TO THE MEMBERS OF

ARIHANT FOUNDATIONS & HOUSING LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying Standalone financial statements of ARIHANT FOUNDATIONS & HOUSING LIMITED, (“the company”), which comprise the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss for the year and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes the maintenance of adequate accounting records in accordance with the 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 internal financial control, 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 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 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 true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the company has in place an adequate internal financial controls over financial reporting and the operating effectiveness of such controls. 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 Standalone 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 loss 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, 2015 (“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 statement on the matters specified in the paragraph 3 & 4 of the Order, to the extent applicable.

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

a) We have sought and 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) Since the Company does not have branches, the report on the account of branch offices audited by other auditor under sub-section (8) of the act is not applicable;

d) 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. The Company has no branches;

e) 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 Companies (Accounts) Rules, 2014;

f) On the basis of 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 other matters 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 as of March 31, 2016;

ii. The Company did not have any long-term contracts including derivatives contracts for which there were any material foreseeable losses.

iii. The amount of Rs.64,470 has not been transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

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

1. a) The company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets;

b) These fixed assets have been physically verified by the management at reasonable intervals; and no material discrepancies were noticed on such verification.

2. a) As explained to us, the stock of construction materials has been physically verified at periodic intervals and no significant discrepancies have been noticed on such verification during the year.

b) In our opinion and according to the information and explanations given to us, the procedure of physical verification of stock of building material followed by the management is reasonable and adequate in relation to the size of the company and nature of its company.

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

3. a) The company has granted loan to seven companies covered in the register maintained under section 189 of the companies Act 2013, The maximum amount involved during the year was Rs.38,56,76,015/- and the year-end balance of loans granted to such parties was Rs.38,12,49,873/-

b) During the year, in respect of the aforesaid loans, in some of the loans there has been no recovery towards principal, in the absence of any terms; we are unable to comment on the regularity of recovery of principal amount.

c) Where the overdue amount exceeds rupees one lakh, in respect of some of the loans, in absence of any terms; we are unable to comment that, company has taken necessary steps to recover the amount and interest thereon.

4. In our opinion and according to information and explanations given to us, the company has an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sales of goods and services. During the course of audit, we have neither come across nor never informed of any continuing failure to correct major weaknesses in internal control system.

5. In our opinion and according to information and explanations given to us, the company has not accepted deposits during the year. Therefore, the provisions of the clause 3(v) of the order are not applicable to the company.

6. The maintenance of cost records specified by the Central Government under sub-section (1) of section 148 of the Companies Act will not apply to the company. Hence maintenance of cost accounts and records is not required ;

7. (a) According to the information and explanations given to us and on the basis of examination of books of accounts, The Company is regular in depositing undisputed statutory dues including, Investor Education and protection fund, Income Tax, Wealth Tax, Service Tax, Cess, Sales tax, Value added tax, Excise duty and any other material statutory dues with the appropriate authorities except in case of following: -

Statement of Arrears of statutory dues outstanding for more than six months:-

(b) According to the information and explanation given to us there are dues in respect of income tax ,or sales tax ,or value added tax following taxes on account of dispute , which are as follows:-Statement of Disputed Dues :-

(c) The company is not regular in transferring amounts to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 and rules made there under within time.

8. The company has been registered for a period not less than five years and has no accumulated losses at the end of the financial year and it has incurred cash losses in such financial year but not in the immediately preceding financial year;

9. In our opinion and according to the information and explanation given to us, the Company has not defaulted in repayment of dues to any financial institution or Bank. Further, in our opinion and according to information and explanations given to us, the Company has not issued any debentures and hence there is no outstanding to debenture holders.

10. In our opinion and according to information and explanations given to us, the Company has given corporate guarantee of Rs.60 crores for loans taken by jointly controlled entity from non-banking finance company. The terms and conditions whereof are not prejudicial to the interest of the company.

11. According to the information and explanation given to us and on the basis of examination of books of accounts, the company has applied term loans for the purpose for which the loans were obtained;

12. To the best of our knowledge and belief and According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year.

For M/S. B.P.JAIN & CO

CHARTERED ACCOUNTANTS

Firm Registration Number: 050105S

Sd/-

DEVENDRA KUMAR BHANDARI

Place: New York PARTNER

Date: 26.05.2016 Membership Number: 208862