Divya Jyoti Industries Ltd Auditors Report.

To,

The Members of Divya Jyoti Industries Limited

Report on the Audit of Standalone Financial Statements

We have audited the Standalone financial statements of Divya Jyoti Industries Limited ("the Company"), which comprise the Standalone Balance Sheet as at 31st March, 2019; the Statement of Changes in Equity; the Statement of Profit and Loss (including Other Comprehensive Income) and the Cash Flow Statement for the year then ended, and Notes to the Standalone Financial Statements, including summary of significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Financial Statements").

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone financial statements give the information required by the Companies Act, 2013 (Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, and loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing specified u/s. 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors Responsibilities for the audit of the Standalone 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(‘ICAI) together with the ethical requirements that are relavant to our audit of the Standalone financial statements under the provisions of the Act 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 obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Standalone financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone 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.

Information Other than the Standalone Financial Statements and Auditors Report thereon

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 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 financial statements, our responsibility is to read the other information 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.

Managements Responsibility for the Standalone Financial Statements

The Companys management and Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view state of affairs, profit and other comprehensive income, changes in equity and cash flows 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. 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management and Board of Directors 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 company has temporarily suspended its manufacturing operations and the lead Banker has filed the petition to NCLT under section 7 of the Insolvency & Bankruptcy Code, which is pending as on the date.

Board of Directors is 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 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 judgment and maintain professional skepticism throughout the audit. We also:

- 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.

- 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 Act, 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.

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

- 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 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.

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

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, 2016 (‘the Order) issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure A, a statement in the paragraph 3 and 4 of the order.

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 purpose of our audit

b. In our opinion proper books of accounts 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, the Cash Flow Statement and the Statement of Changes in Equity 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 the written representation received from the directors as on 31st March 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2019 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 and

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 explanations given to us:

(i) The Company has disclosed the impact of pending litigations on the financial position in its Standalone financial statements.

(ii) The Company has made provision, as required under the applicable law or Accounting Standards, for material foreseeable losses, if any, on long term contracts including derivative contracts.

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

For Anubhav Pradhan and Co.
Date: May 29, 2019 Chartered Accountants
Place: Indore Firm Registration No. 013822C
Sd/-
CA. Amit Ahuja
Partner
Membership No.: 425134

ANNEXURE "A TO INDEPENDENT AUDITORS REPORT

The annexure referred to in Independent Auditors Report on the Standalone financial statements for the year ended on 31st March 2019, we report that:

i. (a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) As explained to us and on the basis of our examination, the company has regular programme for physical verification of its fixed assets which is reasonable with regard to the size of the company and nature of its assets and no material discrepancies were noticed on such verification.

(c )According to the information and explanation given to us and on the basis of our examination the title deeds of immovable properties are held in the name of the company.

ii. According to the information and explanation given to us, the physical verification of inventory has been conducted at reasonable intervals by the management. The procedure of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the company and nature of its business. The company has maintained proper record of inventories and no material discrepancies were noticed on such verification of inventories as compared to the book records.

iii. The company has not granted loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

iv. The company has not given any loans, investments, guarantees and security under the provisions of section 185 and 186 of the Companies Act, 2013.

v. The company has not accepted any deposits from the public.

vi. According to the information and explanation given to us and verified by us broadly the company has maintained the cost records as prescribed by the central government under sub section 1 of section 148 of the Companies Act ,2013.

However, we have not made a detailed examination of Cost records with a view to determine whether they are accurate or complete.

(a) According to the information and explanation given to us and on the basis of our examination of records of the company, the company is regular in depositing statutory dues, including provident fund, employees state insurance, Income tax, Sales Tax, Service Tax, Goods and Service Tax (GST), Duty of Customs, Duty of Excise, Value added tax, cess and any other statutory dues to the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income-Tax, Sales-Tax, Service Tax, Goods and Services Tax, Duty of Customs, Duty of Excise, Value Added Tax, Cess and other material statutory dues were in arrears as at 31st March, 2019 for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us, following dues of Income Tax, sales tax, service tax, duty of customs or duty of excise or value added tax have not been deposited by the company on account of disputes.

Name of the Statute Nature of dues Amount (in Lacs) Period to which the Amount relates Forum where dispute is pending
M.P. Commercial Tax Act, 1994 Commercial Tax 6.51 2004-05 Reference Application filed to Appellate Tribunal, Bhopal
M.P. Commercial Tax Act, 1994 Commercial Tax 2.39 2005-06 Reference Application filed to Appellate Tribunal, Bhopal
M.P. Entry Tax Act, 1976 Entry Tax 0.26 2005-06 Reference Application filed in Jabalpur High Court
M.P. Entry Tax Act, 1976 Entry Tax 0.79 2006-07 Writ Petition filed at Indore High Court
M.P. Central Tax Act, 1956 Central Sales Tax 57.85 2003-04 Writ Petition filed at Jabalpur High Court
M.P. Central Tax Act, 1956 Central Sales Tax 181.46 2004-05 Writ Petition filed at Jabalpur High Court
M.P. Value Added Tax, 2002 Value Added Tax 52.44 2006-07 Appeal filed at Appellate Authority ,Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Sales Tax 39.59 2008-09 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Sales Tax 29.17 2010-11 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Sales Tax 386.62 2011-12 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Sales Tax 85.43 2012-13 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Central Tax Act, 1956 Central Sales Tax 25.48 2014-15 Appeal filed at Appellate Authority, Commercial Tax, Indore
M.P. Entry Tax Act, 1976 Entry Tax 150.41 2007-08 High Court Order came in favour of the company
M.P. Entry Tax Act, 1976 Entry Tax 223.66 2008-09 High Court Order came in favour of the company

Note: The amount due has been shown as net of amounts paid.

The amount does not include the interest claimed, but not yet quantified.

(viii) The company has defaulted in repayments of loans or borrowings to following banks :-

Bank Name Cash Credit Limit Amount
Dena Bank 127339789
Oriental Bank of Commerce (OBC) 114103520
Saraswat Co-operative Bank Ltd. (SCBL) 89993610

The above Cash Credit Loan Amount has been reported as NPA by the banks on different dates during the year. The company has no other borrowings from financial institutions, bank, government or debenture holders.

(ix) The company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the order is not applicable.

(x) According to the information and explanations given to us, no fraud by the company or on the company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanation given to us and based on our examination of the records of the company, the company has paid/provided for the managerial remuneration in accordance with the approvals mandated by the provisions of section 197, read with Schedule V of the Companies Act,2013.

(xii) In our opinion and according to the information and explanation given to us the company is not a Nidhi Company.

Accordingly, paragraph 3(xii) of the order is not applicable to the company.

(xiii) According to the information and explanation given to us by the management, transactions with related parties are in compliance with Section 177 and 188 of the Companies Act, 2013, where applicable and the details have been disclosed in the notes to the financial statements.

(xiv) According to the information and explanation given to us and based on our examination of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanation given to us and based on our examination of records of the company, the company has not entered into non cash transaction with directors or persons connected with him. Accordingly paragraph 3(xv) of the order is not applicable.

(xvi) The company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For Anubhav Pradhan and Co.
Date : May 29, 2019 Chartered Accountants
Place : Indore Firm Registration No. 013822C
CA. Amit Ahuja
Partner
Membership No.: 425134

Annexure ‘B to the Independent Auditors Report on Standalone Financial Statements

Report on the Internal Financial Controls under Clause (i) of sub- section 3 of Section 143 of Companies Act, 2013(‘the Act)

We have audited the internal financial controls over financial reporting of Divya Jyoti Industries Limited (‘the Company) as of 31st March, 2019 in conjunction with our audit of the Standalone financial statements of the company for the year ended on that date.

Opinion

In our opinion the company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2019, based on the internal control over financial reporting criteria established by the company considering the essential component 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.

Managements Responsibility for Internal Financial Controls

The Companys management and the Boar d of Directors are 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(‘ICAI).These responsibilities include the design, implementation and maintenance of adequate internal controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the 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 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 were 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 systems over financial reporting and their operating effectiveness. Our audit of internal financial controls system over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing risk that a material weakness exists, and testing and evaluating the design an operating effectiveness of internal financial controls 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 over financial reporting.

Meaning of Internal Financial Controls with reference to Standalone Financial Statements

A companys internal financial control over financial reporting is a process design to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls over financial reporting include those policies and procedures that:

(i) Pertain to the maintenance of records, in reasonable details, accurately and fairly reflects the transactions and dispositions of the assets of the company.

(ii) Provide reasonable assurance that transaction 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 authorization of the managements and the directors of the company and

(iii) 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 standalone financial statements.

Inherent Limitations of Internal Financial Controls with reference to Standalone Financial Statements

Because of Inherent limitations of internal financial controls of financial reporting, including the possibilities 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 controls over financial reporting may become inadequate because of changes in condition, or that the degree of compliance with the policies or procedures may deteriorate.

For Anubhav Pradhan and Co.
Chartered Accountants
Firm Registration No. 013822C
Place: Indore CA. Amit Ahuja
Date: May 29, 2019 Partner
Membership No.: 425134