Report On The Standalone Financial Statements

We have audited the accompanying Standalone Financial Statements of JBF Industries Limited ("the Company”), which comprise the Balance sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information (hereinafter referred to as "Standalone financial statements”).

Management's Responsibility For The Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act”) with respect to the preparation of these Standalone financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act read with relevant rules issued there under.

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.

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 there under.

We conducted our audit of the Standalone financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone 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 financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the Standalone 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 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 financial statements.

Basis for Qualified opinion:

(i) ,4s mentioned in Note No. 12.1 (i) to the Standalone financial statements, Trade receivables as at 31st March, 2018 includes amounts due from certain parties aggregating to Rs. 62.00 Crore are overdue and classified as doubtful in the financial statements. Management believes that these amounts will be recovered in due course and no provisions for doubtful debts have been considered. In view of the age of these balances and the absence of subsequent settlements, we believe that a provision should have been made for these amounts. Had a provision been made for these balances, there would have been, net loss after tax of Rs. (163.11) Crore as against the reported net loss after tax of Rs. (122.78) Crore for the year ended 31st March, 2018. Further trade receivables, other equity and deferred tax liabilities (net) as at 31st March, 2018 would have been Rs.790.46 Crore, Rs.1344.32 Crore and Rs.170.40 Crore respectively as against reported figure of Rs.852.46 Crore, Rs.1384.65 Crore and Rs.192.07 Crore respectively.

(ii) 4s mentioned in Note No. 12.1 (ii) to the Standalone financial statements, Trade Receivables as at 31st March, 2018 includes Rs.226.83 Crore due from certain parties which are outstanding for the extended period of time and/or in respect of which the parties did not honour the bills, have been considered good for recovery by the management for the reasons stated therein. In view of the age of these balances, the absence of subsequent settlements, dishonor of bills and non-receipt of balance confirmations, we are unable to comment on the recoverability of these trade receivables and possible impacts on the financial statements of the Company.

(iii) 4s mentioned in Note No. 15.3 to the Standalone financial statements, InterCorporate Deposits and interest accrued and due thereon aggregating to Rs.89.75 Crore overdue for substantial period of time, in respect of which Company has initiated legal proceedings (including winding up petitions against a few of them), have been considered good for recovery and no provisions for doubtful debts have been considered necessary, by the management, for the reasons stated therein. The matter described in above has uncertainties related to the outcome of the legal proceedings and therefore we are unable to express an opinion on the ability of the Company to recover the outstanding amount and possible impacts on the financial statements of the Company.

(iv) 4s mentioned in Note No. 16.5 to the Standalone financial statements, an amount of Rs.178.75 Crore towards claims & discounts receivables from suppliers, which are outstanding for the extended period of time. Management has accounted for these claims & discounts receivable from suppliers based on management's best estimate and considered good for recovery. We are unable to ascertain the recoverability of these claims & discounts. Consequently, we are unable to determine whether any adjustments to these amounts are necessary and consequential impacts on the financial statements of the Company.

(v) 4s mentioned in Note No. 21.8 to the Standalone financial statements, Non

Current Borrowings includes an amount of Rs.407.95 Crore due to lenders. 4s per the arrangements with these lenders, the Company is required to comply with certain covenants and non-compliance with these covenants may give rights to the lenders to demand repayment of the loans. 4s at 31st March, 2018, the Company has not complied with certain covenants and we have not been provided with any confirmation from the lenders for extension of time to comply with these covenants. Pending confirmation from the lenders, above amounts have been continued to be classified as Non- Current Borrowings as against Current Liabilities as required by Ind 4S, however it will have no impact on the statement of profit and loss of the Company.

(vi) 4s mentioned in the Note No. 46 to the Standalone financial statements, Company has exposure in subsidiaries by way of investments, loans and other receivables aggregating to Rs.1430.54 Crore, in respect of which the Company could not carry out impairment assessments due to the reasons mentioned therein. In the absence of impairment assessments by the Company, we were unable to determine whether any adjustments to these amounts are necessary and consequential impacts on the financial statements of the Company.

Qualified opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the paragraph above 'Basis for Qualified Opinion', 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 31st March, 2018, and its loss including other comprehensive income, its cash flows and the statement of changes in equity for the year ended on that date.

Emphasis of matter

We draw attention in respect of:

(i) Note No. 33.1 to the Standalone financial statements regarding managerial remuneration paid to the executive chairman which is in excess of the limits prescribed in the Act, is subject to the Central Government approval and remuneration paid to one of the whole-time directors, is subject to shareholders' approval.

(ii) Note No. 38.2 to the Standalone financial statements, regarding invocation of corporate guarantee given by the Company to the lender of JBF Petrochemical Limited ("JPL”). The Company carried out the fair valuation of the above guarantee through an independent Chartered Accountant firm and as per their report the value of securities in favor of lenders of JPL is higher than the total liabilities to them. Accordingly, no provision against the claims under the invoked corporate guarantee is considered necessary.

(iii) Note No. 47 to the Standalone financial statements regarding preparation of financial statements on going concern basis, notwithstanding the fact that the Company has incurred the losses, defaulted in repayment of principle and interest to its lenders, lenders have classified the Company's borrowings as NPA and some of the lenders have even called back the loans. These conditions, along with other matters as set forth in above note indicate the existence of material uncertainty that may cast significant doubt about Company's ability to continue as a going concern. The appropriateness of assumption of going concern is critically dependent upon the Company's ability to raise finance and generate cash flows in future to meet its obligations.

Our opinion is not modified in respect of these matters.

Other matter

The comparative financial information of the Company for the year ended 31st March, 2017 prepared in accordance with Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS), included in these Standalone financial statements, have been audited by the predecessor auditor, whose report dated 30th May, 2017 expressed an unmodified opinion on those financial statements. Our opinion is not modified in respect of above said matter.

Report on other Legal and regulatory requirements

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

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

b. Except for the effects of matters described in the Basis for Qualified Opinion paragraph above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c. The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

d. Except for the effects of matters described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid Standalone financial statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued thereunder.

e. The matters described in paragraph "Basis for Qualified Opinion" and in paragraph (iii) under the "Emphasis of Matters” may have an adverse effect on the functioning of the Company.

f. On the basis of the written representations received from the directors as on 31st March, 2018 and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 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. The Company has disclosed the impact of pending litigations as at 31st March, 2018 on its financial position in its Standalone financial statements as referred to in Note No. 12.1, 15.3 & 38 to the Standalone financial statements;

ii. Except for the effects of matters described in the Basis for Qualified Opinion paragraph above, the Company has made provisions, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31st March, 2018.

2. 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 B” hereto, a statement on the matters specified in the paragraphs 3 and 4 of the Order, to the extent applicable.

(Referred to in paragraph 1 (g) under 'Report on Other Legal and Regulatory R(Referred to in paragraph 1 (g) under 'Report on Other Legal and Regulatory Requirements' of our report of even date on the Standalone financial statements of JBF Industries Limited for the year ended 31st March 2018)

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 JBF Industries Limited ("the Company”) as of 31st March, 2018 in conjunction with our audit of the Standalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The 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 ("the Guidance Note) issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

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

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

Meaning of Internal Financial Controls Over Financial Reporting

A Company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with 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.

Qualified Opinion

According to the information and explanations given to us and based on our audit, the following material weakness has been identified in the operating effectiveness of the Company's internal financial control over financial reporting as on 31st March 2018 :-The Company did not have an appropriate internal control system for customer settlement through credit note, credit evaluation and establishing customer credit limits for some of the export transactions without any advances/ letter of credits, which may result in the Company recognizing revenue without establishing reasonable certainty of ultimate collection.

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

In our opinion, except for the effects/possible effects of above material weakness described above on the achievement of the objectives of the control criteria, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note.

We have considered the material weakness identified and reported above in determining the nature, timing and extent of audit tests applied in our audit of Standalone financial statements of the Company for the year ended 31st March 2018, and these material weakness do not affect our opinion on the Standalone financial statements of the Company.

ANNEXURE - B TO INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 2 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date on the Standalone financial statements to the members of JBF Industries Limited for the year ended 31st March, 2018)

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 on the basis of available information.

b. As explained to us, the fixed assets have been physically verified by the management in accordance with the programme of verification, which in our opinion is reasonable, considering the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.

c. According to the information and explanations given to us and based on the examination of the registered sale deeds and other relevant records evidencing title provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date, except the following:-

In respect of 9 immovable properties having the aggregate cost of Rs. 39.56 Crore, the original documents have been deposited with the lenders, we have been produced photocopy of documents for those immovable properties and based on such documents, the title deeds are held in the name of the Company.

In respect of immovable properties of land and buildings that have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Company.

ii. As explained to us, inventories have been physically verified during the year by the management except material in transit and in our opinion the frequency of verification is reasonable. Discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted by the Company to Companies, firms, Limited liability partnerships or other parties covered in the register maintained under section 189 of the Act. According to the information and explanation given to us:

a. The Company has granted unsecured loans to two such Companies and in our opinion, the rate of interest as applicable and other terms and conditions on which the loans had been granted were not, prima facie, prejudicial to the interest of the Company.

b. The schedule of repayment of principal and payment of interest has been stipulated and repayments of principal amounts and payment of interest were not due as on the balance sheet date.

c. There are no overdue amounts as at the year-end in respect of both principal and interest.

iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of sections 185 & 186 of the Act as applicable, in respect of grant of loans, making investments and security provided and guarantee given, during the year, if any.

v. According to the information and explanations given to us, the Company has not accepted any deposit from the public. Therefore, the provisions of paragraph 3 (v) of the Order are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to Companies (Cost Records & Audit) Rules 2014 prescribed by Central Government under section 148 (1) (d) of the Act as applicable and are of the opinion that prima-facie, the prescribed accounts and records have been made and maintained. We have not, however made a detailed examination of the records with a view to determine whether they are accurate and complete

vii. According to the information and explanations given to us in respect of statutory dues:

a. The company has been generally regular in depositing undisputed statutory dues, including provident fund, employees' state insurance, income tax, sales-tax, goods and services tax, service tax, duty of customs, duty of excise, value added tax, cess and any other statutory dues with the appropriate authorities as applicable during the year except in respect of income tax and tax deduction at source in some cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2018 for a period of more than six months from the date they became payable

b. According to the information and explanations given to us, the disputed statutory dues aggregating to Rs. 12.89 Crore that have not been deposited on account of matters pending before appropriate authorities are as under:

(*) Net of Rs.1.11 Crore deposited under protest.

(#)Net of Rs. 17.79 Crore adjusted against refund.

viii. Based on our audit procedures and according to the information and explanations given by the management, we are of the opinion that the Company has defaulted in repayment of dues to banks and financial institutions aggregating to Rs..1353.05 Crore Lender wise details of such default is as under:-

Further, lenders of the Company have classified all the credit facilities given to the Company as at 31st March, 2018 as Non-Performing Asset (NPA) in their books of account.

ix. According to the information and explanations given to us, the Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and the term loans raised during the year have prima facie been applied for the purposes for which they were raised.

x. Based on our audit procedures performed for the purpose of reporting the true and fair view of the financial statements and on the basis of information and explanations given by the management, no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

xi. In our opinion and according to the information and explanations give to us and based on our examination of the records, the Company has paid/ provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with schedule V to the Act except amount paid to Executive chairman of the Company which was in excess of limit of remuneration by Rs. 4.06 Crore, which is subject to requisite approvals from the Central Government and remuneration paid to one of the whole time directors amounting to Rs. 1.35 Crore, which is subject to the shareholder's approval.

xii. In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Therefore, the provisions of paragraph 3 (xii) of the Order are not applicable to the Company.

xiii. In our opinion and according to the information and explanations given to us and based on our examination of the records of the Company, Company's transactions with the related parties are in compliance with sections 177 and 188 of the Act as applicable and details of such transactions have been disclosed in the Standalone financial statements as required by the applicable Indian Accounting Standards.

xiv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made preferential allotment of shares during the year under audit.

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

xvi. In our opinion and according to information and explanations provided to us, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

For Pathak H.D. & Associates

Chartered Accountants

Firm Reg. No. 107783W

Gopal chaturvedi

Place: Mumbai Partner

Date_: 20.06.2018 Membership No.: 090903