CHD Developers Auditors Report


To the Members of CHD Developers Limited

Report on the Audit of Standalone Financial Statements

Qualified Opinion

We have audited the accompanying Standalone Financial Statements of CHD Developers Limited (the Company), which comprise the Balance Sheet as at 31st March 2022, the Statement of Profit and Loss (including other comprehensive income), statement of change of equity, and statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, except for the matters described in the Basis for Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (the Act) in the manner so required and give a true and fair view in the conformity with the accounting principles generally accepted in India including Indian Accounting Standards (Ind AS) specified under section - 133 of the Act, of the state of affairs of the Company as at 31st March, 2022, and its Loss and other comprehensive income, change in equity, and cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone 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 Standalone 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 standalone Ind AS financial statements

a. Statutory Dues that include TDS Payable (i.e., TDS deducted but not deposited) amounting to Rs. 84.65 lakhs and PF Payable amounting Rs. 9.55 RCM of Rs.6.60 Lakh for GST are not booked in account and Liability for the same not Discharged. The effect on the financial position of the Company due to penalties for non- compliance has not considered. Further Company has not filed various return of GST, ESI and PF act for the said period and liability for the same not discharge.

b. Assessment of litigations (Including RERA Act 2016) and related disclosure & provisions of contingent liabilities-As at March 31, 2022, the Company has ongoing litigations with various authorities and third parties, which could have an impact on the results, if the potential exposures would be, materialize. Claims against the Company not acknowledged as debts are disclosed and provisions are not recognized in the standalone financial statements by the Company after a careful evaluation of the facts and legal aspects of the matters involved. This area was significant to our audit because the outcome of such litigation is uncertain and the position taken by Management involves significant judgment and estimation to determine the likelihood and/or timing of cash outflows and the interpretation of preliminary and pending court rulings. Our focus was on assessing the appropriateness of judgments, estimates, provisioning and disclosures of litigations and contingent liabilities.

Our procedures as mentioned above did not identify any findings that are significant for the financial statements as whole in respect of appropriateness of judgments, estimates, provisioning and disclosures of litigations and contingent liabilities because all the matter are base on outcome of l itigations.

c. 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 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 Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

d. As required by SEBI regulations, the Company is under process for compliance with the stock exchange. At present , the company status is suspended due to penal reasons with SEBI. The penalties and fine for the non-compliance cannot be ascertained and commented upon. Further, company act 2013 compliance for annual filling and AGM has been delay. Liability for the same is uncertain.

Key Audit 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 standalone 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 standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying standalone Ind AS financial statements.

Key Audit Matters

How our Audit addressed the Key Audit Matters

1

As at March 31, 2022, the Company has Bank and Financial Institutions borrowings amounting to Rs. 23,454.72 lakhs. These borrowings are key source of funds taken to finance Its various real estate development projects as well as for general corporate purpose. We consider compliance with repayment terms of borrowings as a key audit matter as this is a key consideration for appropriate classification of loan balances and relevant disclosures thereon in the standalone financial statements. Further, compliance with repayment terms is part of managements assessment of evaluating its gearing and liquidity profile.

Our procedures in relation to compliance with repayment terms of borrowings Include, among others, the following: -

i. Obtained an understanding of the process and testing the internal controls over timely repayment of borrowings and deposits but it is pertinent to note that since Oct-2019 soon after NCLT Order reserved on 24-Sep-2019. As per management confirmation, NCLT order is on hold as on audit report date. The interest, late payment fees or penalties for default chargeable by concerned authorities are not ascertainable.

ii. We tested the repayments of borrowings for a sample of transactions by reading the underlying contracts for repayments schedules, comparing the actual cash flows with the repayment schedules and tracing the amounts paid as per books of account to the bank statements of the Company. However, we noted that the Company defaulted in payment and repayment obligation.

iii.We assessed the maturity profile of the borrowings to evaluate the classification and disclosure of borrowings on test check basis.

Further, The Company has not repaid matured public deposits of Rs. 3,352.17 lakhs and interest on public deposits including during the year.

iv.ln addition to the above regarding public deposits, the Company has also approached Honble National Company law Tribunal to grant extension of time in respect of repayment of the fixed deposits in terms of acceptance of deposit and by operation of law provided under Section 74 (l)(b) of the Company Act 2013.

2

As at March 31, 2022, the carrying values of Companys investment in subsidiaries and associate entities amounted to Rs. 5,354.24lakhs.

Our procedures in assessing the impairment of the Loans and Advances included, among other, the following: -

i. We read and evaluated the accounting policies with respect to investments.

ii. We examined the management assessment in determining whether any impairment indicators exist.

Further, the Company has granted loans and advances to its subsidiaries and associates amounting Rs 3,921.51 lakhs. Management reviews on a oeriodical basis whether

III. We assessed the Companys methodology applied in assessing the carrying value under the relevant accounting standards,

Iv. We assessed the Companys valuation methodology and assumptions based on current economic and market conditions including effects of Covid-19 pandemic in determining the

there are any indicators of impairment of such investments and loans and advances.

recoverable amount.

v. We compared the recoverable amount of the investment to the carrying value in books.

vi. It is noted that, as referred in the note no. 33 of the accompanying financial statements the Company is carrying Loans & Advances receivable of Rs 4065.16 lakhs from (name of the parties along with amount). Currently all these receivables are under litigations as tabulated above and the company foresees remote chances of recovery from the above, accordingly based on the conservative approach, the board of directors of the company has taken the decision to create the provision for the said receivables pertaining to Loans & Advances. We have determined this matter and we have unqualified opinion in this regard. Management presentation in this regar s been taken from company.

For cases where impairment indicators exist, management estimates the recoverable amounts of the Loans and Advances, being higher of fair value less costs of disposal and value in use.

Significant judgments are required to determine the key assumptions used in determination of fair value / value in use.

As the impairment assessment involves significant assumptions and judgment, we regard this as a key audit matter.

Our audit procedures to assess the going concern of the Company in view of the liquidity issues being faced by the Company included the following: i. inquire of management as to its knowledge of events or conditions and related business risks beyond the period of assessment used by management that may cast doubt on the entitys ability to meet its financial commitments continue as a going concern. ii. Analysis and discussion of cash flow, profit, and other relevant forecasts with management. iii. Obtaining written representation from management concerning plans for future action whose outcome is expected to mitigate the situation.

3

i. The negative operating cash flows in the last two financial years amounting Rs 259.37 lakhs for FY 2020-21, Rs 377.16 lakhs for the FY 2021-22. However, the accumulated losses do not exceed the share capital and free reserves of the Company, jj Due to recession in the industry, the Company continues to face liquidity issues due to multiple repayment and statutory obligations.

iii The home buyers have filed complaint against defaults by the company in "National Company Law Tribunal (the Tribunal^ ID?.

order is reserved by the Tribunal on 24-Sep-2019 initially and further again on 01-Mar-2021. The performance and financial position of the Company, over the foreseeable future is dependent on the outcome of the order of the Tribunal.

These events or conditions indicate that there are conditions existing that may have some impact on the Companys ability to continue as a going concern. In view of management facing liquidity issues the management has taken various initiatives to revive their liquidity position and in view of its confidence in achieving these initiatives the accounts have been prepared on the same accounting assumptions.

The management of the company has taken various initiatives, and in view of its confidence in achieving these initiatives, the management has assessed that the going concern assumption is appropriate in the preparation of the standalone financial statements of the Company for the year ended March 31, 2022. Our opinion is not modified in respect of this matter.

4.

Confirmation of Accounts of various Trade receivable, payable and various Deposits and amount payable

Some of Accounts are subject to Confirmation.

All the relevant key audit matters are already described in the Basis of Qualified Opinion section of our report.

Information Other Than Standalone Financial Statements and Auditors Report Thereon

The Companys management and Board of Directors are responsible for the preparation of the other information. The other information comprises of the information included in the Management Discussion and Analysis, Board Report including Annexure therein, Performance Review and Corporate Governance, but does not include the standalone financial statement and our auditors report thereon. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of audit or otherwise appear to be materially misstated. If, based on the work we have performed, we conclude that there may be some material misstatement of this other information; we are required to report the fact. We have nothing to report in this regard subject to above qualified opinion.

Responsibilities of Management and Those Charged with Governance 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 Standalone 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 Indian Accounting Standards (Ind AS) 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 statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are 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 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 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 standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditors report.

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.

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2021 ("the Order"), as amended, issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure- I" a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a) We have 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 and the Statement of Profit and Loss (including other comprehensive income), statement of changes in equity ,and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards (Ind AS) specified under section 133 of the Act, read with Rule 7 of Companies (Accounts) Rules, 2014;

e) The matters described in the Basis for Qualified Opinion paragraph may have an adverse effect on the functioning of the Company;

f) On the basis of the written representations received from the directors as on 31st March, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2022 from being appointed as a director in terms of Section 164 (2) of the Act.

g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in "Annexure- II".

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. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements Except the Company has pending litigations and suits liled against the company and its directors before RERA Authority, various courts and authorities, which may impact its financial position

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

3. In our opinion, the managerial remuneration has not book in accounts for the year ended March 31, 2022 and has no amount required to be paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act. The provisions of Section 197 read with Schedule V to the Act are not applicable to M/S CHD Developers limited during the reporting period.

For KPSK & ASSOCIATES

Chartemd-Accountants

UDIN:

Place: New Delhi

Dated: 04.07.2022

"ANNEXURE -1" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements section

of our report of even date)

On the basis of information and explanations given to us during the course of audit, we

report that

i) In respect of Fixed Assets:

a) The Company has not maintained proper records showing full particulars, including quantitative details, the situation of fixed assets also not proper.

b) The Company has not made program of verification to cover all the items of fixed assets in a phased manner and no such report is provided to us.

c) The records for immovable properties of Land and Building are not provided to us. So, the nature of tittle deeds of immovable properties cannot be comment upon.

d) The Company has not revalued its Property, Plant and Equipment (including Right of use assets) or intangible assets during the year ended March 31, 2022.

ii) The inventory has been physically verified by the management during the year except for inventories lying with third parties. However, in respect of certain items, the inventories were verified by the management on a visual estimation which has been relied upon by us. In our opinion, the frequency of verification by the management is reasonable and the coverage and procedure for such verification is appropriate, and discrepancies of 20% or more in aggregate for each class of inventory were not noticed in respect of such confirmations. Discrepancies of 20% or more in aggregate for each class of inventory have not been noticed, verification.

The Company has not been sanctioned working capital limits in excess of ^ 5 Crore, in aggregate, at any points of time during the year, from banks or financial institutions on the basis of security of current assets and hence reporting under clause 3(ii)(b) of the Order is not applicable.

iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnership or to other parties during the year covered in the register maintained under section 189 of the Act. Therefore, clause (iii) of the Order is not applicable to the Company.

iv) According to the explanation and information furnished to us, the company had complied with -the provisions of section 185 and 186 of the Act. During the current year, the company has not provided any additional corporate guarantees and securities. It is noted that, as referred in the note no. 33 of the accompanying financial statements the Company is carrying Loans & Advances receivable of Rs 4065.16 lakhs from (name of the parties along with amount). Currently all these receivables are under litigations as tabulated above and the company foresees remote chances of recovery from the above, accordingly based on the conservative approach, the board of directors of the company has taken the decision to create the provision for the said receivables pertaining to Loans &^Adva^s. we have

determined this matter and we have unqualified opinion in this regard. Management presentation in this regard has been taken from company.

v) The Company has not complied with the provisions of Section 73 to 76 and rules framed there under companies (Acceptance of Deposits) Rules, 2014 to the extant notified, since no repayment was made for the matured deposit and interest during the year.

vi) We have not reviewed the books of accounts maintained by the company pursuant to the rules maintained by the Central Government for the maintenance of cost records under Section 148(1) of the Companies Act, 2013 related to construction activities since the same has not been provided to us.

vii) In respect of statutory dues:

a) According to information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/ accrued in the books of account in respect of statutory dues including provident fund, employees state insurance, GST, indirect taxes and other material statutory dues were not complied with during the year by the company with the appropriate authorities. And Amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Tax deducted at source, Goods and service tax, professional tax and tax collection at source have not been deposited with the appropriate authorities and dues were arrears for a period of more than six months from the date they became payable are mentioned below:

Nature of Statutory Due

Amount outstanding (in lakhs)

Provident Fund

9.55

Employees State Insurance

0.11

TDS

84.65

b) The details of dues of income tax or goods and services tax or duty of customs or duty of excise or value added tax or cess, which have not been deposited on account of any dispute are given below:

Name of the Act

Nature of Dues

Amount in Lakhs

Related Period

Forum where dispute is pending

Income Tax Act, 1961

Income Tax and Interest thereon

2,704.17

FY 2012-13

CIT(A)

Income Tax Act, 1961

Income Tax and Interest thereon

48.09

FY 2016-17

CIT (A)

Income Tax Act, 1961

Income Tax excluding Interest

1,500.00

FY 2013-14

CIT (A)

viii) There were no transactions relating to previously unrecorded income that have been surrendered or disclosed as income during the year In the tax assessments under the Income Tax Act, 1961 (43 of 1961).

jx) The Company has not made periodic repayment against the loans or borrowings taken from banks or financial institutions or government and debenture holders during the year, as mentioned in the Basis of Qualified Opinion section of the main report.

x) (a) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments) during the year and hence reporting under clause 3(x)(a) of the Order is not applicable.

(b) During the year, the Company has not made any preferential allotment or private placement of shares or convertible debentures (fully or partly or optionally) and hence reporting under clause 3(x)(b) of the Order is not applicable.

xi) (a) Based upon the information and explanations given by the management, we have not noted any instance of fraud by the Company or on the Company by its officers or employees during the year.

(b) No report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and upto the date of this report.

(c) No whistle-blower complaints was received till the date of this report, and hence reporting under clause 3 (xi) (c) is not applicable.

xii) The Company is not a Nidhi Company as per the Nidhi Rules, 2014. Accordingly, the provision of the paragraph 3 clause (xii) of the order are not applicable.

xiii) According to information and explanations given to us and on the basis of our examination of the books of accounts, and records, all transactions with them related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the Standalone Financial Statements as required by the applicable Ind AS.

xiv) (a) In our opinion the Company has an adequate internal audit system commensurate with the size and the nature of its business.

(b) We have considered the internal audit reports of the company issued till date, for the period under audit.

xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or directors of its holding, subsidiary or associate company or persons connected with them and hence provisions of section 192 of the Companies Act, 2013 are not applicable.

xvi) (a) The company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934 and accordingly, the provisions of clause 3 (xvi) of the CARO 2020 is not applicable to the Company.

(b) The company has not conducted any Non-Banking Financial or Housing Finance activities without a valid Certificate of Registration (CoR) from the Reserve Bank of India as per the Reserve Bank of India Act, 1934;

(c) The company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India

(d) The Company is not in a Group so there is no other CIC as part of the Group.

xvii) The Company has incurred cash losses in the financial year and the immediately preceding financial year.

xviii) During the year, previous statutory auditors have continued. No such resignation has been given by auditor.

xix) On the basis of the financial ratios, ageing and expected dates of realisation 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, our attention is on the point as mentioned below:

The home buyer has filed complaint against defaults by the company in "National company Law Tribunal" ("the Tribunal"). The order is reserved by the tribunal on 24- sept-2019 initial and further again on 01-mar-201. The Performance and financial position of the company, over the foreseeable further is dependent on the outcome of the order of the tribunal 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 future viability of the company. We further state that our reporting is based on the facts upto 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) a) There are no unspent amounts towards Corporate Social Responsibility (CSR) on other than ongoing projects requiring a transfer to a Fund specified in Schedule VII to the Companies Act in compliance with second proviso to sub-section (5) of Section 135 of the said Act. Accordingly, reporting under clause 3(xx)(a) of the Order is not applicable for the year.

b) There are some unspent amounts towards Corporate Social Responsibility (CSR) on any remaining unspent under sub-section (5) of section 135 of the Companies Act, pursuant to any ongoing project, has not been transferred to special account in compliance with the provision of subsection (6) of section 135 of t

xxi) Qualification or adverse auditor remarks in other group Companies (as per Annexure).

For KPSK & Associates. Chartered Accountants FRN -025420N

UDIN: Place: New Delhi Dated: 04.07.2022

Kumar Partner M. No.-526235

"ANNEXURE - II TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 2 (f) under Report on Other Legal and Regulatory Requirements

section of our report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

Opinion

We have audited the internal financial controls over financial reporting of CHD Developers Limited ("the Company") as of 31st March, 2022 in conjunction with our audit of the Financial Statements of the Company for the year ended on that date.

Except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph in our main audit report, in our opinion, the Company has an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March, 2022, 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.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal controls 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. 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 requlremj^jand plan and perform the audit to obtain reasonable assurance about whether ade^^m^af,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 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.

For KPSK & Associates ^-Chartered Accountants FRN 025420N

UDIN: Place: New Delhi Dated: 04.07.2022

Pradeep Kuhttat^fier) M.No. 526235