Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of RAINBOW PAPERS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2016, 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 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 and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone 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 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, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the Standalone financial statements.

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

Matter of Emphasis:

1. We draw attention to Note No. 37 of the accompanying Standalone Financial statements in respect of non-provision of interest on NPA accounts of banks of Rs 2858.69 Lakhs. The exact amounts of the said non provisions are not determined and accounted by the company.

2. We draw attention to Note No. 36 of the accompanying Standalone Financial Statement in respect of Winding up Notices and Notices under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act 2002).

3. We draw attention to Note No. 30(a) of the accompanying Standalone Financial Statement relating to third party balance confirmation.

4. We draw attention to Note No. 30(e) of the accompanying Standalone Financial Statement in respect of higher depreciation on account of revision of useful life, resulting into higher depreciation of Rs 5012.56 Lakhs for the year under consideration.

Opinion

In our opinion and to the best of our information and according to the explanations given to us read with the notes to accounts, 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 31 March 2016. 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, on the basis of information given to us by the company, we give in the Annexure A statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable for the year under consideration.

2. As required by Section 143 (3) of the Act, except otherwise stated, we broadly 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 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;

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

(f) With respect to adequacy of the internal financial controls over the financial reporting of the company and the operating effectiveness of such controls refers to our separate report in a Annexure-B

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

i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone financial statements;

ii. There are no long term contracts including derivative contracts and accordingly no provision is required to be made for any loss from the same; and

iii. There is no fund which is pending to be transferred to the Investor Education and Protection Fund by the Company.

[ANNEXURE A REFERRED IN OUR REPORT OF EVEN DATE TO THE MEMBERS OF RAINBOW PAPERS LIMITED, FOR THE YEAR ENDED ON 31^ST MARCH, 2016]

i. (a) The Company maintain records showing full particulars, including quantitative details and situation, of fixed assets, however the company is in the process of updating the fixed assets register in respect of addition made during the year and deprecation for the year.

(b) As informed to us, the fixed assets are physically verified by the Management at regular intervals, however during the year no physical verification is undertaken by the company and therefore we are unable to comment on any discrepancies between the records and physical verification.

(c) As informed to us and on the basis of the records of the company, the title deeds of immovable properties, as disclosed in Note 12 on fixed assets to the Standalone financial statements, are held in the name of the Company.

ii. The physical verification of inventory has been conducted at reasonable intervals by the Management during the year. The various discrepancies noticed on physical verification of inventory as compared to book records were material and have been appropriately dealt with in the books of accounts.

iii. The Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act, 2013 ('the Act') and accordingly the para iii (a), (b) and (c) of the Order are not applicable.

iv. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of the loans and investments made, and guarantees and security provided by it during the year.

v. The Company has not accepted any deposits from the public (Other than exempted deposit) within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.

vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products and we have been informed that the same are maintained and the company is in process of updating the same.

vii. (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 not regular in depositing undisputed statutory dues including provident fund, employees' state insurance, Pension Fund, income tax, service tax, duty of customs, duty of excise, cess and other material statutory dues, as applicable, with the appropriate authorities. There are undisputed amounts payable in respect of above dues which were in arrears as at 31^st March 2016 for a period of more than six months from the date they became payable.

* In absence of evidence, if any, payments made during the year are apportioned on FIFO basis to determine the above outstanding liabilities. Further the amount of interest on the above outstanding amount and the penalty thereon are not included in the above amounts.

(b) According to the information and explanations given to us and the records of the Company produced for our verification, following are the details of outstanding dues in respect of followings, which have not been deposited on account of any dispute:-

viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in repayment of loans or borrowings to financial institution and bank as at the balance sheet date. Details of which are as below:

*The above table does not include the interest which bank has not provided after the account has been classified Non Performing Assets.

ix. In our opinion, and according to the information and explanations given to us during the year, company has not raised money by way of term loan. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.

x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

xi. The Company has paid / provided for managerial remuneration in accordance with provisions of section 197 of the Companies Act, 2013.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the Standalone financial statements as required under Accounting Standard (AS) 18, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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 Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

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 Clause 3(xvi) of the Order are not applicable to the Company.

For Mehta Lodha & Co.,

Chartered Accountants

Firm Regn No: 106250W

Place : Ahmedabad Prakash D. Shah

Date : 30^th May 2016 (Partner)

Membership No:34363