TO THE MEMBERS OF NAGA LIMITED

REPORT ON THE STANDALONE FINANCIAL STATEMENTS

We have audited the accompanying standalone financial  statements of Naga 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 ended on that date, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility  for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters  stated in sub-section 5 of Section 134 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 cashflows 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 (“the   Rules”).  This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting  the frauds and other irregularities; selection and application  of appropriate accounting policies; making 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.

Auditors'  Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under  sub- section 10 Section 143 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 accounting policies used and the reasonableness of the accounting estimates made by Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion and to the best of our information  and according to the explanations given to us, the aforesaid standalone 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, and its profit  and its cash flows 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 exercise of powers conferred by sub-section 11 of Section 143 of the Act, we enclose in “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by sub-section (3) of Section 143 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 Proit 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  standalone financial  statements  comply  with  the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Rules.

e)     On the basis of the written representations received from the directors as on March

31, 2016 and taken   on record by the Board of Directors, none of the  directors are disqualified  as on March 31, 2016 from being appointed as a  director  in  terms of sub-section 2 of Section 164 of the Act.

f)     With respect to adequacy of internal financial controls over financial reporting of the company and the operating effectiveness of such controls, refer to our separate report in “Annexure  B”.  Our report  expresses unmodified  opinion  on the  adequacy and operating effectiveness of the Company's internal financial control over financial reporting.

g)   With respect to the other matters to be included in the Independent  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 as refered  to in   Note 36 to the financial statements.

ii.     The Company did not have any long-term contracts including derivatives 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 Independent  Auditors'  Report

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements' section of our report  of even date to the financial  statements of the Company for the year ended March 31, 2016)

Report  on Companies (Auditor's Report)  Order,  2016 (“the  Order”)  of Naga Limited  (“the Company”)

i)     In respect of its fixed assets:

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

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

c)      According to the information  and explanations given to us, the title deeds of immovable properties,  as disclosed in Note 11 to the financial statements, are held in the name of the Company.

ii)     In respect of its inventories:

a)    The inventories have been physically verified during the year by the management. In our opinion, the frequency of verification is reasonable.

b)     As per the information  and explanations given to us, no material  discrepancies were noticed on physical verification.

iii)   In our opinion and according to the information  and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Act. Accordingly, paragraph 3(iii) of the Order is not applicable to the Company.

iv)   The Company has not granted any loans or provided any guarantees or security to the parties  covered under  section  185 of  the  Act.   The Company has complied  with  the provisions of section 186 of the Act in respect of investments made during the year.

v)     The Company has not accepted any deposit from the public. Accordingly paragraph 3(v) of the Order is not applicable to the Company.

vi)   We have broadly reviewed the records maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of Cost Records under sub-section 1 of Section 148 of the Act and are of opinion that prima facie, the prescribed accounts and records have been made and maintained.   However,  we have not made a detailed examinations of the record.

vii)  In respect of statutory  dues:

a)    According to the information  and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing the undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess, and other material statutory dues, as applicable, with the appropriate authorities.

b)    According to the information  and explanations given to us, no undisputed amounts payable in respect of provident fund, employees state insurance, 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.

c)    Details of dues of Income Tax ,Sales Tax, Wealth Tax, Service Tax, duty of Customs, duty of  Excise, Value Added Tax, Cess  which have not  been deposited as on March 31,2016 on account of disputes are given below:

viii) In our opinion and according to the information  and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to banks or financial institutions. The Company does not have any loans or borrowings from the government and has not issued any debentures.

ix)   The Company has not  raised monies by way of  initial   public  offer  or  further  public offer(including  debt instruments).  The term loans were used for the purposes for which those were raised.

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

xi)   In our opinion and according to the information  and explanations given to us the Company has paid / provided  managerial remuneration  in accordance with  the  requisite  approvals mandated by the provisions the Sections 197 read with Schedule V to the Act.

xii)  The Company is not a Nidhi Company and hence reporting under clause 3(xii) of the Order is not applicable.

xiii) According to the information  and explanations given to us and based on our examination of the records of the Company, transactions with related parties are in compliance with section 177 and 188 of the Act, where applicable.  The details of such related party transactions have been disclosed in the financial  statements as required under Accounting Standard [AS] 18, Related Party Disclosure as specified under section 133 of the Act, read with  Rule 7 of the Companies (Accounts) Rules, 2014.

xiv) According to the information  and explanations given to us and based on our examination of the records, the Company has not made any preferential allotment  or private placement of shares or fully or partly convertible debentures during the year.

xv)  According to the information  and explanations gi ven to us and based on our examination of the records, the Company has not entered into  non-cash transactions with  directors  or persons connected with him.  Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, provisions of clause 3(xvi) of the Order is not applicable to the Company.

ANNEXURE `B' TO INDEPENDENT AUDITORS' REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF NAGA LIMITED

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

Report on the Internal  Financial Controls over Financial Reporting   under Clause (i) of sub- section 3 of Section 143 of the Companies Act, 2013 (`the  Act')

We have audited the internal financial controls over financial reporting of Naga Limited, (`the company' ) as of 31st March 2016 in conjunction with our audit of the financial statements of the Company for the year ended and as 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 (`the  'Guidance Note') 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 the Company's policies,  the safeguarding of its assets, the prevention  and deduction of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor's  Responsibilities

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 Standards on Auditing prescribed under section 143(10) of the Act and the Guidance Note, to the extent applicable to an audit of internal financial controls. Those Standards and Guidance Note required 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 establish and maintain 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 the financial  reporting,  included obtaining an understanding of internal  financial control 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 design 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 transaction 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 the authorizations of the 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 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 controls over financial reporting  may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information  and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls over financial reporting  and such internal financial controls over financial reporting were operating effectively as at 31st March, 2016, based on the internal  control  over financial  reporting  criteria established by the Company considering the essential components internal control stated in the Guidance Note.

For D Sampathkumar & Co.,

Chartered Accountants

(Firm Registration No : 003556S)

M.K. Ravindran

(Partner) M.No: 020887

Place  :            Chennai

Date     :           19.05.2016