srs ltd Auditors report

TO THE MEMBERS OF SRS LIMITED

Report on the Audit of the Standalone Ind AS Financial Statements

1. Corporate Insolvency Proceedings as per Insolvency and Bankruptcy Code, 2016 (IBC)

The Honble National Company Law Tribunal, Chandigarh Bench (“NCLT”) admitted an insolvency and bankruptcy petition led by a lender against SRS Limited (“the Company”) and appointed Mr. Ashok Kumar Gulla to act as Interim Resolution Professional (IRP) with direction to initiate appropriate action contemplated under extant provisions of the Insolvency and Bankruptcy Code, 2016 and other related rules. In their meeting held on 20thSeptember, 2018, Committee of Creditors (CoC) approved appointment of IRP as Resolution Professional (RP).

2. Quali ed Opinion

We have audited the accompanying standalone Ind AS financial statements of SRS

Limited(“the Company”),which comprise the Balance sheet as at 31stMarch, 2019, theStatement of Profitand Loss, including the statement ofOther Comprehensive Income, the Cash Flow Statement andthe Statement of Changes in Equity for the year then ended,and notes to the standalone Ind AS financial statements,including a summary of significant accounting policies andother explanatory information (hereinafter referred to as the“standalone Ind AS financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, except for thee ects of the matters described in the ‘Basis for Quali edOpinion section of our report, the aforesaid standaloneInd AS financial statements give the information requiredby the Companies Act, 2013, as amended (“the Act”) in themanner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India, of the state of a airs of the Company as at 31stMarch, 2019, its loss including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

3. Basis for Quali ed Opinion

We draw attention to the following:

(a) Material Uncertainty relating to Going Concern: We refer Note 1 to the standalone financial statements, in respect of preparation of financial statements of the Company on going concern basis for the reasons stated therein. As on 31st March, 2019, the Company has negative net worth of Rs. 103167 lakhs and the Current Liabilities exceed Current Assets by Rs. 118838 lakhs. The Company has obligations towards fund-based borrowings aggregating Rs.105670lakhs, that are due/overdue and are payable to the bankers. Further, there are liabilities towards public deposits amounting to Rs. 9225 lakhs, operational creditors and statutory dues. Above stated liabilities are showing differences as stated in Note 36. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companys ability to continue as going concern and therefore the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. As a result of ongoing matters, we are unable to determine as to whether any adjustment that would have been necessary and required to be made in respect of trade receivable, trade payables, borrowings, current liabilities, loans and advances and contingent liabilities, as at 31st March, 2019; and in respect of the corresponding possible impact of such items and associated elements on the statement for the year ended on that date, should the Company be unable to continue as a going concern. The ultimate outcome of these matters is at present not ascertainable. Accordingly, we are unable to comment on the consequential impact, if any, on the accompanying standalone financial statements.

(b) Note 36 to the statement, in respect of various claims, submitted by the operational creditors, employees and other creditors of the Company to Resolution Professional (RP) pursuant to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016,thatare showing differences with book balances. We are unable to comment upon the adjustments required and consequential impact on the accompanying statements.

We further refer Note 37 in respect of non-availability of con rmations of trade receivables, loans & advances and trade payables. Balance con rmations, wherever received in case of trade receivables, loans & advances and trade payables, are under reconciliation and impact is pending to be given in books of account.

(c) We refer Note 38 to the standalone financial statements, in respect of balances available with statutory authorities and input credits aggregating Rs.9.93 lakhs that are subject to reconciliation, ling of return and admission by the respective statutory authorities and no provision has beenmade. Thus, we are unable to comment whether any provision for impairment in the value of these balances is required.

(d) We refer Note 31 to the statement. As mentioned in the said Note, no interest expense has been booked on borrowings for the period after initiation ofCorporate Insolvency Resolution Process(CIRP) i.e. 21st August, 2018 to the reporting period. Syndicate Bank and Oriental Bank of Commerce have charged interest aggregating Rs. 657 lacs after initiation of CIRP i.e. 21st August, 2018 to the reporting period, however, the effect of such interest charged in the bank statements has not been given in the books of account. In absence of necessary information, we are unable to comment upon the shortfall in provision for interest and consequential impact on the accompanying standalone financial statements.

(e) We refer Note 31 to the statement. As mentioned in the said Note, no interest expense has been booked on public deposits for the period after 21st August, 2018. We also observed that on matured public deposits, interest was being provided @11.75% p.a. As per Rule 17 of Acceptance of Deposits Rules, 2015, a company shall pay a penal rate of interest of eighteen per cent p.a. for the overdue period of deposits, whether secured or unsecured, matured and claimed but remaining unpaid. In absence of necessary information, we are unable to comment upon the shortfall in provision for interest and consequential impact on the accompanying standalone financial statements.

(f) The Company has investment of Rs. 2,676 lakhs in wholly owned subsidiary companies Rs. 2,666 lakhs in SRS Entertainment India Ltd and Rs. 10 lakhs in SRS Smart Retail Ltd. Additionally, the Company has to recover Rs. 22 lakhs from SRS Smart Retail Ltd, on account of sales/ advance given. As per information and explanation given to us, net worth of wholly owned subsidiary companies is below the Companys exposure to them. No provision for diminution/ doubtful amount has been made in investments made and/or other amounts recoverable. We are unable to commenton the appropriateness of the carrying value ofsuch investments and other amounts recoverable and theirconsequential impact on the financial results for theyear and the financial position of the Company as at 31st March, 2019.

(g) We refer Note 3 to the standalone financial statements. Property, Plant and Equipment (PPE) amounting to Rs. 217 lakhs (WDV) were written o and Loss amounting to Rs. 738 lakhs was incurred on sale of PPE (Prior to CIRP). Further Provision for doubtful Trade Receivables and Loans & Advances was made and Receivables/ Loans & Advances were written o aggregating Rs. 127.62 lakhs during the year ended 31stMarch, 2019. In this respect managements representation was received that the write o s/ provisions were made and losses were incurred since the assets were found short or were discarded or were doubtful of recovery due to lack of proper controls and follow-up. Also, Provision for doubtful Trade Receivables and Loans & Advances no longer required was written back aggregating Rs. 86.15lakhs during the year ended 31stMarch, 2019.

Foreign Trade Receivables aggregating Rs. 14653 lakhs* as on 31st March, 2019 (including Rs.14191 lakhs out of sale to parties from inventories sent by NSEZ unit of the Company located in India to UAE Branch through Branch transfer) on account of sale during the FY

2015-16 and FY 2016-17 in UAE were not backed by any security. Furthermore, in terms of RBI regulations, in case of delay in export realisations beyond the stipulated period, application though required, was not made to the Bank. In absence of alternative corroborative evidence, we are unable to comment on the recoverability of foreign outstanding.

*provided for in books of account.

(h) Certain debtors have claimed ‘no dues in their balance con rmations to the Company for the year ended 31 March 2019 since as per them, they had actually made sales to the Company or they were entitled to certain discounts. Based on such differences in balance con rmations and/or balance con rmations not received over a longer period of time and/or action taken for recovery but no results materializing, in our opinion, Trade Receivables (other than Foreign Trade Receivables) and Advances aggregating Rs.64282 lakhs, though provided for, are yet to be written o .

(i) Rs. 7.86 lakhs (31.03.18: Rs. Nil) are recoverable on account of advance given/ expenses from Ex-Directors, pertaining to period before CIRP.

(j) As per settlement agreement dated 28th May, 2018, the Company sold its multiplex property in Gorakhpur for Rs. 110 lakhs (including GST of Rs. 17 lakhs). The book value of such property was Rs.865 lakhs and the sale resulted in loss of Rs. 772 lakhs. Also, the Company was to recover Rs. 60 lakhs (Net) towards security deposit, which was also w/o in Statement of Profit and Loss. For the said transaction, no valuation report was available.

The Company sold its multiplex property in Bareilly for Rs. 450 lakhs (including GST of Rs. 71 lakhs) as per settlement agreement dated 07th Aug, 2018. The book value of such property was Rs.338 lakhs and the sale resulted in profit of Rs. 41 lakhs. Amount received against the sale was Rs. 250 Lakhs and balance of Rs. 200 Lakhs is still outstanding. For the said transaction, no valuation report was available

(k) The Company has been facing issues such as investigation by SFIO, SEBI, ED and other Authorities. Also, as per lings made by the Company from time to time with stock exchanges, there have been certain regulatory non-compliances w.r.t. the Companies Act, 2013 and the Listing Obligation and Disclosure Requirements (LODR) of Stock Exchanges. Various issues being involved and the matters having not been concluded yet, the Company is in the course of evaluating the impact to the extent ascertainable. Eventually, in respect of such matters, no liability has been booked as on 31st March, 2019.

(l) We refer Note 20 regarding the required disclosures and liability for interest, if any, to Suppliers under the Micro, Small and Medium Enterprises Development Act, 2006. In this respect, sufficient information is not available with the Company.

(m) Deposit Repayment Reserve Account for the Fixed deposits at the close of the year, required under Section 73(2)(c) of the Companies Act, 2013 equal to 15% of the deposits maturing in the year and in the year following were found short by Rs. 1082lakhs as on 31st March, 2019 (net of Fixed Deposit amounting to Rs. 37 lakhs with bank). We are unable to comment on the financial implications in respect of the same.

We conducted our audit of the standalone Ind AS nancialstatements 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 ofthe Standalone Ind AS Financial Statements section of ourreport. We are independent of the Company inaccordancewith the ‘Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statementsunder the provisions of the Act and the Rules thereunder,and we have ful lled our other ethicalresponsibilities inaccordance with these requirements and the Code of Ethics.We believe that the audit evidence we have obtained issu cient and appropriate to provide a basis for our qualified audit opinion on the standalone Ind AS

financial statements.

4. Emphasis of matter

As mentioned in Annual Report of the Company for the FY ended 31st March, 2018, certain divisions were closed down in that year and majority of employees left the Company. Certain Whole-Time Directors also left or their term of appointment expired. Full & nal settlement has not been made in all the cases and as explained to us, was still in process. In this respect, we have relied upon managements representation that the difference between liability providedtowards retirement benefits &other dues and additional liability that may arise, shall not be material.

Our opinion is not qualified in respect of above matter.

5. Key Audit Matters

Key audit matters are those matters that, in our professionaljudgment, were of most significance in our audit of thestandalone Ind AS financial statements for the nancialyear ended March 31, 2019. These matters were addressedin the context of our audit of the standalone Ind AS nancialstatements as a whole, and in forming our opinion thereon,and we do not provide a separate opinion on these matters.In addition to the matter described in the ‘Basis for Quali edOpinion section we have determined the matters describedbelow to be the key audit matters to be communicated inour report. For each matter below, our description of howour audit addressed the matter is provided in that context.

We have ful lled the responsibilities described in theAuditors responsibilities for the audit of the standalone IndAS financial statements section of our report, including inrelation to these matters. Accordingly, our audit includedthe performance of procedures designed to respond to ourassessment of the risks of material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures, including the procedures performed toaddress the matters described below, provide the basis forour audit opinion on the accompanying standalone Ind AS financial statements.

Key Audit Matter	How the matter was addressed in our audit
1. Revenue Recognition The Company mainly derives its revenue from sale of movie tickets (Box office revenue), sale of food items, advertisement income and convenience fees.	Principal Audit Procedure In view of the significance of the matter we applied following audit procedures in this area, among others to obtain sufficient appropriate audit evidence : We assessed and tested the effectiveness of relevant controls, including automated controls, over revenue within each of the revenue streams. We inspected the terms of significant revenue contracts and assessed whether they were consistent with the basis of revenue recognized by the Company. We matched the data underlying the calculation of admission revenue to sales records and other systems having assessed the relevant controls relating to the recording of that revenue.
1. Litigations Contingencies The Company has ongoing litigations with various authorities and third parties which could have a significant impact on the results, if the potential exposures were to materialise. The amounts involved are significant, and the application of accounting standards to determinethe amount, if any, to be provided as a liability ordisclosed as a contingent liability, is inherentlysubjective. Claims against the Company not acknowledged as debts are disclosed in the Financial Statementsby the Company after a careful evaluation of thefacts and legal aspects of the matters involved.The outcome of such litigation is uncertain and theposition taken bymanagement involves significantjudgment and estimation to determine the likelihoodand/or timing of cash out flows and the interpretation of preliminary and pending court rulings. Refer Note 25to the Standalone Financial Statements		Principal Audit Procedures Our audit approach was a combination of test of internalcontrols and substantive procedures including: Assessing the appropriateness of the design andimplementation of the Companys controls over theassessment of litigations and completeness ofdisclosures. Supporting documentation are tested forthe positions taken by the management, meetings areconducted with legalteam, to con rm the operating e ectiveness of these controls. Additionally, considering the effect of new informationin respect of contingencies as at 1st April, 2018 toevaluate whether any change was required in themanagements position on these contingencies as at31st March, 2019.

6. Information Other than the standalone Ind AS Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for theother information. The other information comprises theinformation included in the Annual report, but does notinclude the standalone Ind AS financial statements and ourauditors report thereon.

Our opinion on the standalone Ind AS financial statementsdoes not cover the other information and we do not expressany form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether such otherinformation is materiallyinconsistent with the nancialstatements or our knowledge obtained in the audit orotherwise appears to be materially misstated. If, based onthe work we have performed, we conclude that there is a

material misstatement of this other information, we arerequired to report that fact. We have nothing to reportin this regard.

7. Responsibilities of the Management and those Charged with Governance for the Standalone Ind AS Financial Statements

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 the Ind AS and other 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, 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 responsible for overseeing the Companys financial reporting process.

We refer Note 50to the standalone financial statements. As mentioned in the said Note, pursuant to ongoing Corporate Insolvency Resolution Process (CIRP), powers of the Board of Directors stand suspended and such powers are exercisable by Resolution Professional (RP).

8. Auditors Responsibilities for the Audit of the Standalone Financial Statements

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

As part of an audit in accordance with SAs, we exercise professional 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 ndings, including any significant de ciencies 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.

9. Other Matter

In terms of the Joint Responsibility Statement (as per Standards on Auditing-299) forming part of the Engagement Letter:

i. Audit of Cinema Business, Retail Business (discontinued operations) and part of unallocable Business whose financial statements reflect total assets ofRs. 7199 lakhs as at 31st March, 2019 and total revenue of Rs. 9090 lakhs for the year ended on that date has been carried out by M/s SVP & Associates; and

ii. Audit of Corporate & Other Business, Gold & Jewellery Business (discontinued operations) and part of un-allocable Business whose financial statements reflect total assets of Rs.12033lakhs as at 31st March, 2019 and total revenue of Rs. 91 lakhs for the year ended on that date has been carried out by M/s Oswal Sunil & Co.

Our opinion is not modified in respect of above matter.

10. Report on Other Legal and Regulatory Requirements

(i) As required by the Companies (Auditors Report) Order, 2016, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act (“the Order”), and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in the ‘Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order.

(ii) Subject to matters stated in ‘Basis for Quali ed Opinion, as required by Section 143 (3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Cash Flow Statement and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account; (d) In our opinion, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act; (e) The matters described under “Basis for Quali ed Opinion” and “Emphasis of Matter” paragraph, in our opinion, may have an adverse effect on the functioning of the Company; (f) In terms of section 17 (1) (b) of the Insolvency and Bankruptcy Code, 2016 (“the Code”), the powers of the Board of Directors have been suspended and are exercised by the Resolution Professional. Hence, written representation from directors have not been taken on record by the Board of Directors. Accordingly, we are unable to comment whether none of the directors is disquali ed as on March 31, 2019 from being appointed as a director in the terms of Section 164 (2) of the Act; (g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure B. Our report expresses a qualified opinion on the adequacy and operating effectiveness ofthe Companys internal financial control over financial reporting; (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 remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

(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, in our opinion and to the best of our knowledge and belief and according to the information and explanations given to us: i. We have relied on managements representation that the Company has disclosed the impact of pending litigations as at 31st March, 2019 on its financial position in its standalone financial statements (refer Note 25). ii. Except for the effects/possible effects of matters described under basis of qualified opinion paragraph, the Company has made provision, as required under the applicable law oraccounting standards, for material foreseeable losses, if any, on long-term contracts. The Company did not have any derivative contracts iii. There were delays in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT

(As referred to in paragraph (i) under the heading ‘Report on Other Legal and Regulatory Requirements of our report to the members of SRS Limited on the accounts for the year ended 31st March, 2019)

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

(b) Excepting fixed assets aggregating Rs. 28.62 lakhs (WDV), the fixed assets were physically veri ed by the Management and discrepancies noticed on veri cation between the physical assets and the book records were dealt with in books of account. As on 31st March, 2019, Fixed assets have been written o amounting to Rs. 217 lakhs (WDV)- refer para 3(g) of ‘Basis for Quali ed Opinion forming part of this Report and Note 3 to the standalone financial statements. Other than Leasehold Improvements, Electrical Fittings, Furniture & Fittings, etc., Fixed Assets written o consisted of Plant & Machinery, O ce Equipment, Computers and Vehicles.

(c) According to the information and explanations given to us, title deeds of the immovable properties have been mortgaged with lenders i.e. bankers towards security of the borrowings raised by the Company. On the basis of our examination of the records of the Company and the copies of the title deeds available with the Company, the title deeds of immovable properties are held in the name of the Company.

The Company sent a mail to bankers seeking con rmation of the original title deeds of immovable properties held by them. However, con rmation from the bankers was not received as on the date of our Report.

(ii) The inventory has been physically veri ed by the management at reasonable intervals during the year. According to the information and explanations given to us, for inventory physically veri ed during the year, the discrepancies between the physical stocks and the books were not material and have been properly dealt with in the books of account.

(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, rms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii) (a), 3(iii) (b) and 3(iii) (c) of the Order are not applicable to the Company.

(iv) As mentioned in para 3(i) of ‘Basis for Quali ed Opinion forming part of this report, Rs. 7.86 lakhs are recoverable on account of advance given/ expenses from Ex-Directors. Except for the amount recoverable from Ex-Directors, 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 Act, with respect to the loans and investments made.

(v) In our opinion and according to the information and explanations given to us, the Company has not complied with the directives (to the extent applicable) issued by the Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under with regard to deposits accepted from the public, in respect of maintenance of liquid assets (refer para 3(m) ) of ‘Basis for Quali ed Opinion forming part of this report) and in respect of provisions regarding acceptance, repayment of deposits and payment of interest.

No order has been passed by Company Law Board or Reserve Bank of India or any Court or any other Tribunal. However, the Order/s (including Final Order dated 21st December, 2017) for extension in repayment of deposits and payment of interest issued by National Company Law Tribunal were not complied with fully. The amount involved thereof is not ascertainable as the Order/s provided for staggered payments over a period of time.

(vi) According to information and explanations given to us, the Central Government has not prescribed maintenance of cost records under sub-section (1) of section 148 of the Companies Act, 2013. Therefore, provisions of Clause 3 (vi) of the order are not applicable to the company.

(vii) (a) Undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, goods and service tax (GST), cess and other material statutory dues, as applicable, have not been regularly deposited to the appropriate authorities and there have been significant delays in a large number of cases. Undisputed amounts payable in respect thereof, which were outstanding at the year-end for a period of more than six months from the date they became payable are as follows:

Name of the Statute	Nature of the dues	Amount (Rs. in lakhs)	Period to which it relates	Date of Payment
Income Tax Act, 1961	TDS	390		-
			March 2017 to June 2018
Income Tax Act, 1961	TDS as per	9.40	Up to FY 2018-19	-
	Traces Website
CGST Act, 2017 & IGST	GST (HP)	27.94	July 2017 to	-
Act, 2017			September 2018
CGST Act, 2017 & IGST	GST (HR)	533.39	July 2017 to	Payment of
Act, 2017			September 2018	Rs.19.21 Lakhs pertaining to Aug18 and Sept18 made on 6th July, 2019
CGST Act, 2017 & IGST	GST (UP)	608.34	July 2017 to August 2018	-
A
ct, 2017
CGST Act, 2017 & IGST	GST (PB)	273.91	July 2017 to	Payment of
Act, 2017			September 2018	Rs.59.55 Lakhs pertaining to Aug18 and Sept18 made on 28th June,2019
CGST Act, 2017 & IGST Act, 2017	GST (DL)	49.62	July 2017 to March 2018	-
Finance Act, 1994	Service Tax	125.90	April 2016 to June 2017	-
The Delhi Value Added Tax Act, 2004	VAT (Delhi)	133.28	April 2017 to June 2017	-
The Employees Provident	EPF	101.09	August 2017 to	-
Fund and Miscellaneous
			September 2018
Provisions Act, 1952
The Employees State	ESI	64.78	August 2017 to	Payment of
				Rs.2.56 Lakhs
Insurance Act, 1948			September 2018
				pertaining to
				Aug18 and Sep18
				made on 09th, 12th
				& 25th of April
				2019
				-
UP Vat Act, 2008	VAT and Interest	801.94	FY 2014-15
				-
UP Vat Act, 2008	VAT and Interest	682.47	FY 2015-16
Companies Act, 2013	Investor Education & Protection Fund	1.79	FY 2011-12	-

(b) According to the information and explanations given to us and records of the Company examined by us, particulars of statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax,goods and service tax (GST), cess and other material statutory dues, as applicable, which have not been deposited on account of any dispute are as under:

Name of the Statute	Nature of the dues*	Amount* (Rs. in lacs)	Period to which it relates	Forum where dispute is pending
Income Tax Act, 1961	Income Tax and	4,189.76	AY 2010-11	CIT Appeals, Gurugram
	Interest
-do-	-do-	7,555.68	AY 2011-12	-do-
-do-	-do-	733.19	AY 2012-13	-do-
-do-	-do-	795.41	AY 2013-14	-do-

*net of tax paid under protest/ refund adjusted

(viii) As stated in Note 19 to the standalone financial statements, the amounts of borrowings from banks including interest are overdue and there is continuing default as on 31stMarch, 2019. While referring to repayment schedule stipulated in the sanction letter and subsequent developments, we are unable to provide periods of default. Details of defaults in repayment of borrowing and interest are given below:

	Principal (Rs. in lakhs)
Particulars		Interest (Rs. in lakhs)
Cash Credit	73,555	17,825
Demand Loan	10,000	3,654
Corporate Loan	475	161
Total	84,030	21,640

The Company does not have any debentures issued, loans or borrowings from the government.

(ix) The Company has not raised money by way of initial public o er or further public o er (including debt instruments) during the year. The term loans were applied for the purposes for which they were raised.

(x) Based upon the audit procedure performed for the purpose of reporting the true and fair view and on the basis of the information and explanations given by the management, we are unable to comment whether or not there was any fraud by the Company or on the Company by its officers or employees.

(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(xii) In our opinion and 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) As per our examination of the records of the Company, all transactions with the related parties are in compliance with Section 177 and 188 of the Companies Act, 2013 wherever applicable and the details have been disclosed in the Financial Statements etc. as required by the applicable accounting standards, except disclosure of corporate guarantee given by M/s SRS Knowledge & Technologies Pvt. Ltd., in which Ex-Executive Chairman of the Company is a director (also Refer footnote to Note 19 of Financial Statements). In this respect, working and information is as provided by the management, for which we have relied on the management representation.

(xiv) 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.

(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 them. Accordingly, paragraph 3(xv) of the Order is not applicable.

xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF SRS 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 SRS Limited (“the Company”) as of 31stMarch, 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 Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and the cient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Basis for Quali ed Opinion

In our opinion and according to the information and explanations given to us and based on our audit, the following material weaknesses have been identified as at March 31, 2019:

The Company did not have appropriate internal financial controls over:

(a) The Company did not have appropriate internal financial controls as mentioned in para 3(g) of ‘Basis for Quali ed Opinion forming part of this Report.

(b) Possible Impairment Losses - The Companys internal financial controls over use of assumptions for analysis of asset impairments were not operating effectively which could potentially result in the Company not recognizing possible impairment losses.

(c) We refer para 3(j) of ‘Basis for Quali ed Opinion forming part of this Report. Internal financial controls were lacking for sale of Property, Plant and Equipment (PPE).

Further the company did not have any internal audit system during the year.

The inadequate supervisory and review control over Companys process in respect of aforesaid assessment in accordance with the accounting principles generally accepted in India could potentially result in a material misstatement in preparation and presentation of financial statement including the profit/loss after tax.

A ‘material weakness is a de ciency, or a combination of de ciencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.

Quali ed Opinion

In our opinion, except for the possible effects of material weaknesses described in “basis of qualified opinion” paragraph above, 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 31stMarch, 2019, 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. We have considered the material weaknesses identifiedand reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the Company for the year ended on 31stMarch, 2019,

and these material weaknesses have affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements.