CIAN Agro Industries & Infrastructure Ltd Directors Report.

To,

The Members

CIAN Agro Industries & Infrastructure Limited

Report on the Ind AS Financial Statements

Opinion

1. We have audited the accompanying financial statements of CIAN Agro Industries & Infrastructure Limited ("the Company") which comprise of the Balance Sheet as at 31st March 2020, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement, Statement of Changes in Equity for the year then ended and notes to financial statement, including a summary of the Significant Accounting Policies and other explanatory information (hereinafter referred to as "Financial Statements").

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Financial Statements give the information required by the Act in the manner so required and give a true and fair view, in conformity with the accounting principles generally accepted in India, including Ind AS, of the state of affairs of the Company as at 31st March 2020, and its profit & loss, other comprehensive income, changes in equity and cash flows for the year ended on that date.

Basis for Opinion

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

Key Audit Matters

4. Key audit matters (‘KAM) are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matters (KAM)
Sr. Description of Key No. Audit Matter Why the matter was considered to be one of most significance in the audit How the matter was addressed in the audit
A. Inventory of stores and Spares. As at 31st March 2020, the carrying value of Inventory of stores and spares was Rs.2,859.72 lacs (as at 31st March 2019: Rs.34.19 lacs), as given in Note 7 of the Financial Statements. These investments form 23.41% (0.37%) of the total assets of the Company, and are hence considered to be of one of most significant matters in the audit. We have verified the documents of ownership of the items listed under stores and spares. As mentioned in Note 2(a) of Annexure A to the Independent Audit Report, the physical verification of the inventory has been carried out and certified by the management. We have verified the valuation of the inventory which is in line with the accounting policy of the Company
B. Merger of the company with subsidiary companies In line with the order of Hon. Bombay High Court regarding approval of merger scheme, books were merged retrospectively from 1st April 2019 in compliance with Annexure C of Ind AS 103 for effecting business combinations between common control entities using ‘Pooling of interest method. Accordingly, all the assets, liabilities and reserves of Transferor companies have been recorded at their carrying amounts and in the form in which they appeared in the financial statements as at the date of merger of the respective Transferor Companies. We have verified the correctness of the nature and amounts of merger adjustments effected during the period. We have also ensured the compliance with the recognition and disclosure requirements of the standard.

Emphasis of Matter

5. We draw attention to Note No. 43 regarding Merger of Purti Agrotech Ltd., Jairam Infraventure Pvt. Ltd. and Jupiter Metals Pvt. Ltd with CIAN Agro Industries & Infrastructure Ltd. with effect from 1st April, 2019 in line with the order for approval of merger scheme by Hon. Bombay High Court.

6. We draw attention to Note No. 5 regarding loss on impairment of Rs. 107.04 lakhs recognised during the year in the statement of Profit & Loss.

7. We draw attention to Note No. 49 regarding prior period errors rectified during the financial year by restatement of comparative figures presented of FY 2018-19. The net impact of rectification is Rs. Nil increase/decrease in the reserves of the company.

8. We draw attention to Note No. 12 regarding negative balance in current account of Rs. 176.42 lakhs. This is due to cheques issued but not deposited for Rs. 179.06 lakhs. The balance as per bank statement is Rs. 2.63 lakhs.

9. We draw attention to Note No. 19 where during the year the unsecured loans of Rs. 164.30 lakhs, which were held in the books of the erstwhile subsidiary, were written back in line with the companys accounting policy. The income in respect of the same is recognised under the head "Other Income" in the Statement of Profit & Loss.

10. We draw attention to Note No. 14 where Advance remuneration to a director was adjusted, vide a Novation deed dated 1st April 2019, whereby creditors of the erstwhile subsidiary were settled.

Our opinion is not modified in respect of the same.

Other Information

11. The Companys management and Board of Directors are responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the financial statements and our auditors report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

12. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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

Emphasis of Matter

5. We draw attention to Note No. 43 regarding Merger of Purti Agrotech Ltd., Jairam Infraventure Pvt. Ltd. and Jupiter Metals Pvt. Ltd with CIAN Agro Industries & Infrastructure Ltd. with effect from 1st April, 2019 in line with the order for approval of merger scheme by Hon. Bombay High Court.

6. We draw attention to Note No. 5 regarding loss on impairment of Rs. 107.04 lakhs recognised during the year in the statement of Profit & Loss.

7. We draw attention to Note No. 49 regarding prior period errors rectified during the financial year by restatement of comparative figures presented of FY 2018-19. The net impact of rectification is Rs. Nil increase/decrease in the reserves of the company.

8. We draw attention to Note No. 12 regarding negative balance in current account of Rs. 176.42 lakhs. This is due to cheques issued but not deposited for Rs. 179.06 lakhs. The balance as per bank statement is Rs. 2.63 lakhs.

9. We draw attention to Note No. 19 where during the year the unsecured loans of Rs. 164.30 lakhs, which were held in the books of the erstwhile subsidiary, were written back in line with the companys accounting policy. The income in respect of the same is recognised under the head "Other Income" in the Statement of Profit & Loss.

10. We draw attention to Note No. 14 where Advance remuneration to a director was adjusted, vide a Novation deed dated 1st April 2019, whereby creditors of the erstwhile subsidiary were settled.

Our opinion is not modified in respect of the same.

Other Information

11. The Companys management and Board of Directors are responsible for the other information. The other information comprises the information included in the Companys annual report, but does not include the financial statements and our auditors report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

12. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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

Managements Responsibility for the Financial Statements

13. The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation & maintenance 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management and Board of Directors are 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. Board of Directors is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibility

14. Our objectives are to obtain reasonable assurance about whether the 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 financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

a. Identify and assess the risks of material misstatement of the 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.

b. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(I) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

c. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

d. 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 financial statements or, if such disclosures are 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.

e. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

15. 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 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.

Other Matter

16. We have taken the financial figures related to operations of the erstwhile subsidiaries of Rs.3,857.08 lakhs of Assets, Rs.7,161.00 lakhs of Liabilities, Rs.6,052.58 lakhs of Income and Rs.2,789.86 lakhs of Expenses based on the Trial Balance audited by the auditors of the erstwhile subsidiaries.

17. GST Audit under the provisions of GST Laws is pending Our opinion is not modified in respect of the same.

Report on Other Legal and Regulatory Requirements

18. As required by the Companies (Auditors Report) Order, 2016, as amended, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

19. 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 standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. On the basis of written representations received from the directors as on 31st March, 2020 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

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

i. The Company does not have any pending litigations which would impact its financial position.

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

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

Place : Nagpur For P. G. Joshi & Co.,
Date : 31th July, 2020 Chartered Accountants
UDIN : 20038193AAAADU8760 FRN: 104416W
CA Ashutosh Joshi
Partner
M. No.: 038193

"Annexure A" to the Independent Auditors Report

Referred to in paragraph 18 under the heading ‘Report on Other Legal & Regulatory Requirement of our report of even date to the financial statements of the Company for the year ended 31st March, 2020:

1) In respect of 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) The Fixed Assets have been physically verified by the management in a phased manner, designed to cover all the items over a period of one year, which in our opinion, is reasonable having regard to the size of the company and nature of its business. Pursuant to the program, the fixed asset has been physically verified by the management during the year and no material discrepancies between the records and the physical fixed assets have been noticed, as confirmed by the management.

(c) The title deeds of immovable properties are held in the name of the company.

2) In respect of Inventory :

(a) Physical verification of inventory is the responsibility of the management. The stocks have been physically verified during the year by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable. The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the company and nature of its business.

(b) On the basis of our examination of the inventory records of the company, we are of the opinion that, the company is maintaining proper records of its inventory. As informed to us, there were no material discrepancies noticed on physical verification between the physical stock and the book records. Minor discrepancies were appropriately adjusted in the books.

3) The Company has given salary advance to the Managing Director Shri Nikhil Gadkari of Rs. 3.03 Lakhs as on 31st March 2020. It has not granted any other loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the Register maintained under section 189 of the Act.

4) In our opinion and according to the information and explanations available to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of salary advance to the Managing Director, as given above.

5) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

6) The company has maintained cost accounts & records as notified by the Central Government under sub-section (1) of Section 148 of the Act, in respect of the activities carried on by the company.

7) (a) According to information and explanations given to us and on the basis of our examination of the books of account, and records, the Company is in the practice of depositing undisputed statutory dues including Provident Fund, Employees State Insurance & Income-tax after the end of the respective financial year and dues related to Goods & Services Tax at the end of every quarter with the appropriate authorities. According to the information and explanations available to us, undisputed amounts of statutory dues, in arrears as at 31st March, 2020 for a period of more than six months, are given as follows:

Statutory Dues Payable Amount (Rs. In Lakhs)
ESIC 1.40
GST 666.01
Provident Fund 9.30
Professional Tax 0.79
TCS 0.04
TDS 35.71
Others 14.92
Total 728.17

b) According to the information and explanation given to us, there are no dues of income tax, sales tax, service tax, goods & service tax outstanding on account of any dispute.

8) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks.

9) Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised any funds by way of initial public offer or further public offer including debt instruments.

During the year vehicle loan was taken from BMW India Financial Services Pvt. Ltd. of Rs. 100 Lakhs (balance payable as on 31st March, 2020 was 92.99 Lakhs). These funds have been utilized for the purpose for which they were raised.

10) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the company by its officers or employees has been noticed or reported during the year.

11) Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act 2013;

12) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 4 (xii) of the Order are not applicable to the Company.

13) In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

14) Based upon the audit procedures performed and the information and explanations given by the management, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of clause 3 (xiv) of the Order are not applicable to the Company and hence not commented upon.

15) Based upon the audit procedures performed and the information and explanations given by the management, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

16) In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commented upon.

Place : Nagpur For P. G. Joshi & Co.,
Date : 31th July, 2020 Chartered Accountants
UDIN : 20038193AAAADU8760 FRN : 104416W
CA Ashutosh Joshi
Partner
M. No.: 038193

"Annexure B" to the Independent Auditors Report

Referred to in paragraph 19f under the heading ‘Report on Other Legal & Regulatory Requirement of our report of even date to the financial statements of the Company for the year ended 31st March, 2020

1. We have audited the internal financial controls over financial reporting of CIAN Agro Industries & Infrastructures Limited as of 31st March, 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

2. 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 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

3. 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 on Audit of Internal Financial Controls Over Financial Reporting (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.

4. 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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. 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. However, properly documented processes/ policies for recording of purchase, Sales, Manufacturing activity, inventory, payroll statutory compliances etc., were not available for our verification.

Meaning of Internal Financial Controls Over Financial Reporting

6. 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 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 financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations 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 Over Financial Reporting

7. 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.

Opinion

8. In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting except for the following material weaknesses identified:

a. Attention is drawn to non-availability of properly documented processes/ policies for recording of purchase, Sales, Manufacturing activity, inventory, payroll statutory compliances etc.

b. Tracking of processes to confirm that these controls are in line with the companys policy, was not possible in absence of such documentation.

c. Attention is also drawn in respect of accounting software where more control over access to the system and maintenance of Log regarding the changes made in the system is required.

d. The transactions related to revenue recognised in the Infra division of Rs. 4,856.45 lakhs couldnt be tracked as sufficient & appropriate evidences (contracts with customers, status of completion of contracts) were not available.

However, our opinion in not qualified on the above matters.

Such internal financial controls over financial reporting were operating effectively as at 31st March, 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.

Place : Nagpur For P. G. Joshi & Co.,
Date : 31th July, 2020 Chartered Accountants
UDIN : 20038193AAAADU8760 FRN : 104416W
CA Ashutosh Joshi
Partner
M. No.: 038193