microsec financial services ltd Directors report

Dear Members,

Your Directors are pleased to present the Thirty-fourth (34^th) Annual Report together with Audited Annual Financial Statements (including Audited Consolidated Financial Statements) of the Company for the Financial Year ended 31st March, 2023.

financial highlights

(Rs. in Lakhs)

Particulars	Standalone		Consolidated
	FY 2022-23	FY 2021-22	FY 2022-23	FY 2021-22 (Restated)
Total Revenue	-	-	1,03,981.84	63,142.82
Profit/(Loss) before Interest, Depreciation & Tax	82.28	(14.64)	(2,032.32)	(3,702.30)
Less: Depreciation	15.77	17.66	819.75	415.62
Less: Interest	1.53	1.38	86.76	163.62
Profit/(Loss) before share of profit/(loss) of an associate; exceptional items and tax	64.98	(33.68)	(2,938.83)	(4,281.54)
Share of Profit/ (Loss) on Associates accounted for using equity method	-	-	(8,489.82)	(518.61)
Profit/ (Loss) Before Exceptional Item and Tax	64.98	(33.68)	(11,428.65)	(4,800.15)
Exceptional Items	-	-	(796.45)	1,15,748.53
Profit /(Loss) before Tax	64.98	(33.68)	(12,225.10)	1,10,948.38
Less: Tax Expenses
- Current Tax	-	-	22.18	13,075.27
- Deferred Tax	-	-	(2,287.32)	11,354.15
- Short/(Excess) Provision for Tax relating to prior years	-	5.37	(13.04)	7.74
Profit/(Loss) after Tax	64.98	(39.05)	(9,946.92)	86,511.22
Other Comprehensive Income
A (i) Items that will be not reclassified subsequently to profit or loss
(a) Remeasurement gain/loss on defined benefit plans	(4.43)	(4.20)	(122.74)	(25.94)
(b) Share of Other Comprehensive Income in Associate Company	-	-	2.43	-
(ii) Income tax relating to items that will not be reclassified to profit or loss	-	-	0.78	0.24
B (i) Items that will be reclassified subsequently to profit or loss	-	-	-	-
(a) Remeasurement gain/loss on defined benefit plans	-	-	-	-
(b) Share of Other Comprehensive Income in Associate Company	-	-	-	-
(ii) Income tax relating to items that will not be reclassified to profit or loss	-	-	-	-
Other Comprehensive Income	(4.43)	(4.20)	(119.53)	(25.70)
Total Comprehensive Income	60.55	(43.25)	(10,066.45)	86,485.52
Profit/ (Loss) for the year attributable to
Owner of the company	64.98	(39.05)	(7,221.05)	62,680.54
Non-controlling Interest	-	-	(2,725.87)	23,830.68
Total Comprehensive income for the period attributable to
Owner of the company	60.55	(43.25)	(7,310.18)	62,660.55
Non-controlling Interest	-	-	(2,756.27)	23,824.97

Consolidated Financial Statements

As required under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 [hereinafter referred to as "SEBI (LODR) Reg, 2015"] and in accordance with the Indian Accounting Standard notified under the Companies (Indian Accounting Standards) Rules, 2015, Consolidated Financial Statements of the Company and its subsidiaries form part of the Annual Report and are reflected in the consolidated financial statements of the Company. These statements have been prepared on the basis of audited financial statements received from the subsidiary companies as approved by their respective Boards.

dividend

The Board of Directors do not recommend any dividend for the financial year 2022-23.

In accordance with Regulation 43A of SEBI (LODR) Reg, 2015 your company has adopted Dividend Distribution Policy with effect from June 22, 2021. The Policy lays down various parameters to be considered by the Board before declaration/recommendation of dividend to the members of the Company. The Dividend Distribution Policy is available on the website of the Company at https://www.sastasundarventures.com/Pdf/Dividend_Distribution_Policy.pdf

transfer to reserve

The Company has not transferred any amount to the General Reserve Account during the financial year ended 31st March, 2023. STATE OF COMPANYS AFFAIRS & OPERATIONS

During the financial year under review your Company, made significant progress on advancing its strategies. With the strategic partnership with the Flipkart group, the Company is well positioned to build upon momentum and drive long term, sustainable growth. The Company is committed to build a longterm business that offers a data-driven, digital supply chain for pharmaceuticals, diagnostics and wellness in India, catering to both B2B and B2C spaces.

On a standalone basis, the revenue of your Company is NIL as against NIL during the previous year. EBIDTA for the current year is Rs 82.28 Lakhs as compared to EBIDTA of Rs (14.64) Lakhs during the previous financial year. The net profit for the year under review is Rs 64.98 Lakhs as against Rs (39.05) Lakhs in the previous year.

On a consolidated basis, the revenue of your Company stood at Rs 1,03,981.84 Lakhs as against Rs 63,142.82 Lakhs during the previous year. The EBIDTA for the current year is Rs (2,032.32) Lakhs as compared to EBIDTA of Rs. (3,702.30) Lakhs during the previous financial year. The net loss for the year under review is Rs (9,946.92) Lakhs as against profit of Rs 86,511.22 Lakhs in the previous year.

composite scheme of arrangement

During the year under review the board of directors of your Company at its meeting held on 27^th March, 2023 has approved the Composite Scheme of Arrangement between Sastasundar Ventures Limited ("SVL" or "Demerged Company" or "Amalgamated Company"), Microsec Resources Private Limited ("MRPL" or "Resulting Company") and Sastasundar Healthbuddy Limited ("SHBL" or "Amalgamating Company") and their respective shareholders and creditors ("Scheme of Arrangement" / "Scheme") under Section 230-232 and other applicable provisions of the Companies Act, 2013.

The composite scheme of arrangement after the approval of the Board on 27^th March, 2023 was then filed with both the Stock Exchanges for obtaining their No Objection Certificate in terms of the SEBI Master Circular for Scheme of Arrangement. However, the Stock Exchange had returned the Scheme to the Company with the instruction to re-file the same along with audited financials of the unlisted companies involved in the Scheme. Therefore, the Scheme was again placed before the Board in its meeting held on 14^th July, 2023 for their approval for re-filing to the Stock Exchange along with audited financial statement for the Financial Year 2022-23 of unlisted companies involved in the Scheme.

The proposed Scheme entails the following:

• Demerger of Financial Services Business Undertaking from Sastasundar Ventures Limited to Microsec Resources Private Limited; and

• Amalgamation of Sastasundar Healthbuddy Limited with Sastasundar Ventures Limited, subsequent to the completion of demerger referred above.

Purpose and Rationale for the Demerger of the Financial Services Business from SVL to MRPL

SVL is a multi-business corporate engaged in the business of providing healthcare and financial services. The aforesaid businesses of SVL have been nurtured over a period of time and are currently at different stages of growth. This scheme is in the best interest of the Companies and their respective shareholders, employees, creditors and other stakeholders on account of following benefits:

(a) Demerger shall lead to creation of a separate, distinct and focused entity housing the Financial Services Business leading to greater operational efficiencies;

(b) Segregating the businesses would enable independent business opportunities, attracting different sets of strategic partners and other stakeholders and would bring about greater internal control on business processes / ease in decision making;

(c) Independent group structure for each of the Business Segments of the group will ensure required depth and focus on each of the segments and adoption of strategies necessary for the growth of the respective segments. The structure shall provide independence to the management in decisions regarding the use of their respective cash flows for dividends or capital expenditure in their respective businesses; and

(d) Cost savings are expected to flow from more focused operational efforts, rationalization, standardization and simplification of business processes, productivity improvements, and the elimination of duplication, and optimum rationalization of administrative expenses and utilization of human resources.

Purpose and Rationale for the Amalgamation of SHBL with SVL

SHBL is engaged in the business of wholesale trading of medicinal products, healthcare products and other Over the Counter (OTC) products and food processing unit. The aforesaid business of SHBL has been nurtured over a period of time. This scheme is in the best interest of the Companies and their respective shareholders, employees, creditors and other stakeholders on account of following benefits:

(a) SHBL is the main operational entity in the Healthcare Segment of the group and therefore its Amalgamation with SVL shall result in maximization of overall shareholder value;

(b) Achieve simplification of group structure, optimal utilization of resources, better administration and cost reduction;

(c) Creating synergies in operations, benefit of scale and enhancing competitive strength since duplication of administrative efforts, legal and regulatory compliances will be unified; and

(d) Independent group structure for each of the business segments of the group (i.e., Healthcare Business and the Financial Services Business) will ensure required depth and focus on each of the segments and adoption of strategies necessary for the growth of the respective segments. The structure shall provide independence to the management in decisions regarding the use of their respective cash flows for dividends or capital expenditure in their respective businesses.

The aforesaid scheme is subject to necessary approvals from the BSE Limited, the National Stock Exchange of India Limited, the Securities and Exchange Board of India, the NCLT and other statutory or regulatory authorities.

deposits

During the year under review, the Company has neither accepted nor renewed any deposits from the public within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

share capital

The paid up Equity share capital of the Company as at 31st March, 2023 stood at Rs. 31.81 crores divided into 31810500 equity shares of face value of Rs. 10 each. There has been no change in the Authorised and Paid up Share Capital of the Company during the year under review.

A) Issue of equity shares with differential rights: The Company did not issue equity shares with differential voting rights during the financial year 2022-23.

B) Issue of sweat equity shares: The Company did not issue sweet equity shares during the financial year 2022-23.

C) Issue of employee stock options: The Company did not issue stock options during the financial year 2022-23.

D) Provision of money by Company for purchase of its own shares by employees or by trustees for the benefit of employees: The Company does not have a scheme for purchase of its own shares by employees or by trustees for the benefit of employees.

CHANGE IN NATURE OF BUSINESS, IF ANY

There has been no change in the nature of business of the Company during the financial year ended 31st March, 2023.

LOANS, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the note no. 5 to the Financial Statements.

material changes and commitments

No material changes and commitments affecting the financial position of your Company have occurred between the end of the financial year of the Company to which financial statements relates and the date of this report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATOR/COURTS/TRIBUNALS IMPACTING THE GOING CONCERN

status and companys operations in future

There were no significant and material orders passed by the Regulators or Courts or Tribunals during the year impacting the going concern status and the operations of the Company in future.

internal control systems and their adequacy

Your Companys Internal Control Systems are commensurate with the nature, size and complexity of its business and ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information.

The Audit Committee have laid down internal financial controls to be followed by the Company and such policies and procedures have been adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companys 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.

An external independent firm carries out the internal audit of the Company operations and reports to the Audit Committee on a regular basis. Internal Audit provides assurance on functioning and quality of internal controls along with adequacy and effectiveness through periodic reporting.

However, the management of subsidiary of the company, during the year has detected misappropriation of cash collections from customers aggregating to Rs. 796.45 lakhs (Sastasundar Healthbuddy Limited- Rs. 161.40 Lakhs) (Retailer Shakti Supply Chain Pvt Ltd - Rs. 635.05 Lakhs) by few employees of the Sastasundar Healthbuddy Limited ("SHBL"), subsidiary of the company and Retailer Shakti Supply Chain Pvt Ltd ("RSCPL "), step down subsidiary of the company. The statutory auditors in this regard have also expressed their adverse opinion, the details of which are given elsewhere in this report. Report on the Internal Financial Control under Section 143(3)(i) of the Companies Act, 2013 is attached as annexure to the Independent Auditors Report of the Consolidated Financial Statement for the FY 2022-23 which is part of the report.

SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES:

As on March 31, 2023 the Company has nine subsidiaries (both direct and step down). During the financial year, no company became/ ceased to be subsidiaries, joint ventures and associates.

In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared consolidated financial statements of the Company and all its subsidiaries forms part of the Annual Report. Further a statement containing the salient features of the financial statements of each of the subsidiaries in the prescribed format Form AOC-1, forms part of the Annual Report. The annual accounts of the subsidiary companies will be made available to the shareholders on request and will also be kept for inspection by the shareholders at the registered office of your Company.

Further as per section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company are available at our website at www.sastasundarventures.com.

A Policy has been formulated for determining the Material Subsidiaries of the Company pursuant to Regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [hereinafter referred to as "SEBI (LODR) Reg, 2015"]. The said Policy has been posted on the Companys website at the http://www.sastasundarventures.com/Pdf/SVL_ PolicyforDeterminationofMaterialSubsidiary.pdf

As per the provisions of Regulation 16(1)(c) of the SEBI (LODR) Regulations, 2015, the Company has two material unlisted subsidiary, Sastasundar Healthbuddy Limited and Retailer Shakti Supply Chain Private Limited.

The Company does not have any Joint Venture Company. The Company has one Associate Company i.e. Flipkart Health Limited (formerly Sastasundar Marketplace Limited).

BOARD OF DIRECTORS:

a) Directors and Key Managerial Personnel

As per the provision of the Companies Act, 2013 Mr. Ravi Kant Sharma (DIN: 00364066) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommended the re- appointment of Mr. Ravi Kant Sharma as Director.

The tenure of Mr. Banwari Lal Mittal (DIN: 00365809) as Managing Director & CEO expires on 30th June, 2023. The Board of Director at their meeting held on 30th May, 2023, on the recommendation of Nomination and Remuneration Committee and subject to the approval of members, had re-appointed Mr. Banwari Lal Mittal as Managing Director & CEO for a period of 5 years w.e.f. 1st July, 2023 without any remuneration. The approval of members is being sought at the ensuing Annual General Meeting.

None of the Directors of the Company are disqualified for being appointed as Directors, as specified in section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014. Further, in the opinion of the Board, the Independent Directors also possess the attributes of integrity, expertise and experience as required to be disclosed under Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014.

The details of Director being recommended for reappointment as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are contained in the accompanying Notice convening the ensuing Annual General Meeting of the Company. Appropriate Resolution(s) seeking your approval to the re-appointment of Director are also included in the Notice.

Pursuant to Section 203 of the Companies Act, the Key Managerial Personnel of the Company are Mr. Banwari Lal Mittal, Managing Director, Mrs. Manisha Sethia, Chief Financial Officer and Mr. Pratap Singh, Company Secretary.

None of the Directors of the Company receives any commission from the Company.

b) Declaration by the Independent Director(s)

All the Independent Directors have furnished the requisite declarations that they meet the independence criteria as laid down under section 149(6) of the Companies Act, 2013 read with the rules made thereunder and Regulation 16(1)(b) of the SEBI (LODR) Reg, 2015. Further, the Board of Directors has taken on record the declaration and confirmation submitted by the Independent Director under regulation 25(8) after assessing its veracity. The Independent Directors have also submitted a declaration confirming that they have registered their names in the databank of Independent Directors as being maintained by the Indian Institute of Corporate Affairs (IICA) in terms of Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014. The Independent Directors have complied with the code for Independent Director as prescribed under Schedule IV of the Companies Act, 2013.

c) Familiarization Programme undertaken for Independent Director

In terms of Regulation 25(7) of the SEBI (LODR) Reg, 2015, your Company is required to conduct Familiarisation Programme for Independent Directors to familiarise them about your Company including nature of Industry in which your company operates, business model, responsibilities of the Independent Directors, etc. Further, pursuant to Regulation 46 of the SEBI (LODR) Reg, 2015, your Company is required to disseminate on its website, details of familiarization programmes imparted to the Ids including the details of the same. During the year, the Company has organised one familiarisation Programme of the Independent Directors. The details of the familiarisation programme of Independent Directors are provided in the Corporate Governance Report. The link to the details of familiarization programmes imparted to the Independent Directors is http://www.sastasundarventures.com/Pdf/FamiliarizationProgrammeForIndependentDirector.pdf

d) Board Evaluation

The Nomination and Remuneration Committee of the Company has formulated and laid down criteria for Performance evaluation of the Board (including Committees) and every director (including Independent Directors) pursuant to the provisions of Section 134, Section 149 read with the code of Independent Director (Schedule IV) and Section 178 of the Companies Act, 2013 read with Rules framed thereunder and Regulation 19(4) read with Part D of Schedule II of SEBI (LODR) Reg, 2015.

For annual evaluation of the Board as a whole, its Committee(s) and Individual Directors including the Chairman of the Board, the Company has formulated a questionnaire to assist in evaluation of the performance. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

During the year under review, the Independent Directors of the Company reviewed the performance of Non-independent Directors, the board as a whole and the chairperson of the Company, taking into account the views of executive and non- executive directors.

e) Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committee adopted the Remuneration Policy, which inter alia includes policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management Personnel and their remuneration. The remuneration policy of the Company aims to attract, retain and motivate qualified people at the Executive and at the Board levels. The remuneration policy seeks to employ people who not only fulfill the eligibility criteria but also have the attributes needed to fit into the corporate culture of the Company. The salient features of the Policy has been disclosed in the Corporate Governance Report, which forms part of this Annual Report. The said policy is available at the weblink: https://sastasundarventures.com/Pdf/SVL_Remuneration_policy.pdf.

meetings of the board of directors and committee

a) Board of Directors

The Board meets at regular intervals to discuss and decide on business policy and strategy apart from other Board business. However, in case of special and urgent business need, the Boards approval is taken by passing resolutions through circulation, as permitted by law, which are confirmed in the subsequent Board meeting. During the year under review, five Board Meetings were convened and held on 30^th May, 2022, 13^th August, 2022, 14^th November, 2022, 14^th February, 2023 and 27^th March, 2023, the details of which are given in the Corporate Governance Report. The meetings were held in compliance with the various provisions of the Act/Listing Regulations.

b) Audit Committee

The composition, number of meetings held and attended and terms of reference of the Audit Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee.

c) Nomination and Remuneration Committee

The composition, number of meetings held and attended and terms of reference of the Nomination and Remuneration Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

d) Stakeholders Relationship Committee

The composition, number of meetings held and attended and terms of reference of the Stakeholders Relationship Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

e) Risk Management Committee

The composition, number of meetings held and attended and terms of reference of the Risk Management Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

f) Investment Committee

The composition, number of meetings held and attended and terms of reference of the Investment Committee has been furnished in the Corporate Governance Report forming a part of this Annual Report.

g) Separate Meeting of Independent Directors

The Independent Directors met on 14th November, 2022 and 27th March, 2023 without the attendance of Non-Independent Directors and members of the Management. The Independent Directors at its meeting held on 14^th November, 2022 reviewed the performance of Non-Independent Directors and the Board as a whole, the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The independent directors at its other meeting held on 27^th March, 2023, reviewed the draft composite scheme of arrangement and fairness opinion for issue of Report from the Committee of Independent Directors

auditors

(a) Statutory Auditors

M/s. JKVS & Co., Chartered Accountants (Firm Registration Number: 318086E), the Statutory Auditors of the Company have been appointed as Statutory Auditors of the Company by the Members of the Company from the conclusion of 33rd Annual General Meeting held on 29th September, 2022 till the conclusion of 38th Annual General Meeting of the Company to be held in the year 2027.

M/s. JKVS & Co., Chartered Accountants, the Statutory Auditors have submitted their Independent Auditor Report for the financial year ended 31st March, 2023 and they have made no qualification, reservation, observation or adverse remarks or disclaimer in their Standalone Audit Report. However, the Consolidated Audit Report for the financial year ended 31st March, 2023 have been qualified on account of qualification in the subsidiary companies accounts, which has been detailed below together with management comments thereof.

Qualification in Consolidated Audit Report of FY 2022-23 and Auditors Opinion on Internal Control systems and their adequacy

The Statutory Auditor in their Consolidated Audit Report for FY 2022-23 has expressed Qualification with respect to Financial Statement of subsidiaries and opinions with respect to internal controls. The management of the subsidiaries believes that the Company has adequate internal financial control system in place which operates effectively. The Internal Audit team monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit, management undertakes corrective actions in their respective areas and thereby strengthens the controls.

i) The Independent Auditors of Sastasundar Healthbuddy Limited ("SHBL"), subsidiary company have given a Qualified Opinion on the financial statements of SHBL for the year ended March 31, 2023 vide their report dated July 13, 2023, which has been considered by the statutory auditors of the Company. The basis for Qualified Opinion described by the Independent Auditors of SHBL in their report is as under:

A) Qualification with respect to Investment by SHBL in 0.01% Non-Cumulative Compulsorily Convertible Preference Shares (CCPS) issued by its associate (erstwhile wholly owned subsidiary) and opinion in respect to internal controls for management review of estimates in relation to valuation of Investments in 0.01% Non-Cumulative Compulsorily Convertible Preference Shares (CCPS) issued by its associate (erstwhile wholly owned subsidiary).

Qualification in Audit Report

We draw attention to Note 47 of the Consolidated Financial Statement with regard to fair valuation of the investment in 0.01% Non-Cumulative Compulsorily Convertible Preference Shares (CCPS) issued by its associate (erstwhile wholly owned subsidiary) by the management based on its internal assessment and best estimate of the milestone shares, milestone events and milestone consideration, as defined in the Put Call Option Agreement dated 19 November 2021 and its subsequent amendments. Pending finalisation of the terms and conditions of the milestone shares, milestone events and milestone consideration, the auditor of subsidiary company were unable to obtain sufficient appropriate audit evidence about the fair value the CCPS as at 31 March 2023. Consequently, we were unable to determine whether any adjustments to these amounts were necessary and its resultant impact on the loss for the year ended 31 March 2023.

Adverse Opinion on internal Controls

SHBL internal control system for management review of estimates in relation to valuation of investments was not operating effectively which resulted in non-compliance with Ind AS.

Managements Response

SHBL has received 99,873 number of 0.01% Non-Cumulative Compulsorily Convertible Preference Shares (CCPS) from its associate (erstwhile wholly owned subsidiary) in the previous financial year. SHBL has entered into a Put Call Option Agreement on the 19th November 2021 with its associate and the purchaser (the investor) (the Holding Company of the associate) whereby it agreed to sell 75.1% of the aforesaid CCPS (milestone shares) to the investor at a specified consideration on achievement of certain milestones on or before the milestone event target dates by SHBL.

The put call option agreement was subsequently amended on 3rd March 2022 and 17th April 2023. As per the last amendment, SHBL agreed to transfer 12,612 CCPS to the investor for an agreed consideration, against which Rs. 1,669.23 lakhs were received in May 2023, and 4,182 CCPS to be converted into equity shares of the associate as per the conversion ratio defined in the agreement, post achievement of the specified milestones. With respect to the remaining CCPS, it was decided that SHBL, the associate, and the investor will mutually discuss and agree in writing the terms and conditions of the remaining milestone events, milestone shares and milestone consideration. The maximum overall consideration payable for all milestones has been specified by the amendment agreement dated 17 April 2023 which is in line with the amended Put Call Option Agreement dated 3rd March 2022.

The management of SHBL, based on its internal assessment and best estimate of milestone events, milestone shares and milestone consideration, has derived the fair value of the investment for the aforesaid CCPS by engaging an independent registered valuer. Further, the management estimates that all the milestone events would fall due within a period of 12 months from the Balance Sheet date and hence 75.1% of the aforesaid investment has been classified under current assets.

B) Qualification on determining the period specific effects of expenses booked as exceptional item on comparative information for the prior periods.

Qualification in Audit Report

We draw attention to Note 34.1 of the financial statement, the Company has recorded INR 161.40 lacs as an expense during the year and disclosed as exceptional item. The Company has not determined the period specific effects on comparative information for the prior periods of the impact of misappropriation of cash collections from customers aggregating to INR 161.40 lacs by few employees. As a result, we are unable to assess the likely impact of the non- compliance with the Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, on the financial statements including the comparative information presented and disclosures thereof.

Adverse Opinion on internal Controls

SHBL did not have an appropriate internal control system for cash collections and debtors balance reconciliations which resulted in the omission of recording cash collected from debtors due to fraud.

Managements Response

During the year, the Management of the subsidiary (SHBL) based on its internal assessment, has detected misappropriation of cash collections from customers aggregating to INR 161.40 lacs by few employees of SHBL during the current financial year. SHBL has referred the matter to the police department and after filing of the First Information Report (FIR), the aforesaid employees were arrested by the police and an investigation charge sheet has been filed with the Additional Chief Judicial Magistrate, Baruipur, West Bengal by the police.

SHBL has expensed the aforesaid amount during the current year under the heading "exceptional item" and SHBL is taking necessary legal action to recover the amount.

SHBL had detected the misappropriation after the approval of Financial Statement for the FY 2021-2022. Further the Determination of Specific Period were not possible from the Investigation Charge Sheet of the Police Authorities. The misappropriation is quantified on the date of the report.

SHBL is taking necessary legal action to recover the amount. However, as conservative approach it has been decided to expenses off and hence charged off to current FY 22-23 only.

The Management of the subsidiary has taken opinion from Independent Chartered Accountant, where the opinion received was in line with Management estimate to expense off in Current FY 22-23 only.

C) Qualification on Pending Reconciliation with reference to Note 16.2 under Trade Payables Qualification in Audit Report

Based on audit procedures performed in relation to trade payables, on sample vendor balances we noted instances wherein the independent balance confirmations received from vendors were not in agreement with the balances in the books of account. As stated in Note 16.2 to the financial statements, the management is in the process of reconciling the outstanding balances as at 31 March 2023. Pending reconciliations of the said balances, we are unable to comment on the adjustments, if any, with respect to the balances of trade payables arising out of such reconciliation and its consequential impact on these financial statements.

Adverse Opinion on internal Controls

SHBL did not have an appropriate internal control system for reconciliations of trade payables which could potentially result in material misstatements in the Companys trade payables and related purchase balances

Managements Response

Trade Payables of SHBL as of 31st March 2023 are net of debit note balance of Rs 822.87 lacs related to the return of goods (generally medicine).

This debit notes are related to return of Goods (generally medicine). The suppliers take few months to issue credit notes as per normal trade practice in pharma Industry and there is always a time lag between Purchase Debit Note Raised and Credit Note Received. The management of SHBL is in the process of collecting and matching the debit note with corresponding credit note issued by the vendor and reconciling the outstanding balance of debit notes as at 31st March 2023.

ii) The Independent Auditors of Retailer Shakti Supply Chain Private Limited ("RSSCPL"), a step down subsidiary have given a Qualified Opinion on the financial statements of RSSCPL for the year ended March 31, 2023 vide their report dated July 13, 2023, which has been considered by the statutory auditors of the company. The basis for Qualified Opinion described by the Independent Auditors of RSSCPL in their report is as under:

A) Qualification on determining the period specific effects of expenses booked as exceptional item on comparative information for the prior periods.

Qualification in Audit Report

We draw attention to Note 34.1 of the Consolidated Financial Statements, the Company has recorded INR 635.05 lacs as an expense during the year and disclosed as exceptional item. The Company has not determined the period specific effects on comparative information for the prior periods of the impact of misappropriation of cash collections from customers aggregating to INR 635.05 lacs by few employees. As a result, we are unable to assess the likely impact of the non-compliance with the Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors, on the Consolidated Financial Statements including the comparative information presented and disclosures thereof."

Adverse Opinion on internal Controls

The step down subsidiary, RSSCPL did not have an appropriate internal control system for cash collections and debtors balance reconciliations which resulted in the omission of recording cash collected from debtors due to fraud.

Managements Response

During the year, the Management based on its internal assessment, has detected misappropriation of cash collections from customers aggregating to INR 635.05 lacs by few employees of the subsidiary. The Management has referred the matter to the police department and after filing of the First Information Report (FIR), the aforesaid employees were arrested by the police and an investigation charge sheet has been filed with the Additional Chief Judicial Magistrate, Baruipur, West Bengal by the police.

RSSCPL has expensed the aforesaid amount during the current year under the heading "exceptional item" and the subsidiary is taking necessary legal action to recover the amount. RSSCPL had detected the misappropriation after the approval of Financial Statement for the FY 2021-2022. Further the Determination of Specific Period were not possible from the Investigation Charge Sheet of the Police Authorities. The misappropriation is quantified on the date of the report.

The subsidiary company is taking necessary legal action to recover the amount. However, as conservative approach it has been decided to expenses off and hence charged off to current FY 22-23 only.

Management has taken opinion from Independent Chartered Accountant, where the opinion received was in line with Management estimate to expense off in Current FY 22-23 only.

(b) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding Rules framed thereunder, M/s MKB & Associates, a firm of Company Secretaries were appointed as the Secretarial Auditors of the Company to carry out the secretarial audit for the year ending 31st March, 2023.

Annual Secretarial Audit Report

In terms of Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI (LODR) Reg, 2015, a Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexed with this Report as "Annexure- I". There are no qualifications, reservations or adverse remarks made by Secretarial Auditors in their Report.

However, the secretarial auditor in its report have reported that pursuant to an inspection carried out under Section 206(5) of the Companies Act, 2013; proceedings have been initiated before the relevant judicial authorities for alleged violations of the provisions of Companies Act, 2013; the Company has denied the alleged violation in its reply to the Inspecting officer and is taking necessary steps to contest the same.

The secretarial auditor in its report have further reported that the management based on its Internal assessment, has detected misappropriation of cash collections from customers aggregating to Rs. 796.45 lakhs (Sastasundar Healthbuddy Limited - Rs. 161.40 Lakhs) (Retailer Shakti Supply Chain Pvt Ltd - Rs. 635.05 Lakhs) by few employees of the Sastasundar Healthbuddy Limited ("SHBL"), subsidiary of the company and Retailer Shakti Supply Chain Pvt Ltd ("RSCPL"), step down subsidiary of the company during the current financial year. SHBL has referred the matter to the police department and after filing of the First Information Report (FIR), the aforesaid employees were arrested by the police and an investigation charge sheet has been filed with the Additional Chief Judicial Magistrate, Baruipur, West Bengal by the police. The management is taking necessary legal action to recover the amount and on conservative approach has expensed the aforesaid amount during the current year under the heading "exceptional item" in Consolidated financial statements for the Financial Year 2022-23.

As required under Regulation 24A of the SEBI (LODR) Reg, 2015, Secretarial Audit Report in Form No. MR-3 of Sastasundar Healthbuddy Limited and Retailer Shakti Supply Chain Private Limited, material unlisted subsidiaries of the Company is also annexed herewith and marked as "Annexure- II and Annexure - III" respectively.

FRAUD REPORTING:

During the year, the management based on its internal assessment, has detected misappropriation of cash collections from customers aggregating to Rs. 796.45 lakhs (Sastasundar Healthbuddy Limited - Rs. 161.40 Lakhs) (Retailer Shakti Supply Chain Pvt Ltd - Rs. 635.05 Lakhs) by few employees of the Sastasundar Healthbuddy Limited ("SHBL"), subsidiary of the company and Retailer Shakti Supply Chain Pvt Ltd ("RSCPL "), step down subsidiary of the company during the current financial year. SHBL has referred the matter to the police department and after filing of the First Information Report (FIR), the aforesaid employees were arrested by the police and an investigation charge sheet has been filed with the Additional Chief Judicial Magistrate, Baruipur, West Bengal by the police.

The management is taking necessary legal action to recover the amount and on conservative approach has expensed the aforesaid amount during the current year under the heading "exceptional item" in Consolidated financial statements for the Financial Year 2022-23.

related party transactions

During the financial year 2022-23, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, which were in the ordinary course of business and on arms length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued thereunder and SEBI (LODR) Reg, 2015. Thus the disclosure in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required. However, your attention is drawn to the Related Party disclosure in Note No. 23 of the Standalone Financial Statements.

During the financial year 2022-23, there were no materially significant related party transactions entered into by the Company, which may have a potential conflict with the interest of the Company at large. There were no pecuniary relationship or transactions entered into by any Independent Director with the Company during the year under review.

At the Annual General Meeting held on 29th September, 2022 the Company has taken approval from the members for Material Related Party Transaction(s) between Sastasundar Healthbuddy Limited (SHBL), subsidiary of Sastasundar Ventures Limited and Retailer Shakti Supply Chain Private Limited (RSSCPL), step down subsidiary of Sastasundar Ventures Limited for an aggregate value of upto Rs. 300 crore for each financial year, subject to such contract(s)/ arrangement(s)/ transaction(s) being carried out at arms length and in the ordinary course of business of SHBL and RSSCPL.

All Related Party Transactions are placed before the Audit Committee and also before the Board for approval. Omnibus approval was obtained on a yearly basis for transactions which were of repetitive nature. Transactions entered into pursuant to omnibus approval of all the Related Party Transactions are placed before the Audit Committee and the Board for review and approval on a quarterly basis.

The Company has formulated a policy on related party transactions for purpose of identification and monitoring of such transactions. The said policy on related party transactions as approved by the Board is posted at the Companys website at the weblink http://www.sastasundarventures.com/Pdf/SVL_RelatedPartyTransactionPolicy.pdf

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as per section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure - IV".

PARTICULARS OF EMPLOYEES & RELATED DISCLOSURES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this Report as "Annexure - V" and forms part of the Report.

annual return

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act, as amended, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company for the Financial Year ended 31st March, 2023 is available on the website of the Company at https://www.sastasundarventures.com/Pdf/Draft_Annual_ Return_31.03.2023.pdf

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to the Directors and Employees to report their concern about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company at the weblink http://www. sastasundarventures.com/Pdf/SVL_whistle_blower_policy.pdf

During the year under review, no complaints have been received/reported.

corporate social responsibility

The provisions relating to the Corporate Social Responsibility ("CSR") are not applicable to the Company.

business responsibility and sustainability report

The Securities and Exchange Board of India (SEBI) has mandated Indias top 1,000 listed entities based on market capitalization on the BSE and NSE as on March 31, 2022 to submit a Business Responsibility and Sustainability Report (BRSR) along with their Annual Report for the financial year 2022-23. This report is required to be in line with the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) as released by the Ministry of Corporate Affairs (MCA) in July, 2011 and the amendment to Listing Regulations in May 2021. As per Regulation 34(2)(f) of SEBI (LODR) Reg 2015, BRSR is a report on the nine principles of the National Voluntary Guidelines on social, environmental and economic responsibilities of business as framed by the MCA, is annexed herewith as "Annexure- VI" and forms a part of this Report.

policy on prevention of insider trading

Your Company has adopted a Code for Prevention of Insider Trading with a view to Regulate trading in equity shares of the Company by the Directors and designated employees of the Company. The said Code of Conduct is available on the website of the Company at www.sastasundarventures.com. The Code requires preclearance for dealing in Companys shares and prohibit the purchase or sale of shares in your company by the Directors and designated employees, while they are in possession of unpublished price sensitive information and also during the period when the Trading Window remains closed.

corporate governance report and management discussion analysis report

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements as set out by SEBI. The Company has also implemented several best corporate governance practices. The report on Corporate Governance and Management Discussion & Analysis Report as stipulated under Schedule V of the SEBI (LODR) Reg, 2015 forms an integral part of this report.

practicing company secretaries certificate on corporate governance

In Compliance with the provisions of Regulation 34 of the SEBI (LODR) Reg, 2015 read with Schedule V of the said Regulations, the Corporate Governance Certificate issued by the Practicing Company Secretaries, M/s MKB & Associates, Company Secretaries regarding compliance with the conditions of Corporate Governance as stipulated is annexed to this report.

Your Company has taken adequate steps for strict compliance with the Corporate Governance guidelines, as amended from time to time.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS

The Company has complied with Secretarial Standard on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India during the year under review.

LISTING WITH STOCK EXCHANGES

Your Company is listed with BSE Ltd. and National Stock Exchange of India Ltd. and the Company has paid the Listing Fees to both the exchanges on time.

CHIEF EXECUTIVE OFFICER (CEO) / CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION

As required under Regulation 17(8) of the SEBI (LODR) Reg, 2015, the CEO/CFO certification has been submitted to the Board and a copy thereof is contained elsewhere in this Annual Report.

risk management

Your Companys risk management strategy strives to balance the trade-off between risk and return and ensure optimal risk-adjusted return on capital, and entails independent identification, measurement and management of risks across the various businesses of your Company.

The Company has formulated a Risk Assessment & Management Policy which identify, evaluate business risks and opportunities. The risk management system of the Company is reviewed by the Audit Committee and the Board of Directors on a regular basis. During the year, no major risks were noticed, which may threaten the existence of the company.

The Company has duly constituted risk management committee, the details of the same are covered in the Corporate Governance Report forming part of the Boards Report.

directors responsibility statement

The Directors acknowledges the responsibility for ensuring compliances with the provisions of section 134(3)(c) read with section 134(5) of the Companies Act, 2013 and provisions of the SEBI (LODR) Reg, 2015 and in the preparation of the annual accounts for the year ended 31st March, 2023 states that —

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that year;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) proper systems had been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

other disclosures

Your Directors state that:

1. No proceedings are pending against the Company under the Insolvency and Bankruptcy Code, 2016.

2. The Company serviced all the debts & financial commitments as and when they became due and no settlements were entered into with the bankers.

3. The company is not required to maintain cost records.

human resources

Our employees are our core resource and the Company has continuously evolved policies to strengthen its employee value proposition. Your Company was able to attract and retain best talent in the market and the same can be felt in the past growth of SastaSundar Group. The Company is constantly working on providing the best working environment to its Human Resources with a view to inculcate leadership, autonomy and towards this objective, your company spends large efforts on training. Your Company shall always place all necessary emphasis on continuous development of its Human Resources. The belief "great people create great organization" has been at the core of the Companys approach to its people.

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

Your Company is committed to provide a safe and secure environment to its women employees across its functions, as they are considered as integral and important part of the Organisation. Your company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.

In terms of provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder, your Company has duly adopted a Policy and has also complied with the provisions relating to the constitution of Internal Complaints Committee (ICC).

There was no case of sexual harassment reported during the year under review.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank the Regulatory and Government Authorities, Bankers, Business Associates, Shareholders and the Customers of the Company for their continued support to the Company. The Directors express their deep sense of appreciation towards all the employees and staff of the Company and wish the management all the best for achieving greater heights in the future.