NEL Holdings South Ltd Directors Report.

To the Members of

NEL Holdings Limited (Formerly known as Nitesh Estates Limited)

Report on the Audit of the Standalone Financial Statements Adverse Opinion

We have audited the standalone financial statements of NEL Holdings Ltd. (Formerly known as Nitesh Estates Limited and herein after referred as "the Company"), which comprise the Balance Sheet as at 31st March 2020, the Statement of Profit and Loss, Stateme nt of changes in Equity and Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, because of the reasons described in the basis for Adverse Opinion para below, the aforesaid standalone financial statements do not 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, 2020, and its loss, changes in equity and its cash flows for the year ended on that date.

Basis for Adverse Opinion

1. The Company has incurred losses over the years resulting in negative net worth, negative working capital and negative cash flows. The default in payment of dues to banks and financial institution and creditors etc are the identified events that, individually or collectively, may cast significant doubt on the Companys ability to continue as a going concern.

In this financial scenario, the management has no concrete plan to improve upon the situation which indicates that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern. The standalone financial statements do not adequately disclose this fact.

As the Company has not recognized this fact and has prepared the standalone financial statements on going concern assumption basis without carrying out any adjustments, in our opinion, the standalone financial statements may not give a true and fair view.

2. The Company has given unsecured advance amounting to Rs 1911.70 Lakhs to Winter Lands Pvt. Ltd (Winter Lands) and Rs 3515.33 Lakhs to Boulevard Developers Pvt. Ltd for acquiring various immovable properties on behalf of the Company for which no Joint Development Agreements could be produced to us. We have been informed that these companies are not in a position to honor their commitment and repay the advance. No provision has been made by the Company with respect to these advances resulting in understatement of loss and overstatement of the net worth by the said amount.

However, in case of Winter Lands the Company has represented that they are in the process of taking appropriate measures to regularize and enter into the development agreements with the land owners & aggregators within next two quarters. [Refer Note No 13(ii) of the standalone financial statements]

3. The Company had advanced Rs. 1227.98 Lakhs to Somerset Infra Projects Private Limited (Somerset) for acquiring immovable properties on behalf of the Company. Somerset has neither delivered any property to the Company as per the agreement nor refunded the money. The Company has made full provision for the said advance and has entered into an agreement for assignment of claims against the party with another Company at a substantially lower consideration which may result in substantial loss to the Company.

Considering these factors, we are concerned about the manner in which the funds were given to Somerset and other companies without obtaining any security and the corresponding provision made in the books without taking necessary legal action for recovery. [Refer Note No 13(i) of the standalone financial statements]

4. As stated in Note No 17, the Company has not accounted for the demand of penal interest amounting to Rs. 2,177 Lakhs by banks and financial institutions on credit facilities, resulting in the understatement of loss and overstatement of net worth by the said amount.

5. As stated in Note No 17 of the standalone financial statements, the Company has made short provision of interest on debentures amounting to Rs 6,966 Lakhs against the interest demand of Rs 11,812 Lakhs (includes interest plus penal interest) in respect of appeal filed by Debenture Trustee Investcorp Real Estate Yield Fund (Formerly known as IDFC Real Estate Yield Fund) before the National Company Law Tribunal (NCLT), Bangalore, resulting in the understatement of loss and overstatement of net worth by the said amount.

6. As stated in Note No 43 of the standalone financial statements, the Company has collected Rs 1,414 Lakhs in earlier years as advance from customers for closed/suspended residential projects which have now been abandoned and the receipts, are now in the nature of deemed deposits under rule 2(c ) (xii) (b) of the Companies Acceptance of deposit (Rules) 2014 and are also within the purview of sections 73 to 76 of the Companies Act, 2013 in respect of which proper disclosure has not been made in the books of accounts in this respect.

7. The Company holds investments in its subsidiaries and also disbursed advances of Rs. 9,126 Lakhs as on the balance sheet date. The subsidiaries have reported consolidated negative net worth as on 31st March, 2020. The Company has provided for impairment loss on such investments due to negative net worth in its books of account but no adjustments have been made in respect of the advances given to such subsidiaries which are also doubtful of recovery. [Refer Note No 13(iv) of the standalone financial statements].

8. The Company has CWIP and Inventories relating to projects amounting to Rs 8,835 Lakhs and Rs 23,232 Lakhs [Net "Payable to land owner for land under Joint Development Agreement, JDA) respectively as on 31st March, 2020. No impairment test has been carried out to ascertain the realizable value of Rs 3,492 Lakhs and Rs 19,603 Lakhs respectively as estimated by the management against these projects assets. [Refer Note No 4.2(i) and 8 of the standalone financial statements].

9. Year-end balance confirmation certificates in respect of trade receivables, trade payables, advances and other advances have not been provided for our verification. In absence of adequate audit evidence, we are unable to ascertain as to whether any provision is required with respect to the carrying amounts of these balances as at reporting date.

10. As stated in Note No 19(a) of the standalone financial statements, the Company has neither ascertained nor accounted for component wise Deferred Tax Assets/ Liabilities as on balance sheet date and its corresponding adjustment in the Statement of profit & loss for the year.

11. The Company has not provided customer wise reconciled figures for the outstanding balances for "Billing in excess of revenue" (Net of debit balance) of Rs 12,600 Lakhs (Refer Note No 20(ii) to the standalone financial statement). Due to non-availability of the said details we are unable to verify the correctness of the same.

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 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 financial statements under the provisions of the Companies Act, 2013 and the Rules made 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 adverse 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 year. 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. In addition to the matters described in the Basis for Adverse Opinion section of our report, we have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter Response to Key Audit Matter
1. Accuracy of recognition, measurement, presentation and disclosures of revenues and other related balances in view of adoption of Ind-AS 115 "Revenue from contracts with Customers". Principal Audit Procedure:
Our audit approach consisted testing of the design and operating effectiveness of internal controls and procedures as follows:
The revenue recognition by the Company in a particular contract is dependent on certain key judgments relating to identification of distinct performance obligations, determination of transaction price of identified performance obligation and disclosures including presentations of balances in the Ind-AS standalone financial statements. a) We have assessed the application of the provisions of the Ind AS 115 in respect of the Companys revenue recognition and appropriateness of the estimated adjustments in the process.
b) Selected a sample of existing continuing contracts and new contracts and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price.
Refer Notes 23 and 42 to the standalone financial statements. c) Tested the relevant information, accounting systems and change relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard.
d) Performed analytical procedures and test of details for reasonableness and other related material items.
Conclusion:
Our procedures did not identify any material exceptions.
2. Contingent Liabilities Principal Audit Procedure:
Assessment of provisions and contingent liabilities in respect of certain litigations including direct and indirect taxes, various claims filed by other parties not acknowledged as debt. Our audit was focused on analysing the facts of subject matter under consideration and judgements/ interpretation of relevant law.
There is high level of judgements required to estimate the level of provisioning. Our Audit approach involved:
a) Examining recent orders and/or communication received from various Tax authorities/ judicial forums and follow up action thereon.
The Companys assessment is supported by the facts of matter, their own judgement, past experience and advice from legal and independent tax consultant wherever considered necessary. Accordingly, unexpected adverse outcomes may significantly impact the companys reported loss and net assets. Associated uncertainty relating to the outcome requires application of judgement in interpretation of law.
b) Understanding the current status of the litigation/tax assessments.
c) Evaluating the merit of the subject matter under consideration with reference to the grounds presented therein and available independent legal / tax advice.
Refer Note 34 to the standalone Financial Statements.
d) Review and analysis of the contentions of the company through discussion, collection of details of the subject matter under consideration, the likely outcome and consequent potential outflows on those issues.
Conclusion:
Our procedures did not identify any material exceptions.
3. Evaluation of Uncertain Tax Position Principal Audit Procedure:
The Company is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including direct and indirect tax matters. These involve significant management judgement to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the standalone financial statements. Our audit procedures include the following substantive procedures:
a) Obtained understanding of key uncertain tax positions; and
b) We along with our internal tax experts -
> Read and analysed select key correspondences, external legal opinions / consultations by management for key uncertain tax positions;
> Discussed with appropriate senior management and evaluated managements underlying key assumptions in estimating the tax provisions; and
> Assessed managements estimate of the possible outcome of the disputed cases.
Conclusion:
Our procedures did not identify any material exceptions.

Information Other than the Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the draft Directors Report including annexures to Directors Report, which we obtained prior to the date of this auditors report and other reports included in the Annual report, which are expected to be made available to us after that date, 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 and will 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 identified above, and in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information that we obtained prior to the date of this auditors report, 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.

When we read the full Annual report, which is expected to be made available to us after the date of this auditors report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of the Management and Those Charged with Governance for the Standalone 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 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 accounting policies; making judgements 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 statement 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 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.

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

Auditors Responsibilities for the Audit of the 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 judgement 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 financial 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 system 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 the 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.

Materiality is the magnitude of misstatements in the standalone 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 standalone 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

Emphasis of Matter

1. The Company is holding Rs 20,547 Lakhs in its 100% subsidiary companies as investment in equity and preference shares which has been impaired fully due to negative net worth as on the balance sheet date [Refer Note no 28A of the standalone financial statements].

2. We draw attention to Note 44 of the standalone financial statements, which states the economic and social consequences/disruption that the entity is encountering as a result of COVID-19 pandemic which is impacting supply chains, consumer demand and personnel availability. The situation is still evolving and the managements assessment of the impact on the subsequent period is dependent on the circumstances as they evolve. This may further affect the Companys ability to carry out the business.

Our opinion is not modified in respect of these matters.

Other Matters

a) Prolonged lock-down of COVID-19 has caused significant challenges for audit of the Company on deployment of our audit team at various locations due to travel restrictions imposed by the State as well as Central Government of India. We have performed alternate audit procedures and have obtained various documents and other audit information which were made available to us by the Company as sufficient appropriate audit evidence to issue our audit opinion on the standalone financial statements.

Our report is not modified in respect of these matters.

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 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, which is subject to the possible effect of the matters described in the Basis for Adverse Opinion paragraph of our Audit Report and the material weakness described in Basis of Qualified Opinion in our separate report on t he Internal Financial Controls over Financial Reporting.

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

a) Except for the effects of the matters described in the Basis for Adverse Opinion section above, 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) Except for the effects of the matters described in the Basis for Adverse Opinion section above, 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 statement of cash flows dealt with by this Report are in agreement with the books of account.

d) Based to the matters stated in the Basis for Adverse Opinion section above, in our opinion, the aforesaid standalone financial statements do not comply with the Indian Accounting Standards specified under Section 133 of the Act, read with relevant rules issued thereunder.

e) The matters stated in the Basis for Adverse Opinion section above, in our opinion, may have an adverse effect on the functioning of the Company.

f) 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 directors is disqualified as on 31st March, 2020 from being appointed as director in terms of Section 164(2) of the Act.

g) 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 a qualified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting for the reasons stated therein.

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

i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 34;

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.

ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT

"Annexure A" referred to in our report to the members of NEL Holdings Ltd. (Formerly known as NITESH ESTATES LIMITED) under the heading Report on Other Legal and Regulatory Requirements of our report at even date.

We report that:

i. a) The Company has maintained proper records showing full particulars including quantitative details and situations of fixed assets.

b) According to the information and explanation given to us, some of the fixed assets have been physically verified by the Management during the year in a phased program and no material discrepancies were noticed on such verification. In our opinion, the frequency of such verification is reasonable having regard to the size of the company and the nature of its assets.

c) According to information and explanation given to us no immovable properties are held in the name of the company.

ii. The Company is engaged in the business of real estate development and related services and holds inventories in the form of land, developed and under development of properties. In our opinion and according to the information and explanations given to us, having regard to the nature of inventories, the procedures and frequency of the physical verification by way of title deeds, site visits by the management and certification of work completion are reasonable and adequate having regard to the size of the Company and the nature of its business.

iii. According to the information and explanation given to us, the Company has granted unsecured loans to companies, firms, or other parties as listed in the register maintained under section 189 of the Companies Act, 2013 (Refer to Note 38 to the standalone financial statements). In our opinion and according to the information and explanations given to us, the terms and conditions of the loans are not prejudicial to the interest of the Company.

iv. According to the information and explanation given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to loans and investments made except for a loan given by one of the subsidiary companies to the erstwhile director of the company amounting to Rs. 472 Lakhs during his tenure as director.

v. The Company has not accepted any deposits during the year. However, the Company has collected Rs 1,414 Lakhs in earlier years as advance from customers for closed/suspended residential projects, which have now been abandoned and the receipts, are now in the nature of deemed deposits under rule 2(c) (xii) (b) Companies Acceptance of deposit (Rules) 2014 and are also within the purview of sections 73 to 76 of the Companies Act, 2013. The amount and disclosure requirements of deemed deposits which are required by the relevant act and directives issued by the Reserve Bank of India have not yet been ascertained. (Refer Note no. 43 to the standalone financial statements).

vi. The Central Government has prescribed for the maintenance of the cost records under section 148(1) of the Companies Act, 2013 in respect of the products of the Company. However, since the Companys net revenue falls below the threshold, no Cost Auditor was appointed during the year ended on 31st March, 2020.

vii. (a) According to the information and explanations given to us, the Company is not regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Employees State Insurance, Sales Tax, Wealth Tax, Cess, Custom Duty and GST and other statutory dues applicable to it.

There are no undisputed amounts payables in respect of provident fund, employees state insurance, income tax, sales tax, duty of customs, duty of excise, goods and service tax, cess and any other statutory dues to the appropriate authorities except the following which have been outstanding as at 31st March, 2020 for a period more than six months from the date they became due.

Name of the statute Nature of the dues Amount (Rs in Lakhs) Period to which the amount relates Due date Date of payment Remarks, if any
KVAT Act VAT 41.20 2009-10 - Not paid
KVAT Act VAT 1,267.31 2010-11 - Not paid
Income Tax Act, 1961 TDS 133.85 April 2019 - September 2019 Various due dates Not paid
Income Tax Act, 1961 TDS 82.51 Previous Years - Not paid
CGST Act, SGST Act & IGST Act, 2017 GST 6.91 April 2019 - September 2019 Various due dates Not paid
CGST Act, SGST Act & IGST Act, 2017 GST 41.71 Previous Years - Not paid
Provident Fund & Misc. Provisions Act, 1952 Provident Fund 15.11 April 2019 - September 2019 Various due dates Not paid
Provident Fund & Misc. Provisions Act, 1952 Provident Fund 11.37 - Not paid
KTPTCE Act, 1976 Profession Tax 0.81 Various due dates Not paid
KTPTCE Act, 1976 Profession Tax 0.25 Previous Years - Not paid
ESI Act, 1948 ESI 1.37 April 2019 - September 2019 Various due dates Not paid
ESI Act, 1948 ESI 0.45 Previous Years - Not paid

(b) According to the information and explanations given to us, the following are the disputed statutory dues which have not been deposited by the company as on 31st March, 2020.

Name of Statute Nature of Dues Period to which the amount relates

Amount (Rs. in Lakhs)

Forum where Disputes is Pending
Income Tax Act, 1961 Income tax AY 2009-10

148

CIT- Appeal
AY 2011-12

9

CIT-Appeal
AY 2007-08, 2008-09 &

77

High Court
2009-10
KAVAT Act VAT AY 2009-10

41

DCCT - Appeal
AY 2011-12

1267

DCCT-Audit
AY 2014-15

114

DCCT-Audit

viii. According to the information and explanations given to us, the company has defaulted in repayment of loans or borrowing to a banks, financial institutions and debenture holders as detailed below.

Nature of Borrowings, including debt securities Name of Lender Amount not paid on due date (Rs. in Lakhs) Whether Principal or Interest No. of days delay or unpaid Remarks, if any
Term Loan Yes Bank Limited 24,646 Principal Rs. 21,210 and Interest Rs. 3,436 More than 180 days
Loan HDFC Ltd. 32,926 Principal Rs. 25,675, Interest Rs. 7,251 More than 180 days
Loan Sriram City Union Finance Ltd. 1,513 Principal Rs. 1,380, Interest Rs. 133 More than 180 days
Non-Convertible Debenture IDFC Real Estate Yield Fund 10,346 Principal Rs. 5,500, Interest Rs. 4,846 More than 180 days

The borrowings from the Banks have become Non-Performing Assets (NPA) as on the balance sheet date and the Banks and financial institutions have called upon the debt. Due to non-repayment of debentures, Debenture Trustee, Investcorp Real Estate Yield Fund (Formerly known IDFC Real Estate Yield Fund) has filed the recovery petition with National Company Law Tribunal (NCLT), Bangalore Branch. [Refer note 17 to the standalone financial statements]. The Company has not taken any loans or borrowings from the government.

ix. The company has not raised money by way of initial public offer or further public offer (including debt instruments) and term loans were applied for the purposes for which those are raised.

x. According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the year. Accordingly, the provision of clause 3(x) of the said order is not applicable.

xi. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the provisions of section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.

xiii. According to the information and explanations given to us by the management all transactions with the related parties are in compliance with Sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the standalone financial statements as required by the applicable Indian Accounting Standards.

xiv. 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 provision of clause 3(xiv) of the Order is not applicable.

xv. The company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, the provision of clause 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. Accordingly, the provision of clause 3(xvi) of the Order is not applicable.

RAY & RAY
Chartered Accountants
(Firms Registration No. 301072E)
Place: Bangalore (Mrinal Kanti Banerjee)
Date: 31st July, 2020 Partner
Membership No. 051472
UDIN 20051472AAAAAS8201

"Annexure-B" to the Independent Auditors Report

Report on the Internal Financial Controls over Financial Reporting 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 NEL Holdings Ltd. (Formerly known as Nitesh Estates Limited and herein after referred as "the Company") as of 31st March, 2020 in conjunction with our audit of the standalone 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 issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls 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.

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. 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 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

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

In our opinion, to the best of our information and according to the explanations given to us, except for the effects/possible effects of the material weaknesses described in Basis for Qualified Opinion paragraph below on the achievement of the objectives of the control criteria, further improvement is required in designing the Documentation on Internal Financial Controls of the Company.

In respect of other matters, the Company has maintained in general and adequate internal financial controls over financial reporting 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.

Basis for Qualified Opinion

A 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 financial statements will not be prevented or detected on a timely basis.

According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified in the Companys internal financial controls over financial reporting as at 31st March, 2020.

a) The Company did not have an appropriate internal control system relating to granting of unsecured advances for acquiring various immovable properties. The credit worthiness of the parties, exposure and experience in handling land procurement, asset base for providing security and guarantee, etc. have not been verified at the time of authorization and disbursement of said advances.

b) The Company did not have an adequate internal control system to ensure compliance with the provision of the Companies Act, with respect to refund of advances collected from customers for closed/suspended residential projects which has been abandoned.

c) The Company did not have any system of obtaining year-end balance confirmation certificates in respect of trade receivable, trade payables, advances and other advances.

d) The Company did not have an appropriate internal control system regarding ascertaining and accounting of component wise Deferred Tax Asset/Liabilities as on the balance sheet date.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company for the year ended 31 March, 2020 and these material weaknesses have affected our opinion on the said standalone financial statements of the Company and we have issued an adverse opinion on the standalone financial statements of the Company.

RAY & RAY
Chartered Accountants
(Firms Registration No. 301072E)
Place: Bangalore (Mrinal Kanti Banerjee)
Date: 31st July, 2020 Partner
Membership No. 051472
UDIN 20051472AAAAAS8201