Vadilal Industries Ltd Directors Report.

To The Members of Vadilal Industries Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS Disclaimer of Opinion

We were engaged to audit the accompanying standalone financial statements of Vadilal Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2020, and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

We do not express an opinion on the accompanying standalone financial statements of the Company. Because of the significance of the matters discussed in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these standalone financial statements.

Basis for Disclaimer of Opinion

We refer to the following:

(a) Note 49 to the standalone financial statements, which describes various allegations and counter-allegations on financial, operational, and management matters between the Promoter Directors of the Company, between August, 2018, and July, 2019. The Promoter Directors have communicated to the Audit Committee and the Board of Directors of the Company, their withdrawal of all the allegations on July 22, 2019, except for the matters referred to in Note 50(A) and 50(B) of the standalone financial statements, which relate to the potential personal expenses amounting to INR 25.33 lakh and INR 23.00 lakh incurred by PD 2 and PD 1, respectively, claimed as business expenses over the past years.

(b) Note 40 to the standalone financial statements which refers to the status of on-going litigations filed against the Company and some of its promoters under Section 241 and 242 of the Companies Act, 2013, pertaining to prevention of oppression and mismanagement of the Company before the National Company Law Tribunal, Ahmedabad.

(c) Due to the possible effects of the matters described in paragraphs (a) and (b) above, we are unable to state whether the remuneration of INR 355.95 lakh and INR 363.23 lakh paid by the Company to its Promoter Directors during the financial year 201819 and 2019-20, respectively, is in accordance with the provisions of section 197 of the Companies Act, 2013, and consequential effect thereof on the accompanying standalone financial statements.

(d) The committee of independent directors has appointed an independent law firm and a chartered accountant to inquire/examine all the matters as referred to in Notes 49, 50(A), and 50(B), and advise the Board of Directors of the Company for further course of action.

Pending completion of the aforesaid inquiries/examination and resolution of the above matters, we are unable to determine if any adjustments are necessary to the aforesaid standalone financial statements on account of the aforesaid matters, any restatement of prior years including any consequential effect thereof.

Emphasis of Matter

(a) We draw attention to Note 45(5) of the standalone financial statements, which describes that the Managerial Remuneration payable to Managing Directors, is subject to approval of members.

(b) We draw attention to Note 52 of the standalone financial statements which describes the Managements evaluation of COVID-19 impact on the future performance of the Company.

Our opinion is not modified in respect of the above matters.

Management and Board of Directors Responsibilities for the Standalone Financial Statements

The Management and the Board of Directors of the Company are 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 including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Ind AS and the accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the management and the Board of Directors are responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our responsibility is to conduct an audit of entitys standalone financial statements in accordance with the standards on auditing and to issue an auditors report. However because of the matters described in the Basis for Disclaimer of Opinion section above, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these standalone financial statements.

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the standalone financial statements and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Other Matter

The standalone financial statements of the Company for the year ended March 31,2019 were audited by the predecessor auditor who expressed a Disclaimer of Opinion on those standalone financial statements on August 23, 2019. Our report on the standalone financial statements is not modified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by Section 143(1)(e), we report that in respect of the expenses stated in paragraph (a) of the Basis for Disclaimer of

Opinion section above, we are unable to comment on whether personal expenses have been charged to revenue account.

2. As required by the Companies (Auditors Report) Order, 2016 (the "Order") issued by the Central Government in terms of Section

143(11) of the Act, we give in "Annexure A", a statement on the matters specified in paragraphs 3 and 4 of the Order which is

subject to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above and the material

weakness described in the Basis for Disclaimer of Opinion in our separate Report on the Internal Controls over Financial Reporting.

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

(a) As described in the Basis for Disclaimer of Opinion section above, we have sought but were unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

(b) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above, we are unable to state whether proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

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

(d) Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion section above, we are unable to state whether the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act.

(e) The matter described in the Basis for Disclaimer of Opinion section above, in our opinion, 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 March 31,2020 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2020 from being appointed as a director in terms of Section 164(2) of the Act.

(g) The reservation relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Disclaimer of Opinion paragraph, read with paragraph 3(b) above.

(h) 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 Disclaimer of Opinion on the Companys internal financial controls over financial reporting for the reasons stated therein.

(i) 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, due to the possible effects of the matter described in paragraphs (a) & (b) in the Basis for Disclaimer of Opinion section above, we are unable to state whether the remuneration paid/provided by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

(j) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. Due to possible effect of matters described in the Basis of Opinion section above, we are unable to state whether the Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements.

ii. The Company has made provisions, required under applicable law or accounting standards for material foreseeable losses, if any on long term contracts including derivative contracts.

iii. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the company except for INR 0.15 lakh which is held in abeyance pending resolution of a legal dispute.

For Arpit Patel & Associates.
Chartered Accountants
[Firm Registration No : 144032W]
Arpit K. Patel
Partner
Place: Ahmedabad [Membership No.: 034032]
Date: June 26, 2020 UDIN: 20034032AAAABM2880

ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirements section of our report to the members of Vadilal

Industries Limited of even date)

The Annexure referred to in Independent Auditors Report to the members of the Company on the standalone financial statements for

the year ended March 31,2020.

We report that:

(i) (a) The Company has maintained proper records showing full particulars; including quantitative details and situation of fixed

assets.

(b) The Company has a regular program of physical verification of its fixed assets by which all fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, portion of the fixed assets were physically verified by the Management during the year. According to information and explanation given to us, no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed/transfer deed/conveyance deed provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date, except for the following:

Particulars of the land and building Gross Block (as at March 31, 2020) Net Block (as at March 31, 2020) Remarks (give reasons for the exception)
Freehold land located at Dwarka admeasuring 58,096 sq. mtrs. INR 338.44 lakh INR 338.44 lakh The title deeds are not readily available.
Freehold land located at Bareilly admeasuring 94 sq. yards INR 8.82 lakh INR 8.82 lakh The title deeds are not readily available.
House Building Located at Pushpak Bungalow, Ahmedabad admeasuring 200 sq. yards INR 13.39lakh INR 8.43 lakh The title deed is in dispute.
Residential Flat in Maruti Centre, Ahmedabad admeasuring carpet area 4750 sq. ft. INR 13.34 lakh INR 4.59 lakh The title deeds are not readily available.
Investment property located at Mahalaya Complex, Ahmedabad admeasuring 1360 sq. ft. INR 20.69 lakh INR 19.06 lakh The title deed is not yet in name of the Company

In respect of following immovable property of leasehold land and building, and disclosed as fixed asset in the standalone financial statements, final lease deed/sale agreement is yet to be executed in the name of the Company:

Particulars of the land and building Gross Block (as at March 31, 2020) Net Block (as at March 31, 2020)
Leasehold land admeasuring 7,825 sq. mtrs. and building constructed thereon located at Bareilly, Uttar Pradesh. INR 586.82 lakh INR 586.82 lakh

(ii) As explained to us, inventories have been physically verified at reasonable intervals by the management during the period. In our opinion, the frequency of such verification is reasonable. No material discrepancies were noticed during such verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013.

(iv) In our opinion and according to the information and explanations given to us, provisions of section 185 and 186 of the Act in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given, have been complied with by the Company, as applicable.

(v) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, as amended. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.

(vi) To the best of our knowledge and according to the information and explanations given to us, the Company is not required to maintain cost records pursuant to Companies (Cost Records and Audit) Rules, 2014, as amended, prescribed by the Central Government under section 148(1) of the Companies Act, 2013.

(vii) (a) According to the 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 undisputed statutory dues including provident

fund, employee state insurance, income-tax, goods and services tax and other material statutory dues have generally been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, goods and services tax and other material statutory dues were in arrears as at March 31,2020, for a period of more than six months from the date they became payable.

(b) According to the records of the Company, the dues of income tax, sales tax, duty of excise, value added tax, cess and goods and services tax which have not been deposited as on March 31,2020, on account of disputes are as follows:

Sr. No. Name of Statute Nature of Dues Forum where dispute is pending Period to which the amount relates Amount involved (In INR Lakh) Amount unpaid (In INR Lakh)
1 Central Sales Tax Act and Sales Tax Acts of various states Sales tax and penalty High Court 1998-99 39.07 23.24
Additional tax demand JT Comm S. Tax 2000-01 12.49 12.49
Sales tax demand DC, Appeal-4, Mehsana 2000-01 20.74 15.74
Sales tax demand Dy. Comm, S. Tax 2001-02 1.55 1.55
Sales tax demand Sales Tax Tribunal, Bhubaneshwar 2002-03 2.10 0.60
Sales tax asst. dues JC-1, Appeal, Ahmedabad 2003-04 2.39 2.39
Purchase tax JC-1, Appeal, Ahmedabad 2003-04 0.46 0.46
Sales tax Sales Tax Tribunal 2004-05 3.67 3.67
Sales tax and penalty Sales Tax Tribunal 2010-11 24.81 14.81
Sales tax JC-Corporate, Bareilly. 2010-11 8.02 7.25
Sales tax Addnl. Comm., Grade-2 Appeal, Bareilly. 2013-14 9.34 4.67
Sales tax Addnl. Comm., Grade-2 Appeal, Bareilly 2012-13 0.66 -
Sales tax Addnl. Comm., Grade-2 Appeal, Bareilly. 2017-18 0.25 -
Sales tax Addnl. Comm., Grade-2 Appeal, Bareilly 2015-16 3.83 1.25
Sales tax Addnl. Comm., Grade-2 Appeal, Raigadh 2014-15 14.62 13.97
Excise Act Excise duty Asst. Commissioner 1988-89 4.58 4.58
Excise duty Asst. Commissioner 2003-04 4.28 4.28
Excise duty Customs, Excise & Service Tax Appellate Tribunal 2011-12 to 2014-15 34.14 34.14
2 Income tax Income tax CIT(A) 2016-17 15.26 15.26
Income tax ITAT 1996-97 1.93 -

(viii) According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government as at the balance sheet date. The Company did not have any outstanding dues to debenture holders during the period.

(ix) In our opinion and according to the information and explanations given to us, money raised by way of term loans has been applied by the Company during the year for the purpose for which they were raised. The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments).

(x) Except for the possible effects of the matters described in the Basis for Disclaimer of Opinion section in our audit report on the standalone financial statements on which we are unable to comment, to the best of our knowledge and according to the information and explanation given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

(xi) Due to the possible effects of the matter described in paragraph (a) & (b) in the Basis for Disclaimer of Opinion section above, we are unable to state whether the remuneration paid by the Company to its promoter directors during the year is in accordance with the provisions of section 197 of the Act. Reference also invited to Note No. 45(5), which describes that the Managerial Remuneration payable to Managing Directors, is subject to approval of members.

(xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us, the Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Companies Act, 2013. The details of such related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standard.

(xiv) According to the records of the Company examined by us and the information and explanation given to us, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, provisions of clause 3(xiv) are not applicable to the Company.

(xv) Based on the examinations of the records and according to the information and explanations given by the management, during the year, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) According to the information and explanations given to us, the Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For Arpit Patel & Associates.
Chartered Accountants
[Firm Registration No : 144032W]
Arpit K. Patel
Partner
Place: Ahmedabad [Membership No.: 034032]
Date: June 26, 2020 UDIN: 20034032AAAABM2880

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 3(h) under Report on Other Legal and Regulatory Requirements section of our report to the members of Vadilal Industries Limited of even date)

Report on the Internal Financial Controls Over Financial Reporting 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 the Company as of March 31, 2020, in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management and Board of Directors Responsibility for Internal Financial Controls

The Management and the Board of Directors of the Company are 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 (the "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 respective 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 standalone financial statements based on our audit conducted in accordance with the Guidance Note on Audit of Internal Financial Control over Financial Reporting (the "Guidance Note") and the Standards on Auditing deemed to be prescribed under Section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI.

Because of the matters described in the Disclaimer of Opinion paragraph below, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on internal financial controls system with reference to standalone financial statements of the Company.

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 standalone 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 standalone financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations 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 standalone financial statements.

Disclaimer of Opinion

Due to the possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph in our main audit report, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion on whether the Company had adequate internal financial controls over financial reporting with reference to those standalone financial statements as at March 31, 2020 and whether such internal financial controls were operating effectively. Accordingly, we do not express an opinion on Internal Financial Controls Over Financial Reporting with reference to these standalone financial statements.

We were engaged to audit, in accordance with the Standards on Auditing issued by the ICAI, as specified under section 143(10) of the Act, the standalone financial statements of the Company, which comprise the Balance Sheet as at March 31,2020, and the related Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information. We have considered the disclaimer of opinion 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 financial year ended March 31,2020, and this report affects our report dated June 26, 2020, which expressed a disclaimer of opinion on those standalone financial statements.

For Arpit Patel & Associates.
Chartered Accountants
[Firm Registration No : 144032W]
Arpit K. Patel
Partner
Place: Ahmedabad [Membership No.: 034032]
Date: June 26, 2020 UDIN: 20034032AAAABM2880