Panchsheel Organics Ltd Directors Report.

To the Members of Panchsheel Organics Limited

Report on the Audit of the Standalone Financial Statements

1. Opinion

We have audited the standalone financial statements of Panchsheel Organics Limited

(?the Company ), which comprise the balance sheet as at 31st March 2021, and the statement of Profit and Loss, statement 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, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the Ind AS and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, and profit, total comprehensive income, changes in equityand its cash flows for the year ended on that date.

2. Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the

Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there under, 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.

3. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. There are no key audit matters to communicate. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

4. Emphasis of Matter

a. As per note no. 42 of the accounts ?Disclosure on Impact of COVID-19 pandemic on Company, we have gone through the details provided in the notes and of the opinion that considering the nature of the business and size of the company, the disclosure made by the company is proper and the impact on the business operations, revenue, cash flow of the Company for the year has been appropriately assessed by the Company. No adjustment is required to the financial statement for F.Y 2021-22. The accounts are prepared as a going concern and we are of the opinion that the company has properly done it. Being a pharmaceutical company, the effect of CORONA 19 pandemic is not much effecting the company.

b. As per Note No.41, Consequent to the Companies (Corporate Social

Responsibility Policy) Amendment Rules, 2021 the Company is required to transfer its un spend CSR fund to a designated bank account, the company is require to transfer Rs. 33.98 lakhs to designated bank account, Company has opened the bank account but has not transferred the amount till the date of this report.

Our opinion is not modified in respect of the above matters.

5. Management s Responsibility for the Standalone Financial Statements

The Company‘s 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 implementation and maintenance of accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the

Company‘s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors are also responsible for overseeing the Company‘s financial reporting process.

6. Auditor s Responsibilities for the Audit of the Financial Statements

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

7. Other Matters

The Company is require to appoint Internal Auditor as per the requirement of section 138 read with Rule 13 of Companies (Accounts) Rules, 2014, but has not appointed any during the year under audit.

The records of fixed assets as per requirements of clause I of Companies (Auditor‘s Report) Order, 2016 (?the Order ), are still under preparation.

8. Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor‘s 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 B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

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

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

(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

(e) On the basis of the written representations received from the directors as on 31st March, 2021 taken on record by the Board of Directors, none of the director is disqualified from being appointed as a director in terms of section 164(2)(a) of the Companies Act, 2013 as on 31st March, 2021.

(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 A .

(g) With respect to the other matters to be included in the Auditor‘s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements Refer Note 25 to the financial statements;

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

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

Annexure-A to the Independent Auditors Report

Referred to in paragraph 9(f) of the Independent Auditors‘ Report of even date to the members of Panchsheel Organics Limited on the Ind AS financial statements for the year ended March 31, 2021

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")

1. We have audited the internal financial controls over financial reporting of

Panchsheel Organics Limited (?the Company ) as of March 31, 2021 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management s Responsibility for Internal Financial Controls

2. The Company‘s 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 company‘s 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

3. Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls

Over Financial Reporting (the ?Guidance Note ) and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial control, both applicable to an audit of internal financial control and both issued by ICAI. Those Standards and the Guidance Note require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor‘s judgment, including the assessment of the risks of material misstatement of the Ind AS 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 Company‘s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

6. A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS 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 Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with 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 Ind AS financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

8. In our opinion, subject to our note no.7 Other Matter of the main report, 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 March 31, 2021, based on the internal control over financial reporting criteria established by the Company - commensurate with the size of the company and nature of its business 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.

Annexure-B to the Independent Auditors Report

Referred to in paragraph (7) of the Independent Auditors Report of even date to the members of Panchsheel Organics Limited on the Ind AS financial statements for the year ended March 31, 2021

I (a) The records of the Company for fixed assets showing full particulars including quantitative details and situations of fixed assets are still under preparation. (b) According to the information and explanation, in absence of records, in our opinion it is difficult to report on whether any material discrepancies have been noticed and properly dealt with in the books of accounts. According to management representation, the management claims that they have verified the fixed assets during the year, and due to proper internal control at the factory there are no chance of discrepancies. As informed to us the management is trying their best to prepare records of fixed assets as required but has not done since last three years.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immoveable properties other than self-constructed properties, are held in the name of the Company.

II As per the information furnished, the inventories have been physically verified by the management during the year once in a year, having regard to the nature of stocks, the frequency of the physical verification is reasonable, discrepancies noticed on physical verification of inventories as compared to book records have been properly dealt with in the books of accounts..

III As per the information furnished and from verification of the records, we are of the opinion that, the Company has not granted any interest free loans to Companies, firms or other parties covered in the Register, maintained under Section 189 of the Companies Act, 2013; hence para 3(a),(b),(c) of the order is not applicable.

IV In our opinion, and according to the information and explanations given to us and from verification of the records, the Company has not granted any loans or provided any guarantee or security to the parties covered under section 185. Further the Company has complied with the provisions of section 186 of the Companies Act, in respect of the loans and investments made, and guarantees and security provided by it.

V The Company has not accepted any deposits during the year from the public within the meaning of the provisions of Sections 73 to 76 of the Companies Act, 2013 and the rules framed there under.

VI As per the information provided and from verification of the records, We are of the opinion that, the Central Government has specified the maintenance of cost records under Section 148(1) of the Companies Act, 2013, and the Company has made and maintain such accounts and records. Cost audit is applicable to the Company and company has appointed M/s. Talati& Associates, Cost Auditor, but the audit is not completed and report has not been produced till the date of this report.

VII (a) According to the information and explanation given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees‘ State

Insurance Fund, Income-tax, Sales-tax, service tax, Custom Duty, Excise Duty, Cess and other material statutory dues as applicable with appropriate authorities.

(b)According to the records of the Company examined by us and the information and explanations given to us, there are no undisputed amounts payable in respect of Income Tax, Service Tax, Custom Duty, Sales Tax, Excise Duty, PF, ESIC and any other statutory dues which have remained outstanding as at 31st March, 2021 for a period of more than six months from the date they become payable.

According to the records of the Company and information and explanation given to us and record verified by us the outstanding dues of Sales-tax, Custom Duty, Excise Duty, Income tax, service tax, cess which have not been deposited on account of dispute with the appropriate authorities are given below:

Sr. No Name of the Statue Nature of Dues Amt Due Period to which the amt. relates Forum where dispute is pending
1 Income Tax Act, 1961 80HHC/80I A/ MAT 347684/- FY 1998-99 The Income Tax Appellate Tribunal, Indore.
2 Income Tax Act, 1961 80HHC/80I A/ MAT 603802/- FY 1999-2000 The Income Tax Appellate Tribunal, Indore.
3 Income Tax Act, 1961 80HHC/80I A/ MAT 451589/- FY 2000-2001 The Income Tax Appellate Tribunal, Indore.
4 Income Tax Act, 1961 630140/- FY 2016-2017 Rectification filed with CPC Bangalore
5 Central Sales Tax & VAT Sales Tax Interest & Penalty 488138/- FY 2005-06 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
6 Central Sales Tax & VAT Sales Tax Interest & Penalty 273138/- FY 2006-07 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
7 Central Sales Tax & VAT Sales Tax Interest & Penalty 591395/- FY 2007-08 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
8 Central Sales Tax & VAT Sales Tax Interest&Penalty 688435/- FY 2008-09 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
9 Central Sales Tax & VAT Sales Tax Interest & Penalty 0 FY 2008-09 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
10 Central Sales Tax & VAT Sales Tax Interest & Penalty 526244/- FY 2009-10 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
11 Central Sales Tax & VAT Sales Tax Interest & Penalty 851350/- FY 2010-11 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
12 Central Sales Tax & VAT Sales Tax Interest & Penalty 497963/- FY 2011-12 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
13 Central Sales Tax & VAT Sales Tax Interest & Penalty 2234783/- FY 2012-13 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
14 Central Sales Tax & VAT Sales Tax Interest & Penalty 1870695/- FY 2013-14 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
15 Central Sales Tax & VAT Sales Tax Interest & Penalty 1535545/- FY 2014-15 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
16 Central Sales Tax & VAT Sales Tax Interest & Penalty 92134/- FY 2015-16 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
17 Central Sales Tax & VAT Sales Tax Interest & Penalty 332470/- FY 2016-17 The Hon‘ble Registrar, MP Commercial Tax Appellate Board, Bhopal (MP)
18 Central Excise Act Excise Duty 471369/- FY 1999-2000 The Asst Registrar, Customs, Excise & Service Tax Appellate Tribunal, New Delhi

VIII. Based on our audit procedures and the information and explanations given by the management, We are of the opinion that the Company has not defaulted in repayment of its dues to any banks or financial institutes and debenture holders.

IX. We have verified the records of the Company, and of the opinion that the company has not raised any money by way of public offer (including debt instruments). The amount of term loan which company have received were applied for the purpose for which those are raised.

X. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practice, and according to the information and explanations given to us, we have neither come across any instances of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the management.

XI. The Company has provided for managerial remuneration in accordance with the requisite approvals mandated by the Provisions of Section 197 read with Schedule V to the Act.

XII.As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company

XIII.As per the verification of the records, We are of the opinion that 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 Ind AS Financial Statements as required under Ind AS 24, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules 2014.

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 provisions of Clause 3(xiv) is not applicable to the Company.

XV. The Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly the provisions of Clause 3(xv) is not applicable to the Company.

XVI.I have been informed that the company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly the provisions of Clause 3(xvi) is not applicable to the Company.

For Jayesh R. Shah & Co

Chartered Accountants0

Firm Registration No. 104182W

Sd/-

Jayesh Shah

Proprietor

Membership No. 033864

Place: Mumbai

Date: 30th June, 2021