Artefact Projects Ltd Directors Report.

To

The Members

ARTEFACT PROJECTS LIMITED

Report on the Indian Accounting Standards (Ind AS) Financial Statements

We have audited the accompanying Ind AS financial statements of ARTEFACT PROJECTS LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2020, the Statement of Profit and Los s (including Other Comprehensive Income), the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Managements Responsibility for the Ind AS Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance (including Other Comprehensive Income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2015.

This responsibility also includes maintenance of adequate accounting records in accordance with the provision s of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder and the Order under section 143 (11) of the Act. We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the Ind AS financial statements that give a true and fair view in order to design

audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Companys directors, as well as evaluating the overall presentation of the Ind AS financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Emphasis on Matter:

We draw attention to:

1) Note No. 9.01 to the accompanying Statement of audited Standalone Financial Results, wherein the Management of the company had considered certain over dues and outstanding Trade Receivables from the Government clients in respect of completed Contracts, amounting to Rs.639.48 Lacs and the management as matter of prudent accounting policy and expected delays in its recovery, has written off Rs 429.22 Lacs during the quarter and year ended 31 March 2020 (including provision of Rs 75 Lacs made upto Q3).However, any recoveries received in subsequent years out of the claims submitted therefore shall be accountedfor in the year of its receipts.

2) Note No. 6.01 to the accompanying Statement of audited Financial Results, regarding investment of Rs. 13.02 crores (Including cumulative interest of Rs 1.02 crores accrued thereon) in Unquoted fully compulsory convertible debentures in private unlisted companies as at reporting date. The management has represented that all investments in the said companies, based on its ass essment of cash flows, investment being long term and strategic in nature and valuation report of registered external Valuers received by the company, no provision for impairment of expected Losses in accordance with Ind-As-109 "Financial Instruments" is required and the amounts are fully recoverable. We have relied on the management representation and external valuers report in this regard.

3) Note No.6.02 to the accompanying Statement of audited standalone Financial Results regarding investment of Rs. 90 Lacs in equity shares of associate company. The management based on its assessment for the current financial year and considering that the company has earned profits and has positive net worth as per audited balance sheet for the year ending 31st March 2019, is of the opinion that there is no diminution in the value of its investment in the said company and hence no provision for impairment loss is required. We have relied on the management.

4) The company has made declaration under service tax legacy dispute resolution scheme (SVLDRS) during the year. Consequent to declaration made, benefit of waiver of service tax and interest provision made in earlier years amounting to Rs 3,48,42,430/-has been written back and credited to profit and loss account for the year.

5) The impact of pandemic in immediate future cannot be quantified as on date. However, the Management is of view that there is no expected significant adverse impact on the continuity of operations of the business on long term basis/ on useful life of the assets/ on financial position, etc.

Our opinion is not Qualified in respect of above matters.

Opinion

Based on our audit conducted as above, nothing has come to our attention that causes us to believe that the Statement has not been prepared in all material respects in accordance with IND AS prescribed and other recognized accounting practices and policies, and has not disclosed the information required to be

disclosed in terms of Regulation 33 of the Listing Regulations, 2015 read with SEBI circular No. CIR/CFD/CMD1/44/2019 dated March 29, 2019 (‘the Circular)

Key Audit Matters:

Except for the matters described in Emphasis on matters for paragraphs above, we have determined that there are no other matters to communicate in our report.

Other Matters

The Financial statements and other financial information include the companies proportionate share in jointly controlled total assets of Rs. 237.48 Lacs, revenue of Rs.11.16 Lacs, expenditure of Rs.14.35 Lacs and share of loss of Rs.3.19 Lacs in joint ventures for the year ended March 31, 2020 and the elements making up the cash flow statements and related disclosures in respect of unincorporated joint ventures which is based on the audited financial statements of the respective joint ventures audited by us.

Report on Other Legal and Regulatory Requirements

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

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

b. In our opinion, proper books of account as required by law have been kept by the Company, so far as it appears from our examination of those books;

c. The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d. In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, as applicable read with Rule 7 of the Companies (Accounts) Rules, 2015;

e. On the basis of the written representations received from the directors as on March 31, 2020 and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2020 from being appointed as a director in terms of Section 164 (2) of the Act.

f. With respect to the adequacy of the internal financial controls with reference to financial statements of the company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A" to this report.

g. With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2016, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements as referred to in Note no. 32 to the IND AS financial statements.

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

iii. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 1 43 of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

For Banthia Damani & Associates

Chartered Accountants

Firm Registration Number- 126132W

Sd/-

Sudesh Banthia Partner

Membership No. - 041344

Place: Nagpur Date : July 29, 2020

"ANNEXURE A" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in Paragraph 1 (f) of the Independent Auditors Report of even date to the members of Artefact Projects Limited on the standalone Financial Statements as of and for the year ended March 31, 2020)

Report on the Internal Financial Controls With reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the Internal Financial Controls with reference to Financial Statements of ARTEFACT PROJECTS LIMITED ("the Company") as of March 31, 2020 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over financial reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

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

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system with reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

A companys internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys

internal financial control with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financial statements

Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has in all material respects, an adequate internal financial control system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2020, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over financial reporting issued by the Institute of Chartered Accountants of India .

For Banthia Damani & Associate s

Chartered Accountants

Firm Registration Number- 126132W

Sd/-

Sudesh Banthia Partner

Membership No. - 041344

Place: Nagpur Date : July 29, 2020

"ANNEXURE B" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in Paragraph 2 of the Independent Auditors Report of even date to the members of Artefact Projects Limited on the standalone Financial Statements as of and for the year ended March 31, 2020)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. According to the information and explanations given to us, the Company has physically verified all the fixed assets and no material discrepancies were noticed on such physical verification as compared with the available records.

c. According to the information and explanations given to us, the original title deeds of immovable properties have been pledged as security for loans with a lender, The Company has produced the photocopy of the title deeds of these immovable properties and based on such documents, the title deeds are held in the name of the Company except that the Land on which the building has been constructed is jointly owned by the Company, some of the directors and their relatives (Refer Note No. 3.02 to the Financial Statements).

ii. In respect of its inventories:

The Company does not have any Inventories of Raw Material, Finished Goods and Stores & Spares. The Inventory/ WIP at the year end represents expenditure incurred in respect of the Project Management Consultancy Services executed but remained un-billed as on the reporting date and accordingly the provisions of Clause (ii) of Paragraph 3 of the Order as far as it relates to Physical Verification of Inventories are not applicable to the Company.

iii. In respect of loans, secured or unsecured, granted by the Company to companies, firms, limited liability Partnerships or other parties covered in the register maintained under section 189 of the Act:

a. The Company has given advances in the nature of loan to three joint ventures and two Companies . As per the information and explanations given to us the loans are repayable on demand.

b. As the loan is repayable on demand, the question of overdue amount does not arise.

iv. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Act, as applicable, in respect of loans granted, investments made and guarantees and securities provided.

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

vi. According to the information and explanations given to us, the Central Government has not prescribed maintenance of the cost records under sub section (1) of section 148 of the act in respect of business activities carried on by the company. Therefore, the provisions of Clause (vi) of paragraph 3 of the Order are not applicable to the Company.

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

a) Substantial delays have been noticed in depositing undisputed statutory dues in respect of ESIC, Provident fund, Profession tax, GST and TDS with the appropriate authorities during the year. According to the information and explanations given to us, undisputed amounts payable in respect of such statutory dues outstanding as at March 31, 2020 for a period of more than six months from the date they became payable are as given below:

Name of the Statute Nature of the Dues F.Y. to which it relates Amount (In Rs.)
Income Tax Act, 1961 Tax Deducted at Source (TDS) 2019-20 47,54,693.00
GST GST 8,00,798.00
TOTAL 55,55,491.00

b) According to Information and explanation given to us and the records of the company examined by us, there are no dues of Goods and Service Tax which have not been deposited on account of any dispute. The particulars of dues of income tax as at March 31,2020 which have not been deposited on account of dispute are as follows:

Name of the statute Nature of dues Amount F.Y. to which the amount relates Forum where The dispute is Pending
Income Tax Act, 1961 Income Tax 23,09,910.00 2016-17 CIT(A)
Total 23,09,910.00

viii) According to the records of the company examined by us and the information and explanation given to us, the company has not defaulted in repayment of loans and borrowings to any financial institution or bank as at the balance sheet date. The company does not have any loans or borrowings from government, nor has it issued any debentures on the balance sheet date .

ix) The company has not raised any money by initial public offer, further public offer (including debt instruments) and term loans during the year. Accordingly, provisions of paragraph 3 (ix) of the order is not applicable to the Company.

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

xi) According to the information and explanations given to us, the managerial remuneration has been paid or provided in accordance with the provisions of section 197 read with Schedule V to the Act.

xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of Clause 3 (xii) of the Order are not applicable to the Company.

xiii) According to the information and explanations given to us, the transactions entered with the related parties are in compliance with section 177 and 188 of the Act where applicable and the details of related party transactions have been disclosed in the financial statements as required by the applicable accounting standards.

xiv) According to the records of the company examined by us and the information and explanation given to us, the company has raised money by issue of 2.75 Lacs equity shares of Rs.10/- each at Rs.32/- (including premium of Rs.22/-) for total consideration of Rs.88 Lacs to the promoters of the company . The company has also issued 14.75 lacs share warrants (2.75 Lacs to promotors and 12 Lacs to Non promotors) of Rs.10/- each at Rs.32/- (including premium of Rs.22/-) for total consideration of Rs. 472 Lacs carrying an option / entitlement to subscribe to equivalent number of equity shares of Rs 10/- each at a price of Rs 32/-each including premium of Rs22/-each as per valuation determined by independent valuer at a future date not exceeding 18 months from the date of issue of such warrants. The company has received Rs 88 Lacs for issue and allotment of equity shares and Rs 118 Lacs (25% amount ) as subscription for share warrants and balance to be received within 18 months from the date of subscription. of share or debentures. The company has complied with the requirements of section 42 of the Companies Act, 2013 and the funds received during the year have been used for the purpose for which they have been raised.

xv) According to the information and explanations given to us, during the year the company has not entered into any non-cash transactions with directors or persons connected with him, Therefore, the provisions of Clause (xv) of paragraph 3 of the Order are not applicable to the Company.

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

For Banthia Damani & Associates

Chartered Accountants

Firm Reg.No- 126132W

Sd/-

Sudesh Banthia

Partner

Membership No. - 041344

Place: Nagpur

Date : July 29, 2020