)(2)}.

2. (a)The company has not provided interest of Rs. 1000.54 Lakhs upto March 31, 2008 on overdue amounts payable to a supplier resulting in understatement of liabilities and debit balance of reserve and surplus by Rs. 1000.54 Lakhs each and (b) the amount of interest to be provided for in the books of account for the period April 1, 2008 to March 31, 2014 has not been ascertained {Note no. 18(B)(4)}.

3. The amount of interest to be provided for in the books of account, if any, for the period April 1, 2007 to March 31, 2014 to Small and Micro enterprises has not been ascertained {Note no. 18(B)(7)}.

4. During the year ended March 31, 2009, the company has sold 68,042 sq. yds. of its vacant land at Modinagar for Rs. 1021.15 Lakhs (original cost Rs. 1.95 Lakhs) for which the approval of bank is pending {Note 18B(11b)}.

5. During the year 2011-12, the company has given physical possession of its vacant 59 ( 53 as on March 31, 2014) houses located at Modinagar, Uttar Pradesh to a lender i.e. Ashoka Mercantile Limited (AML), a related party, (balance outstanding of loan taken from AML as on March 31, 2014 as per books of account: Secured loan Rs. 157.13 Lakhs and Unsecured loan Rs. 1251.85 Lakhs) for use without any charges / rent / security deposit and no lease rent agreement has been entered into with AML. The company contends that the temporary possession of houses for use without charges was given to AML as the company was unable to repay the loans taken from AML {Referfoot-note to note no. 18B(16)}.

6. We are informed by the Company that the factory buildings at Modinagar mortgaged to banks have been demolished and disposed of during the year 2011-12 by Ashoka Mercantile Limited (AML), a related party, and the book value of factory buildings amounting to Rs. 50 Lakhs has been charged to Statement of Profit and Loss as an exceptional item during the year 2011- 12. The management, based upon its assessment and legal advice received, contends that the sale of movable assets to AML approved by the Debt Recovery Tribunal (DRT) on 23.11.2009 also included factory buildings whereas the DRT vide its order dated 23.11.2009 gave direction that AML shall be entitled to possession of the movable assets, dismantling and removal thereof and it is clarified that AML shall not be entitled to demolish the building except to the extent of taking out the fixtures and structure.

In view of the above, we are of the opinion that the company should obtain post-facto approval / clarification again from DRT and / or bank in this matter.

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 paragraphs 2a above and possible effects of the matters described in paragraphs 1, 2b, 3 to 6 above in the ''Basis for Qualified Opinion'' paragraph, the 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 Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

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

(c) in the case of the cash flow statement, of the cash flows for the year ended on that date.

Emphasis of Matter

1. The above financial results of the company for the year ended March 31, 2014 has not been prepared on a going concern basis since the company has closed its manufacturing operations since May 19, 2007 (closure of factory w.e.f. September 8, 2007) on account of huge losses incurred and sale of entire plant & machinery during the year ended March 31, 2010. Adjustments relating to recoverability of most of the recorded asset amounts have been made in the accounts. {Refer note no. 18(B)(3)}.

2. (i) As stated in note {18(B)(13e)}, the amounts paid by the assignee i.e. Ashoka Mercantile Limited (AML), a related party, to Abu Dhabi Commercial Bank (ADCB) on account of one time settlement (OTS) of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the ADCB by AML and the balance amount of Rs. 153.92 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of Punjab National Bank as the settlement of assigned dues with AML is linked to the OTS of dues with PNB.

(ii) As stated in note no. 18(B)(13d)(i), the amounts paid to Karnataka Bank by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2012, on account of OTS of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the Karnataka Bank by AML and the balance amount of Rs. 339.20 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of Punjab National Bank as the settlement of dues with AML is linked to the OTS of dues with PNB.

(iii) As stated in note no. 18(B)(13d)(ii), the part payment made to Bank of Baroda by Ashoka Mercantile Limited (AML), a related party, during the year ended March 31, 2013 on account of OTS of dues of the bank was accounted for in the books of the Company to the extent of OTS amount paid to the Bank of Baroda by AML and the company and the balance amount of Rs. 232.04 Lakhs is still lying unallocated under unsecured loans in view of pending successful implementation of OTS of the dues of Punjab National Bank as the settlement of dues with AML is linked to the OTS of dues with PNB.

3. Punjab National Bank has approved the OTS of its dues on April 2, 2014 as stated in note 18(13)(b) and the OTS scheme is presently under implementation and the last instalment as per OTS scheme falls due on March 28, 2015. In view of the above, since the existing outstanding amount in the books of account of the Company is more than the OTS amount by Rs. 183.90 Lakhs, no provision has been made for interest in the books of account for the year ended March 31,2014. Had the interest been provided as per the original terms, there would be short provision of interest on cash credit amounting to Rs. 304.93 Lakhs for the current year (upto March 31,2014 Rs. 1004.95 Lakhs) {Note no. 18(B)(13c)}.

4. As mentioned in note no. 18(B)(14)ofannualaccounts, the sale of agricultural land admeasuring 40,827 Sq. mtrs has been approved by the Debt Recovery Tribunal in its order dated 19.05.2011 to M/S GDC Buildcon (P) Ltd subject to receipt of payment of Rs. 425 Lakhs to be deposited directly with the Tribunal. Balance sale consideration of Rs. 405 Lakhs was paid by the buyer directly towards OTS dues of Bank of Baroda and physical possession of land has been given to the buyer and the sale of above land has been accounted for by the Company during the year ended March 31, 2013. The Company has filed an affidavit in DRT stating the above facts.

Our opinion is not qualified in respect of matters mentioned at 1 to 4 above.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors'' Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraph 4 and 5 of the Order.

2. As required by 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 purpose of our audit;

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

c. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the accounting standards notified under the Companies Act, 1956 ("the Act") read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013;

e. On the basis of written representations received from the Directors as on March 31,2014 and taken on record by the Board of Directors, we report that none of the Directors from whom written representations were received,is disqualified as on March 31,2014 from being appointed as a Director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441Aof the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company.

ANNEXURE REFERRED TO IN PARAGRAPH 1 UNDER

"Report on Other Legal and Regulatory Requirements"

PARAGRAPH OF AUDITORS'' REPORT OF EVEN DATE

I. (a) The Company has not maintained proper records showing full particulars including quantitative details and situation ofits Axed assets.

(b) The Fixed Assets of the Company have not been physically verified by the management during the previous seven years period ended March 31, 2014.

(c) Substantial part of the Fixed Assets of the Company were disposed off during the year 2009-10 in view of closure of manufacturing operations and the Company is not a going concern.

II. There is no inventory at the year end. Accordingly, the provisions of clause 4(ii) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

III. In respect of Loan amounting to Rs. 70.31 Lakhs granted in earlier year to a Company covered in the register maintained u/s 301 of the Companies Act, 1956, our observations are as under:

Unsecured interest free loans amounting to Rs. 70.31 Lakhs, due from a Company which has been declared a Sick Industrial Undertaking, is receivable after the rehabilitation period. However, full provision for doubtful amount has been made.

IV. There were no purchases and sale of inventory during the current year. In regard to sale of land and buildings and connected expenses incurred to promote sale of properties, internal control procedures, including obtaining appropriate supporting evidences / approvals / quotations / prevailing market prices etc., were not obtained / adequate and, in our opinion, internal control procedures in respect of these matters needs to be laid down and implemented to make them commensurate with the nature and amount of transactions.

V. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered during the current year in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made during the current year in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

VI. In our opinion and according to the information and explanations given to us, the Company has not complied with the provision of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975 since there were defaults in the repayment of deposits on the due dates and we are informed by the company that the existing deposits of Rs. 25.67 Lakhs as on 31st March, 2014 are unclaimed by the depositors which we are unable to verify. Further, the defaults in the repayment of deposits received from depositors was not intimated to the Company Law Board as required by section 58AA(1) of the Companies Act, 1956. We are informed that the investments as required under Rule 3A of the Companies (Acceptance of Deposits) Rules, 1975 have not been made in view of the stay granted by the Hon''ble Allahabad High Court. As per information and explanations given to us, no order has been passed by the Company Law Board, Company Law Tribunal or Reserve Bank of India or any Court or any other tribunal on the Company.

VII. The Company has no internal audit system and no internal audit has been conducted since October 1, 2007.

VIII. No cost records are required to be maintained by the Company since the manufacturing operations were closed in the year 2007.

IX. In respect of statutory dues:

(a) According to the information and explanations given to us and the records of the Company examined by us, the Company was generally regular in depositing with appropriate authorities undisputed statutory dues including contribution for employees state insurance, income-tax including tax deducted at source and cess applicable to it.

(b) According to the information and explanations given to us, undisputed amounts payable in respect of trade tax / sales tax dues as at March 31, 2014 for a period of 6 years from the date they became payable are Rs. 4.45 Lakhs.

(c) According to the records of the Company and based on information and explanations furnished to us, the following sales-tax, income-tax, custom duty, excise duty and cess dues were not deposited on account of disputes pending at various forums:

Nature of Forum where matter is Financial Year to Gross Dues pending which the amount Amount relates (Rs. in lakhs)

Sales Tax High Court 1991-92 1.41 Asst. Commissioner 2005-06& 1.35 2006-07 Addl. Commissioner 2005-06 to 27.43 2007-08

Dy. Commissioner (Asst) 2004-05 94.30

Custom Assistant Commissioner 1982-83 74.66 Duty Appellate Tribunal 2002-03 19.39

Water tax Addl. Civil judge, 1997-98, 7.11 Ghaziabad 1998-99

Excise Law Commissioner Appeal, 1983-84 115.75 Ghaziabad

Income-tax High Court 2006-07 to 207.33 Act 2008-09

ITAT / Commissioner of 2006-07 to 609.60 Income -tax (Appeals) 2008-09

X In our opinion, as per the books of account, the accumulated losses of the Company at the end of the current financial year are more than 100% of its net worth. The Company has earned cash proft in this financial year as well as in the preceding financial year also.

XI. In our opinion, and according to the information and explanations given to us, the details of defaults in repayment of dues to a bank are as under:

Cash credit/working capital demand loan taken from Punjab National Bank amounting to Rs. 1893.90 Lakhs as on March 31, 2014 as per books of account i.e. excluding un-provided interest of Rs. 1004.95 Lakhs as on March 31, 2014 are out of order. Loan was classified by the bank as non-performing asset before March 31, 2009, already taken symbolic possession of the assets of the company and also sold all movable assets of the Company. The bank has now approved the OTS of its dues on 2nd April, 2014 as stated in note 18B(13)(b) and the OTS scheme is presently under implementation and the last instalment as per oTs scheme falls due on March 28, 2015.

XII. According to the information and explanations given to us, the Company has not granted loans and advances on the basis of any security by way of pledge of shares, debentures and other securities.

XIII. The provisions of any special statute as specified under Clause 4(xiii) of the Order are not applicable to the Company.

XIV. As the Company is not dealing in or trading in shares, securities, debentures and other investment, the provision of clause 4(xiv) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

XV. In our opinion, and according to the information and explanations given to us, during the current year, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions which are prejudicial to the interest of the Company. However, in the past, the Company had given guarantees/ undertakings as mentioned in Note no. 18(B)(1c) of Annual Accounts in respect of certain Companies (which presently have become Sick Industrial Undertakings and are yet to be rehabilitated or are under liquidation) to banks and government authorities.

XVI. In our opinion, and according to the information and explanations given to us, no term loans were taken during the current year. Accordingly, the provision of clause 4(xvi) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

XVII. 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 during the current year have been used for long-term investment i.e. payment of OTS dues ofa bank.

XVIII. The Company has not made any preferential allotment of shares during the year.

XIX. The Company has not issued any debentures during the year.

XX. During the period covered by our audit report, the Company has not raised any money by way of public issues.

XXI. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the Company has been noticed or reported during the course of audit.

For P.R.MEHRA& CO., Chartered Accountants (Regn. No. 000051N) Sd/- (Ramesh Chand Goyal) Place : New Delhi Partner Dated: May 19, 2014 M.No.012628

---

Mar 31, 2012

(1) We have audited the attached Balance Sheet of Modipon Limited 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 annexed thereto. These 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 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 disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 issued by Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order.

(4) Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

(i) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account.

(ii) On the basis of written representations received from the Directors as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the Directors from whom written representations were received is disqualified as on 31st March, 2012 from being appointed as a Director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

(5) The above financial results of the company for the year ended 31st March, 2012 has not been prepared on a going concern basis since the company has closed its manufacturing operations since 19th May, 2007 (closure of factory w.e.f. 8th September, 2007) on account of huge losses incurred and sale of entire plant & machinery during the year ended 31st March, 2010. Adjustments relating to recoverability of most of the recorded asset amounts have been made in the accounts. {Refer note no. 18(B)(3)}.

(6) Balance confirmation certificates were not obtained by the company from creditors, house/shop security depositors and banks (for cash credit balance, interest accrued on cash credit, appropriation of amount of sale consideration of movable assets received by banks towards principal & interest on cash credit and fixed deposits with banks including interest accrued on these deposits and of inoperative current accounts with banks) etc. since 30th September, 2007 and consequently adjustments required, if any, has not been carried out in the financial results.{Note no. 18(B)(2)}. Further, amount received of Rs. 361.86 Lakhs during the year ended 30th September, 2007 from Modipon Welfare Trust (MWT) was treated as revenue during the year ended 31st March, 2009 for which the confirmation of MWT regarding nature of payments made to the company as well as balance confirmation letters as on 31st March, 2009 and onwards have not been received till date. {Note no. 18(B)(11c)}.

(7) Managing Director's remuneration paid of Rs. 2.71 Lakhs w.e.f. 12th February, 2007 to 31st May, 2007 is subject to the approval of the Central Government. {Note no. 18(B)17)}.

(8) (a)The company has not provided interest of Rs.1000.54 Lakhs upto 31st March, 2008 on overdue amounts payable to a supplier and (b) the amount of unprovided interest for the period 1st April, 2008 to 31st March, 2012 has not been ascertained. {Note no. 18(B (4)}.

(9) The amount of unprovided interest, if any, for the period 1st April, 2007 to 31st March, 2012 to Small and Micro enterprises has not been ascertained. {Note no. 18(B)(7)}.

(10) Non-provision of interest on cash credit from banks amounting to Rs. 286.15 Lakhs for the current year (upto 31st March, 2012 Rs. 702.53 Lakhs). {Note no. 18(B)(13d)(v)}.

(11) During the year ended 31st March, 2009, the company has sold 68,042 sq. yds. of its vacant land at Modinagar for Rs.1021.15 Lakhs (original costRs. 1.95 Lakhs) for which the approval has not been obtained from banks to whom immovable properties of the company, including the above land, are charged.

(12) (i) As stated in note {18(B)(13e)}, the amounts paid by the assignee i.e. Ashoka Mercantile Limited (AML), a related party, to Abu Dhabi Commercial Bank (ADCB) on account of OTS of dues of the bank was accounted for in the books of the company to the extent of OTS amount paid to the ADCB by AML and the balance amount of Rs. 153.92 Lakhs is still lying unallocated under unsecured loans in view of pending settlement of the dues of Punjab National Bank as the settlement of assigned dues with AML is linked to the OTS of dues with PNB.

(ii) As stated in note no. 18(B)(13d) (iii), the amounts paid to Karnataka Bank by Ashoka Mercantile Limited (AML), a related party, during the year ended 31st March, 2012, on account of OTS of dues of the bank was accounted for in the books of the company to the extent of OTS amount paid to the Karnataka Bank by AML and the balance amount of Rs.339.20 Lakhs is still lying unallocated under unsecured loans in view of pending settlement of the dues of Punjab National Bank as the settlement of dues with AML is linked to the OTS of dues with PNB.

(13) The company gave an advance ofRs.100.00 Lakhs for purchase of property costing Rs.103.95 Lakhs and the same has been wrongly shown as unsecured loan to a corporate body instead of showing as capital advance under 'Long- term loans & advances' in the balance sheet as on 31st March, 2012.

(14) The company has given physical possession of its vacant 59 houses located at Modinagar, Uttar Pradesh to a lender i.e. Ashoka Mercantile Limited (AML), a related party, (balance outstanding of loan taken from AML as on 31st March, 2012 as per books of account: Secured loan Rs.157.13 Lakhs and Unsecured loan Rs.1070.04 Lakhs) for use without any charges / rent / security deposit and no lease rent agreement has been entered into with AML. The company contends that the temporary possession of houses for use without charges was given to AML as the company was unable to repay the loans taken from AML.

(15) We are informed by the company that the factory buildings at Modinagar mortgaged to banks have been demolished and disposed of during the current year by Ashoka Mercantile Limited (AML), a related party, and the book value of factory buildings amounting to Rs. 50 Lakhs has been charged to Statement of Profit and Loss as an exceptional item during the current year. The management, based upon its assessment and legal advice received, contends that the sale of movable assets to AML approved by the Debt Recovery Tribunal (DRT) on 23.11.2009 also included factory buildings whereas the DRT vide its order dated 23.11.2009 gave direction that AML shall be entitled to possession of the movable assets, dismantling and removable thereof and it is clarified that AML shall not be entitled to demolish the building except to the extent of taking out the fixtures and structure.

In view of the above, we are of the opinion that the company should obtain post-facto approval / clarification again from DRT and/ or banks in this matter.

(16) As mentioned in note no. 18(B)(14) of annual accounts, the sale of agricultural land admeasuring 40,827 Sq. mtrs has been approved by the Debt Recovery Tribunal in its order dated 19.05.2011 to M/S GDC Buildcon (P) Ltd subject to receipt of payment of Rs.425 Lakhs to be deposited directly with the Tribunal. Balance sale consideration of Rs.405 Lakhs is still awaited. Further, it is stated in the above mentioned note that pending receipt of entire sale consideration by the DRT, neither physical possession of land has been given to the buyer nor the sale of above land has been accounted for by the company during the year ended 31st March, 2012.

We are informed that some plots out of above land have been sold by the company at the request of M/S GDC Buildcon (P) Ltd which as per the legal opinion ( furnished by the company) is within the rights of the company and accordingly sale consideration is not accounted for by the company. We are of the opinion that the said sales are subject to the approval of DRT.

17. We further report that without considering paragraphs 6,7, 8(b),9 ,12,15 and 16 above, the effect of which could not be determined, had the observations made by us at paragraphs 8(a), 10 & 13 above been considered, the profit for the year of Rs.214.45 Lakhs would have converted into loss ofRs.71.70 Lakhs, negative figure of reserves would have been Rs.11,311.47 Lakhs as against the reported figure of Rs.9,608.40 Lakhs), long-term loans and advances would have been Rs.100.00 Lakhs (as against reported NIL figure) and short-term loans and advances would have been Rs.89.01 Lakhs (as against the reported figure of Rs.189.01 Lakhs) and trade payables would have been Rs.2,704.92 Lakhs (as against the reported figure of Rs.1,704.38 Lakhs).

18. Subject to the foregoing:

(i) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books.

(ii) 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.

(iii) In our opinion, the Balance Sheet, the Statement of Profit & Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred in sub-section (3C) of section 211 of The Companies Act, 1956 except for non-disclosure of deferred tax assets and liabilities.

(iv) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other notes thereon including note no. 18(B)(1b) regarding disputed income-tax demands, give the information required by the Companies Act, 1956, in the manner so required except for non- disclosure of information relating to Micro, Small and Medium enterprises as stated in note no. 18(B)(7) 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 31st March, 2012;

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

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

ANNEXURE REFERRED TO IN PARAGRAPH (3) OF AUDITOR'S REPORT OF EVEN DATE

I. (a) The Company has not maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) The Fixed Assets of the company have not been physically verified by the management during the previous five years period ended 31st March, 2012.

(c) Substantial pari of the Fixed Assets of the Company were disposed off during the year 2009-10 in view of closure of manufacturing operations and the company is not a going concern. (Refer paragraph 5 of our main audit report).

II. There is no inventory at the year end. Accordingly, the provision of clause 4(ii) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

III. In respect of Loans amounting to Rs.84.81 Lakhs granted in earlier years to two Companies, covered in the register maintained u/s 301 of the Companies Act, 1956, our observations are as under:

(i) Unsecured interest free loans amounting to Rs.70.31 Lakhs, due from a Company which has been declared a Sick Industrial Undertaking, is receivable after the rehabilitation period. However, full provision for doubtful amount has been made.

(ii) Unsecured, interest free loan amounting to Rs.14.50 Lakhs which was overdue from an erstwhile wholly owned subsidiary of the Company mentioned at (i) above, against which liquidation order has been passed, has been written off during the current year.

IV. There are no purchases and sale of inventory and purchase of fixed assets. Accordingly, the provision of clause 4(iv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

V. (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered during the current year in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made during the current year in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

VI. In our opinion and according to the information and explanations given to us, the Company has not complied with the provision of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975 with regard to the deposits accepted from the public since there were defaults in the repayment of deposits on the due dates and the existing deposits are overdue and are in excess of the limits prescribed under the Rules. Further, the defaults in the repayment of deposits received from depositors was not intimated to the Company Law Board as required by section 58AA(1) of the Companies Act, 1956. The investments as required under Rule 3A of the Companies (Acceptance of Deposits) Rules, 1975 have not been made in view of the stay granted by the Hon'ble Allahabad High Court. As per information and explanations given to us, no order has been passed by the Company Law Board, company law tribunal or Reserve Bank Of India or any Court or any other tribunal on the Company.

VII. The Company has no internal audit system and no internal audit has been conducted since 1st October, 2007.

VIII. No cost records are required to be maintained by the Company.

IX. In respect of statutory dues:

(a) According to the information and explanations given to us and the records of the company examined by us, the company was generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees' state insurance, income-tax including tax deducted at source and cess applicable to it except for few minor delays in deposit of TDS, PF and FPS dues.

(b) According to the information and explanations given to us, undisputed amounts payable in respect of trade tax/sales tax dues as at 31st March, 2012 for a period of 5 years from the date they became payable are Rs.4.45 Lakhs.

(c) According to the records of the company and based on information and explanations furnished to us, the following sales-tax, income-tax, custom duty, excise duty and cess dues were not deposited on account of disputes pending at various forums:

Nature of Forum where matter is Financial Year to Gross Dues pending which the amount Amount relates (Rs. in lakhs)

Sales Tax High Court 1991-92 1.41

Dy. Commissioner 2005-06 & 15.00

Additional Commissioner 2006-07 94.30

(Appeal) 2004-05

Custom Assistant Commissioner 1982-83 74.66 Duty

Appellate Tribunal 2002-03 19.39

Water tax Addl. Civil judge, 1997-98, 1998-99 7.11 Ghaziabad

Excise Law Commissioner Appeal, 1983-84 115.75 Ghaziabad

Income-tax High Court 2006-07 to 207.33 Act Commissioner of 2008-09 662.91

Income-tax (Appeals) 2006-07 to 2008-09

Grand Total 1197.86

X. In our opinion, as per the books of account, the accumulated losses of the Company at the end of the current Financial Year are more than 100% of its net worth. The Company has incurred cash losses in this financial year as well as in the preceding financial year. Our opinion on the matters specified in this clause has been arrived at after considering the effect of the qualifications on the figures of accumulated losses, net-worth and cash losses except for those qualifications the effect of which can't be ascertained/given.

XI. In our opinion, and according to the information and explanations given to us, the details of defaults in repayment of dues to banks are as under:

(i) Cash credit/working capital demand loans taken from Punjab National Bank and Bank of Baroda amounting to Rs.2894.76 Lakhs as on 31st March, 2012 as per books of account i.e. excluding un-provided interest of Rs. 702.53 Lakhs as on 31st March, 2012 are out of order and were classified by banks as non-performing assets before 31st March, 2009 and these banks have already issued notices to the company under section 13(2) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security interest Act, 2002 for the recovery of their dues. Further, Punjab National Bank and Bank of Baroda have also issued notice under-section 13(4) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security interest Act, 2002 to the company for taking possession of the secured assets of the company, has also taken symbolic possession of the assets of the company and also sold all movable assets of the company.

XII. According to the information and explanations given to us, the company has not granted loans and advances on the basis of any security by way of pledge of shares, debentures and other securities.

XIII. The provisions of any special statute as specified under Clause 4(xiii) of the Order are not applicable to the Company.

XIV. As the Company is not dealing in or trading in shares, securities, debentures and other investment, the provision of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

XV. In our opinion, and according to the information and explanations given to us, during the current year, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions which are prejudicial to the interest of the Company. However, in the past, the Company had given guarantees/ undertakings as mentioned in Note no. 18(B)(1c) of Annual Accounts in respect of certain Companies (which presently have become Sick Industrial Undertakings and are yet to be rehabilitated or are under liquidation) to banks and government authorities.

XVI. In our opinion, and according to the information and explanations given to us, term loans taken during the current year were applied for the purposes for which these were taken.

XVII. 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 during the current year have been used for long-term investment i.e. OTS dues of a bank.

XVIII.The company has not made any preferential allotment of shares during the year.

XIX. The company has not issued any debentures during the year.

XX. During the period covered by our audit report, the company has not raised any money by way of public issues.

XXI. To the best of our knowledge and belief and according to the information and explanation given to us, subject to our observations given in paragraph 16 of our main audit report of even date, no other fraud on or by the company has been noticed or reported during the course of audit.

For P. R. MEHRA & CO.,

Chartered Accountants,

(Regn. No. 000051N)

Jai Prakash Agarwal

Place : New Delhi Partner

Dated: 16th August, 2012 M.No. 010270

---

Mar 31, 2010

1. We have audited the attached Balance Sheet of Modipon Limited as at 31st March, 2010, the Profit & Loss Account and the Cash Flow Statement of the Company for the year ended on that date 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 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 disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by 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 issued by Central Government of India in terms of Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order.

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

(i) 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.

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

(iii) On the basis of written representations received from the Directors as on 31st March, 2010 and taken on record by the Board of Directors, we report that none of the Directors from whom written representations were received is disqualified as on 31st March, 2010 from being appointed as a Director in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956.

5. The above financial results of the company for the year ended

31st March, 2010 has not been prepared on a going concern basis since the company has closed its manufacturing operations since 19th May, 2007 (closure of factory w.e.f. 8th September, 2007) on account of huge losses incurred. Adjustments relating to recoverability of most of the recorded asset amounts have been made in the accounts for the 18 months period each ended 30th September, 2007 & 31st March, 2009 and for the year ended 31st March,2010 (Refer note 3 of Schedule 14).

6. (i) During the year ended 30th September, 2007, the company vide agreement dated 28.10.2006 had sold its profit-making Chemical Division along with certain other immovable properties and investment in shares (ICC Division) on a going concern basis w.e.f. 01.10.2006 to Indofil Organics Industries Ltd (IOIL) for Rs.124.66 Crores (sale consideration arrived at by aggregating tax written down value in case of depreciable assets and net book values for other assets/ liabilities) whereas the fair market value, amount unascertained, of these assets, in our opinion, was substantially higher than cost/book value. Sale consideration of Rs.124.66 Crores has been discharged by IOIL by way of: (a) payment of Rs.17.83 Crores by cheque ; (b) taking over the loan liabilities of Fibres Division of Rs.57.84 Crores and

(c) issue of 1,17,57,086 fully paid up equity shares of Rs.10 each of IOIL for Rs.48.99 Crores i.e. at a premium of Rs.37.23 Crores which were distributed directly to the equity shareholders of the company. In our opinion, the above transaction of transfer of Chemical Division of the company as a going concern at or below cost/book values and appropriation of part sale consideration of Rs.48.99 Crores towards issue of fully paid-up shares of IOIL to the equity shareholders of the company is an arrangement i.e. reconstruction by way of demerger of an undertaking of the company which is covered under section 391 and 394 of the Companies Act, 1956 and required prior approval of the High Court and all stakeholders whereas originally the company had approved the above transaction under sections 293(1)(a) and 293(3) of the Companies Act, 1956 and now, as stated in note 8 of schedule 14 of the accompanying statement of financial results, has also sought approval under section 391 of the Companies Act, 1956 of the Honble High Court for treating Rs.48.99 Crores as Goodwill in the books of account. In terms of the order of the Honble Company Judge, the meeting of the shareholders of the company was held on 3rd May,2008 and the shareholders approved the scheme. The minutes thereof were submitted to Honble Allahabad High Court and further orders are awaited.

(ii) As the matter is still pending for final determination by the Honble Allahabad High Court, the nature of payment and the final accounting treatment that should be given in the books of account to Rs.48.99 Crores (which is presently shown as "Equity shares of IOIL issued to shareholders" on the face of the balance sheet under the head "Miscellaneous Expenditure" (to the extent not written off or adjusted)) as on 31.03.2010, even though IOIL has already discharged the aforesaid part sale consideration by issue of its shares directly to the equity shareholders of the company on 28.03.2007) will depend upon the order of the Honble Allahabad high Court. In case the Honble Allahabad High Court finally approves the above scheme of treating Rs.48.99 Crores as Goodwill in the books of the company, the same, in our opinion, will have to be charged to revenue as per Accounting Standard 26 i.e. Intangible Assets.

7. Balance confirmation certificates were not obtained by the company from debtors, creditors, house security depositors and banks ( for cash credit, appropriation of amount of sale consideration received by banks towards principal & interest on cash credit and fixed deposits with banks) etc. since 30th September,2007 and consequently adjustments required, if any, has not been carried out in the financial results (Note.2). Further, amount received of Rs.361.86 Lakhs during the year ended 30th September, 2007 from Modipon Welfare Trust (MWT) was treated as revenue during the previous year for which the confirmation of MWT regarding nature of payments made to the company as well as balance confirmation letter as on 31st March,2009 & 31st March,2010 has not been received {Note 14 (d)}.

8. Managing Directors remuneration of Rs.2.71 Lakhs w.e.f. 12th February, 2007 to 31st May, 2007 is subject to the approval of the Central Government (Note 20 of schedule 14 ).

9. (i) (a)The company has not provided interest of Rs.1000.54 Lakhs

upto 31st March, 2008 on overdue amounts payable to a supplier. (b)The amount of unprovided interest for the period 1st April, 2008 to 31st March, 2010 has not been ascertained (Note 4). (ii) The amount of unprovided interest, if any, for the period 1st April, 2007 to 31st March, 2010 to Small and Micro enterprises has not been ascertained & provided for (Note 9).

(iii) Non-provision of interest on cash credit from banks amounting to Rs.250.52 Lakhs for the current year {Note16(d)(iii)}.

10. During the previous year, the company has sold 68,042 sq. yds. of its vacant land at Modinagar for Rs.1021.15 Lakhs (original cost Rs.1.95 Lakhs) for which the approval has not been obtained from banks to whom immovable properties of the company, including the above land, are charged. However, as stated in note 14(b) of Schedule14, profit on sale of the above land amounting to Rs.1019.20 Lakhs was accounted for in the books of account during the previous year.

11. No internal audit was conducted for the 18 months period ended 31st March, 2009 and for the year ended 31st March,2010. Further, internal controls needs to be improved adequately including in respect of maintaining proper books of account in time, reconciliation of accounts and balance confirmation of banks, debtors and creditors in order to safeguard the interest of the company (Note 2).

12. As stated in note 16(e), amounts paid by the assignee i.e. Ashoka Mercantile Limited (AML) to bank on account of OTS of dues of the bank has been accounted for in the books of the company to the extent of OTS amount paid to the bank by AML and the balance amount of Rs.153.92 Lakhs is lying unallocated under unsecured loans in view of pending settlement of the dues of Punjab National Bank. Further, the amount of interest, if any, payable to AML has not been ascertained and provided for by the management in view of the above (Note 16(e) of schedule 14).

13. We further report that without considering item no.6(ii), 7, 8 ,

9(i)(b) & (ii) and 12 above, the effect of which could not be determined, had the observations made by us at paragraphs 9(i)(a) & (iii) above been considered, the loss for the year before tax would have been Rs.282.41 Lakhs (as against the reported figure of Rs.31.89 Lakhs), debit balance of profit & loss would have been Rs.6444.26 Lakhs (as against the reported figure of Rs.5193.20 Lakhs), loan funds would have been Rs.4852.62 Lakhs (as against the reported figure of Rs.4602.10 Lakhs) and sundry creditors would have been Rs.6243.26 Lakhs (as against the reported figure of Rs.5242.72 Lakhs).

14. Subject to the foregoing:

(i) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books.

(ii) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred in Sub-section (3C) of Section 211 of the Companies Act, 1956.

(iii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the significant accounting policies and other Notes thereon mentioned in Schedule 14 including note 21 regarding non-provision of income-tax in view of the reasons stated therein, give the information required by the Companies Act, 1956, in the manner so required except for non-disclosure of information relating to Micro, Small and Medium enterprises as stated in note 9 of schedule 14 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 31st March, 2010;

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

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

ANNEXURE REFERRED TO IN PARAGRAPH (3) OF AUDITORS REPORT OF EVEN DATE

In addition and subject to our observations mentioned in paragraph 6 in our main audit report, we further report as under:

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

(b) The Fixed Assets of the company were not physically verified during the current year.

(c) Substantial part of Fixed Assets of the Company have been disposed off during the current year in view of closure of manufacturing operations and the company is not a going concern (Refer paragraph 5 of our audit report and note 12 of schedule 14).

II. There is no inventory at the year end. Accordingly, the provision of clause 4(ii) of the Companies (Auditors Report) order, 2003 are not applicable to the Company.

III. In respect of Loans amounting to Rs.84.81 Lakhs granted in earlier years to two Companies, covered in the register maintained u/s 301 of the Companies Act, 1956, our observations are as under:

(a) Unsecured interest free loans amounting to Rs.70.31 Lakhs, due from a Company which has been declared a Sick Industrial Undertaking, is receivable after the rehabilitation period.

(b) Unsecured, interest free loans amounting to Rs.14.50 Lakhs is overdue from a wholly owned subsidiary of the Company mentioned at (i) above against which liquidation order was passed.

However, full provision for doubtful amounts has been made in all the above cases.

IV. In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the company and the nature of the business with regard to the sale of goods. There were no purchases of inventory and fixed assets during the current year due to closure of manufacturing operations. We have not observed any continuing failure to correct major weaknesses in internal control system.

V. (a) According to the information and explanations given to

us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered during the current year in the register required to be maintained under that Section.

(b) In our opinion and according to the information and explanations given to us, the transactions made during the current year in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

VI. In our opinion and according to the information and explanations given to us, the Company has not complied with the provision of section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules,1975 with regard to the deposits accepted from the public since there were defaults in the repayment of deposits on the due dates and the existing deposits are overdue and are in excess of the limits prescribed under the Rules. Further, the defaults in the repayment of deposits received from depositors was not intimated to the Company Law Board as required by

section 58AA(1) of the Companies Act, 1956. The investments as required under Rule 3A of the Companies (Acceptance of Deposits) Rules, 1975 have not been made in view of the stay granted by the Honble Allahabad High Court. As per information and explanations given to us, no order has been passed by the Company Law Board, company law tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company.

VII. The Company has no internal audit system and no internal audit has been conducted since 1st October, 2007.

VIII. In view of closure of manufacturing operations during the previous year, no cost records were required to be maintained by the Company .

IX. In respect of statutory dues:

(a) According to the information and explanations given to us and the records of the company examined by us, the company was not regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income-tax including tax deducted at source and cess applicable to it.

(b) According to the information and explanations given to us, undisputed amounts payable in respect of aforesaid dues as at 31st March, 2010 for a period of more than six months from the date they became payable were Rs.19.15 Lakhs.

(c) According to the records of the company and based on information and explanations furnished to us, the following sales-tax, income-tax, custom duty, excise duty and cess dues were not deposited on account of disputes pending at various forums:

Nature of Forum where Financial Year Gross

Dues matter to which the Amount

is pending amount relates (Rs.in

Lakhs)

Sales Tax High Court 1991-92 1.41

Custom Duty Assistant 1982 74.66

Commissioner

Appelate Tribunal 2002-03 19.29

Water tax Addl. Civil judge, 1997-98,1998-99 7.11

Ghaziabzad

Grand Total 102.47

X. In our opinion, as per the books of account, the accumulated losses of the Company at the end of the current Financial Year are more than 100% of its net worth. The Company has incurred cash losses in this Financial Year as well as in the preceding financial year. Our opinion on the matters specified in this clause has been arrived at after considering the effect of the qualifications on the figures of accumulated losses, net-worth and cash losses except for those qualifications the effect of which cant be ascertained/given.

XI. In our opinion, and according to the information and explanations given to us, the details of defaults in repayment of dues to banks are as under:

(i) Cash credit/working capital demand loans taken from 4 banks amounting to Rs7229.34 Lakhs as on 31st March,2009 were out of order and were classified by banks as non-performing assets

before 31st March,2009. (ii) Three member banks of the consortium i.e. Punjab National Bank, Allahabad Bank & Bank of Baroda have already issued notices to the company under section 13(2) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 for the recovery of their dues. Further, Punjab National Bank has also issued notice under-section 13(4) of the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 on 12th February, 2008 to the company for taking possession of the secured assets of the company, has also taken symbolic possession of the assets of the company and also sold all movable assets as stated in note 13(a)(i) of schedule 14. (iii) Fourth member of the consortium i.e. Karnataka Bank Limited has also recalled its loans Rs.965.30 Lakhs, (iv) Refer note 16(d)(ii) of schedule 14 regarding OTS of dues of Allahabad Bank (Refer note 16 of schedule 14).

XII. According to the information and explanations given to us, the company has not granted loans and advances on the basis of any security by way of pledge of shares, debentures and other securities.

XIII. The provisions of any special statute as specified under Clause 4(xiii) of the Order are not applicable to the Company.

XIV. As the Company is not dealing in or trading in shares, securities, debentures and other investment, the provision of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

XV. In our opinion, and according to the information and explanations given to us, during the current year, the Company has not given any guarantee for loans taken by others from Banks or Financial Institutions which are prejudicial to the interest of the Company. However, in the past, the Company had given guarantees/ undertakings as mentioned in Note 1(b) of Schedule 14 of Annual Accounts in respect of certain Companies (which presently have become Sick Industrial Undertakings and are yet to be rehabilitated or are under liquidation) to banks and government authorities.

XVI. In our opinion, and according to the information and explanations given to us, no term loans were taken during the current year.

XVII. According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis during the current year have been used for long-term investment.

XVIII. The company has not made any preferential allotment of shares during the year.

XIX. The company has not issued any debentures during the year.

XX. During the period covered by our audit report, the company has not raised any money by way of public issues.

XXI. To the best of our knowledge and belief and according to the information and explanation given to us, no fraud on or by the company has been noticed or reported during the course of audit.

For P. R. MEHRA & CO.,

Chartered Accountants,

Regn. No. 000051N

Ramesh Chand Goyal

Place : New Delhi Partner

Dated: 13th August, 2010 M.No. 012628