Nava Bharat Ventures Ltd Directors Report.

To the Members of Nava Bharat Ventures Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of Nava Bharat Ventures Limited (the Company), which comprise the Balance Sheet as at 31 March 2021, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

2. 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 including Indian Accounting Standards (Ind AS) specified under section 133 of the Act, of the state of affairs of the Company as at 31 March 2021, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing specified under section 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 relevant to our audit of the 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 we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

4. 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.

5. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matter How our audit addressed the key audit matter
Recoverability of Minimum Alternate Tax (MAT) credit asset: Refer note 2(s) for the accounting policy, note 2(b) (viii) and note 17 for the related disclosures. Our audit procedures included, but were not limited to, the following:
As detailed in note 17 to the accompanying standalone financial statements, the Company has recognized deferred tax assets aggregating to Rs.9,078.93 lakhs (31 March 2020: Rs.13,330.41 lakhs) in the nature of credit of Minimum Alternate Tax (MAT) as at 31 March 2021. • Evaluated the design and tested the operating effectiveness of key controls implemented by the Company over recognition of MAT credit.
The Companys ability to recover the deferred tax asset is assessed by management at each reporting date which depends on the estimates of future operations and taxable profits the Company expects to earn within the period by which such MAT balance can be utilized as governed by the Income-tax Act, 1961. • Obtained managements analyses for MAT credit realizability and evaluated the analyses and workings in relation to the recognition of deferred tax assets taking into account the status of recent income-tax audits and enquiries, changes to the tax laws etc.
We have identified the recoverability of MAT Credit as a key audit matter owing to the materiality of the amounts involved and inherent subjectivity involved in determination of utilization of MAT credit through estimation of future taxable profits. • Evaluated the reasonability of future projected profitability by assessing the forecasts against past results and our knowledge of the industry.
• Compared the prior year expected tax profits with the actual results to determine the efficacy of the managements budgeting process.
• Evaluated the appropriateness and adequacy of the disclosures made in the financial statements in respect of MAT Credit in accordance with the applicable accounting standards.
Contingent liabilities relating to ongoing litigations: Refer note 2(r) for the accounting policy and note 35(b) and 35(d) for the related disclosures. Our audit procedures included, but were not limited to the following:
As disclosed in Note 35(b) and 35(d) to the accompanying standalone financial statements, the Company has presently disputed various claims from tax and other regulatory authorities (litigations). • Obtained an understanding of the management process for:
Whether a liability is recognised as a provision or disclosed as a contingent liability in the financial statements involves inherent judgments dependent on a number of significant assumptions and assessments. - identification of legal and tax matters initiated against the Company.
These include assumptions relating to the likelihood and / or timing of the cash outflows from the business and the interpretation of local laws and pending assessments at various levels of the statute. - assessment of accounting treatment for each such litigation identified under as per the applicable accounting standards, and for measurement of amounts involved.
The amounts involved are significant and due to the range of possible outcomes and considerable uncertainty around the various litigations the determination of the need for creating a provision in the financial statements is inherently subjective and therefore is considered to be a key audit matter in the current year. • Tested the design and operating effectiveness of the controls put in place by the management in relation to assessment of the outcome of these pending litigations.
• Obtained an understanding of the nature of litigations pending against the Company and discussed the key developments during the year for these key litigations with the management, inhouse legal team.
• Where relevant, we read the external legal advice obtained by the management.
• Obtained relevant third-party legal confirmations, together with follow up discussions, where appropriate on certain cases.
• Evaluated the appropriateness and adequacy of the disclosures made relating to provisions and contingent liabilities in accordance with the applicable accounting standards.

Information other than the Standalone Financial Statements and Auditors Report thereon

6. The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the annual report but does not include the standalone 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.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

7. The accompanying standalone financial statements have been approved by the Companys Board of Directors. The Companys 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 of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the 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.

8. In preparing the standalone financial 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.

9. Those Board of Directors is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

10. 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 Standards on Auditing 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.

11. As part of an audit in accordance with Standards on Auditing, 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 standalone 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 financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

12. 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.

13. 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.

14. 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.

Other Matter

15. The accompanying standalone financial statements include the financial information of 1 branch, which have not been audited, and whose financial information reflects total assets and net assets of Rs.7.86 lakhs and Rs.7.86 lakhs as at 31 March 2021, and total revenues of Rs.Nil, total net loss after tax of Rs.8.55 lakhs, total comprehensive loss of Rs.8.55 lakhs, and cash outflows (net) of Rs.8.55 lakhs for the year then ended, as considered in the standalone financial statements. Our opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on such unaudited financial information. According to the information and explanations given to us by the management, this financial information is not material to the Company.

Our opinion on the standalone financial statements, and our report on other legal and regulatory requirements below, is not modified in respect of the above matter with respect to our reliance on the aforesaid financial information certified by the management.

Report on Other Legal and Regulatory Requirements

16. As required by section 197(16) of the Act, based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.

17. 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 I a statement on the matters specified in paragraphs 3 and 4 of the Order.

18. Further to our comments in Annexure I, as required by section 143(3) of the Act, based on our audit, we report, to the extent applicable, 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 of the accompanying standalone financial statements.

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 and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

c) the standalone financial statements dealt with by this report are in agreement with the books of account and with the return received from the branch not visited by us.

d) in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act.

e) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2021 from being appointed as a director in terms of section 164(2) of the Act.

f) we have also audited the internal financial controls with reference to standalone financial statements of the Company as on 31 March 2021 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 17 June 2021 as per Annexure II expressed unmodified opinion. 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. the Company, as detailed in notes 35(b), 35(c), 35(d) and 35(xiii) to (xvi) to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2021.

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2021.

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2021. and

iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016, which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.

Annexure I to the Independent Auditors Report of even date to the members of Nava Bharat

Ventures Limited, on the standalone financial statements for the year ended 31 March 2021.

Annexure I

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of Property, plant and equipment.

(b) The Property, plant and equipment have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.

(c) The title deeds of all the immovable properties (which are included under the head Property, plant and equipment) are held in the name of the Company except for the following properties which were transferred as a result of amalgamation of companies in earlier years wherein the title deeds are in the name of the erstwhile company:

Nature of property Total Number of Cases Whether leasehold / freehold Gross block as on 31 March 2021 (Rs. in lakhs) Net block on 31 March 2021 (Rs. in lakhs) Remarks
Land Multiple Freehold 86.36 86.36 Nil

Owing to expiry of the lease period of the underlying land on which the sugar manufacturing facility of the Company located in Samalkot is situated on 12 August 1996, the title deeds of the same are not held in the name of the Company. The buildings of the sugar manufacturing facility located on the said land have a gross block of Rs.1,400.82 lakhs and net block of Rs.250.21 lakhs as on 31 March 2021.

ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies between physical inventory and book records were noticed on physical verification.

iii) The Company has granted unsecured loans to companies covered in the register maintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of grant of such loans are not, prima facie, prejudicial to the companys interest.

(b) the schedule of repayment of principal and payment of interest has been stipulated and repayments of the principal amount (3 cases) and the receipt of interest (10 cases) are not regular.

(c) there is no amount which is overdue for more than 90 days in respect of loans granted to such companies.

iv) In our opinion, the Company has complied with the provisions of Section 186 in respect of loans, investments, guarantees. In our opinion, the Company has not entered into any transaction covered under Section 186 of the Act in respect of security. Further, in our opinion, the Company has not entered into any transaction covered under Sections 185 of the Act.

v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under subsection (1) of Section 148 of the Act in respect of Companys products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

vii) (a) Undisputed statutory dues including provident fund, employees state insurance, income-tax, goods and services tax, duty of customs, cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been a slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

Annexure I to the Independent Auditors Report of even date to the members of Nava Bharat

Ventures Limited, on the standalone financial statements for the year ended 31 March 2021.

(b) The dues outstanding in respect of income-tax, sales-tax, service-tax, duty of customs, duty of excise, goods and service tax and value added tax on account of any dispute, are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount (Rs. in lakhs) Amount paid under Protest(Rs. in lakhs) Period to which the amount relates Forum where dispute is pending Remarks, if any
Central 64.88 - 2000-01 The Andhra Pradesh Sales Tax and VAT Appellate Tribunal, Hyderabad Nil
Various Sales Sales Tax 2.20 - 2004-05 Assistant Commissioner of Sales Tax, Range-II, Cuttack Nil
Tax Acts Andhra Pradesh General Sales Tax 79.36 - 2003-04 Assistant. Commissioner of Commercial Taxes, Warangal Nil
206.06 - 2012-13 CESTAT, Chennai Nil
Customs Act, 1962 Customs duty 17.62 - 1985-87 Honble High Court of Telangana Nil
369.94 - 2012-13 The Customs, Excise and Service Tax Appellate Tribunal (cEStAT), Bangalore Nil
Central Excise Act, 1944 Excise duty 100.72 - 2011-16 Commissioner of Customs and Central Excise (Appeals), Hyderabad Nil
1.09 - 2000-01 to 2001-02 Honble High Court of Telangana Nil
Finance Act, Service 6.14 - April 2016 to June 2017 Assistant Commissioner of Central Excise, Kakinada Nil
1994 (as amended) Tax 65.62 - October 2007 to March 2017 Commissioner of Central Excise (Appeals), Visakhapatnam Nil
5,467.63 857.93 AY 2005-06, 2006-07, 2010-11 and 2018-19 Honble High Court of Telangana Nil
Income Tax Act, 1 QR1 Income Tax 469.47 380.81 AY2009-10, 2010-11 and 2011-12 Income Tax Appellate Tribunal (ITAT) Nil
722.74 722.74 AY 2008-09, 2009-10, 2012-13, 2013-14 and 2016-17 Commissioner of Income Tax (Appeals) Nil

Annexure I to the Independent Auditors Report of even date to the members of Nava Bharat

Ventures Limited, on the standalone financial statements for the year ended 31 March 2021.

viii) The Company has not defaulted in repayment of loans or borrowings to any banks during the year. The Company did not have any outstanding loans or borrowings from financial institutions or government or outstanding debentures during the year.

ix) In our opinion, the Company has applied monies raised by way of the term loans for the purposes for which these were raised. The Company did not raise monies by way of initial public offer/ further public offer (including debt instruments) during the year.

x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

xi) Managerial remuneration has been paid (and)/ provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

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

xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the standalone financial statements etc., as required by the applicable Ind AS.

xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

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

Annexure II to the Independent Auditors Report of even date to the members of Nava Bharat Ventures Limited on the standalone financial statements for the year ended 31 March 2021

Annexure II

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

1. In conjunction with our audit of the standalone financial statements of Nava Bharat Ventures Limited (the Company) as at and for the year ended 31 March 2021, we have audited the internal financial controls with reference to standalone financial statements of the Company as at that date.

Responsibilities of Management and Those Charged with Governance for Internal Financial Controls

2. The Companys Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements 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 financial controls that were operating effectively for ensuring the orderly and efficient conduct of the Companys 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 Act.

Auditors Responsibility for the Audit of the Internal Financial Controls with Reference to Standalone Financial Statements

3. Our responsibility is to express an opinion on the Companys internal financial controls based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India (ICAI) prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements were 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 with reference to standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference to standalone financial statements includes obtaining an understanding of such internal financial controls, 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.

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 with reference to standalone financial statements.

Meaning of Internal Financial Controls with Reference to Standalone Financial Statements

6. A companys internal financial controls with reference to standalone financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial controls with reference to standalone financial statements include those policies and procedures that

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

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

7. Because of the inherent limitations of internal financial controls with reference to standalone financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to standalone financial statements to future periods are subject to the risk that the internal financial controls with reference to standalone financial statements 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, adequate internal financial controls with reference to standalone financial statements and such controls were operating effectively as at 31 March 2021, based on the internal financial controls with reference to financial statements 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 ICAI.