Dhanada Corporation Auditors Report


To the Members of Dhanada Corporation Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Dhanada Corporation Limited(“the Company”), which comprise of the Balance sheet as at 31st March 2021, and the statement of Profit and Loss (including Other Comprehensive Income), the Statement of changes in equity and the Statement of cash flows for the year ended on that date with notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred as ‘ financial statements).

Subject to the matters of concern specified in Basis of Opinion paragraph and also in various notes to the financial statements (financial impact mentioned therein, wherever ascertainable), in our opinion and to the best of our information and according to the explanations given to us, the aforesaid 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 the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with the Companies (Indian accounting standards) Rules, 2015, as amended and the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2021 and the loss, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

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 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 (“ICAI”) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules 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 financial statements.

Matters of concern:

a. As mentioned in note no. l of Note 22 B, the accounts have been compiled on the basis of the records and documents available with the Company due to seizure of records and documents by various authorities on various occasions. The impact on accounts (financial as well as disclosure) due to such non-availability of the records is not ascertainable.

b. During last year, in the last week of March 2020 (23rd March 2020), there was lockdown announced due to Covid-19. Further vide the order of SDO dated 05.05.2020 the hotel has been declared as a Covid centre for the stay of doctors, as per the order of session judge. The hotel was occupied for the doctors stay till February 2021.This created an impact on the operations of the concern; financial implication of the same is not ascertainable.

c. As mentioned hereinabove, a lockdown was announced w.e.f. 23rd March 2020 throughout the state of Maharashtra., and the same was reimposed again in April 2021. Due to the restriction on inter-district movements, we could not visit the Place of business at Aurangabad. We have carried out our audit on the basis of the accounts maintained in the system and scanned copies of various records and documents submitted to us. As far as the bills, vouchers and documents pertaining to the business place at Aurangabad are concerned, we have been constrained to keep reliance on the internal audit reports and stock verification reports submitted by an independent firm of Chartered Accountants appointed as Internal Auditors of the Company. Our audit and certification is subject to the non-availability of these records also.

d. As mentioned in foot note no. 1 of Note no. 1 and foot note no. 2 of Note no. 8, pending conveyance of land at Nande, pending payment of stamp duty applicable to scheme of arrangement & amalgamation sanctioned by Honble Bombay High Court vide their judgment dated 16th July 2009 and pending legal formalities of allotment of shares (the subject matter of the aforesaid scheme), accounting has been done of Fixed Assets (Land) of Rs. 1,59,65,999.74, Issued, Subscribed and Paid up Share Capital of Rs. 17,96,254.00, Share Premium of Rs. 1,06,69,748.76 and Current Liabilities (Amount payable to Dr. Laxman V. Kulkarni) of Rs. 34,99,996.98. Pending completion of all legal formalities, the respective amounts on the aforesaid accounts are overstated to that extent.

e. In the absence of the records, the nature of Capital Work in Progress (pending since long), as mentioned in foot note no. 3 of Note no. 1, could not be ascertained. As such the probable accounting thereof, capital or revenue, is pending. Further, the impairment of Assets (including Capital Work in Progress), if any, as per the requirements of Ind AS 36 has not been ascertained, and as such, the consequent financial impact on accounts is not ascertainable.

f. Details and supporting documents of the amount of Rs. 3,91,00,000/- paid as Advance to Dr. Laxman V. Kulkarni (Foot note 2 of Note no. 4) are not available with the Company. As such, we are unable to express our opinion on the genuineness of the payment, recoverability thereof and correctness of the accounting treatment. Financial impact on accounts is not ascertainable.

g. As mentioned in foot note no. 6 of Note no. 7, Balances with Banks in current account include as amount of Rs. 179,75,000/- kept in bank account in the individual name of a director. As informed to us, this amount has been kept in No Lien Account as part of the negotiation with a lender bank for One Time Settlement. Further, this account is subject to confirmation, reconciliation and consequential adjustments, if any. Financial impact on accounts is not ascertainable. The Company has assured us that no such other bank account (other than those recorded in the books of the Company) has been opened by the Company, on which reliance has been placed.

h. As mentioned in foot note no. f of Note no. 22 B, the outstanding balances of sundry creditors, sundry debtors, and advances (taken or given), bank current accounts (as specified in foot note 8 and 9 of Note 7), bank deposit accounts, all loan/overdraft accounts are subject to confirmation, reconciliation and consequential adjustments if any. Financial impact on accounts is not ascertainable.

i. As mentioned in various notes, no provision has been made for interest on Sales Tax Deferment and interest / penalties for non-payment / late payment of statutory dues and for non-compliance of legal formalities under different statutes and laws, interest payable to MSME creditors etc., if any. The amount is not ascertainable. Financial impact on accounts is not ascertainable.

j. As mentioned in Note no. 16 and 20, in the absence of details, the interest on borrowings and on bank deposits has been accounted for at contractual rates. Financial impact on accounts is not ascertainable.

k. The companys gross investments in equity shares of the then three subsidiary companies of Rs. 883.13 lakhs were sold during the Financial Year 2017-18 for an amount of Rs. 0.48 lakh only. The value of these investments was diminished progressively by charging to profit and loss accounts for the years from 2014-15 to 2017-18. We have not examined the propriety of this sale, which was based on the managements assessment on the recoverability of these financial assets and of the consequent loss.

l. The Company has not obtained confirmations from debtors and other parties for the amount due from them. Further, in the absence of the records, seized by various authorities at various points of time, the recoverability of these amounts could not be ascertained. The company has written off / provided for the credit loss and non- recoverability of debtors, based on its own assessment. However, the company has not applied any scientific / verifiable basis for arriving at such write off or provision for doubtful of recovery.

m. In the earlier years, an advance was paid to a Director (outstanding balance as on 31st March, 2020 Rs. 3,01,44,128/- swapped in the name of Dhanada Holding Pvt. Ltd. in earlier year and again transferred during the year in the name of the director) which was in contravention of Section 185 of the Companies Act, 2013. As mentioned in note no. ‘j of Note no. 22 B, the director has cleared this advance by bringing in money from his own business activity at various times in the current year.

In the absence of any supporting documentary evidence, we are constrained to rely on the declaration of the Director that the said amount has been brought in from his own business activity.

Out of such money brought in by the director, the cheques amounting to Rs. 2,59,04,128/- were lying with the company as at the Balance Sheet date. They are reflected as Cheques on Hand as at 31st March, 2021. However, the amounts have actually been credited in the bank account in the months of April and May 2021. Further, pay-in-slips for these credits have not been produced for our verification. Though there are actual credits in the bank statements in the ensuing months, we are unable to ascertain whether really these were the cheques on hand as at 31st March, 2021.

Further, any interest, fines and penalties for contravention of the provisions of Section 185 & 186 (for a small intervening period) of the Companies Act, 2013, if any, is not ascertainable. Impact on accounts is not ascertainable.

n. As mentioned in Foot note 4 of Note no. 6, the company has been running the hotel under an arrangement with Vitizen India Pvt. Ltd. (VIPL) to whom Management and other charges are payable. Sessions Court, Aurangabad, under the ongoing MPID case, had appointed an independent auditor to examine the books of the Company. Pursuant to his audit report, the Court ordered VIPL to deposit an amount of Rs. 41.00 lakhs with the Competent Authority. Against this, VIPL has deposited an amount of Rs. 32.52 lakhs which has been included in amount with ‘additional session judge Aurangabad. Management and other charges in respect of revenue from the Doctors stay at Hotel during pandemic have not been accounted for pending discussion with VIPL. VIPL has now submitted their account statement which is in the process of reconciliation. In view of the foregoing, the account of VIPL is subject to confirmation, reconciliation and consequential adjustments, if any. Impact on accounts is not ascertainable.

o. As mentioned in Foot note 9 of Note 4, An amount of Rs. 96.42 lakhs (Previous Year Rs. 63.90 lakhs) has been transferred to the account of ‘Additional Sessions Judge Aurangabad till 31st March 2021, pursuant to an order dated 24.05.2019 and 17-03- 2021, passed by the Sessions Judge under MPID Act. The balance is subject to confirmation. Vide order dated 24.10.2019, Spl. Judge (MPID), Aurangabad has ordered to make payment to the applicants of the said case under MPID Act, out of this amount deposited in the Court. The Company has not received any intimation from the Court Authority till date about any payments made under MPID Act to the applicants. Pending such intimation, the amount is shown as advance in the name of Spl. Judge, MPID Aurangabad. As informed to us, on receiving the official intimation, appropriate accounting would be done. Impact on accounts is not ascertainable.

Key Audit Matters

Key audit matters (KAM) 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 herein below to be the key audit matters to be communicated in our report.

The Key Audit Matters How the matter was addressed in our audit
1. Seizure of records
The companys records were seized by government and police authorities. They had records at two places: Head Office-Pune and Hotel operations- Aurangabad. The transactions at Head office were verified based on the records available with the company. Wherever the records were not made available or were not available at the company office has been mentioned specifically by the company (in the notes to account).
The head office at Pune was sealed by the authorities in the earlier years and the company had almost no access to the same. During the year 2017-18 the same were partially released and the company has been accounting for the transactions on the basis of available data and records. The details have been mentioned in the notes to account of the previous year. The list of documents and records seized / taken possession of by various authorities is not readily available with the Company.
Audit procedures included:
- Verification of various records, documents, transactions statements, bank reconciliations of now available bank statements and verifying its impact
- Verification of the records and documents, the Company could get hold of and ensuring the accounting arising thereof even for earlier accounting periods
- Perusal of various supporting statements to disclosures required.
In the year 2018-19, the hotel operations at Aurangabad were also seized and bank account operations were frozen by the police authorities following an order of the High court, Aurangabad. Later a person at district collector office was appointed to release the payments for expenditures that were incurred at hotel.
- During last year, in the last week of March 2020 (23rd March 2020) there was lockdown announced due to Covid-19. Further vide the order of SDO dated 05.05.2020, the hotel has been declared as a Covid centre for the stay of doctors, as per the order of session judge. This created an impact on the operations of the concern; financial implication of the same is not ascertainable. The hotel was occupied for the doctors stay till February 2021.
- As mentioned hereinabove, a lockdown was announced w.e.f. 23rd March 2020 throughout the state of Maharashtra. and the same was reimposed again in April 2021, Due to the restriction on inter-district movements, we could not visit the Place of business at Aurangabad.
Further, the bills, vouchers and documents pertaining to the business place at Aurangabad were not produced for our verification. As such, we have been constrained to keep reliance on the internal audit reports and stock verification reports submitted by an independent firm of Chartered Accountants appointed as Internal Auditors of the Company.
Our audit and certification is subject to the non availability of these records also.
- In respect of Audit of transactions at Hotel at Aurangabad we have carried out substantive testing on the basis of selected samples of transactions and tested that the impact is recognized in accordance with the standard accounting procedures.
Significant observations in internal audit report related to revenue and mitigation thereof were considered.
2. Recoverability of Indirect tax receivables Our audit procedures include the following substantive procedures:
The company is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business. These involve significant management judgment to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the consolidated financial statements. - Obtained understanding of key uncertain tax positions; and
- We read and analysed select key correspondences, external legal opinions / consultations by management for key uncertain tax positions;
- Discussed with appropriate senior management and evaluated managements underlying key assumptions in estimating the tax provisions; and
Refer Notes 4 and 14 to the financial statements. - Assessed managements estimate of the possible outcome of the disputed cases;
3. Impact of Covid 19 Pandemic We draw attention to Note n of Note 22 B in which the Company describes the impact arising from the COVID 19 pandemic. We have considered the same and our report is not modified in respect of this matter.
Note in Other Matters no. B(n) to the standalone financial statements.

Managements Responsibility for the Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statement that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Board of Directors is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

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

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

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

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act, 2013, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

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

However, future events or conditions may cause the Company to cease to continue as a going concern.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

The Companys borrowings from banks and financial institutions have been classified by the lenders as non-performing assets during the year. We were informed that the Company is also in the process of initiating One Time Settlement (OTS) with the banks. As informed to us, some of the lenders have approached Government Authorities in respect of the Companys borrowings. Also the property of the Company Hotel VITS located at Aurangabad is currently the place of business of the company. Consequent to the Session court order by Additional Sessions Judge, Aurangabad dated 05.02.2019 the competent authority after attaching VITS Hotel has taken its possession and management of day to day affairs of the said hotel operations. The Sub Divisional Officer and Competent Authority (MPID Act), Aurangabad has issued notice for e-Auction of the hotel property of the Company at Aurangabad. The e-Auction process has been conducted on 22nd February 2019 and 8th March 2019. The e-Auction of the said property of the Company could not, reportedly be materialized. The company has assessed the impact of Covid-19 pandemic on the financial statements, however has not assessed the future impact of this pandemic on the operations of the company. The above factors cast a significant uncertainty on the Companys ability to continue as a going concern. Pending the resolution of the above uncertainties, the Company has prepared the aforesaid statements on a going concern basis.

Report on Other Legal and Regulatory Requirements

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

Subject to the Matters of concern mentioned in the para ‘Basis for Opinion, Key Audit Matters and Other Matters mentioned hereinabove,

(a) We have sought and obtained the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit, only to the extent the record was available with the Company.

(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), Statement of cash flow and the Statement of changes in equity dealt with by this Report, except disclosure of unrealised income on derivatives (financial instruments) are in agreement with the books of account;

(d) In our opinion, the aforesaid Ind AS financial statements, except the disclosure requirement of Statement of Other comprehensive income, comply with the Indian Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31stMarch 2021 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 the financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in “Annexure A”., and

(g) With respect to the other matters to be included in the Auditors Report in accordance with section 197 (16) of the Act, in our opinion and to the best of our information and according to the explanations given to us, no remuneration is paid by the Company to its directors during the year. The Ministry of Corporate Affairs has not prescribed other details under Section 197(16) which are required to be commented upon by us.

(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, subject to Note a of Matters of Concern mentioned in the para Basis for Opinion hereinabove:

i. The Company has disclosed the fact of pending litigations against the Company (subject to Note m (vi) of Note 22 B) . However, financial impact thereof on its financial position has not been ascertained.

ii. As informed to us, there was no derivative contract outstanding on the date of Balance Sheet. As informed to us, the Company has not ascertained the material foreseeable losses, if any, on long-term contracts for proposed project and consultancy for financial arrangements.

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

2. 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 Act, we give in the Annexure B, a statement on the matters specified in the paragraph 3 and 4 of the order.

UDIN: 21035151AAAAAW2527
For Shashank Patki & Associates
Chartered Accountants
Firms registration number: 122054W
Shashank Patki
Partner
Membership number: 035151
Pune, 30th June 2021

Annexure - A to the Auditors Report

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

We have audited the internal financial controls with reference to the financial statements of Dhanada Corporation Limited (“the Company”) as of 31stMarch 2021 in conjunction with our audit of the said financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management including board of directors is responsible for establishing and maintaining internal financial controls based on the internal control with reference to the 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 (‘ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 Act.

Auditors Responsibility

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

Meaning of Internal Financial Controls with reference to financial statements

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 with reference to 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 unauthorised 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 financial statements

Because of the inherent limitations of internal financial controls with reference to 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 financial statements to future periods are subject to the risk that the internal financial control with reference to 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, the internal financial controls system with reference to financial statements as of 31st March 2021, especially in respect of:

i. Sale and cash/revenue collection

ii. All sorts of receivables and advances (capital or trade) by whatever name called,

iii. All sorts of creditors and payables by whatever name called and

iv. Control, identification and verification of property, plant and equipments including capital work in progress and/or additions to fixed & intangible assets need to be reviewed and substantially strengthened so as to be commensurate with the size and nature of the business of the Company to be in line with the essential components of internal control stated in the Guidance Note on Audit of Internal controls over financial reporting issued by the Institute of Chartered Accountants of India.

UDIN: 21035151AAAAAW2527
For Shashank Patki & Associates
Chartered Accountants
Firms registration number: 122054W
Shashank Patki
Partner
Membership number: 035151
Pune, 30th June 2021

Annexure - B to the Independent Auditors Report

With reference to the Annexure referred to in Independent Auditors Report to the members of the Company on the standalone financial statements for the year ended 31stMarch 2021, we report that:

(i) (a) In view of the seizure of the records of the Company by the Police authorities, the Fixed Assets Register could not be verified.

(b) As informed to us, the physical verification of fixed assets was not carried out during the year.

(c ) As mentioned in footnote 1 of Note No 1 Property Plant and Equipment, the land at Nande has not yet been transferred in the name of the Company, pending execution of conveyance deed. As mentioned in footnote 2 of Note No 1 Property Plant and Equipment, the property at Aurangabad has not yet been transferred in the name of the Company. According to the information and explanations given to us and on the basis of our examination of the available records of the Company, the title deeds of other immovable properties are held in the name of the Company.

(ii) (a) As per the information and explanations given to us, the Inventories were physically verified by the management during the year, at reasonable intervals.

(b) As informed to us, discrepancies noticed on physical verification of inventories were not material and the same have properly been dealt with.

(iii) The Company had given advance to a Director of the Company. During the earlier year, as mentioned in Footnote 8 of Note no. 4 Current Assets, as on 31st March 2020, the entire advance to the director was swapped in the name of the Holding Company viz., Dhanada Holdings Private Limited, again transferred in the name of the director during the year. The advance to Director was given without mention of any interest and any repayment period. In our opinion, the said advance is prima facie prejudicial to the interest of the Company. The said advance is fully repaid by the director as on 31st March, 2021. For our detailed qualified opinion, please refer to para m of Matters of Concern under Basis for qualified opinion of this report. As per information and explanations given to us, except these loan transactions, the Company has not made any transaction with the parties mentioned in the register maintained u/s 189 of the Act.

(iv) The provisions of Section 185 and 186 have not been complied with in respect of advance given to a director and the same swapped to the holding Company in earlier year as mentioned in Footnote 8 of Note no. 4 Current Assets. Please refer to para m of Matters of Concern under Basis for qualified opinion for details of non- compliance.

(v) On the basis of the available records and as per the information and explanations given to us, the Company has not accepted any deposits from the public (as appearing in the books of the Company) during the year. As such, the directives 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 are not applicable.

(vi) The Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the services rendered by the Company.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, there have been delays in payment of amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales tax, value added tax, duty of customs, service tax, cess, GST and other material statutory dues with the appropriate authorities.

Sale Tax Deferment dues of Rs. 2,54,188/- are outstanding for a period of more than six months from the date they became payable. Similarly, Sales tax and VAT/CST dues of Rs. 3,59,944/- are outstanding pursuant to the final order of Sales Tax Authorities, for a period of more than six months from the date they became payable. Except this, according to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues were in arrears as at 31stMarch 2021 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, the following dues of income tax, sales tax, duty of excise, service tax and value added tax have not been deposited by the Company on account of disputes:

Disputed income tax liability against income tax assessment order passed by Income Tax officer.

Name of the statute Nature of dues Amount F.Y. Forum where dispute is pending
Income Tax Act, 1961 Assessment dues 1,96,01,345 201 1-12 Commissioner of Income Tax (Appeals) Aurangabad
Income Tax Act, 1961 Assessment dues 74,34,315 201 2-13 Commissioner of Income Tax (Appeals) Aurangabad
Income Tax Act, 1961 Assessment dues 49,75,050 201 3-14 Commissioner of Income Tax (Appeals) Aurangabad

(viii). In our opinion and according to the information and explanations given to us the company has defaulted in repayment of dues to the following parties:

Name of Financial institution/ Govt. Authority Amount defaulted as at the balance sheet date Period of default Remarks
Bank of Maharashtra
- Loan 10,74,60,840 Since 2014-15 Symbolic possession has been taken on mortgaged Asset.
- Overdraft 1,16,26,046.44 Since 2014-15 No information available, but treated as default since credit term expired.
Phoenix ARC Pvt. Ltd 17,38,46,368.44 Since 2012-13 Symbolic possession has been taken on mortgaged Asset
HDFC Bank Fixed Deposit
Overdraft 21,06,101.00 Since 2014-15 Receipt Assigned (Seized under MPID Act)
Overdraft 28,788.00 Since 2014-15 Seized by Sales Tax Department
ICICI Bank Fixed Deposit
- Overdraft 17,63,012.61 Since 2018 Receipt Assigned (Seized under MPID Act)
Sales Tax Deferment 2,54,188.02 Since 2004 Interest over and above this amount not paid nor provided.
Special Incentive 25,00,000.00 Since 2008 -

(ix). The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3 (ix) of the Order is not applicable.

(x). According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not paid/provided for any managerial remuneration.

(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) Subject to our comment in para m in Matters of concern- of Basis of qualified opinion and according to the information and explanations given to us and based on our examination of the records of the Company, the recorded transactions with the Director in earlier year were not pre-authorised but ratified in the subsequent audit committee meetings, that too, to the extent of Rs. 99.34 lakhs only as against total advance paid of Rs. 118.09 lakhs during that year. The transaction of swapping the directors advance to the holding company was also not pre-authorised but ratified by the Board of Directors. Thus, in our opinion, there was a contravention of provisions of Section 177 and 188 of the Act. During the year, the director has repaid the advance which has been recorded in the register. The applicable details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give 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) As mentioned in Footnote 8 of Note no. 4 Current Assets, as on 31st March 2020, the entire advance to the director has been swapped in the name of the Holding Company viz., Dhanada Holdings Private Limited which has been again re- transferred in the name of the director during the year, by a mere book entry. According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not, during the year, entered into any other non-cash transactions with directors or persons connected with him.

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

UDIN: 21035151AAAAAW2527
For Shashank Patki & Associates
Chartered Accountants
Firms registration number: 122054W
Shashank Patki
Partner
Membership number: 035151
Pune, 30th June 2021