cerebra integrated technologies ltd share price Auditors report


To the Members of M/s. Cerebra Integrated Technologies Limited Report on the Audit of the Standalone Financial Statements Qualified Opinion

We have audited the accompanying standalone Ind AS financial statements of M/s. Cerebra Integrated Technologies Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2023, the Statement of Profit and Loss (including Other Comprehensive Income), Statement of Changes in Equity, and Statement of Cash flows for the year then ended on that date, notes, including a summary of significant accounting policies and other explanatory information(hereinafter referred to as the "standalone Ind AS financial statements").

In our opinion and to the best of our information and according to the explanations given to us, Except for the effects of matters mentioned in the " Basis for Qualified Opinion" paragraph, these aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013 (the "Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2023 and its profit, comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis of Qualified Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the standalone Ind AS Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone Ind AS financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ourQualified Opinion.

I. The company has reported Rs.45.51 Crore as inventory held by the company including E waste inventory as on 31.03.2023, for which we have not been provided with item wise details, movement of inventory during the year and basis for valuation, due to the nature of inventory, we could not verify the quantity of the inventory and In the absence of sufficient audit evidence we are unable to validate the correctness of the quantity and value of inventory held as on 31.12.2023 and its consequential impact, if any, on the standalone Ind AS financial statement.

ii. Loans (under Non-current assets) reported by the company includes Rs.5.95 Crore receivable from its subsidiary company and which is outstanding for more than 3 years. Also, the subsidiary companys auditors expressed concerns over the subsidiary companys ability to continue as going concern as the net worth of the company has been completely eroded. The company has not made any provision for expected loss of said advance and its investment in equity shares (with book value of Rs.0.035 Crore) of the said subsidiary company. And hence, profit and Reserves reported in standalone financial result are over stated to the extent of Rs.5.97 Crore.

iii. The company has not made any provision for bad and doubtful debts. Trade Receivables reported under non-current assets amounting

Rs.60.57 crore and trade receivable reported under current assets includes Rs.86.40 crore receivable from various parties which are outstanding for more than 1 year. The balance reported under trade receivables are subject to confirmation and therefore we are unable to comment on the recoverability of the said receivables and its impact, if any, on the standalone Ind AS financial statements.

iv. Other Non-Current Assets includes to Rs 85.28 Crore and Other current assets includes Rs.15 crore Pertaining to outstanding dues recoverable from an overseas party on account of sale consideration of Companys erstwhile subsidiary M/s Cerebra Middle East FZCO Dubai, vide sale agreement dated 17.03.2022. As per the terms of the said agreement, the payment period now stands expired and overdue for payment and no provision has been made in the books for bad and doubtful receivables, also the said balances were not restated as per the requirement of Ind AS 21 "The effects of changes in foreign exchange rates" and also, we are unable to comment on the regulatory compliances, recoverability of this and its impact on the standalone Ind AS financial statements.

v. Other Current Assets includes Rs.18 crore capital advances and other advances paid by the company to various parties which are outstanding for more than 1 year and no provision has been made in the books for bad and doubtful portion and no confirmation of balances have been provided. Hence, we are unable to comment on its recoverability and its consequential impact, if any, on the standalone Ind AS financial statements.

Emphasis of Matter

We draw attention to the following matters in the standalone Ind AS financial statements wherein:

a. We draw your attention to Current tax liabilities (Ref Note No. 27) reported in Standalone Ind AS financial statement which includes Rs. 34.39 crore payable towards income tax dues of the company pertaining to earlier years.

b. We draw your attention to Other current assets(Ref Note No.17) reported in Standalone Ind AS financial statement which includes the balance with Govt authorities amounting to Rs.5.82 crore which is subject to reconciliation with respective statutory returns.

c. We draw attention to Exceptional items reported in the Standalone Statement of Profit or loss, wherein advance for capital expenditure amounting Rs.14.44 crore has been written off and trade payable (trade payables) amounting to Rs.14.24 crore has been written back as no longer payable.

d. We draw attention to Trade Payables(Ref Note No.23) reported in the Standalone Ind AS financial statement of Rs.52.36 crore is subject to confirmation and reconciliation.

Our opinion on the standalone Ind AS financial Statement is not modified in respect of above matter

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone Ind AS financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined that, Except for the matter described in the "Basis for Qualified Opinion" section, we have determined that there are no Key Audit Matters to communicate in our report.

Information Other than the standalone Ind AS Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Companys annual report but does not include the standalone Ind AS financial statements and our auditors report thereon. Such other information is expected to be made available to us after the date of this auditors report.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the other information when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility of Management for the standalone 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 standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation and maintenance of accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone Ind ASfinancial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the companys financial reporting process.

Auditors Responsibilities for the Audit of the standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: l Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

l Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

l Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by

management.

l Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial Ind AS statements or, if such disclosuresare inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

l Evaluate the overall presentation, structure and content of the standalone Ind AS financial statements, including the disclosures, and whether

the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant

audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

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

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

c. The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the

Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d. In our opinion, the aforesaid standalone Ind AS financial statements comply with the specified under Section 133 of the Act.

e. On the basis of written representations received from the directors as on March 31, 2023, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2023, 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses Qualified opinion on the adequacy and operating effectiveness of the Companys internal financial controls with reference to standalone Ind AS financial statements.

g. With respect to the other matters to be included in the Auditors Report in accordance with the requirements under Section 197(16) of the

Act, as amended:

In our opinion and according to the information and explanations given to us, the remuneration paid by the Company to its directors during the current year is in accordance with the provisions of Section 197 of the Act.

h. 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, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations (if any) on its financial position in its standalone Ind AS Financial Statements.

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

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

iv. a. The management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person or entity, including foreign entity ("Intermediary"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

b. The management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the company from any person or entity, including foreign entity ("Funding Party"), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries

c. Based on the audit procedures that havebeen considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b)above,contain any material mis-statement.

v. The company has not declared or paid any dividend during the year in contravention of the provisions of section 123 of the Companies

Act, 2013.

vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

For YCRJ & Associates

Chartered Accountants,

FRN: 006927S

Place: Bangalore

Yashavanth Khanderi

Date: 30th May 2023

Partner

M.No: 029066

UDIN:23029066BGSEPJ1513

"Annexure A" to the Independent Auditors Report

(Referred to in paragraph 1 under the heading Report on Other Legal & Regulatory Requirements of our report of even date to the standalone Ind AS financial statements of the company for the year ended 31st March, 2023) As per the books and records produced before us and as per the information and explanations given to us and based on such audit checks that we considered necessary and appropriate, we confirm that: I. In respect of the Companys Property, Plant and Equipment and Intangible Assets:

a. (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, Plant and Equipment.

(B) The Company has maintained proper records showing full particulars of intangible assets.

b. As per the information and explanation given us, all Property, Plant and Equipment, right-of-use assets and other Intangible assets have been physically verified by the management during the year. However, documents in support of physical verification has not been provided for our verification. Hence, we are unable to comment on the reasonability of physical verification and material discrepancies noticed if any.

c. According to the information and explanations given to us, the records examined by us and based on the examination of the conveyance deeds provided to us, we report that, the title deeds comprising all the immovable properties (Other than Immovable property held under Lease cum Sale Agreement) are freehold, are held in the name of the Company as at the balance sheet date, except for the following which is not held in the name of the Company:

Relevant Line Item in the balance Sheet

Description of Item of Property Gross carrying value Tittle deed Held in the Name of Property Held Since Whether tittle deed holder is a promoter, director or relative of promoter or director or employee of promoter or director Reason for not being held in the name of the company

Property Plant and Equipment

Leasehold Land (Lease cum sale) 5.14 crore Karnataka Industrial Areas Development Board 28-04-2012 Not applicable The land will be transferred to the Company once certain terms and conditions of the lease cum sale agreement are complied with which is currently pending. There is no dispute.

d. As per the information and explanation given to us the Company has not revalued any of its Property, Plant and Equipment (including right of-use assets).

e. As per the information and explanation given us, no proceedings have been initiated during the year or are pending against the Company as at March 31, 2023 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

ii.

a. We have not been provided with the details of physical verification of inventory conducted by management of the Company during current financial year. Hence, we are unable to comment on the clause 3(ii)(a) of the order.

b. The Company has been sanctioned with working capital limits in excess of 5 crore, in aggregate during the year, from banks on the basis of security of inventory and trade receivables quarterly returns or statements filed by the company with such banks are not in agreement with the books of account of the company, below are the details of the same :

INR in Crore

Quarter Ended

Closing Stock as per Stock statement provided to Bank Closing Stock as per Financials
Jun 20221 21.44 21.50
Sep 2022 23.66 23.85
Dec 2022 41.97 41.97
March 2023 45.51 45.51

iii. According to the information and explanation given to us and based on our examination of records of the company, during the year the

Company has given loans or provided advances which are in the nature of loans.

a. i. The aggregate amount of advance given to its subsidiary is Rs.1.12 lakh and the balance outstanding as on 31.03.2023 is Rs. 595.24 lakh (Prev Year Balance Rs.594.12 lakh)

ii. The company has not advanced any loans or advances and guarantees or security to parties other than subsidiaries, joint ventures and associates.

b. According to the information and explanation given to us and based on audit procedures conducted by us, we are of the opinion that, the terms and conditions of the grant of such advances are prima facie prejudicial to the interest of the company, as such advances are interest free.

c. We have been informed that, schedule of repayment is not fixed for these advances, hence we are unable to comment on whether repayments or receipts are regular.

d. As the schedule of repayment is not fixed for these advances we are unable to comment on whether the amount is overdue and whether reasonable steps have been taken by the company.

e. As the schedule of repayment is not fixed for these advances we are unable to comment on its due if any. However, company has not renewed or extended or sanctioned fresh loans to settle the existing loans given to the same parties.

f. The Company has not granted any loans or advances in the nature of loans either repayable on demand or without specifying any terms or period of repayment during the year. Hence, reporting under clause 3(iii)(f) is not applicable.

iv. As per the information provided and explanation given to us, there are no loans, investments, guarantees, and security under section 185 and 186 of the Companies Act 2013. Hence the provisions of clause 3(iv) of paragraph 3 of the Order are not applicable.

v. As per the information provided and explanation given to us, the Company has not accepted any deposit or amounts which are deemed to be deposits. However, during the year the company has accepted few security deposits towards franchise business for opening outlets for sale of refurbished laptops, due to reduced market demand for such business, these franchise agreement was cancelled and converted into unsecured loans and these were reported as exempted deposits in draft form DPT 3.

vi. The maintenance of cost records under sub section (1) of section 148 of the companies Act 2013 and the rules made thereunder are applicable relating to the operations of the company. However, we have not been provided with the same. Hence, we are unable to comment on whether such cost records are maintained or not.

vii.

a. As per the information and explanations given to us, the company has generally been regular in depositing undisputed statutory dues including Goods and service tax, provident fund, income-tax, cess and other statutory dues to the appropriate authorities except for few delays. As explained to us, the company did not have any dues on account of employees state insurance, duty of customs and duty of excise.

As per the information and explanations given to us, below are the details of undisputed amounts payable in respect of aforesaid dues were outstanding as on March 31, 2023 for a period of more than 6 months from the date they became payable.

Statute

Nature of Dues

Amount (Rs. In lakhs) Period to which amount relates Date of Payment Not Paid as on the

Income Tax Act 1961

Income Tax

9 2001-02 Date of this Report

Income Tax Act 1961

Income Tax

13.06 2017-18 Date of this Report

Income Tax Act 1961

Income Tax

1775.04 2018-19 Date of this Report

Income Tax Act 1961

Income Tax

304.56 2020-21 Date of this Report

Income Tax Act 1961

Income Tax

1337.16 2021-22 Date of this Report

Central Excise Act 1944

Excise Duty

28.09 2022-23 Date of this Report

Goods and service Tax

Provision for Interest on reversal of GST input credit

288.23 2018-19 Date of this Report

b. As per the information and explanations given to us, the following statutory dues have not been deposited on account of dispute:

Statute

Nature of Due

Amount (Rs. In lakhs) Period to which amount relates Forum where dispute is pending

Income Tax Act 1961

Disallowance of Expenses

Rs.141.97 FY 2017-18 CIT (A),Bengaluru- 11

Income Tax Act 1961

Disallowance of Expenses

Rs.116.99 FY 2018-19 CIT (A),Bengaluru- 11

Income Tax Act 1961

Disallowance of Bad Debts Written off

Rs.987.39 FY 2019-20 CIT (A),Bengaluru- 11

viii. As per the information and explanations given to us, there were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961(43 of 1961). Hence, reporting under clause 3(viii) of the Order is not applicable.

ix.

(a) In our opinion, the company has not defaulted in repayment of loans or other borrowings or in the payment of interest thereon to any lender during the year;

(b) Company is not declared wilful defaulter by any bank or financial institution or other lender;

c) According to the information and explanation given to us, term loans were applied for the purpose for which the loans were obtained. However, during the year the Company has not taken any term loan.

(d) According to the information and explanation given to us, funds raised on short term basis have not been utilised for long term purposes;

(e) According to the information and explanation given to us, the company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures;

(f) According to the information and explanation given to us, the company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies;

x. a. As per the information and explanations given to us, the company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Hence, reporting under clause 3(x)(a) of the Order is not applicable.

b. As per the information and explanations given to us, the company has not made any preferential allotment or private placement of shares or convertible debentures during the year. Hence, reporting under clause 3(x)(b) of the Order is not applicable.

xi. a. No fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

b. No report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and up to the date of this report.

c. As per the information and explanation given to us, the Company has not received any whistle blower complaints during the year.

xii. The company is not a Nidhi Company. Hence, reporting under clause 3(xii) of the Order is not applicable.

xiii. As per the information and explanations given to us, all transactions with the related parties are in compliance with sections 177 and 188 of the Companies Act,2013 where applicable and details of such transactions have been disclosed in the standalone Ind AS financial statements as required by the applicable accounting standards.

xiv. a. Based on the Internal Audit Report shared to us, we are of the opinion that, Company has adequate internal audit system commensurate with the size and the nature of its business. However, in our opinion scope, coverage and periodicity of the Internal Audit needs improvement. b. We have relied on the Internal Audit report provided by the management and the same is considered in determining the nature, timing and extent of our audit procedures.

xv. As per the information and explanations given to us, the Company has not entered into any non-cash transactions with its directors or persons connected with its directors. and hence provisions of section 192 of the Companies Act, 2013 are not applicable to the Company.

xvi. In our opinion, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934 and also is not a core investment company (as defined in the Core Investment Companies (Reserve Bank) Directions, 2016). Hence, reporting under clause 3(xvi)(a), (b), (c) and (d) of the Order is not applicable.

xvii. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year and hence, reporting under clause 3(xvii) of the Order is not applicable.

xviii. There has been no resignation of the statutory auditors of the Company during the year and hence clause 3(xviii) is not applicable to the company.

xix. On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements and our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company as there are overdue receivables and advances which are pending for undue long time. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

xx. a. As per the information and explanations given to us, the company has not complied with second proviso to sub-section (5) of Section 135 of the said Act. b. The company has not complied with the second proviso to sub-section (5) of Section 135 of the said Act and also, not transferred any amount to "Unspent Corporate Social Responsibility Account".

xvii. As this report being given on the Standalone Ind AS Financial Statements of the company, reporting under clause 3 (xxi) is not applicable.

For YCRJ & Associates

Chartered Accountants,

FRN: 006927S

Place: Bangalore

Yashavanth Khanderi

Date: 30th May 2023

Partner

M.No: 029066

UDIN:22029066AJXZOR5117

Page of "Annexure B" to the Independent Auditors Report

(Referred to in paragraph 2(f) under the heading Report on Other Legal & Regulatory Requirements of our report of even date to the standalone Ind AS financial statements of the company for the year ended 31st March, 2023) Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act") We have audited the internal financial controls over financial reporting of M/s. Cerebra Integrated Technologies Limited ("the Company") as of 31st March, 2023 in conjunction with our audit of the standalone Ind AS 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. 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 over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, 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 over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

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

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Qualified Opinion

According to information explanation provided to us and based on audit procedures conducted by us, the following material weakness has been identified as at March 31, 2023 a. The Companys internal financial control over placing purchase order, payment to vendor, processing of sales order, customer acceptance, credit evaluation is inadequate and not commensurate with the size of operation and nature of activity. b. The Companys internal financial control over selection of vendors, payment to vendor in case of capital expenses is inadequate and not commensurate with the size of operation and nature of activity. c. The Companys internal financial control over payment of advances for supplies, services and capital assets were not operating effectively, which could potentially result in impact on recognition of expenses. d. The Companys internal financial control over recovery of trade receivables were not operating effectively, which could potentially result in credit losses.

AA material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim Standalone Ind AS financial statements will not be prevented or detected on a timely basis.

In our opinion, except for the possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company has, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2023, 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.

We have considered the material weakness identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2023, Standalone Ind AS financial statements of the Company, and the material weakness do not affect our opinion on the Standalone financial statements of the Company.

For YCRJ & Associates

Chartered Accountants,

FRN: 006927S

Place: Bangalore

Yashavanth Khanderi

Date: 30th May 2023

Partner

M.No: 029066

UDIN:22029066AJXZOR5117