Viceroy Hotels Ltd Directors Report.

To the Members of

M/s. VICEROY HOTELS LIMITED

Report on the Audit of Ind AS Standalone Financial Statements Qualified Opinion

We have audited the accompanying Ind AS Standalone Financial Statements of M/s VICEROY HOTELS LIMITED("the company"), which comprise the Balance Sheet as at 31st March, 2019, 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 then ended on that date and notes to 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 effects of the matter 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 conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("IndAS") and other accounting principles generally accepted in India, of the state of affairs of "the Company" as at March 31,2019, the Loss and total comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion:

We conducted our audit of the standalone financial statements 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 Standalone 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 standalone financial statements under the provisions of the Act and the Rules made there under, 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 qualified opinion on the standalone financial statements.

1. Qualified Opinion:

a) Capital Work In progress: The Company has converted capital work in progress into Fixed Assets during the F.Y 2017-18 of an amount of Rs.111.94 Crores. However the company has not submitted us any valuation certificate towards capitalization of fixed assets of Rs.111.94 crores, and the depreciation claimed by the company towards such capitalization of fixed assets for the F.Y 2017-18 is Rs. 358.34 Lakhs and for the F.Y 2018-19 Rs.599.98 Lakhs As we could not obtain sufficient audit evidence in this regard and the capitalization is not in compliance with the generally accepted accounting principles we are unable to comment upon the true and fair view of the same.

b) Forfeiture of advance: The Company has forfeited an advance of amounting to Rs.134.65 Croresreceived from Mahal Hotel Private Limited, Bhagyanagar Investments and trading private limited and Ganga Industrial Corporation Limited in the F.Y 2013-14 and adjusted in slump sale proceeds as disclosed in the annual report of F.Y 2013-14. In the financial year 2017-18 again the company has recognised the forfeited advances in the books of accounts as liability which is not in line with the IND AS accounting policies, also the management of the company has not provided us any supporting document towards re recognition of such advances as liability in the books of accounts in the F.Y 2017-18. As per the Business transfer agreement (BTA) entered between Viceroy Hotels Limited and Mahal Hotels Limited dated 02nd April, 2011, the company M/s Viceroy Hotels Ltd received an advance of Rs.124.52 Crores (Included in above said advance Rs.,134.65 Crores). The date of termination of the agreement is 31.12.2011. In the event of termination, the company is liable to repay the advance along with the interest @2% per month till the date of repayment.However no interest has been paid or provided by the company in its Books of Accounts since the termination of the agreement, which is not in line with the accounting principles. Hence we are unable to comment upon the true and fair view of the same.

c) Directorate of Enforcement: The Directorate of Enforcement made a Provisional Attachment Order in PAO No. 04/2019 dated 26.03.2019 passed by the Deputy Director, Directorate of Enforcement against the M/s Viceroy Hotels Limited of OC No.1118/2019 pending adjudication before the Honourable Adjudicating Authority, PMLA, 2002, from alienating the proceeds of crime in the form of movable and immovable properties which are involved in money laundering and the non-attachment may seriously affect and frustrate the proceedings under PMLA, 2002. The resolution professional has challenged the provisional attachment order of Enforcement Directorate, Chennai, before the Honble NCLT, Hyderabad on 08-04-2019. NCLT has raised the attachment of Enforcement Directorate, Chennai. Further proceedings are subject to the respective authorities.

d) NCLT: The Asset Reconstruction Company (India) Ltd (ARCIL) has filed plea under Sec.7 of The Insolvency and Bankruptcy code 2016 against M/s Viceroy Hotels Limited for non-payment of dues and the same has been accepted by the Honble NCLT. Further proceedings are subject to NCLT order. The Resolution Professional has invited Expression of Interest from the prospective bidders for submission of Resolution Plans for revival of the Company. In terms of provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) the resolution plan submitted by M/s CFM Asset Reconstruction Company Private Limited for M/s Viceroy Hotels Limited has been approved by the Committee of Creditors (COC) of the company in its 18th COC meeting and identified as a successful resolution applicant, subject to the approval of the Honble NCLT, Hyderabad bench.

e) Loans from Banks or Financial Institutions: During the current Financial Year, the company has not provided interest on the loans obtained from various Banks and financial Institutions which is not in accordance with generally accepted accounting principles. Confirmations from Banks/Financial Institutions are not yet received in this regard, due to the non-provision of interest in the financial statements; the financial statements may not give a true and fair view in this regard.

f) Statutory Dues: The Company has not paid the statutory dues for a period more than 6 months is as follows as per the Books and records verified by us as on 31-03-2019.

Particulars Amount ( Rs .)
1 TDS 3,31,29,274/- (F.Y 2013/14 - Rs.1,65,37,076/-, F.Y 2014/15 - Rs.1,33,91,164/-,
F.Y 2015/16 - Rs.17,47,280/-, F.Y 2016/17 - Rs.14,53,754/-)
Total 3,31,29,274/-

g) Non availability of confirmations Trade Receivables, Trade Payables - In the absence of alternative corroborative evidence, we unable to comment on the extent to which such balances are recoverable.

h) Exceptional items: The management decided to write off various assets, capital work in progress etc for an amount of Rs. 291.94 crores in the F.Y 2017-18 for which there is no provision has made for such amount up to F.Y 2016-17 .

i) In respect of investment in subsidiaries those have significant accumulated Losses as on March 31st 2019. And the Loans and advances given to those subsidiaries. The Management of the company is of the view that the 100 percent provision for made for Loss of such investments in the Profit & Loss account made during the F.y 2017-18 in the accompanying IND As financial statements. In the absence of fair valuation of those investments in the subsidiaries, we are unable to comment on the total provision made by the company in this regard.

j) Tax Disputes: the company has material tax disputes with the Income Tax department as given under as per the information submitted by the management in this regard. However the company has not made provision for such dues in the financial statements for the year ending 31-03-2019. As per the information submitted by the company to us the following are the cases pending at different levels.

Name of the Statue Nature of Dues Section under which order is passed Amount (Rs.) Period to which it relates Case is pending at
Income Tax Act, 1961 Income Tax 154 Rs.54,68,19,040/- AY 2014-15 Commissioner of Income Tax Appeals
Income Tax Act, 1961 Income Tax 143(3) Rs.8,30,89,950/- A.Y 2016-17 Commissioner of Income Tax (Appeals)

k) Going Concern The above conditions indicate the existence of material uncertainties which may cast significant doubt on the Companys abilities to continue as going concern. In the event that the going concern assumption of the company is inappropriate, adjustments will have to be made as not a going concern. However the financials has not been made with such adjustments for the F.Y 201819.

Key Audit Matters

Key audit matters are those matters that, on our professional judgment, we are 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 financial statements as a whole, and in forming opinion thereon and we do not provide a separate opinion on these matters.

Except for the matters discussed in the Basis of Qualified Opinion Paragraph, there are no Key audit matters to be discussed in the Auditors report.

Information Other than the Standalone Financial Statements and Auditors Report Thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexure to Boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the standalone financial statements 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 standalone financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Managements Responsibility for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of "the Act" with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows of the Company in accordance with the Ind AS and other accounting principles generally accepted in India, 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 the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors Responsibilities for the Audit of the Standalone Financial Statements

Our objective is to obtain reasonable assurance whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit 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 Standards on Auditing 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 our audit is conducted in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(If the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

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

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

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

• Obtain sufficient appropriate audit evidence regarding the financial information of the entity or business activities of the Company to express an opinion on the financial statements.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit 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 safe guards.

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

Report on Other Legal and Regulatory Requirements

1. 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.

2. As required by Section 143(3) of the Act, based on our audit we reportthat:

a) We have sought and obtained all the information and explanations which to thebestofourknowledgeand belief were necessary for the purposes of ouraudit except for the matters given in the qualified opinion paragraph.

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 thosebooks except for the matters described in the Basis of Qualified opinion paragraph.

c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the relevant books of account except for the matters specified in the Basis of Qualified opinion paragraph.

d) In our opinion, the aforesaid standalone financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,2014 except for the matter specified in basis for qualified opinion except for the matters specified in the Basis of Qualified Opinion Paragraph.

e) On the basis of the written representations received from the directors as on March 31,2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2019 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses amodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

g) 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. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements.(Note No: 35)

ii. The Company does 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.

For P C N & Associates,
Chartered Accountants,
Firm Registration No: 016016S
Place : Hyderabad
Date : 29-05-2019
Sd/-
Lakshmi Prasanthi.S
Partner
M.No:236578

ANNEXURE ‘A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements section of our report to the Members of VICEROY HOTELS LIMITED of even date)

i. In respect of the Companys fixed assets:

a) The Company has not produced Fixed Assets Register.

b) As per the information and explanations given by the management, the fixed assets have been physically verified by the management in a phased periodical manner. But as per the "Basis for Qualified opinion" given by us, there is capitalization of Rs. 111.94 crores in the FY 2017-18as we havent obtained any valuation certificate towards capitalization of fixed assets; we are unable to ascertain the verification of fixed assets by the management.

c) According to the information and explanation given to us and on verification of documents provided to us, we are of the opinion that the title deeds of immovable properties are held as per note no: 39 of the financial statements. Accordingly the title deeds are not on the Name of the company M/s Viceroy Hotels Limited

ii. As per the information and explanations given to us, and as per the books and records maintained by the company, the physical verification of inventory has been conducted at reasonable intervals by the management during the year and no material discrepancies were noticed on such verification.

iii. The company has not granted any loans secured, unsecured to companies, firms, limited liability partnerships, covered in the register maintained under section 189 of the Companies Act, 2013.

iv. In our opinion and according to the information and explanation provided to us, in respect to loans, investments, guarantees and securities, provisions of section 185 and 186 of the Companies Act, 2013 has been complied with.

v. The Company has not accepted any deposits during the year from the public within the meaning of the provisions of section 73 of "the Act" and hence directives issued by the reserve bank of India and the provisions of section 73 to 76 or any other relevant provisions of "the Act" the Rules framed there under are not applicable to the Company at present.

vi. The maintenance of cost records has not been specified by the Central Government under section 148(1) of the Companies Act, 2013 for business activities carried out by the Company. Thus reporting under clause 3(vi) of the order is not applicable to the company.

vii. 1. The Company is not regular in depositing TDS statutory dues with the appropriate authority. As at the end of the financial year the amounts which were due for more than 6 months from the date they became payable as per books and records of the company are as follows:

Particulars Am ount ( Rs . )
TDS 3,31,29,274/- (F.Y 2013/14 - Rs.1,65,37,076/-, F.Y 2014/15 - Rs.1,33,91,164/-, F.Y 2015/16 - Rs.17,47,280/-, F.Y 2016/17 - Rs.14,53,754/-)
Total 3,31,29,274/-

2. According to the information and explanations given to us, no disputed amounts are payable in respect of Income Tax and any other statutory dues as at the end of the period except for the below mentioned due to income tax, service tax,luxury tax as per the information and explanations given by the company and as per the books and records verified by us.

Name of the Statue Nature of Dues Section under which order is passed Amount (Rs.) Period to which it relates Case is pending at
Income Tax Act, 1961 Income Tax 154 Rs.54,68,19,040/- AY 2014-15 Commissioner of Income Tax Appeals
Income Tax Act, 1961 Income Tax 143(3) Rs.8,30,89,950/- A.Y 2016-17 Commissioner of Income Tax (Appeals)

Service Tax

SCN O.R. No. OIO/OIA No. and Date Period Demand (Rs.)
1 O.R. No.95/2012-Adjn (ST) (Commr) dt.23.04.2012 OIO No.HYD-EXCUS-000- COM-21-16-17 dt.25.05.2016 2006-07 to 2010-11 7,31,65,038/-
2 O.R.No. 54/2013-Adjn (ST) (Commr) dt.18.06.2013 OIO No.HYD-EXCUS-000- COM-22-16-17 dt.25.05.2016 April, 2011 to March, 2012 2,41,663/-
3 O.R.No. 84/2013-Adjn (ST) (Commr) dt.19.05.2014 OIO No.HYD-EXCUS-000- COM-23-16-17 dt.25.05.2016 April, 2012 to June, 2012 2,85,941/-
4 O.R.No. 164/2014-Adjn (ST) (Commr) dt.26.09.2014 OIO No.HYD-EXCUS-000- COM-24-16-17 dt.25.05.2016 July, 2012 to March, 2013 26,01,002/-
5 O.R.No. 45/2015-Adjn (ST) (Commr) dt.16.04.2015 OIO No.HYD-EXCUS-000- COM-25-16-17 dt.25.05.2016 April, 2013 to March, 2014 40,29,335/-
6 O.R.No. 73/2016-Adjn (ST) (JC) dt.30.08.2016 OIA No. HYD-SVTAX-000- AP2-0236-17-18 dt.24.11.2017 July, 2012 to March, 2015 13,14,253
7 O.R No.82/2016-Adjn ST Commr. Dt.22.04.16 OIO No.07/2017-ST dt.19.05.2017 April, 2014 to March, 2015 45,26,905/-
8 F.No.DRI/CZU/HRU/26B/ENQ- 08 (INT-7)/2014 dt.29.12.2016 OIO No.68847/2019 dt.15.05.2019 2012 to 2016 3,80,41,131/-
9 C.No.V/15/12/2018- Adjn dt.24.04.2018 OIA No. HYD-EXCUS-SC-AP2- 0125-18-19 ST dt.26.03.2019 April 2015 to March 2016 20,13,146/-
10 C.No.V/15/12/2018-Adjn dt.29.10.2018 OIO No.15/2018 dt.30.01.2019 April 2016 to June 2017 15,15,857/-
11 O.R.No.57/2018-19-GST- SEC-Adjn-JC dt.15.11.2018 October 2015 to June 2017 1,25,84,491/-

Luxury Tax/ Sales Tax

Arrear Notice issued by office of the Assistant Commissioner(ST) Gandhinagar Circle Hyd Period Demand issue Luxury Tax 50% Paid
1 15.02.2019 2011-12 795429/- Dispute of Levy of Luxury Tax on Service Tax 397715/-
2 15.02.2019 2012-13 10,77,592/- Dispute of Levy of Luxury Tax on Service Tax 5,38,796/-
3 15.02.2019 2013-14 7,58,952/- Dispute of Levy of Luxury Tax on Service Tax 3,79,476/-
4 15.02.2019 2010-11 to 2012-13 (upto 31.10.2012) 01.11.2012 to 30.09.2013 15,88,152/- Disputed arrears against completion of Revision of Assessment U/VAT Act -

viii.According to the information and explanations given to us and as the books and records produced by the company it has defaulted in repayment of dues to various banks and financial institutions which are as follows as on 31-03-2019 as per books and records verified by us . However the company has not made interest provision with regarding to those loans in the books of accounts from financial year 2012-13.

Amount in Crores (Rs.)

NAME OF THE BANK INSTITUTION PRINCIPLE DUE INTEREST DUE TOTAL DUES
ARCIL 131.68 91.79 223.47
IARC LTD 1.95 - 1.95
State Bank of India 56.18 50.55 106.73
Canara Bank 24.02 34.81 58.83
Total 213.83 177.15 390.98

We not yet received confirmations from Banks/ Financial institutions/Asset Reconstruction companies for the above outstanding balances. ix. The Company has not raised moneys by way of initial public offer or further public offer during the year under consideration (including debt instruments) and the loans defaulted by the company has been given in the Notes to accounts of the financial statements in Note no: 37 and the company is not providing interest in their books of accounts with respect those loans as such the qualification has been given in the Audit report in the Basis of qualified opinion paragraph. x.To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year.

xi.According to information and explanations given to us the company and verification of the records of the company, the company has provided and paid managerial remuneration during the year under consideration incompliance with the provisions of Section 197 of The companies Act 2013. xii.The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the Order is not applicable to the Company. xiii.In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 wherever applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards (Refer Note no. 38) xiv.During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly paid convertible debentures and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company. 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 persons connected to its directors and hence provisions of section 192 of “the Act” are not applicable to the Company. xvi.The Company is not required tobe registered under section 45-IA of the Reserve Bank of India Act, 1934.

For P C N & Associates,
Chartered Accountants,
Firm Registration No: 016016S
Place : Hyderabad
Date : 29-05-2019
Sd/-
Lakshmi Prasanthi.S
Partner
M.No:236578

ANNEXURE “B” TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 2(f) under ‘Report on Other Legal and Regulatory Requirements section of our report to the Members of VICEROY HOTELS 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 VICEROY HOTELS LIMITED (“the Company”) as of March 31, 2019 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 Companies Act,2013.

Auditors Responsibility

Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company 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”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section143(10)of the Companies Act,2013,to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for qualified opinion on the internal financial controls system over financial reporting 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 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 e 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.

Limitations of Internal Financial Controls over Financial Reporting

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

Basis of Qualified Opinion:

1. The company did not have appropriate internal controls for confirmation and reconciliation of trade receivables, trade payables, other current assets and current liabilities.

2. The company did not have fixed asset register as on 31.03.2019.

3. The company has written off various assets and liabilities as exceptional items during the F.Y 2017-18 due to which we couldnt get appropriate audit evidence in relation to such written off. As a result of these matters, we have not been able to obtain sufficient and appropriate audit evidence in relation to Internal Financial Controls over Financial Reporting and consequently we are unable to determine whether the company has established adequate internal financial controls over Financial Reporting and also whether such internal financial controls were operating effectively as at March 31st, 2019.

Qualified Opinion

In our opinion, as am result of the matters given in the Basis of Qualified opinion paragraph givenin the Audit report the company as we have not obtained sufficient appropriate audit evidence in respect of those matters specifies in the Basis of Qualified opinion paragraph we are unable to determine whether the company has established adequate internal financial controls over Financial Reporting and also whether such internal financial controls were operating effectively as at March 31st, 2019. Based internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute Of Chartered Accountants of India.

For P C N & Associates,
Chartered Accountants,
Firm Registration No: 016016S
Place : Hyderabad
Date : 29-05-2019
Sd/-
Lakshmi Prasanthi.S
Partner
M.No:236578