Religare Enterprises Ltd Directors Report.

TO THE MEMBERS OF RELIGARE ENTERPRISES LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of Religare Enterprises Limited (“the Company”), which comprise the Balance Sheet as at March 31,2020, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flow for the year then ended and notes to the financial statements, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the standalone financial statements”).

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“the Act) in the manner so required and give a true and fair view in conformity with Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015, as amended, (“IND AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31,2020, the loss and total comprehensive income , changes in equity and its cash flow for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the Standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the standalone financial statements.

Emphasis of Matter

4. Attention is invited to note no. 47(d) of the standalone financial statement of the company relating to pending RELs application with Honble High Court of Delhi for staying the redemption of 1,500,000 non-convertible preference shares of the Company held by Oscar Investments Limited, Promoters Group Company and due on 31st Oct. 2018 with an approx, redemption value of Rs. 4,190.28 lakhs. Pending the outcome of the application, we are unable to comment the likely implication on the standalone financial statements.

5. We draw attention to note no. 2.3 of the standalone financial statement, which states the managements evaluation of COVID-19 impact on the operations of the company.

Our report is not modified in respect of this matters.

Key Audit Matters

6. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Financial Statements of the current period. These matters were addressed in the context of our audit of the Standalone Financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key Audit Matter Auditors response
Impairment of investments in Subsidiaries - Our audit procedures included:
Carrying value (net of impairment) of companys investment in its subsidiaries as on reporting date is Rs 2,05,551.01 lakhs, which is approx. 99% of companys total assets. Besides obtaining an understanding of Managements processes and controls with regard to testing the investments for impairment, our procedures included the following: -
Company has investment in its subsidiaries, which were valued at fair value as on date of transition and taken as deemed cost under Ind AS and subjected to impairment testing at the end ofeach reporting period thereafter. - We understood the methodology applied by management in performing its impairment test for the investment at cost and walked through the controls over the process.
We do not consider the carrying value of these investments to be at a high risk of significant misstatement or to be subject to a significant level of judgement, except for the determination of impairment in the carrying value of such investments determined based on appropriate methodology followed by the company for the subsidiaries. - We challenged the assumptions made by management for the input data used by managements fair valuation expert through discussions, comparisons to industry peers and other available independent external data sources. We also performed sensitivity analysis on the key assumptions.
This involves significant estimates and judgement, due to inherent uncertainty involved in forecasting future cash flows and in selection of appropriate methodology. - Comparing the carrying amount of investments with the subsidiary balance sheet to identify whether their net assets, being an approximation of their minimum recoverable amount, were in excess of their carrying amount and assessing whether subsidiary have historically been profit-making.
On account of major investments in material subsidiaries as indicated above in context of total investment of the company, this is considered to be significant to our overall audit strategy and planning. - Comparing the carrying amount of the investments with the expected value of the business based on market approach, income approach, suitable multiple of stock price to book value of the subsidiarys peer companies, discounted cash flow method, development affecting the projected financials of such subsidiaries as applicable.
- Comparing the carrying value of investments with the transactions related to sale/purchase of such investments including any offers, close to reporting date with unrelated parties.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

7. The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Companys annual report particularly with respect to the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Business responsibility report and Corporate Governance report, but does not include the standalone financial statements and our auditors report thereon. The other information is expected to be made available to us after the date of this auditors report.

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

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available 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.

When we read the other information identified above if, we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

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

8. The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with IND AS and the accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the Board of Directors are 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 the Board of Directors 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

9. 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 ofthese standalone financial statements.

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

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

• Obtain an understanding of internal financial controls 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 management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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 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.

Report on Other Legal and Regulatory Requirements

A) 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, to the extent applicable.

B) 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.

c) The Standalone Balance Sheet, the Statement of Profit and Loss including other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account.

d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act, read with relevant rules issued thereunder.

e) On the basis of the written representations received from the directors as on March 31, 2020 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2020 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure B”. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls with reference to the standalone financial statements.

g) 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, remuneration paid by the Company to its whole-time director during the year is in accordance with the provisions ofsection 197 of the Act.

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 as on 31 Mar 2020 on its financial position in its standalone financial statements, (refer note no. 32 of the standalone financial statements)

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

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

For S S Kothari Mehta & Company
>Chartered Accountants
Firms Registration Number: 000756N
Naveen Aggarwal
Partner
Place: New Delhi Membership Number: 094380
Date: 28th July 2020 UDIN : 20094380AAAAET4234

ANNEXURE ‘A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements section of our report to the

Members of Religare Enterprises Limited of even date)

i. In respect of the Companys fixed assets:

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

b) According to the information and explanation provided to us, the property, plant and equipment are physically verified by the management according to designed process to cover all the items once in three years. In our opinion, this frequency is reasonable having regard to the size of the company and the nature of its assets. Pursuant to this program, no physical verification exercise was due during previous financial year. Accordingly, question of discrepancies does not arise.

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

ii. The Company is engaged in the business of rendering services and investment activity, consequently, does not hold any inventory. Accordingly, Clause (ii) of Para 3 of the order is not applicable to the Company.

iii. According to the information and explanation given to us and on the basis of our examination of the records, the Company has granted a loan to its wholly owned subsidiary company during the year covered in the register maintained under section 189 ofthe Companies Act, 2013, in respect of which

a. The terms and conditions of the grant of loan given during the year are, in our opinion, prima facie, not prejudicial to the companys interest.

b. Receipt / Repayment of principal amount and Interest have been regular as stipulated in loan agreement.

c. There is no amount outstanding as at the year-end with respect to loan given during the year.

iv. As per the information and explanation given to us and based on Section 186 read with applicable Rules, the requirement of reporting under this clause of the order is not applicable.

v. In our opinion and as per the information and explanation provided to us, the Company has not accepted any deposits from the public within the meaning of directives issued by the Reserve Bank of India and provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed thereunder to the extent notified.

vi. As per the requirement under section 148(1) of Companies Act, 2013 the Central government has not prescribed for maintenances of the cost records for any of the products of the company. Accordingly, Clause (vi) of Para 3 of the order is not applicable to the Company.

vii. According to the information and explanations given to us, in respect of statutory dues:

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 in respect of provident fund, employees state insurance, income tax, Goods and Services Tax, cess and other material statutory dues as applicable with the appropriate authorities. Further, there were no undisputed amounts outstanding at the year-end for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, service tax and Goods and Services Tax which have not been deposited on account of any dispute except forthe following:

Name of the Statute Nature of Dues Amount * (Rs.) Period to which the amount relates Forum where the dispute is pending
Income Tax Act, 1961 Income Tax Demands 1,74,21,276 AY 2008-09 Income Tax Appellate Tribunal
4,82,456 AY 2009-10 Income Tax Appellate Tribunal
32,32,216 AY 2010-11 Income Tax Appellate Tribunal
3,90,29,230 AY 2011-12 Income Tax Appellate Tribunal
62,69,634 AY 2011-12 Income Tax Appellate Tribunal
3,93,00,168 AY 2012-13 Commissioner of Income Tax (Appeals)
9,18,392 AY 2012-13 Income Tax Appellate Tribunal
7,61,125 AY 2013-14 Income Tax Appellate Tribunal
2,45,63,334 AY 2016-17 Commissioner of Income Tax (Appeals)
Service Tax Regulations Service Tax 9,25,130 FY 2006-07 to FY 2010-11 Custom Excise and Service Tax Appellate Tribunal**
39,54,567 FY 2011-12 Custom Excise and Service Tax Appellate Tribunal
51,95,173 FY 2012-13 Custom Excise and Service Tax Appellate Tribunal

* Amount is net ofdeposit paid under protest ** Inclusive of Penalty of Rs. 10,58,180

viii. In our opinion and according to the information & explanations given to us, the company has defaulted in repayment of loan or borrowing to financial institution i.e. Religare Finvest Limited, its wholly owned subsidiary which is non-banking financial company as per section 45I of RBI Act 1934. However, company has not taken any loans or borrowings from any bank and government.

Details of borrowing and its default is as follows : -

Name of Lender Amount of default as at March 31, 2020 (INR in Lakhs) Period of default
Religare Finvest Limited 18,550.00 Ranging from 553 days to 779 days

However, subsequent to balance sheet date based on the request of the company to the lender i.e Religare Finvest Limited (RFL), this loan was rescheduled by providing an extension of two years ( i. e on or before April 30, 2022) from date of request letter for repayment of principal and waiver of current and future interest component and all other charges .

ix. As per the information and explanation given to us and on the basis of our examination of the records, the company has not raised moneys by way of initial public offer or further public offer (including debt instruments or term loans). Hence, reporting under clause (ix) of para 3 of the order is not applicable to the company.

x. As per the information and explanation given to us and on the basis of our examination of the records we have neither come across any instance of material fraud by the company or on the company by its employees, noticed or reported during the year, nor have been informed of such case by the management.

xi. As per the information and explanation given to us and on the basis of our examination of the records, the Company has paid /provided managerial remuneration in accordance with the requisite approvals mandated by provisions of section 197 of the Act read with schedule V of the Act.

xii. The company is not Nidhi Company. Accordingly, Clause (xii) of Para 3 of the order is not applicable to the Company.

xiii. As per the information and explanation given to us and on the basis of our examination of the records, Company has transacted with the related parties which are in compliance with section 177 and 188 of the Act and the details have been disclosed in the financial statements as required by Ind AS 24.

xiv. According to the information and explanations give to us and based on our examination of the records of the Company, the Company has made allotment of equity shares against warrants as per Section 42 of the Companies Act, 2013. The company had duly utilised the funds received from the warrant holders forthe purposes forwhich it has been raised.

xv. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi. The Company is required to and has been registered under section 45-IA of the Reserve Bank of India Act, 1934 as a Core Investment Company (CIC).

For S S Kothari Mehta & Company
Chartered Accountants
Firms Registration Number: 000756N
Naveen Aggarwal
Partner
Place: New Delhi Membership Number: 094380
Date: 28lh July 2020 UDIN : 20094380AAAAET4234

ANNEXURE “B” TO THE INDEPENDENT AUDITORS REPORT

Report on the Internal Financial Controls with reference to the standalone financial statements under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (“the Act”).

We have audited the internal financial controls with reference to the standalone financial statements of Religare Enterprises Limited (“the Company”) as at March 31, 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 with reference to the standalone financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India”. 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 underthe Act.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls with reference to the standalone financial statements 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 Act 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 with reference to the standalone financial statements 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 with reference to the standalone financial statements and their operating effectiveness. Our audit of internal financial controls with reference to the standalone financial statements included obtaining an understanding of internal financial controls with reference to the standalone financial statements, 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 controls with reference to the standalone financial statements.

Meaning of Internal Financial Controls with reference to the standalone financial statements

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

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

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the company has, in all material aspect, an adequate internal financial controls with reference to the standalone financial statements and such internal financial control with reference to the standalone financial statements were operating effectively as at 31st March, 2020, based on the criteria for internal financial controls with reference to the standalone financial statements established by the company considering the essential components of internal controls stated in guidance note on audit of internal financial controls over financial reporting issued by the Institute of Chartered Accountants of India.

For S S Kothari Mehta & Company
Chartered Accountants
Firms Registration Number: 000756N
Naveen Aggarwal
Partner
Place: New Delhi Membership Number: 094380
Date: 28th July 2020 UDIN : 20094380AAAAET4234