Raj Rayon Industries Ltd Auditors Report.

TO THE MEMBERS OF RAJ RAYON INDUSTRIES LIMITED

Qualified Opinion

We have audited the standalone financial statements of Raj Rayon Industries Limited (“the Company”), which comprise the Balance Sheet as at 31 March 2019, the Statement of Profit and Loss, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of the 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, except for the possible effect of the matters described in Basis for Qualified Opinion section of our report, 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 accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2019, and its loss (including other comprehensive income), changes in equity and its cash flows for the year ended on that date.

Basis of Qualified Opinion:

1. Due to defaults in payments of bank loans, the companys accounts have been classified as Non-Performing Assets (NPA) by the lenders under Consortium advance. The lenders have not charged interest on the companys borrowings / loan since April 2016. Therefore, no provision has been made for such Interest in the books of accounts of the company and to that extent, finance cost and total loss is estimated to be understated by Rs. 12,114.63 Lakhs for the financial year ended 31 March 2019.

2. The Companys account s tands exited from CDR Mechanism. Pursuant to provisions of Securitization and Reconstruction of Financial Assets and Enforcement of security Interest act 2002, State Bank of India has taken over the possession of the properties which is given in the possession notice dated 31 July 2018 published in free press journal newspaper. There has been no production activity carried out since then.

3. We draw attention to the note no. 42 of the attached statement regarding the financial results of the company having been prepared on the going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has been continuously incurring losses past many years and its net worth stands fully eroded. These conditions indicate the existence of material uncertainty that cast significant doubt about companys ability to continue as going concern.

4. The properties of the company including Plant & Machineries has been taken into possession by the State Bank of India on 31 July 2018, hence physical verification of inventories and fixed assets could not be carried out by the management and by us. Hence, we are unable to comment on the actual physical existence of the same.

5. The company has not complied with Ind AS 19 with respect to employee benefits. The Company has made provision for gratuity and leave encashment for the year under audit on an estimated basis and actuarial valuation has not been done. In the absence of such valuation, relevant disclosures as per Ind AS 19 have not been provided. We are unable to determine consequential impact of the same on the Audited Financial Statements.

6. The company has obtained unsecured loans amounting to Rs. 1,000.00 Lakhs, the same is outstanding from previous year and has been shown under Long-Term Borrowings in the Balance Sheet. However, loan agreement in respect of these loans have not been furnished and in absence of the same the terms of repayment, chargeability of interest and other terms are not verifiable.

7. Balances under sundry debtors and sundry creditors, loans and advances given by the company and parties from whom unsecured loans have been taken are subject to confirmations and adjustments, if any. In the absence of s uch pending confirmations and reconciliations, consequential impact of the same on financial statements of the company cannot be ascertained.

8. In view of pending confirmations / reconciliations from banks, lender liabilities, trade payables and any other liabilities including contingent, we are unable to comment on the impact, if any, on the financial statement arising out of such pending confirmations / reconciliations. In the absence of such pending confirmations and reconciliations, consequential impact of the same on financial statements of the company cannot be ascertained.

We conducted our audit in accordance with the standards on auditing 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 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 qualified opinion.

Material Uncertainty Related to Going Concern:

We draw attention to the Note No. 42 accompanying the financial statements, regarding preparation of financial statements on going concern basis, notwithstanding the fact that the company continue to incurred the cash losses, defaulted to repayment of principal and interest to its lenders, resulting into impairment for non-current assets and substantial erosion of its net-worth, also its current liability exceeds current assets by Rs. 72,170.79 Lakhs. These conditions coupled with weakened internal controls and other matters set forth in notes to the financial statements indicate that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern. The appropriateness of the assumptions of the going concern is critically depended upon the Companys ability to raise finance and generate cash flows in future to meet its obligation and to restructure its borrowing with the lenders. Our opinion is not modified in respect of this matter.

Emphasis of Matter:

1. One operational creditor (Khanna & Khanna Ltd.) has gone into Corporate Insolvency Resolution Process (CIRP) under the provisions of Insolvency & Bankruptcy Code, 2016 (Insolvency Code) in terms of order dated 29 May 2019 passed by Honble NCLT, Ahmedabad Bench. However, the same stands withdrawn dated 28 June 2019 due to mutual consent.

2. The company has not carried out detailed assessment of the useful life of Companys assets and hence depreciation has not been adjusted, as per the notification to Schedule II of the Companies Act, 2013. We are unable to comment on the impact on statement of Profit & Loss Account.

3. In our opinion, securities provided to banks are not adequate to cover the amounts outstanding to them as on the date of Balance Sheet.

4. During the year, Company has received notice of demand from the income tax department for the Assessment Year 2011 2012 and 2012 2013 for Rs. 1,25,24,480/- & Rs. 1,60,68,990/- respectively, liability for which is not provided for as the company has preferred an appeal against the same.

5. Due to resignation of the Board of Directors, the Board was not as per the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR).

6. The management has appointed the Board Members at the Board meeting dated 28 January 2019 due to which the AGM was not scheduled and conducted within the time limit of Companies Act, 2013 and the Company didnt received any extension for the same.

7. The Company was not able to conduct Board meeting as per the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Exchange compliance for the quarter ended 30th September, 2018 and 31st December, 2018 was not as per the time line of LODR and company has received the notice for suspension of trading form exchanges on January 2019. The Company has paid the penalty and completed the compliances with exchanges for the quarter ended 30th September, 2018 and 31st December, 2018 and pursuant to which the suspension of trading was revoked.

Our opinion is not modified in respect of these matters.

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

1. Non-Verification of Fixed Assets and Inventories:

Refer Note No 3.5 and 8.2 wherein it is stated by the management that due to possession of factory premises by lenders, the company was unable to physically verify Fixed Assets and Inventories of the company. We have considered the same as a Key Audit Matter due to following reasons:

As at 31 March 2019, value of Net Block of Fixed Assets of Rs. 19,828.93 Lakhs and Inventories of Rs. 60.38 Lakhs is significant item which was not verified physically and no assurance could have been provided for physical existence of the same.

Our procedures included the following:

We have approached with alternate method of analysing the fixed asset register which again was not available with the company leading us to qualify the matter. In case of Inventories, since physical verification was not done, we were unable to confirm its existence thereby leading us to qualify the matter. These issues were discussed with the management.

2. Non conduct of Internal Audit and Non availability of Internal Financial Controls:

We were not provided with copy of Internal Audit Report and Risk Control Matrix including Standard Operating Procedures of the company which we consider to be significant key matter.

Our procedures included the following:

In the absence of Internal Financial Controls, we have discussed the issues with the management at length and to conclude have qualified the report.

Other Information:

The Companys board of directors is responsible for the preparation of the other information. The other information comprises the information included in the Boards Report including Annexures to Boards Report, Business Responsibility Report but does not include the financial statements and our auditors report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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, 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 except for matters described in the ‘Basis for Qualified Opinion and ‘Emphasis of Matters para stated above.

Managements Responsibility for the Standalone Financial Statements:

The Companys board of directors are responsible for the matters stated in section 134 (5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting standards specified under section 133 of the Act. 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 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 Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The board of directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements:

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

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

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls 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 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016 (the ‘Order) issued by the Central Government of India in terms of sub-section (11) of the Act, we give in Annexure ‘A to this Report, a statement on the matters specified in paragraph 3 and 4 of the said Order, to the extent applicable.

2. As required by Section 143 (3) of the Act, based on our audit 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 except for matters described in the ‘Basis for Qualified Opinion and ‘Emphasis of Matters para stated above;

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 financial statements comply with the accounting standards specified under section 133 of the Act, read with rule 7 of the Companies (Accounts) Rules, 2014 except for matters described in the ‘Basis for Qualified Opinion and ‘Emphasis of Matters para stated above;

e. In our opinion, the matter described in the Basis for Qualified Opinion paragraph above, may have an adverse effect on the functioning of the Company.

f. On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the board of directors, none of the directors are disqualified as on March 31, 2019 from being appointed as a 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”.

h. With respect to the other matters to be included in the auditors report in accordance with the requirements of Section 197(16) of the Act (as amended); In our opinion and to the best of our information and according to the explanations given to us, the Company has not paid any remuneration to its directors during the year; and

i. 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.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts, if any.

iii. There is no amount outstanding which needs to be transferred to investor education and protection fund.

For Chaturvedi & Patel

Chartered Accountants

FRN: 121351W

CA Deepak Karwa

Partner

M.N: 175321

UDIN: 19175321AAAABQ4055

Place: Mumbai

Dated: 27 July 2019

ANNEXURE ‘A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements section of our report to the Members of RAJ RAYON INDUSTRIES LIMITED of even date)

(i). (a) As per the information and explanation given by the management, the Company has not maintained proper records showing full particulars, including quantitative details and situation of fixed assets;

(b) As per the information and explanation given by the management, the Fixed Assets have not been physically verified by the management during the year due to possession of premises by the lenders. In the absence of such physical verification, we are unable to comment on the physical existence of such fixed assets and relied on management certificate in this regards.

(c) According to the information and explanation given to us and the records examined by us and based on the examination of the scanned copies of the title deeds of the immovable properties pledged with the bankers as security against borrowings, we report that the title deeds of the immovable properties that have been pledged as security against borrowings and other facilities availed by the Company, are held in the name of the Company as at the balance sheet date.

(ii) As per the information and explanation given by the management, the management has not conducted the physical verification of inventory at year end due to possession of premises by the lenders. In the absence of such physical verification, we are unable to comment on the physical existence of such inventories and relied on management certificate in this regards.

(iii) As per the information and explanation given by the management, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability partnerships or other parties covered in the Register maintained under section 189 of the Act. Accordingly, the provisions of clause 3 (iii) (a) to (C) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 In respect of loans, investments, guarantees, and security.

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

(vi) As informed to us, the maintenance of Cost Records has been specified by the Central Government under sub-section (1) of Section 148 of the Act, in respect of the activities carried on by the company. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribe accounts and records have been made and maintained. We have not however made detailed examination of the records with a view to determine whether they are accurate and complete.

(vii) a) According to the information and explanations 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 of provident fund, income-tax, sales tax, value added tax, cess and professional tax during the year with appropriate authorities and there have not been serious delays in a large number of cases.

b) According to the information and explanations given to us and the records of the Company examined by us, the particulars of income tax, sales tax, service tax, duty of customs, duty of excise, value added tax as at 31 March 2019 which have not been deposited with statutory authorities on account of a dispute pending are given as below:

Name of the Statute Nature of the Dues Amount in Lakhs Excluding penalties and interest, if any except otherwise stated) Period to which the amount relate* Forum where dispute is Pending
Central Excise Duty Excise Duty 23.89 1995-1996 Additional Directorate of Anti Evasion
32.09 1996-1997
38.30 1997-1998
25.82 1998-1999
7.40 1999-2000
127.50
0.09# 1999-2000 The company is in the process of refund
2.95 2003-2004 Appellate tribunal of central excise
3.35 2003-2004 & 2004-2005 the company has filed reply to show cause notice received from superintendent of central excise
2.84# 2003-2004 The company has filed the appeal in the customs, excise & service tax appeallate tribunal, Ahmedabad
174.57 2012-2013
283.52 (**) 2005-2006 & 2006-2007
Textile Committee Act Cess 0.35 1997-1998 Textile Cess Appellate Tribunal
0.88 1998-1999
2.13 1999-2000
3.10 2000-2001
1.37 2001-2002
7.82
Gujarat Tax on Entry of Specified Goods into Local area Tax,2001 (including penalties & interest Entry Tax 308.83 (Net of 250.00 Lakhs being amount recovered by the Department) 01-04-2012 to 31.01.2014 The company is in the process of filing reply to the show cause notice issued by the commercial tax officer, Ahmedabad
State Bank of India Loan 1,00,808.99 2017-2018 -
Phoenix ARC Pvt Ltd Loan 6,548.21 2018-2019 -
Income Tax Department Income Tax 125.24 2011-2012 -
Income Tax Department Income Tax 160.69 2012-2013 -

# Payment made under protest

* Assessment year

** Represents penalty demand

(viii) In our opinion and according to the information and explanations given to us and records of the Company examined by us, the Company has defaulted in repayment of loans or borrowings to banks and financial institutions for which the lender wise details are as follows. The Company has not taken loan from the government and has not issued any debentures.

Default in Repayment of dues to Bank towards Term Loan (Rs. In Lakhs)

Particulars Period of Default As at 31/03/2019
Principal Interest
State Bank of India Since 2015-16 26,449.57 13,209.60
State Bank of Hyderabad Since 2015-16 12,801.50 7,794.22
State Bank of Mysore Since 2015-16 5,040.89 2,757.19
State Bank of Travancore Since 2015-16 4,862.46 2,541.82
State Bank of Bikaner & Jaipur Since 2015-16 2,698.80 1,272.67
State Bank of Patiala Since 2015-16 3,023.16 1,782.57
Phoenix ARC Private Limited (*) Since 2015-16 4,063.03 1,863.04
Total 58,939.42 31,221.11

The Facilities being classified as Non-Performing Assets (NPAs), hence entire outstanding amount is considered as a Short Term Loan by the Company.

(*) Phoenix ARC Pvt. Ltd. (an Assets Reconstruction Company) has acquired the loans from South Indian Bank.

Default in Repayment of dues to Bank towards Working Capital Facilities (Rs. In Lakhs)

Particulars Period of Default As at 31/03/2019
Principal Interest
State Bank of India Since 2015-16 4,611.06 3,850.06
State Bank of Hyderabad Since 2015-16 1,689.99 674.46
State Bank of Mysore Since 2015-16 491.61 231.59
State Bank of Travancore Since 2015-16 820.13 337.52
State Bank of Bikaner & Jaipur Since 2015-16 1,415.77 570.14
Phoenix ARC Private Limited (*) Since 2015-16 1,010.73 385.27
Total 10,039.30 6,049.04

The Facilities being classified as Non-Performing Assets (NPAs), the lenders have reduced the Drawing Power to ‘NIL, hence entire outstanding amount is considered as default by the Company.

(*) Phoenix ARC Pvt. Ltd. (an Assets Reconstruction Company) has acquired the loans from South Indian Bank.

(ix) Based upon the audit procedures performed and the information and explanations given by the management, the company has not raised moneys by way of initial public offer or further public offer including debt instruments and term Loans. Accordingly, the provisions of clause 3 (ix) of the Order are not applicable to the Company and hence not commented upon.

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

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

(xii) In our opinion and explanation given to us, all transactions with the related parties, if any are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Financial Statements as required by the applicable accounting standards.

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

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

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

For Chaturvedi & Patel

Chartered Accountants

FRN: 121351W

CA Deepak Karwa

Partner

M.N: 175321

UDIN: 19175321AAAABQ4055

Place: Mumbai

Dated: 27 July 2019

ANNEXURE “B” TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and Regulatory Requirements section of our report to the Members of RAJ RAYON INDUSTRIES LIMITED of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of RAJ RAYON INDUSTRIES LIMITED (“the Company”) as of March 31, 2019 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 Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to respective 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 internal financial controls over financial reporting of the Company 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”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. 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 judgement, 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 internal financial controls system over financial reporting of the Company.

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.

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.

Disclaimer of Opinion:

The system of Internal Financial Control Over Financial Reporting with regard to the company were not made available to us to enable us to determine if the company has established adequate internal financial control over financial reporting and whether such internal financial control was operating effectively. Because of this reason, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2019.

We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements of the Company, and the disclaimer does not affect our opinion on the financial statements of the Company.

For Chaturvedi & Patel

Chartered Accountants

FRN: 121351W

CA Deepak Karwa

Partner

M.N: 175321

UDIN: 19175321AAAABQ4055

Place: Mumbai

Dated: 27 July 2019