pratibha industries ltd Directors report

To,

The Members

Pratibha Industries Limited

Your Directors/Resolution Professional have pleasure in presenting the 24th Annual Report together with the financial statements for the financial year ended 31st March, 2019.

FINANCIAL HIGHLIGHTS

The performance of the Company for the financial year ended 31st March, 2019, is summarized below:

(Rs. in Crores)

Particulars	Standalone		Consolidated
	31.03.2019	31.03.2018	31.03.2019	31.03.2018
Total Revenue	369.66	1010.45	440.32	1,241.40
Total Expenditure	1958.53	3813.92	2010.26	4062.79
Profit/(loss) before Tax	-1588.87	-2803.47	-1,569.94	-2,821.39
Less: Provision of Taxation	–	–	–	-0.40
Profit/(loss) After Tax	-1588.87	-2803.47	-1569.94	-2820.99
Add: Share in Profit/(loss) of Joint Ventures/Associates (net) &	–	–	-46.56	-1.86
Adjustment for Non-Controlling interest in Subsidiaries
Net Profit after Tax, Non-Controlling interest and share in Profit/(loss) of Joint Ventures	-1588.87	-2803.47	-1616.50	-2822.85
Other Compressive Income	–	-0.15	-0.02	-0.16
Total Comprehensive Income	-1588.87	-2803.62	-1616.52	-2823.01
Earnings Per Share (in Rs.)
Basic	-66.59	-117.5	-67.75	-118.31
Diluted	-66.59	-117.5	-67.75	-118.31

PERFORMANCE REVIEW

During the financial year 2018-19 (‘FY 2019 or ‘year under review), the turnover of the Company has been sharply declined due to non-receipt of new projects/work. The Company was facing severe financial crisis. Due to which, the Company is into Corporate Insolvency Resolution Process ("CIRP") w.e.f. 01.02.2019, details of the same is given in the notice of this AGM.

During the year under review, most of the ongoing contracts were given on back to back basis due to liquidity crunch in the Company.

DIVIDEND

In view of losses, no dividend has been recommend for the F.Y. 2018-19.

TRANSFER TO GENERAL RESERVE

The Directors do not propose to transfer any amount to the General Reserve.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company is annexed as Annexure -A to this Report.

SUBSIDIARIES/ASSOCIATE COMPANIES/JOINT VENTURES

The names of companies which are subsidiaries, associates and joint ventures of the Company are provided under point III of MGT 9. Pursuant to the provisions of Section 129 and other applicable provisions of the Companies Act, 2013 ("the Act") read with rules framed thereunder, the Company has prepared consolidated financial statements of the Company and its subsidiaries, associate companies and joint ventures, in accordance with IND AS-27 on Consolidated Financial Statements read with IND AS-31 on interest in Joint Ventures and IND AS-28 on Investments in Joint Ventures, and a separate statement containing the salient features of financial statements of subsidiaries, joint ventures and associates in Form AOC-1 are attached to the said consolidated financial statement forming part of the Annual Report.

The business highlights of subsidiaries have been covered in Management Discussion and Analysis forming part of this Annual Report.

FIXED DEPOSITS

The Company has not invited, accepted and renewed fixed deposits from public/members during the year under review.

The Company had accepted public deposits prior to the commencement of the Act.

After the Commencement of CIRP, all the FD holders are required to submit their claim in respect of their outstanding dues before the Resolution Professional.

DIRECTORS

During the financial year under review, Mr. Sharad Deshpande- Director of the Company resigned on 25th December, 2018. All the Directors of the Company are disqualified u/s 164 (2) of the Companies Act, 2013.

KEY MANAGERIAL PERSONNEL

During the year under review, Mrs. Bhavana Shah, Company Secretary resigned on 29th December 2018.

MEETINGS OF THE BOARD

The details of meetings of Board and its Committees held during FY 2018-19 and other prescribed information are provided in the Corporate Governance Report forming part of this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (5) of the Act, your Directors hereby affirm that: (a) in the preparation of the annual accounts, the applicable IND AS have been followed along with proper explanation relating to material departures; (b) the Directors 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 loss of the Company for that period; (c) the Directors have taken proper and sufficient care for the 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 fraud and other irregularities; (d) the Directors have prepared the annual accounts on a going concern basis; (e) the Directors 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) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

STATUTORY AUDITORS

M/s. Ramanand & Associates, Chartered Accountants (ICAI Firm Registration Number 117776W) were appointed as the Statutory Auditors of the Company to hold office for a term of 5 years from the conclusion of the 22nd Annual General Meeting (AGM) held on 29th September, 2017 until the conclusion of the 27th Annual General Meeting (AGM) of the Company to be held in the year 2022.

Pursuant to the Notification issued by the Ministry of Corporate Affairs on 7th May, 2018, amending section 139 of the Companies Act, 2013, the mandatory requirement for ratification of appointment of Auditors by the Members at every AGM has been omitted and hence your Company has not proposed ratification of appointment of M/s. Ramanand & Associates, Chartered Accountants, at the forthcoming AGM.

AUDITORS REPORT

The Auditors have made certain qualified observations in their Reports.

The statement on impact of audit qualifications as stipulated in Regulation 33(3)(d) of SEBI (LODR) Regulations is enclosed hereto as Annexure B.

COST AUDITORS

Pursuant to provisions of Section 148 of the Act, the Board of Directors on the recommendation of the Audit Committee, reappointed M/s. Ketki D. Visariya & Co., Cost Accountant, as Cost Auditor of the Company for the financial year 2018-19 at a remuneration of Rs. 200,000 /- plus applicable taxes and out of pocket expenses. However, cost audit is not conducted due to nonpayment of fees to the cost auditor since last three years.

INTERNAL FINANCIAL CONTROLS

During the year under review, proper systems for internal financial control could not be followed due to irregularities in payment of fees to Internal Auditors, M/s. Chokshi & Chokshi LLP, Chartered Accountants. The effectiveness of the internal controls is continuously reviewed by the Audit Committee. The internal control system is supplemented by an extensive programme of internal, external audits and periodic review by the management.

Main objective of Internal Audit is to provide the Audit Committee an independent, objective and reasonable assurance of the adequacy and effective operation of Companys risk management, internal control and governance processes.

On the basis of its deliberations on the internal control systems and internal audits, the Audit Committee makes recommendations to the Board.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Resolution Professional has appointed Mr. Mayank Padiya, Practicing Company Secretary to conduct Secretarial Audit of the Company for the financial year 2018-19. The report of the Secretarial Auditor is annexed to this report as Annexure - C.

Managements para wise reply to Secretarial Auditors qualification/remarks/reservations:

1. After the term of Mr. Ajit Kulkarni and Mr. Sharad Deshpande as Managing Director and Whole Time Director, respectively, expired on March 2018, position of the Managerial Personnel was vacant due to precarious financial condition of the Company. Further due to disqualification of existing directors on account of default in repayment of public deposits, the same directors could not be reappointed for managerial position. In the meantime, the Corporate Insolvency Resolution Process of the Company commenced w.e.f. 01/02/2019 and in view of the same, the Resolution Professional has taken over charge of the management/Board of Directors of the Company in terms of the provisions of the Code and the Board is suspended.

2. Due to delay in payment of salaries, no new Company Secretary was willing to join the Company. In view of the same, the position of the CS was vacant.

3. During the Financial Year 2017-18 four Independent Directors of the Company resigned from their post and only one independent director left in the Company. As stated in para one herein, powers of the Board of Directors are suspended.

4. Powers of the Board of Directors is suspended w.e.f. 01.02.2019 on account of CIRP. In view of the same, Company is managed by the Resolution Professional. Further, as per the provisions of the Code, all the claims regarding outstanding debt against the Company shall lay before the Resolution Professional during the CIRP.

5. The Cost Auditor is not paid any fees during the FY 2018-19. Further, there are procedural overlap in his appointment.

6. Statutory Registers, if any, pending to be updated, will be prepared and updated.

7. Rely of the management is same as stated in para 5 herein.

8. There are no business/activities in the foreign subsidiaries. Further, the Consultants/Auditors of these foreign subsidiaries are not paid since many years. In view of the same APR returns with RBI were not filed.

9. With regard to point 9 of the Secretarial Audit Report, it is humbly submitted that these forms are not filed due various reasons such as disqualification of directors, non-availability of data due to nonpayment to RTA or oversight etc.

10. With regard point 10, no comments are required and further, the since the Company is into CIRP, all the powers of the Board of Directors are now being exercised by the RP w.e.f. 01.02.2019.

11. With regard point 11, reply of the management is same as stated in para 9 herein.

12. Minutes, if any, pending will be updated in consultation with the suspended Board of Directors.

13. There is no official communication from the Registrar after search.

14. The Company has complied with the provisions of the Listing Regulations in best possible manner.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company does not own any manufacturing facility. The business activities of your Company are not energy intensive. However, your Company is committed to take required measures to reduce energy consumption by the purchase of energy efficient construction equipment, implementation of energy efficient lightings. The specific details as per Rule 8(3) are provided under Annexure - D.

PERSONNEL

Disclosure with respect to the remuneration of Directors and Employees in accordance with the provisions of Section 197 of the Act read with rule 5(1) & (2) the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure - E.

CORPORATE SOCIAL RESPONSIBILITY

The Company is a socially conscious organisation and assigns tremendous value in serving the society at large. We appreciate our position of responsibility for sharing the benefits with those less fortunate in society and their upliftment.

The Board has constituted a CSR Committee which has recommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company. The Corporate Social Responsibility policy has been devised in accordance with Section 135 of Act. The CSR policy of the Company is available on the website of the Company www.pratibhagroup.com. Since company has incurred losses during the year 2016-17, 2017-18 and 2018-19 and due to liquidity crunch, the Company could not spend money on CSR activities. The annual report on CSR activities is set out as Annexure - F to this report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During the financial year 2018-19, your Company has entered into transactions with related parties as defined under Section 2(76) of the Act read with Companies (Specification of Definitions Details) Rules, 2014, in the ordinary course of business and at arms length basis.

Since all the related party transactions are carried out at arms length basis in the ordinary course of business, the Company do not have any particulars to report in Form AOC- 2 pursuant to Section 134 (3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014.

However, the disclosure of transactions with related party for the year, as per Accounting Standard -18 Related Party Disclosures is given in Notes to the Balance Sheet as on 31st March, 2019.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website at the link: http://www.pratibhagroup.com/pratibha_new/pages/PDFs/ PIL_RPT.pdf.

PARTICULARS OF LOANS, INVESTMENTS, GUARANTEES UNDER SECTION 186

The details of investment made during the year under review (including previous years) are disclosed under Notes of the standalone financial statements of the Company.

The Company is engaged in providing infrastructural facilities and therefore is exempted under sub-section 11 of Section 186 of the Act from the application of provisions of that Section. As such, the requirement to provide the details of a loan, guarantee or security is not applicable to the Company.

ANNUAL EVALUATION OF BOARD

In terms of provisions of the Act read with Rules issued thereunder and SEBI LODR Regulations, the Nomination and Remuneration Committee formulated the criteria for evaluating the Board of Directors, its Committees and individual Directors. During the year under review, evaluation of board was not conducted.

CORPORATE GOVERNANCE

As per the provisions of SEBI LODR Regulations, a Corporate Governance Report is included in the Annual Report as

Annexure - G.

PREVENTION OF SEXUAL HARRASSMENT AT WORK PLACE

In line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 read with rules made thereunder, your Company has constituted Internal Complaints Committee which is responsible for redressal of complaints related to sexual harassment. During the year under review, there were no complaints pertaining to sexual harassment.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism to facilitate reporting of any instances of fraud, unethical conduct and mismanagement, if any vide Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Act and SEBI LODR Regulations.

The policy also provides for adequate safeguards against victimization of persons who use such mechanism and makes provision for direct access to the Chairman of the Audit Committee in all cases. The Whistle Blower Policy of the Company is available on the website of the Company, http://www.pratibhagroup.com/pratibha_new/pages/PDFs/ WHISTLE_BLOWER_POLICY_PIL_.pdf.

EMPLOYEE RELATIONSHIP

The Company due to financial crunch, the Company could not make payments to the employees on time. However, staff and other employees, through out the year gave valuable support to the company by giving uninterrupted service to the company. Management is thankful to them for such gesture and wishes to place on record its sincere appreciation of the efforts put in by the Companys workers, staff and executives for achieving results under demanding circumstances.

OTHER DISCLOSURES

- During the year under review, Corporate Insolvency Resolution Process ("CIR Process") has been initiated for the Company in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 pursuant to order dated February 01, 2019, of the Honble National Company Law Tribunal - Mumbai Bench.

- Material changes and commitments, affecting the financial position of the Company, have occurred between the end of the financial year and the date of this Report:

As on the date of signing of this report, CIRP Period is expired and accordingly, the RP has filed an application before the Honble National Company Law Tribunal - Mumbai Bench for liquidation of the Company as going concern, which is pending to be decided by the Honble Bench.

- The Company has not issued any shares or options for subscription of shares by its employees under any employee stock option scheme or any other scheme.

- None of the Directors received any remuneration or commission from any of the subsidiaries.

- The Company has not issued any equity shares with differential voting rights.

- During the year under review, no instances of fraud were reported to the Audit Committee/Board of Directors by Statutory Auditors, Secretarial Auditors, Cost Auditors or Internal Auditors.

SECRETARIAL STANDARDS

During the period under review, the Company has tried to complied with the applicable Secretarial Standards issued by The Institute of Company Secretaries of India.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thanks the Banks, Financial Institutions, Central and State Governments, Various Statutory Authorities, Customers, Suppliers, Employees and Business Associates for their continued co-operation and support to the Company. Your Directors appreciate and value the trust reposed and faith shown by every shareholders of the Company.

By the Order of Resolution Professional

Ajit Kulkarni

Chairman and Director

Date: 09th January 2019

Place: Mumbai

Annexure B - to Directors Report

Statement of Impact of Audit Qualifications (for audit report with modified opinion) submitted along-with Annual Audited Standalone Financial Results for 31st March, 2019

(Rs. In crores)

I. Sr. No.	Particulars	Audited Figures (as reported before adjusting for qualifications)	Adjusted Figures (audited figures after adjusting for qualifications)
1	Turnover / Total income	369.66	369.66
2	Total Expenditure	1958.53	1958.53
3	Net Profit/(Loss)	(1588.87)	(1588.87)
4	Earnings Per Share	(66.59)	(66.59)
5	Total Assets	2710.96	2710.96
6	Total Liabilities	2710.96	2710.96
7	Net Worth	(4,193.64)	(4,193.64)
8	Any other financial item(s) (as felt appropriate by the management)

II. Audit Qualifications:

Audit Qualification: 1

a. Details of Audit Qualification:

The company has accumulated losses of Rs. 4,908.76 Crores and its net worth is fully eroded. It has incurred net loss during the year ended March 31, 2019 amounting to Rs. 1,588.87 Crores as well as in previous years. It is unable to repay its debts, statutory obligations and pay salaries apart from other obligations/commitments. The application of Financial Creditors under section 9 of the Insolvency and Bankruptcy Code (IBC) had been admitted by Honble National Company Law Tribunal, Mumbai Bench and Resolution Professional ("RP") was appointed vide order dated March 14, 2019. Till the date of signing of Statement, no resolution plan had been approved. Further, application for liquidation of the Company has been filed with the NCLT. All these indicate a material uncertainty that may cast significant doubt upon the Companys ability to continue as a Going Concern. However, the standalone financial results are prepared on a going concern basis.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing Repetitive since Financial Year 2017-18

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

Auditors remarks are self-explanatory. Hence, do not require any further explanation.

iii. Auditors Comments on (i) or (ii) above:

Not Required

Audit Qualification: 2

a. Details of Audit Qualification:

Inventory of Work in Progress (WIP) includes certain contractual claim amounting to Rs.0 310.60 Crores. These amounts have been ascertained by the management based on their estimates. Out of these contractual claims, claims amounting to Rs. 259.33 Crores, are either formally submitted but not yet approved by respective clients or no formal submissions have been made to respective clients. The amounts of these claims are subject to change post approval

from respective clients. To the extent of Rs. 259.33 Crores, Inventories are overstated and accumulated losses are understated in the standalone financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Repetitive since Financial year 2015-16

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

The Company has prepared the claims based on contractual terms, which have been submitted to the clients. Further, the Company is in process of submitting pending claims with the clients. The Company is hopeful of clients approval in due course of time.

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

Not Applicable

iii. Auditors Comments on (i) or (ii) above:

Not Applicable

Audit Qualification: 3

a. Details of Audit Qualification:

The management has not provided us with the detailed working of Construction Work in Progress (WIP), Cost to Completion and consequent profitability and/or losses on projects which are pending execution. In absence of these details, it is not possible for us to ascertain whether the Construction WIP of Rs. 5.63 Crores has been valued and stated correctly or not. The consequential impact, if any, on the standalone financial results is therefore not ascertainable.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since Financial year 2017-18

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Since all the balance contracts are on back to back basis with 2 percent average margin, question of cost to completion and consequent profitability/ and or losses on projects does not arise. Hence, it will not have any impact.

ii. If Management is unable to estimate the impact, reasons for the same:

Not applicable

iii. Auditors Comments on (i) or (ii) above:

In case of Back to back projects, there is no question of having any Work in Progress as expenses are recognised along with revenue. Further, even if the projects are given on back to back basis, as per the requirement of applicable Ind AS, it is mandatory to prepare Cost to complete to arrive at project profitability and in case of prossible loss, making provision for the same. Without proper estimation for cost to complete and estimated profitability, it is difficult to arrive at correct working of WIP.

Audit Qualification: 4

a. Details of Audit Qualification:

Balance confirmation of trade Receivables, Loans and Advances, deposits and trade payables are not received from third parties. These balances are subject to confirmations and consequent adjustments, if required. In absence of balance confirmations, financial impact on standalone financial results is not ascertainable.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Repetitive since Financial year 2017-18.

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

The company is mainly working for government or semi government organisation where there is no practise of giving any balance confirmation certificate. There will not be any impact on financial statement.

iii. Auditors Comments on (i) or (ii) above:

None of the balance confirmation is available with respect to Trade Receivable, Payable, Loans & Advances given and Deposits. Without balance confirmation, it is difficult to quantify the impact on financial statements.

Audit Qualification: 5

a. Details of Audit Qualification:

As per the bank loan statements made available to us by the management, the banks have charged Rs. 25.55 Crores on account of interest and other charges for the period February 01, 2019 to March 31, 2019. However, the company has not made provision for such interest and charges, due to commencement of CIRP period under IBC. To that extent, finance expenses, loan liability, loss for the year and accumulated losses are understated.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

First Time

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

The impact of audit qualification is quantified by the Auditor. The remarks of the Auditor is self explanatory and does not require further comments of the management.

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Not Applicable

iii. Auditors Comments on (i) or (ii) above:

Not Applicable

Audit Qualification: 6

a. Details of Audit Qualification:

Certain loan accounts of company having aggregate balance of Rs. 186.61 Crores are not reconciled with their respective bank statements which are showing aggregate balance of Rs. 58.19 Crores, for reasons other than Interest & Other charges. Thus, loan balances of the company are overstated by Rs. 128.42 Crores. Also, the current accounts have long standing unreconciled balance aggregating to Rs. 2.68 Crores. To the extent of Rs. 2.68 Crores, bank balances are overstated. In absence of detailed reconciliation statement, we cannot ascertain the overall impact on standalone financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Adit Qualification(s) where the impact is not quantified by the auditor:

i. Mangements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Due to unavailability of detailed information in bank statement, the Company was not able to make necessary entries in books of accounts in respect of the Bank Loan acocunts.

iii. Auditors Comments on (i) or (ii) above:

Without bank reconciliation statement, it is not possible to ascertain overall impact on financial statements. The management should immediately reconcile book balance with balance in bank statements which are available with them

Audit Qualification: 7

a. Details of Audit Qualification:

Many loan accounts having aggregate balance of Rs. 801.43 Crores and current accounts having aggregate balance of Rs. 0.53 Crores are not confirmed due to non-availability of statement / confirmation from respective banks. In absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on standalone financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

First Time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The Company had requested for balance confirmations from the Banks, however the same were not provided by the Banks during the audit period. Since the Books of Accounts of the Company are maintained properly, this audit qualification will not have any impact on the Financial Statement of the Company.

iii. Auditors Comments on (i) or (ii) above:

Without bank statement and balance confirmation from respective Banks, it is not possible to ascertain overall impact on financial statements

Audit Qualification: 8

a. Details of Audit Qualification:

In the reconciliation statement of various bank accounts, there are many entries relating to Receipts and Payments, having aggregated value of Rs. 7.15 Crores and Rs. 5.72 Crores, respectively, which are pending to be cleared since long. To the extent of Rs. 1.43 Crores, the bank balance is overstated. In absence of complete details, we cannot ascertain the overall impact on standalone financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The Company will take corrective measures to reconcile the bank balances. After reconciliation, there will not be any mismatch.

iii. Auditors Comments on (i) or (ii) above:

The management should immediately reconcile book balance with balance in bank statements which are available with them

Audit Qualification: 9

a. Details of Audit Qualification:

The company has unconfirmed balances of Fixed Deposit with Bank of Baroda, amounting to Rs. 5.17 Crores as at March 31, 2019. In absence of balance confirmation from the bank and other entities, financial impact on standalone financial results is not ascertainable.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

First Time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above

Without bank statement and balance confirmation from respective Banks, it is not possible to ascertain overall impact on financial statements/results.

Audit Qualification: 10

a. Details of Audit Qualification:

The company has given loans and advances to related parties amounting to Rs. 957.76 Crores and received loans and advances from related parties amounting to Rs. 301.18 Crores. As per the information given by the management, all these related parties have made substantial losses and their net worth has been fully eroded. However, the company has not made provision for possible loss on such loans and advances.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

First Time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Erstwhile management before the appointment of the RP was of the view that this loans/advance would be recovered from the Related Parties regardless of current losses. In view of the same no provisions were made.

iii. Auditors Comments on (i) or (ii) above

Provision for expected loss should be made as the networth of all related parties has fully eroded.

Audit Qualification: 11

a. Details of Audit Qualification:

The company has not provided audited financial statements of its wholly owned subsidiary M/s. Pratibha Holdings (Singapore) Pte. Ltd. In absence of these Financial Statements, we cannot comment on any requirement for provision for diminution in value of investment.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Appearing since FY 2017-18

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

No.

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not applicable

ii. If management is unable to estimate the impact, reasons for the same:

There is no activities/business in the M/s. Pratibha Holdings (Singapore) Pte. Ltd. Since Pratibha Industries Limited was under financial stress from many years, payment to auditors of the said subsidiary was not made and due to non-payment the Auditor has not conducted audit. Further, the accounts are maintained by the holding company, available details are provided to the Auditor.

iii. Auditors Comments on (i) or (ii) above

Without audited financial statements, any impact on consolidated financial statement can not be ascertained.

Audit Qualification: 12

a. Details of Audit Qualification:

The Company has not made provision for impairment against Investment of Rs. 0.01 Crore in its subsidiary M/s. Bhopal Sanchi Tollways Private Limited. Its Concession Agreement has been terminated by NHAI. As informed to us, the subsidiary company has lodged claim and the matter is under arbitration.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appearing since FY 2017-18

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The Arbitrator has passed an award in the arbitration matter on 30th November 2018. The said award is challenged by M/s. Bhopal Sanchi Tollways Private Limited u/s 34 of the Arbitration Act. Hence, provision for impairment of the investment is not made by the Company.

iii. Auditors Comments on (i) or (ii) above

The claim amount is dependent upon the outcome of arbitration. Hence until then the amount cant be ascertained

Audit Qualification: 13

a. Details of Audit Qualification:

There are many statutory dues amounting to Rs. 129.77 Crores, which are pending to be deposited with appropriate government authorities. The company has not made provision for interest on these dues on account of delay in depositing them. The management is of the opinion that since the matter in under CIRP, there will not be any possibility of payment of such interest. Since the management has not estimated overall liability on account of interest, financial impact on standalone financial results is not ascertainable.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2015-16

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Since the Company is under CIRP, there will not be any possibility of payment of such interest and hence provisions were not made.

iii. Auditors Comments on (i) or (ii) above

Provision for interest should be made irrespective of CIRP period. Since outcome of the CIRP is known only after its completion, it cant be assumed that there will not be any liability on account of interest on statutory dues.

Audit Qualification: 14

a. Details of Audit Qualification:

The company has not provided sufficient appropriate information to evaluate the accuracy of recognition, measurement and presentation of revenues and other related balances in view of the applicability of Ind AS 115 "Revenue from Contracts with Customers". The company has not evaluated impact of variable consideration on its revenue as required under IND AS 115.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Appeared for the First time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The Company is having many sites spread over the different states of India, where the accounts are maintained at site level. As the Company was facing fund crisis, many employees left the Company including site in charge. In view of the high employee attrition level, no. of sites and fund crisis, there might be some procedural lapses in following IND AS. In this back drop, the possible impact of the same is not identifiable by the Company for the reporting period.

iii. Auditors Comments on (i) or (ii) above

Adoption of IND AS is mandatory and hence the management should analyse impact on financial statements on its adoption.

Audit Qualification: 15

a. Details of Audit Qualification:

During the year, the Company has unilaterally written back certain liabilities amounting to Rs. 48.66 Crores. The management of the Company is of the opinion that based on their analysis of balances and due to various reasons, these balances were not payable and hence written back. To that extent, the liabilities, current years loss and accumulated losses are understated.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

This audit qualification remark of the Auditor is self-explanatory and hence, do not require further comments.

iii. Auditors Comments on (i) or (ii) above

Not required

Audit Qualification: 16

a. Details of Audit Qualification:

The company has maintained Fixed asset register, however locations of assets have not been updated properly.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2015-16

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not quantified

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The company being EPC company, majority of assets are located at various work sites where these assets are updated on going concern basis.

iii. Auditors Comments on (i) or (ii) above

Maintenance of updated Fixed Asset Register is mandatory under Companies Act 2013.

Audit Qualification: 17

a. Details of Audit Qualification:

For the Property, Plant & Equipment having net written down value of Rs. 376.24 Crores, as at the balance sheet date, the management had conducted physical verification at few locations. In the physical verification, assets having written down value of Rs. 112.00 Crores have been verified. As per the explanation and information provided, no physical verification could be carried out for the balance assets having written down value of Rs. 264.24 Crores, due to such assets being either under client custody, seized by vendors / subcontractors, or such assets being available at sites with no access to the company. Based on such verification and managements own assessment for balance locations, the company has written off assets having aggregate written down value of Rs. 69.11 Crores during the year. No details have been provided for arriving at the management assessment for the location not physically verified. In absence of these details, we cannot ascertain the accuracy of the amount written off.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion:

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Usually in any EPC (Engineering Procurement Construction) project, at the completion stage most of the assets were not depreciated fully or not useable. Due to this, assets were not depreciated fully and not in condition to use or transfer at any other running project. In our case all such assets are writen off .

iii. Auditors Comments on (i) or (ii) above

There are no documented records to ascertain the condition of the asset and its usability.

Audit Qualification: 18

a. Details of Audit Qualification:

The company has not done impairment testing for the Property, Plant and Equipment, not physically verified. In view of the limited information provided to us by the management, we cannot comment on the requirement of the impairment for these assets and its consequential impact on the standalone financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

ii. If management is unable to estimate the impact, reasons for the same:

The Company being into EPC business, main assets are machineries lying and being at sites/ project places. In view of the same, it was not possible to do impairment testing or physical verification of such assets for the reporting period.

iii. Auditors Comments on (i) or (ii) above

The company should conduct physical verification of all the assets and ascertain the requirement of impairment. Without conducting physical verification, it is not possible to know the exact condition of assets as the company now dont have manpower on each of the project sites where the assets are located.

Audit Qualification: 19

a. Details of Audit Qualification:

The company has not made Provision for Employee Benefits in accordance with Ind AS 19. The management is in opinion that since the matter is under CIRP and also majority of the employees have already left the company, there will be no additional liability on account of employee benefits. In absence of valuation report, we cannot comment on the impact on standalone financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

ii. If management is unable to estimate the impact, reasons for the same:

This audit qualification is self-explanatory and hence does not require further comments.

iii. Auditors Comments on (i) or (ii) above

Audit Qualification: 20

a. Details of Audit Qualification:

The foreign currency balances, for foreign vendors having credit balance and for advances paid to foreign vendors, aggregating to Rs. 4.50 Crores and Rs. 1.20 Crores, respectively, as at March 31, 2019, could not be ascertained

due to improper accounting. In the absence of complete details, their closing foreign currency balances could not be translated at the rate as on the balance sheet as required under IND AS 21 and consequential impact on standalone financial results could not be ascertained.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

First time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

There is lack of accounting staff as many have left the company, However, the company will put its efforts in next financial year to regularise the accounts by passing necessary entries required in IND AS 21.

iii. Auditors Comments on (i) or (ii) above

NIL

Audit Qualification: 21

a. Details of Audit Qualification:

The balance with statutory authorities includes credits for Service Tax and Excise Duty amounting to Rs. 24.44 Crores. The company has not filed Service Tax and Excise Returns since 2016-17, to claim credits against Service Tax and Excise Duty liabilities. In absence of submission of returns, the credits cannot be utilized. To this extent, the current assets are overstated and accumulated losses are understated.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

First time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

The Company will try to file pending Service Tax and Excise Returns, so as to claim credits.

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Not Applicable

iii. Auditors Comments on (i) or (ii) above

Not Applicable

Audit Qualification: 22

a. Details of Audit Qualification:

During the financial year 2017-18, four independent directors of company had resigned from its Board and no new appointments have been made during the financial year 2018-19. As a result its composition of Board of Directors, Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee were not in compliance with the provisions of Section 149(4), Section 177 & Section 178 respectively.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2017-18.

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The Company is into Insolvency Resolution Process w.e.f. 01.02.2019. Pursuant to which, powers of Board of Directors of the Company have been suspended and the same is vested with Mr. Anil Mehta – Resolution Professional. As such, composition of Board of Directors and other committee will not be applicable to the Company.

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 23

a. Details of Audit Qualification:

As per the requirement of the order, passed by Company Law Board under section 73 (3) of the Companies Act 2013, and section 74 (3) of the Act, the company has failed to repay Public Deposits amounting to Rs. 18.48 Crores and interest thereon amounting to Rs. 12.10 Crores within the stipulated time.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2015-16

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Due to precarious financial condition of the Company, it was neither able to make payment to the Public Depositors nor any other creditors or statutory dues. Due to such financial distress, the Company is under Corporate Insolvency Resolution Process w.e.f. 01.02.2019.

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 24

a. Details of Audit Qualification:

The Company has not maintained detailed Party wise outstanding of Public Deposits and the provision for penal interest has been made on estimated basis. In the absence of party wise details, we cannot ascertain the possible impact on standalone financial results due to short / excess provision for Interest. Further, penal interest for the months of February & March 2019, as required under Rule 17 of Companies (Acceptance of Deposits) Rules, 2014, has not been provided, due to the commencement of CIRP period under IBC.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

First Time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The Company has maintained register of public deposits containing name, address, principal amount outstanding and other relevant details. Other than the register of public deposit, this audit qualification is self-explanatory and hence do not require further clarification.

iii. Auditors Comments on (i) or (ii) above:

No such register with party wise details was produced during audit.

Audit Qualification: 25

a. Details of Audit Qualification:

As required under the provisions of Section 148 of the Companies Act, 2013, read with Rule 4 of the Companies (Cost Records and Audit) Rules, 2014, the cost audit has not been conducted of companys records.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2017-18

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Due to non-payment to Cost Auditors, Cost Auditors have not conducted the Audit.

As per the managements view, this will not have any impact on financial statement of the Company.

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 26

a. Details of Audit Qualification:

As required under the provisions of Section 138 of the Companies Act, 2013, read with Rule 13 of the Companies (Accounts) Rules, 2014, the Internal Audit of the functions and activities of the company has not been conducted for the year ended March 31, 2019.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification: whether appeared for the first time/repetitive/since how long continuing

Appearing for the first time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Due to non-payment to Internal Auditor, Internal Auditors have not conducted the Audit.

As per the managements view, this will not have any impact on financial statement/results of the Company.

iii. Auditors Comments on (i) or (ii) above:

NIL

For Ramanand & Associates	For Pratibha Industries Limited
Chartered Accountants
ICAI Firm Regn No.: 117776W	Ajit B Kulkarni	K H Sethuraman
Ramanand Gupta	Chairman & Director	Chief Financial Officer
Managing Partner	DIN - 00220578
M No: 103975		Taken On Record
		Anil Mehta
Place : Mumbai		Resolution Professional IP Registration
Date : 06th December 2019		IBBI/IPA-001/IP-P00749/2017-2018/11282

Annexure B - to Directors Report

Statement of Impact of Audit Qualifications (for audit report with modified opinion) submitted along-with Annual Audited Consolidated Financial Results for 31st March, 2019

(Rs. In crores)

I. Sr. No.	Particulars	Audited Figures (as reported before adjusting for qualifications)	Adjusted Figures (audited figures after adjusting for qualifications)
1	Turnover / Total income	440.32	440.32
2	Total Expenditure	2,010.26	2,010.26
3	Net Profit/(Loss)	(1,616.52)	(1,616.52)
4	Earnings Per Share	(67.75)	(67.75)
5	Total Assets	3085.72	3085.72
6	Total Liabilities	3085.72	3085.72
7	Net Worth	(4,336.71)	(4,336.71)
8	Any other financial item(s) (as felt appropriate by the management)

II. Audit Qualifications:

Audit Qualification: 1

a. Details of Audit Qualification:

The Group has accumulated losses of Rs. 5,051.89 Crores and its net worth is fully eroded. It has incurred net loss during the year ended March 31, 2019 amounting to Rs. 1,616.50 Crores as well as in previous years. It is unable to repay its debts, statutory obligations and pay salaries apart from other obligations/commitments. The application of Holding Companys Financial Creditors under section 9 of the Insolvency and Bankruptcy Code (IBC) had been admitted by Honble National Company Law Tribunal, Mumbai Bench and Resolution Professional ("RP") was appointed vide order dated March 14, 2019. Till the date of signing of Statement, no resolution plan had been approved. Further, application for liquidation of the Holding Company has been filed with the NCLT. All these indicate a material uncertainty that may cast significant doubt upon the Groups ability to continue as a Going Concern. However, the consolidated financial results are prepared on a going concern basis.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since Financial Year 2017-18

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

Auditors remarks are self-explanatory. Hence, do not require any further explanation.

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 2

a. Details of Audit Qualification:

Inventory of Work in Progress (WIP) of the Holding Company and of the JVs includes certain contractual claims amounting to Rs. 310.60 Crores and Rs. 1,003.36 Crores, respectively. These amounts have been ascertained by their respective managements based on their estimates. Out of these contractual claims, claims of the Holding Company and of the JVs, as reported by their auditors, amounting to Rs. 259.33 Crores and Rs. 1,003.36 Crores, respectively,

are either formally submitted but not yet approved by respective clients or no formal submissions have been made to respective clients. The amounts of these claims are subject to change post approval from clients. To the extent of Rs. 1,262.70 Crores, Inventories are overstated and accumulated losses are understated in the consolidated financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since Financial year 2015-16

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

The Group has prepared the claims based on contractual terms, which have been submitted to the clients. Further, the Group is in process of submitting pending claims with the clients. The Group is hopeful of clients approval in due course of time.

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

Not Applicable

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 3

a. Details of Audit Qualification:

The management of the Holding Company and a JV, has not provided us and to the auditor of that JV, as reported in the JVs audit report, with the detailed working of Construction Work in Progress (WIP), Cost to Completion and consequent profitability and / or losses on projects which are pending execution. In absence of these details, it is not possible for us and for the JVs auditor, to ascertain whether the Construction WIP of Rs. 8.71 Crores has been valued and stated correctly or not. The consequential impact, if any, on the consolidated financial results is therefore not ascertainable.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since Financial year 2017-18

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

ii. If Management is unable to estimate the impact, reasons for the same: Not applicable

iii. Auditors Comments on (i) or (ii) above:

In case of back to back projects, there is no question of having any work in progress as expenses are recognised along with revenue. Further, even if the projects are given on back to back basis, as per the requirement of applicable Ind AS, it is mandatory to prepare cost to complete to arrive at project profitability and in case of possible loss, making provision for the same. Without proper estimation for cost to complete and estimated profitability, it is difficult to arrive at correct working of WIP.

Audit Qualification: 4

a. Details of Audit Qualification:

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since Financial year 2017-18.

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above:

Audit Qualification: 5

a. Details of Audit Qualification:

As per the bank loan statements made available to us and to the auditor of JVs, by the respective management of the Holding Company and such JVs, the banks have charged Rs. 25.55 Crores and Rs. 3.40 Crores, respectively, on account of interest and other charges for the period February 01, 2019 to March 31, 2019. However, the Holding Company and such JVs, as reported in the JVs audit reports, have not made provision for such interest and charges, due to commencement of CIRP period under IBC. To the extent of Rs.28.95 Crores, finance expenses, loan liability, loss for the year and accumulated losses of Group are understated.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First Time

d. For Audit Qualification(s) where the impact is quantified by the Auditors, Managements Views:

The impact of audit qualification is quantified by the Auditor. The remarks of the Auditor are self-explanatory and do not require further comments of the management.

e. For Audit Qualification(s) where the impact is not quantified by the Auditors:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

Not Applicable

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 6

a. Details of Audit Qualification:

Certain loan accounts of Holding Company having aggregate balances of Rs. 186.61 Crores are not reconciled with their respective bank statements which are showing aggregate balance of Rs. 58.19 Crores, for reasons other than Interest & Other charges. Thus, loan balances of the Holding Company are overstated by Rs.128.42 Crores. Also, the current accounts of the Holding Company have long standing unreconciled balance aggregating to Rs.2.68 Crores. To the extent of Rs. 2.68 Crores, bank balances are overstated. In absence of detailed reconciliation statement, we cannot ascertain the overall impact on consolidated financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

Due to unavailability of detailed information in bank statement, the Company was not able to make necessary entries in books of accounts in respect of the Bank Loan accounts.

iii. Auditors Comments on (i) or (ii) above:

Without bank reconciliation statement, it is not possible to ascertain overall impact on financial statements. The management should immediately reconcile book balances with balances in bank statements which are available with them.

Audit Qualification: 7

a. Details of Audit Qualification:

Many loan accounts of the Holding Company, having aggregate balance of Rs. 801.43 Crores, and current accounts of the Holding Company and of the JVs, as reported in the JVs audit reports, having aggregate balance of Rs. 0.53 Crores and Rs. 0.33 Crores, respectively, are not confirmed due to non-availability of statement / confirmation from respective Banks. In absence of sufficient appropriate audit evidence, we are unable to determine any possible impact thereof on consolidated financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First Time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above:

Without bank statement and balance confirmation from respective banks, it is not possible to ascertain overall impact on financial statements.

Audit Qualification: 8

a. Details of Audit Qualification:

In the reconciliation statement of various bank accounts of the Holding Company, there are many entries relating to Receipts and Payments, having aggregated value of Rs. 7.15 Crores and Rs. 5.72 Crores, respectively, which are pending to be cleared since long. To the extent of Rs. 1.43 Crores, the bank balance is overstated. In absence of complete details, we cannot ascertain the overall impact on consolidated financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable.

ii. If Management is unable to estimate the impact, reasons for the same:

The Company will take corrective measures to reconcile the bank balances. After reconciliation, there will not be any mismatch.

iii. Auditors Comments on (i) or (ii) above:

The management should immediately reconcile book balance with balance in bank statements which are available with them.

Audit Qualification: 9

a. Details of Audit Qualification:

The Holding Company has an unconfirmed balance of Fixed Deposit with Bank of Baroda, amounting to Rs. 5.17 Crores as at March 31, 2019. In absence of balance confirmation from the bank, financial impact on consolidated financial results is not ascertainable.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First Time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above

Without bank statement and balance confirmation from respective Banks, it is not possible to ascertain overall impact on financial statements.

Audit Qualification: 10

a. Details of Audit Qualification:

The Group has given loans and advances to related parties amounting to Rs. 120.27 Crores and received loans and advances from related parties amounting to Rs. 15.31 Crores. As per the information given by the Holding Companys management and as reported in the JVs audit reports, all these related parties have made substantial losses and their net worth has been fully eroded. However, the Group has not made provision for possible loss on such loans and advances.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First Time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above

Provision for expected loss should be made as the net worth of all related parties has fully eroded.

Audit Qualification: 11

a. Details of Audit Qualification:

The Holding company has not provided audited financial statements of its wholly owned subsidiary M/s. Pratibha Holdings (Singapore) Pte. Ltd. In absence of these Financial Statements, we cannot comment on any requirement for provision for diminution in value of investment.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appearing since FY 2017-18

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

No.

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not applicable

ii. If Management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above

Without audited financial statements, any impact on consolidated financial statement can not be ascertained.

Audit Qualification: 12

a. Details of Audit Qualification:

The Holding Company has not made provision for impairment against Investment of Rs. 0.01 Crore in its subsidiary M/s. Bhopal Sanchi Tollways Private Limited. Its Concession Agreement has been terminated by NHAI. As informed to us, the subsidiary company has lodged claim and the matter is under arbitration.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appearing since FY 2017-18

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

The Arbitrator has passed an award in the arbitration matter on 30th November 2018. The said award is challenged by /s. Bhopal Sanchi Tollways Private Limited u/s 34 of the Arbitration Act. Hence, provision for impairment of the investment is not made by the Company.

iii. Auditors Comments on (i) or (ii) above

The claim amount is dependent upon the outcome of arbitration. Hence, until then the amount cannot be ascertained

Audit Qualification: 13

a. Details of Audit Qualification:

For the Holding Company and for the JVs, there are many statutory dues amounting to Rs. 129.77 Crores and Rs. 13.58 Crores, respectively, which are pending to be deposited by the respective entities with appropriate government authorities. The Holding company and the JVs, as reported by the JVs auditors, have not made provision for interest on these dues on account of delay in depositing them. Since the management of Holding Company and of the JVs has not estimated overall liability on account of interest, financial impact on consolidated financial results is not ascertainable.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2015-16

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

Since the Company is under CIRP, there will not be any possibility of payment of such interest and hence provisions were not made.

iii. Auditors Comments on (i) or (ii) above

Provision for interest should be made irrespective of CIRP period. Since outcome of the CIRP is known only after its completion, it cannot be assumed that there will not be any liability on account of interest on statutory dues.

Audit Qualification: 14

a. Details of Audit Qualification:

The Holding Company and the JVs, as reported by its auditors, have not provided sufficient appropriate information to evaluate the accuracy of recognition, measurement and presentation of revenues and other related balances in view of the applicability of Ind AS 115 "Revenue from Contracts with Customers". The Group has not evaluated impact of variable consideration on its revenue as required under IND AS 115.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the First time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above

Adoption of IND AS is mandatory and hence the management should analyse impact on financial statements on its adoption.

Audit Qualification: 15

a. Details of Audit Qualification:

During the year, the Group has unilaterally written back certain liabilities amounting to Rs. 48.78 Crores. The managements of the Company and of the JVs, as reported by its auditors, are of the opinion that based on their analysis of balances and due to various reasons, these balances were not payable and hence written back. To that extent, the liabilities, current years loss and accumulated losses are understated in the consolidated financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

ii. If Management is unable to estimate the impact, reasons for the same:

This audit qualification remark of the Auditor is self-explanatory and hence, do not require further comments.

iii. Auditors Comments on (i) or (ii) above

NIL

Audit Qualification: 16

a. Details of Audit Qualification:

The contracts of the JVs have been terminated by their respective clients and the projects have been assigned to other contractors, as reported by the auditors of JVs. As per the information & explanation given by the management of such JVs, there are no liabilities in such projects. However, there are certain provision for expenses aggregating to Rs. 38.74 Crores is appearing in Other Financial Liabilities. No detail of the provision has been provided to the auditor of such JVs for verification. In absence of the details, to the extent of amount of the provision, the liabilities and accumulated losses are overstated.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

The provisions for expenses were made at the time when the projects were executed by the Company/JV. It is evident from the ongoing Insolvency Process that the Company was facing server financial crisis. Many projects were terminated by the clients due to delay in project completion. As stated earlier, the site/project in charges have left the Company on account of non-payment of salary. In view of the aforesaid facts and circumstances, the provisions made for expenses were not reconciled and appropriate entries in the books were not made.

The Company will reconcile the accounts of the sites and necessary actions will be taken. For this reporting period, impact of the same cannot be estimated.

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

Not Applicable

iii. Auditors Comments on (i) or (ii) above

NIL

Audit Qualification: 17

a. Details of Audit Qualification:

The Holding Company has maintained Fixed Asset register. However, locations of assets have not been updated properly.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2015-16

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not quantified

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

The company being EPC company, majority of assets are located at various work sites where these asset registers are updated on going concern basis.

iii. Auditors Comments on (i) or (ii) above

Maintenance of updated Fixed Asset Register is mandatory under Companies Act 2013.

Audit Qualification: 18

a. Details of Audit Qualification:

For the Property, Plant & Equipment in the Holding Company, having net written down value of Rs. 376.24 Crores, as at the balance sheet date, the management of the Holding Company had conducted physical verification at few locations. In the physical verification, assets having written down value of Rs. 112.00 Crores have been verified. As per the explanation and information provided, no physical verification could be carried out for the balance assets having written down value of Rs. 264.24 Crores, due to such assets being either under client custody, seized by vendors / subcontractors, or such assets being available at sites with no access to the company. Based on such verification and managements own assessment for balance locations, the Holding Company has written off assets having aggregate written down value of Rs. 69.11 Crores during the year. No details have been provided for arriving at the managements assessment for the location not physically verified. In absence of these details, we cannot ascertain the accuracy of the amount written off.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion:

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appeared for the first time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If Management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above

There are no documented records to ascertain the condition of the asset and its usability.

Audit Qualification: 19

a. Details of Audit Qualification:

The Holding Company has not done impairment testing for the Property, Plant and Equipment, not physically verified. In view of the limited information provided to us by the management of the Holding Company, we cannot comment on the requirement of the impairment for these assets and its consequential impact on the consolidated financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

iii. Auditors Comments on (i) or (ii) above

The Group should conduct physical verification of all the assets and ascertain the requirement of impairment. Without conducting physical verification, it is not possible to know the exact condition of assets as the Group now dont have manpower on each of the project sites where the assets are located.

Audit Qualification: 20

a. Details of Audit Qualification:

The Holding Company has not made Provision for Employee Benefits in accordance with Ind AS 19. The management of the Holding Company, is in opinion that since the matter is under CIRP and also majority of the employees have already left the company, there will be no additional liability on account of employee benefits. In absence of valuation report, we cannot comment on the impact on consolidated financial results.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

ii. If management is unable to estimate the impact, reasons for the same:

This audit qualification is self-explanatory and hence does not require further comments.

iii. Auditors Comments on (i) or (ii) above

NIL

Audit Qualification: 21

a. Details of Audit Qualification:

The foreign currency balances, in respect of the Holding Company and of the JVs, for foreign vendors having credit balance aggregating to Rs. 4.50 Crores and Rs. 3.14 Crores, respectively, and for advances paid to foreign vendors, aggregating to Rs. 1.20 Crores and Rs. 7.67 Crores, respectively, as at March 31, 2019, could not be ascertained due to improper accounting. In the absence of complete details, their closing foreign currency balances could not be translated at the rate as on the balance sheet as required under IND AS 21 and consequential impact on consolidated financial results could not be ascertained.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

ii. If management is unable to estimate the impact, reasons for the same:

There is lack of accounting staff as many have left the Group, However, the Group will put its efforts in next financial year to regularise the accounts by passing necessary entries required in IND AS 21.

iii. Auditors Comments on (i) or (ii) above

NIL

Audit Qualification: 22

a. Details of Audit Qualification:

The balances with statutory authorities includes credits, in respect of the Holding Company and of the JVs, aggregating to Rs. 24.44 Crores and Rs. 7.01 Crores, respectively, which pertains to the Service Tax, and Excise Duty. The Holding Company and the JVs, as reported in the JVs audit reports, have not filed Service Tax and Excise Returns since long, to claim credits against Service Tax and Excise Duty liabilities. In absence of submission of returns, the credits cannot be utilized. To this extent, the Groups current assets are overstated and accumulated losses are understated.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

The Company will try to file pending Service Tax and Excise Returns, so as to claim credits.

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Not Applicable.

iii. Auditors Comments on (i) or (ii) above

NIL

Audit Qualification: 23

a. Details of Audit Qualification:

During the financial year 2017-18, four independent directors of Holding Company had resigned from its Board and no new appointments have been made during the financial year 2018-19. As a result, its composition of Board of Directors, Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee was not in compliance with the provisions of Section 149(4), Section 177 & Section 178 respectively.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2017-18.

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The Holding Company is into Insolvency Resolution Process w.e.f. 01.02.2019. Pursuant to which, powers of Board of Directors of the Holding Company have been suspended and the same is vested with Mr. Anil Mehta – Resolution Professional. As such, composition of Board of Directors and other committee will not be applicable to the Holding Company.

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 24

a. Details of Audit Qualification:

As per the requirement of the order, passed by Company Law Board under section 73 (3) of the Companies Act 2013, and section 74 (3) of the Act, the Holding Company has failed to repay Public Deposits amounting to Rs. 18.48 Crores and interest thereon amounting to Rs. 12.10 Crores within the stipulated time.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Qualified Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2015-16

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Due to precarious financial condition of the Holding Company, it was neither able to make payment to the Public Depositors nor any other creditors or statutory dues of the Holding Company. Due to such financial distress, the Holding Company is under Corporate Insolvency Resolution Process w.e.f. 01.02.2019.

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 25

a. Details of Audit Qualification:

The Holding Company has not maintained detailed Party wise outstanding of Public Deposits and the provision for penal interest has been made on estimated basis. In the absence of party wise details, we cannot ascertain the possible impact on consolidated financial results due to short / excess provision for Interest. Further, penal interest for the months of February & March 2019, as required under Rule 17 of Companies (Acceptance of Deposits) Rules, 2014, has not been provided by the Holding Company, due to the commencement of CIRP period under IBC.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

First Time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

The Holding Company has maintained register of public deposits containing name, address, principal amount outstanding and other relevant details. Other than the register of public deposit, this audit qualification is self-explanatory and hence do not require further clarification.

iii. Auditors Comments on (i) or (ii) above:

No such register with party wise details was produced during audit.

Audit Qualification: 25

a. Details of Audit Qualification:

As required under the provisions of Section 148 of the Companies Act, 2013, read with Rule 4 of the Companies (Cost Record and Audit) Rules, 2014, the cost audit has not been conducted of Holding Companys records.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Repetitive since FY 2017-18

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Due to non-payment to Cost Auditors, Cost Auditors have not conducted the Audit.

As per the managements view, this will not have any impact on financial statement of the Holding Company.

iii. Auditors Comments on (i) or (ii) above:

NIL

Audit Qualification: 26

a. Details of Audit Qualification:

As required under the provisions of Section 138 of the Companies Act, 2013, read with Rule 13 of the Companies (Accounts) Rules, 2014, the Internal Audit of the functions and activities of the Holding Company has not been conducted for the year ended March 31, 2019.

b. Type of Audit Qualification :

Qualified Opinion / Disclaimer of Opinion / Adverse Opinion

Disclaimer of Opinion

c. Frequency of qualification:

whether appeared for the first time/repetitive/since how long continuing

Appearing for the first time

d. For audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

Not Applicable

e. For Audit Qualification(s) where the impact is not quantified by the auditor:

i. Managements estimation on the impact of audit qualification:

Not Applicable

ii. If management is unable to estimate the impact, reasons for the same:

Due to non-payment to Internal Auditor, Internal Auditors have not conducted the Audit.

As per the managements view, this will not have any impact on financial statement of the Company.

iii. Auditors Comments on (i) or (ii) above:

NIL

For Ramanand & Associates	For Pratibha Industries Limited
Chartered Accountants
ICAI Firm Regn No.: 117776W	Ajit B Kulkarni	K H Sethuraman
Ramanand Gupta	Chairman & Director	Chief Financial Officer
Managing Partner	DIN - 00220578
M No: 103975		Taken On Record
		Anil Mehta
Place : Mumbai		Resolution Professional IP Registration
Date : 06th December 2019		IBBI/IPA-001/IP-P00749/2017-2018/11282

pratibha industries ltd Directors report

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