sainik finance industries ltd share price share price Auditors report

To the Members of Sainik Finance & Industries Limited Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying Ind AS financial statements of Sainik Finance & Industries Limited comprising of the Balance Sheet as at 31 March 2023, the Statement of Profit and Loss, including other comprehensive income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the Ind AS financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as ‘the Ind AS financial statements). In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the Companies Act, 2013, as amended (‘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 2023, their losses including other comprehensive income, their cash flows and the statement of changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing (SAs), as 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 Ind AS 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 audit opinion on the Ind AS financial statements.

Emphasis of Matter

a) We draw attention to note no. 39 to the Ind AS financial statements in terms of which it has been reported that in certain cases, the Company has advanced loans on which no amount has been received against the principal and interest accrued thereon but the same is in accordance with the loan agreements entered by the Company which provides for payment of interest along with principal amount or at the expiry of the said loan agreements. Although, the Company is confident of the recovery of the said amounts as per respective terms of the loan agreements and has obtained declarations and confirmations from the respective parties. Our report is not modified in respect of this matter. b) We draw attention to note no. 40 to the Ind AS financial statements in terms of which it has been reported that in respect of loan given to Tejswi Impex Private Limited, as per the ICD agreement dated 30 November 2011 expired on 30 November 2021. Tejswi Impex Private Limited has offered a settlement amount of Rs.6.50 crore as against total outstanding loan of Rs.8.34 crore, and the Company has agreed to settle the loan vide agreement dated 01 May 2022. Accordingly, during the month of May22 & June22, amount of Rs.6.5 crore has been recovered. Hence, no interest has been provided during the FY 2022-23 as per the above settlement. Also, in respect of loan given to TRN Energy Private Limited (Borrower) as per ICD agreement dated 31 May 2021 it is specified therein that the payment of interest on ICD or repayment of ICD shall be made by the Borrower upon clearing the dues of its term lenders as per financing agreement entered between the Borrower and its term lenders, who have sanctioned term facilities to TRN Energy Private Limited, which will be repaid up to 30 June 2038. Hence, the Company entered into a Novation Agreement dated 31 March 2022 with ACB (India) Power Limited, the holding company of the Borrower, wherein it was agreed that ACB (India) Power Limited shall take over the loan of TRN Energy Private Limited from the Company by way of novation on cash basis with total consideration of Rs.76.75 crore as against total outstanding loan of Rs.84.09 crore in full and final settlement.

Accordingly, during the month of June 2022 an amount of Rs.76.75 crore has been paid by ACB (India) Power Limited in full and settlement of the ICD given to TRN Energy Private Limited.

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. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Ind AS financial statements. The results of audit procedures performed by us, including those procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Ind AS financial statements.

Sl.	Key Audit matter	Auditors Response
1.	Impairment on financial assets (expected credit losses).	We read and assessed the Companys accounting policies for impairment of financial assets and their compliance with Ind AS 109.
	Ind AS 109 requires the Company to recognise impairment loss allowance towards its financial assets (designated at amortised cost and fair value through other comprehensive income) using the expected credit loss (ECL) approach. Such ECL allowance is required to be measured considering the guiding principles of Ind AS 109 including:	? We tested the criteria for staging of loans based on their past-due status to check compliance with requirement of Ind AS 109. Tested a sample of performing (stage 1) loans to assess whether any loss indicators were present requiring them to be classified under stage 2 or 3 and vice versa.
	? unbiased, probability weighted outcome under various scenarios;	? We evaluated the reasonableness of the Management estimates by understanding the process of ECL estimation and tested the controls around data extraction and validation.
	? time value of money;	? Tested the ECL model, including assumptions and underlying computation.
	? impact arising from forward looking macro-economic factors and;	? Assessed the floor/minimum rates of provisioning applied for loan products with inadequate historical defaults.
	? availability of reasonable and supportable information without undue costs.	? Audited disclosures included in the Ind AS financial statements in respect of expected credit losses.
	Applying these principles involves significant estimation in various aspects, such as:
	? grouping of borrowers based on homogeneity by using appropriate statistical techniques;
	? staging of loans and estimation of behavioral life;
	? determining macro-economic factors impacting credit quality of receivables;
	? estimation of losses for loan products with no/minimal historical defaults. Considering the significance of such allowance to the overall financial statements and the degree of estimation involved in computation of expected credit losses, this area is considered as a key audit matter.

Information other than the Financial Statements and Auditors Report thereon

? The Companys Board of Directors is responsible for the preparation of other information which comprises the Directors Report including annexures to Directors Report, Management Discussion and Analysis Report and Report on Corporate Governance, 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 accordingly, 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 financial statements or our knowledge obtained during the course of audit or otherwise appears to be materially misstated. ? Based on the work we have performed, if we conclude that there is a material misstatement of this other information; we are required to report the fact. We have nothing to report in this regard.

Responsibility of Management for Financial Statements

The Companys Board of Directors is responsible for the preparation and presentation of these Ind AS financial statements in terms of the requirements of the Act that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and statement of changes in equity in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act. The respective Board of Directors of the Companies are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets 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 the 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the Ind AS financial statements by the Directors of the Company, as aforesaid. In preparing the Ind AS financial statements, the respective Board of Directors of the companies are responsible for assessing the ability of the Company 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 respective Board of Directors of the Companies are also responsible for overseeing the financial reporting process of the Company.

Auditors Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the Ind AS 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 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 Ind AS financial statements. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

? Identify and assess the risks of material misstatement on the Ind AS 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, misrepresentation, 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.Page 55

? 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 Ind AS 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 Ind AS 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 charge with governance, we determine those matters that were of most significance in the audit of Ind AS 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 in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public benefits of such communication.

Other Matters

The financial statements of the Company for the year ended 31 March 2022 were audited by the predecessor auditor who resigned due to casual vacancy, have expressed an unmodified opinion on those financial statement.

Our report is not modified in respect of this matter.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditors Report) Order, 2020 ("the order") issued by the Central Government in terms of Section 143(11) of the Act, we give in the "Annexure A" 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, we report, to the extent applicable, that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid Ind AS financial statements; b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit and Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account maintained for the purpose of preparation of the Ind AS financial statements; d) In our opinion, the aforesaid Ind AS financial statements comply with the Ind AS specified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on 31 March, 2023 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 2023 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure (B)".

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 accordingly to the explanations given to us, no remuneration has been paid by the company to its directors during the year.

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, in our opinion and to the best of our information and according to the explanations given to us: i. There is no pending litigation which would have its impact on Ind AS financial statement of the Company. ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses. iii. There are no amounts required to be transferred to the Investor Education and Protection Fund by the Company during the year ended 31 March 2023 iv. (a) The management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed fund or share premium or any other source or kind of funds) by the Company to or in any other persons(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; (b) The management has represented that, to best of its knowledge and belief, no funds have been received by the Company from any other person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recording in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; (c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representation under clause (a) and (b) contain any material misstatement. v. The Company has neither declared nor paid any dividend during the year.

ANNEXURE (A) TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF SAINIK FINANCE & INDUSTRIES LIMITED

The Annexure referred to in Independent Auditors Report to the members of the Company on the financial statements for the year ended 31 March, 2023, we report that:

(i) (a) According to the information and explanations given to us, the Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment. Further, the Company does not have any intangible assets as on 31 March 2023. (b) According to the information and explanations given to us, the Company has a regular programme of physical verification of its property, plant and equipment by which all property, plant and equipment are verified at periodic intervals. In our opinion, the period of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed during physical verification of property, plant and equipment. (c) According to the information and explanations given to us, the Company does not have any immovable properties on 31 March 2023.

(d) According to the information and explanations given to us and on the basis of our examination of the records of the Company, no Property Plant and Equipment (including Right of Use assets) or has been revalued during the year. Further, the Company does not have any intangible assets as on 31 March 2023.

(e) According to the information and explanations given to us, no proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder. (ii) The company does not hold any inventory as at year end. Accordingly paragraph 3(ii) of the order is not applicable to the company.

(iii) In our opinion and according to the information and explanations given to us, the Company has not made investments or provided any guarantees or securities during the year. Although, the company has granted unsecured loans to companies and individuals.

a) As the Company is a Non-Banking Financial Institution (NBFC) and its principal business is to give loans and advances. Accordingly, paragraph 3(iii)(a) is not applicable to the Company.

b) Based on our examination and the information and explanation given to us, in our opinion, the terms and conditions under which such loans were granted are not prejudicial to the companys interest. Further, no investment, guarantees and security have been provided by the Company to any person.

c) In our opinion, the borrowers have been regular in the repayment of the principal and payment of interest on loans where so stipulated unless the arrangement does not contain any such schedule for repayment of principal/interest except for the parties which have been declared Non Performing Assets. The terms of arrangement in case of loans given to Companies do not stipulate any repayment schedule and the loans are repayable on demand along with interest in most of the cases. d) Detail of amount overdue for more than 90 days along with necessary steps taken by Company are as follows:

S. No.	Party Name	Principal Amount Overdue	Interest Overdue	Total Overdue
1	Ambience Private Limited-NPA	-	18.11	18.11
2	Ambience Projects & Infr. Pvt. Ltd.-NPA	-	4.60	4.60
3	Sainik Automobiles-NPA	23.25	27.63	50.88
4	Samarth Erectors And Developers-NPA	-	6.50	6.50
5	SRC And Associates-NPA	200.00	125.43	325.43
6	Anil Kumar Sachdeva-NPA	1.25	0.45	1.70
7	Mr Rajesh Kumar-NPA	0.69	0.23	0.92
8	Usha Phogut w/o Sukhbir Phogut-NPA	35.00	6.30	41.30
9	Mr Rajesh Kumar-NPA	1.05	1.40	2.45
	Total	261.24	190.65	451.89

In relation to cases where terms of arrangement do not stipulate any repayment schedule and loans are repayable on demand, no question of overdue amounts will arise in respect of the loans granted to parties. Further, the Company has taken reasonable steps for recovery of principal and interest amount.

e) As the Company is a Non-Banking Financial Institution (NBFC) and its principal business is to give loans and advances. Accordingly, paragraph 3(iii)(e) is not applicable to the Company.

f) Detail of loans and advances repayable on demand or without specifying any terms or period of repayment are as follows:

		(amount in rupees lakhs)
	All Parties	Promoters	Related Parties
- Aggregate amount of loans/ advances in nature of loans:-Repayable on demand (A)	14745.47	-	3413.35
- Agreement does not specify any terms or period of repayment(B)	-	-	-
Total (A+B)	14745.47	-	3413.35
Percentage of loans/ advances in nature of loans to the 98.04 %	-	23 %
total loans

(iv) According to the information and explanation, the Company is a NBFC Company. So provisions of section 185 and 186 of the Act. are not applicable to the Company.

(v) According to the information and explanations provided to us, the Company has not accepted any deposits from the public. Accordingly, the directives issued by Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Act and rules framed thereunder in this regard, are not applicable.

(vi) According to the information and explanations provided to us, the Central Government has not specified for maintenance of cost records under Section 148(1) of the Companies Act, 2013 in respect of the activities carried on by the Company. Hence, the provisions of paragraph 3(vi) of the Order is not applicable to the Company.

(vii) In respect of statutory dues;

(a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the amounts deducted/accrued in the books of accounts in respect of undisputed statutory dues including provident fund, employees state insurance, income-tax, goods and service tax and other material statutory dues, as applicable have been deposited with slight delays in few cases during the year by the Company with the appropriate authorities.

Further, there are no undisputed amounts payable outstanding as at 31 March, 2023 for a period of more than six months from the date they become payable. (b) According to the information and explanations given to us, the Company has not deposited outstanding demand amount of INR 9.90 lakhs with the appropriate authorities on account of demand pertaining to the A.Y. 2008-09. (viii) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the Company has not surrendered or disclosed any transactions, previously unrecorded as income in the books of account, in the tax assessments under the Income-tax Act, 1961 as income during the year.

(ix) (a) In our opinion and according to the information and explanations given to us, The Company has not taken any loan from bank, financial institutions and government. Further, in case of other lenders the terms and conditions for payment of loan and interest thereon have been stipulated in such a way that they are further extended from time to time and in rest of the cases payment of loan and interest are payable on demand, such loans and interest thereon have been paid as and when demanded for payment during the financial year under reporting. (b) According to the information and explanations given to us and on the basis of our audit procedures, we report that the Company has not been declared wilful defaulter by any lender. (c) According to the explanation and information given to us and on the basis of our audit procedures, no money has been obtained by the Company by way of term loans during the year. Accordingly, paragraph 3 (ix) (c) of the Order is not applicable to the Company. (d) According to the explanation and information given to us and on the basis of our audit procedures, the company has not obtained any term loans. Accordingly, paragraph 3(ix)(d) of the Order is not applicable to the Company. (e) According to the explanation and information given to us and on the basis of our audit procedures, the Company does not have any investment in subsidiary, associate or joint ventures. Accordingly paragraph 3 (ix) (e) and (f) of the Order is not applicable to the Company.

(x) (a) According to the information and explanations provided to us, the company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) during the year under audit and therefore paragraph 3(x)(a) of the Order is not applicable.

(b) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under audit & therefore paragraph 3(x)(b) of order is not applicable.

(xi) (a) Based on examination of the books and records of the Company and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company during the year, nor have we been informed of any such case by the management.

(b) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, a report under Section 143(12) of the Act, in Form ADT-4, as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 was not required to be filed with the Central Government. Accordingly, the reporting under Clause 3(xi)(b) of the Order is not applicable to the Company.

(c) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, the Company has not received whistle-blower complaints during the year.

(xii) According to the information and explanations given to us, 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 and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards. Further, according to the information and explanations given to us, the Company has complied with the provisions of Section 177 of the Act.

(xiv) (a) In our opinion and according to the information and explanation given to us, the Company has an internal audit system commensurate with the size and nature of its business.

(b) The reports of the Internal Auditor for the period under audit have been considered by us.

(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) (a) The Company is required to and has been registered under Section 45-IA of the Reserve Bank of India Act, 1934 as a Non-deposit taking non-systematically important Company.

(b) As the Company has registration under Section 45-IA of the Reserve Bank of India Act 1934. Accordingly, paragraph 3(xvi) (b) is not applicable to the Company.

(c) According to the explanation and information given to us for verification, Company is not a Core Investment Company. Accordingly, paragraph 3(xvi) (c) is not applicable to the Company.

(d) Based on the information and explanation provided by the management of the Company, the Group has three CICs as part of the Group. We have not, however, separately evaluated whether the information provided by the management is accurate and complete.

(xvii) The Company has incurred cash loss during the current financial year amounting to Rs.548.81 lakhs. However, the Company has also incurred cash loss of Rs.300.40 lakhs in the preceding financial year.

(xviii) According to the information and explanations given to us, there has been resignation of the statutory auditor due to dissolution of firm resulting in casual vacancy and outgoing auditor has not raised any issues, objections or concerns.

(xix) On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements and our knowledge of the Board of Directors and Management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the Company as and when they fall due.

(xx) In our opinion and according to the information and explanations given to us, the Company is not required to comply with the Provisions of section 135 of Companies Act, 2013. Since there is no average profit in the preceding three financial years calculated as per the provisions of the Act. Accordingly, paragraph 3(xx) of the Order is not applicable to the Company.

(xx) The Company is not required to prepare consolidated financial statement. Accordingly, reporting under paragraph 3 (xxi) of the Order is not applicable to the Company.

For Kumra Bhatia & Co.

Chartered Accountants

ICAI Firm Registration No.: 002848N

Harish Kumar Bhargava

Partner

Membership No.: 090572 UDIN: 23090572BGUEAD8378 Place: New Delhi Date: 25 May 2023

ANNEXURE- (B) TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF SAINIK FINANCE & INDUSTRIES LIMITED

Report on the Internal Financial Controls 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 Sainik Finance & Industries Limited ("the Company") as of 31 March, 2023 in conjunction with our audit of the 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. 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 with reference to these Ind AS financial statements. 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 with reference to these Ind AS financial statements 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 Ind AS 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 with reference to these Ind AS financial statements.

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 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 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

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

In our opinion, 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, 2023, 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".

For Kumra Bhatia & Co.

Chartered Accountants

ICAI Firm Registration No.: 002848N

Harish Kumar Bhargava

Partner

Membership No.: 090572 UDIN: 23090572BGUEAD8378 Place: New Delhi Date: 25 May 2023