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Arshiya Ltd.

BSE: 506074 Sector: Others
NSE: ARSHIYA ISIN Code: INE968D01022
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OPEN 21.65
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VOLUME 42468
52-Week high 39.44
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Mkt Cap.(Rs cr) 547
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OPEN 21.65
CLOSE 22.20
VOLUME 42468
52-Week high 39.44
52-Week low 18.85
P/E
Mkt Cap.(Rs cr) 547
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Arshiya Ltd. (ARSHIYA) - Auditors Report

Company auditors report

To the Members of Arshiya Limited

Report on the Audit of Standalone FinancialStatements

Qualified Opinion

1. We have audited the accompanying Standalone Financial Statements ofArshiya Limited (‘the Company') which comprise the Balance Sheet as at 31stMarch 2021 the Statement of Profit and Loss (including Other Comprehensive Income) theCash Flow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.(hereinafter referred to as "the Financial Statements")

In our opinion and to the best of our information and according to theexplanations given to us except for the effects of the matter described in the Basisfor Qualified Opinion section of our report the aforesaid financial statementsgive the information required by the Act in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in Indiaincluding Ind AS specified under Section 133 of the Act of the financial position of theCompany as at 31st March 2021 and its financial performance including other comprehensiveincome its cash flows and the changes in equity for the year ended on that date.

Basis for Qualified Opinion

2. As mentioned in the Note No. 43 to the FinancialStatement the Company has provided penal interest at 8% on borrowing from EdelweissAssets Reconstruction Company Limited (EARC) as against the documented rate of 18%.Interest provisions in earlier period / years were accounted based on the confirmationsreceived from EARC. It has resulted in the short provision of interest amounting to Rs.2198.74 Lakh till the year ended 31st March 2020 and for the year ended 31st March 2021amounting to Rs. 1301.46 Lakh which is not in compliance with Ind AS-23 "BorrowingCost" read with Ind AS-109 "Financial Instruments". In aggregate interestprovisions are lower by Rs. 3500.20 Lakh till 31st March 2021. Had interest beenrecognised at its documented rate finance cost for the year ended 31st March 2021 andearlier years would have been higher and net profit after tax for the year and totalcomprehensive income would have been lower by equivalent amount having consequentialimpact on other equity.

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013 our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities forthe Audit of the Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

3. Material uncertainty related to goingconcern:-

We draw attention to the Note no. 47 of the Financial Statements theCompany is unable to pay it's dues to operational and financial creditors the Company hasdefaulted in repayment of dues to lenders and started recovery proceeding the Company hasgiven guarantees for loan taken by the subsidiaries out of which guarantees are invoked bytwo lenders some of the lenders have even called back their loans current liabilitiesexceeded its current assets of the Company lenders have applied before NCLT underInsolvency and Bankruptcy Code 2016 and the Company have accumulated losses as at 31stMarch 2021. These matters including other matters as set out in the notes indicate that amaterial uncertainty exists that may cast significant doubt about its ability to continueas a going concern. The management s plans as a developer of the business indicate thatmonetization will happen periodically and staggered but significant payments will bereceived to streamline the cash flows. These along with other developments in the sectorare detailed in the notes. The said assumption of going concern is dependent uponCompany's plan to monetize its assets in timely manner and generate cash flows to meet itsobligations. Our opinion is not modified in respect of the said matter.

4. Emphasis of Matters

4.1 We draw attention to the Note no. 51 to the Financial Statementsregarding invocation of corporate guarantee by the Company to lenders of Arshiya NorthernFTWZ Limited (ANFTWZ). The Company carried out the fair valuation of above guaranteethrough an independent Chartered Accountants firm and as per their report the value ofassets in favor of lenders of ANFTWZ is higher than the total liabilities to them.Accordingly no provision against the claims under the invoked corporate guarantee isconsidered necessary by the management.

4.2 We draw attention to the Note no. 57 (b) to the FinancialStatements regarding Company's non-current investment in Arshiya Northern FTWZ Limited(ANFTWZ) and its loans dues amounting to ' 45322.25 Lakh and '14688.48 Lakh respectively. The operations of ANFTWZ are dependent on business plans andvarious steps taken by the management. Based on this and other factors stated in aforesaidnote management has considered that no adjustment at this stage are required to be madeto the carrying value of investment and receivables as at 31st March 2021.

4.3 We draw attention to the note no. 41 and 42 of the FinancialStatements pending execution of restructuring agreement for assignment of its debt toEdelweiss Asset Reconstruction Company (EARC) the Company has continued to provide normalinterest for the year ended 31st March 2021 in line with major terms negotiated with EARCin case of other agreements. In view of the management no penal interest needs to beprovided for the above said debt presently.

4.4 We draw attention to the Note No. 75 during the course ofpreparation of standalone financial statements for the year ended 31st March 2021 e-mailshave been sent to lenders by the Company with a request to confirm their balances directlyto us. As at 31st March 2021 direct balance confirmations of total borrowings includinginterest accrued (including current maturities and current borrowings) aggregating to '118269.24 Lakh have not been received. Out of these the Company has received statements /confirmations amounting to ' 101115.89 Lakh which have been provided to us.The management is confident and is of view that there will not be any material variationin its liabilities.

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

5. Key Audit Matter

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current yearended 31st March 2021. These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. In addition to the matters described in the Basisfor Qualified Opinion and Material Uncertainty Related to Going Concern sectionwe have determined the matters described below to be key audit matters to be communicatedin our report.

Key Audit Matters How Our Audit Addressed The Key Audit matter
1. Litigations matters and contingent liabilities
The Company is subject to number of significant litigations. In such litigation matters certain lenders and creditors have filed winding up petitions/cases/other legal proceedings against the Company and its Directors for recovery of the amounts due to them which are at different stages before the respective judicial forums/authorities. The financial implication of such claims will be disclosed and recognized as and when finality in the matter is reached. Our audit procedures included the following
The amounts of litigations may be significant and estimates of the amounts of provisions or contingent liabilities are subject to significant management judgment. [Refer note no. 40 and 48]. • Assessing the procedures implemented by the Company to identify and gather the risks it is exposed to.
Due to complexity involved in these litigation matters management's judgment regarding recognition and measurement of provisions for these legal proceedings is inherently uncertain and might change over time as the outcomes of the legal cases are determined and it has been considered as a key audit matter. • Discussion with the management on the development in theses litigations during the year ended 31st March 2021.
• Obtaining an understanding of the risk analysis performed by the Company with the relating supporting documentation.
• Verification that the accounting and / or disclosures as the case may be in the standalone financial statements is in accordance with the assessment of management.
• Obtaining representation letter from the management on the assessment of those matters as per SA 580 (revised) - written representations.

6. Information Other than the Financial Statements and Auditor's ReportThereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises in the Annual Report (but does not includethe financial statements and our auditor's report thereon) which is expected to bemade available to us after that date.

Our opinion on the financial statements does not cover the otherinformation and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements ourresponsibility is to read the other information identified above and in doing soconsider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

7. Responsibilities of Management and thosecharged with Governance for the Financial Statements

The Company's Board of Directors is responsible for the matters statedin Section 134(5) of the Companies Act 2013 ('the Act) with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards ('Ind AS') prescribed under Section 133of the Act read with relevant rules issued there under. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

That Board of Directors is also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibility for the Audit of theFinancial Statements

Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these financial statements.

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

• Identify and assess the risks of material misstatement of thefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls with reference tostandalone financial statements in place and the operating effectiveness of such controls.

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

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the financialstatements of the year ended 31st March 2021 and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 issuedby the Central Government of India in terms of sub-section (11) of section 143 of the Act("the Order") and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationsgiven to us we give in the “Annexure A” a statement on the mattersspecified in paragraphs 3 and 4 of the Order.

2. Further to our comment in the Annexure A as required by Section 143(3) of the Act we report that:

a. We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

b. Except for the possible effects of the matters described in theBasis for Qualified Opinion paragraph above in our opinion proper books ofaccount as required by law have been kept by the Company so far as it appears from ourexamination of those books;

c. The Balance Sheet the Statement of Profit and Loss (including othercomprehensive income) the Cash Flow Statement and the Statement of Changes in Equitydealt with by this report are in agreement with the books of account;

d. Except for the possible effects of the matters described in theBasis for Qualified Opinion paragraph above in our opinion the aforesaidfinancial statements comply with Ind AS prescribed under Section 133 of the Act read withrelevant rules there under;

e. On the basis of the written representations received from thedirectors of the Company as on 31st March 2021 and taken on record by the Board ofDirectors we report that none of the directors is disqualified as on 31st March 2021from being appointed as a director in terms of Section 164(2) of the Act;

f. The matters described in paragraphs above in 3 under the MaterialUncertainty Related to Going Concern in our opinion may have an adverse effect on thefunctioning of the Company;

g. With respect to the adequacy of the internal financial controls withreference to the standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in “Annexure B”;

h. The qualifications relating to the maintenance of accounts and othermatters connected therewith are as stated in the Basis for Qualified Opinion paragraphabove;

i. In our opinion and to the best of our information and according tothe explanations given to us no remuneration is paid by the Company to its directorsduring the year hence the provisions of section 197 of the Act is not applicable;

j. With respect to the other matters to be included in the Auditor'sreport in accordance with Rule 11 of the Companies (Audit and Auditor's) Rules 2014in our opinion and to the best of our information and according to the explanations givento us:

i. The Company as detailed in Note no. 40 and 48 to the financialstatements have disclosed the impact of pending litigations on its financial position.

ii. The Company does not have any long term contracts includingderivative contracts and hence there are no material foreseeable losses.

iii. There has been no delay in transferring amount which was requiredto be transferred to the Investor Education and Protection Fund by the Company.

For Chaturvedi & Shah LLP Chartered Accountants
Registration No. 101720W/ W100355
Vijay Napawaliya Partner
Membership No. 109859
UDIN : 21109859AAAACZ3105
Place: Mumbai
Date: 30th June 2021

"Annexure A” to the Independent Auditors' Report

(Referred to in paragraph 1 under the heading"Report on Other Legal and Regulatory Requirements” of our report of even date to the members of the Arshiya Limited on the standalone financial statements forthe year ended 31st March 2021)

(i) In respect of property plant and equipment :-

(a) The Company has maintained proper records showing full particularsincluding quantitative details and situation of the property plant and equipment.

(b) As explained to us the Company has physically verified propertyplant and equipment in accordance with a phased program of verification which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. No material discrepancies were noticed on such physical verification as comparedwith the available records.

(c) In our opinion and according to information and explanation givento us and on the basis of our examination of available records of the Company the titledeeds of immovable properties are held in the name of the Company.

(ii) The Company is engaged in the business and development of FreeTrade and Warehousing Zone (FTWZ) and Domestic Warehousing and the Company has inventoryrepresented by freehold land for the business purpose. In our opinion management hasconducted physical verification of inventory at reasonable intervals and no materialdiscrepancies were noticed on the aforesaid verification.

(iii) In respect of unsecured loans granted by the Company tocompanies firms Limited liability partnerships or other parties covered in the registermaintained under section 189 of the Act. According to the information and explanationsgiven to us:

(a) In our opinion and according to the information and explanationsprovided to us the terms and conditions of the grant of such loans are prima facie notprejudicial to the Company's interest.

(b) The schedule of repayment of principal and payment of interest hasbeen stipulated for the loans granted and the repayment/ receipts are regular asapplicable. This loan has fallen due during the year has been extended.

(c) There are no overdue amounts as at the year-end in respect of bothprincipal and interest as applicable.

(iv) In our opinion and according to the information and explanationsprovided to us provisions of section 185 and 186 of the Companies Act 2013 in respect ofloans investments guarantees and security as applicable have been complied with.

(v) The Company has not accepted any deposits from the public withinthe meaning of Sections 73 to 76 of the Act and the Rules framed there under to the extentnotified. During the year no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any court or any other Tribunal.

(vi) Pursuant to the rules made by the Central Government of India theCompany is required to maintain cost records as specified under Section 148(1) of the Actin respect of services rendered. We have broadly reviewed the same and are of the opinionthat prima facie the prescribed accounts and records have been made and maintained. Wehave not however made a detailed examination of the records with a view to determinewhether they are accurate or complete.

(vii) (a) According to the records of the company and information andexplanations given to us the Company has generally been regular except slight delays infew cases in depositing undisputed statutory dues including provident fundemployees' state insurance income tax duty of customs goods and service tax cessand any other statutory dues to the appropriate authorities as applicable during the year.According to the information and explanations given to us no undisputed amounts payablein respect of such statutory dues were outstanding as at 31st March 2021 for a period ofmore than six months from the date they became payable except Tax deducted at Source to Rs.1009.20Lakh and interest on tax deducted at source amounting to Rs. 908.61 Lakh.

(b) According to the information and explanations given to us and therecords of the Company examined by us there are no dues of income-tax sales-taxservice-tax duty of customs duty of excise value added tax and goods and service taxwhich have not been deposited on account of any dispute except as mentioned below:-

(Rs. in Lakh)

Name of the Statute Nature of Dues Amount Disputed (Net of TDS and Advance tax Paid) Period to which Dispute Relates Forum where Dispute is Pending
Income Tax Act 1961 Income Tax 8444.43 Assessment year 20092010 to 2016-2017 Income Tax Appellate Tribunal & Bombay High Court
Service Tax Act 1994 Service Tax 62.68 Financial Year 2013-2014 Central Excise and Service Tax Appellate Tribunal (CESTAT)
Total 8507.11

(viii) According to the records of the Company examined by us and theinformation and explanation given to us the Company has not defaulted in repayment ofloans or borrowings to any financial institution or bank as at balance sheet date exceptas mentioned below. There are no dues to debenture holders and government as at thebalance sheet date.

Defaults in respect of bank and financialinstitutions are as under :-

(Rs. in Lakh)

Particulars

Amount of continuing default as on 31st March 2021*

Period of Default
Principal Interest
Edelweiss Asset Reconstruction Company Limited - various trust 5671.09 22542.59 Financial year 2017-2018 2018-2019 2019-20 and 2020-21
Edelweiss Asset Reconstruction Company Limited-SC 162 3433.00 - Financial year 2018-2019 2019-20 and 2020-21
Edelweiss Asset Reconstruction Company Limited (Short term priority loans) 8474.05 1722.93 Financial year 2018-2019 2019-20 and 2020-21
Axis Bank 1463.41 664.25 Financial year 2017-2018 2018-19 2019-20 and 2020-21
SREI Equipment finance Ltd. 545.11 135.13 Financial year 2018-2019 2019-20 and 2020-21
IDFC FIRST Bank Ltd. 3674.30 1668.68 Financial year 2018-2019 2019-20 and 2020-21
ECL Finance Limited 2100.00 911.61 Financial Year 2018-19 2019-20 and 2020-21
Total 25360.96 27645.19

*The above does not include borrowing assigned by lenders to EdelweissAsset Reconstruction Company Limited pending restructuring agreement.

(ix) According to the information and explanations given to us duringthe year the Company did not raise any moneys by way of term loans initial public offerand further public offer (including debt instruments).

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

(xi) In our opinion and according to the information and explanationsgiven to us the Company has not paid or provided managerial remuneration during the year.

(xii) As the Company is not a Nidhi Company and the Nidhi Rules 2014are not applicable to it the provisions of Clause 3(xii) of the Order are not applicableto the Company.

(xiii) The Company has entered into transactions with related partiesin compliance with the provisions of Sections 177 and 188 of the Act. The details of suchrelated party transactions have been disclosed in the financial statements as requiredunder Indian Accounting Standard (Ind AS) 24 Related Party Disclosures specified in theCompanies (Indian Accounting Standards) Rules 2015 (as amended) under Section 133 of theAct.

(xiv) The Company has made preferential allotment of equity sharesduring the year and the requirement of Section 42 of the Companies Act 2013 have beencomplied with. These allotments were made against conversion of optionally convertibleredeemable preference shares.

(xv) According to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith him. Therefore the provisions of Clause 3(xv) of the Order are not applicable to theCompany

(xvi) The Company is not required to be registered under section 45-1Aof the Reserve Bank of India Act 1934.

For Chaturvedi & Shah LLP Chartered Accountants
Registration No. 101720W/ W100355
Vijay Napawaliya Partner
Membership No. 109859
UDIN : 21109859AAAACZ3105
Place: Mumbai
Date: 30th June 2021

"Annexure B” to the Independent Auditor's Report

Referred to in paragraph 2(g) under the heading"Report on Other Legal and Regulatory Requirements” of our report of even dateto the members of the Arshiya Limited on the standalone financial statements for the yearended 31st March 2021.

Report on the Internal Financial Controls underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct”)

We have audited the internal financial controls with reference tofinancial statements of Arshiya Limited ("the Company") as of 31st March 2021in conjunction with our audit of the standalone financial statements of the Company forthe year ended on that date.

Management's Responsibility for InternalFinancial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control with reference tostandalone financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India. These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence toCompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to standalone financial statements based on our audit.We conducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") and the Standards onAuditing issued by ICAI and deemed to be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls with reference tostandalone financial statements was established and maintained and if such controlsoperated effectively in all material respects. Our audit involves performing procedures toobtain audit evidence about the adequacy of the internal financial controls with referenceto standalone financial statements and their operating effectiveness. Our audit ofinternal financial controls with reference to standalone financial statements includedobtaining an understanding of internal financial controls with reference to standalonefinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the standalone financial statementswhether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrol with reference to standalone financial statements.

Meaning of Internal Financial Controls withReference to Standalone Financial Statements

A Company's internal financial control with reference to standalonefinancial statements is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of standalone financial statementsfor external purposes in accordance with generally accepted accounting principles. ACompany's internal financial control with reference to financial statements includes thosepolicies and procedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of standalone financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of theCompany are being made only in accordance with authorizations of management directors ofthe Company; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the Company's assets thatcould have a material effect on the standalone financial statements.

Inherent Limitations of Internal FinancialControls with Reference to Standalone Financial Statements

Because of the inherent limitations of internal financial controls withreference to standalone financial statements including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

Basis of Qualified Opinion

Based on our audit and information & explanations provided by themanagement the material weaknesses have been identified in the Company's internalfinancial controls with reference to standalone financial statements as at 31st March2021 with regard to providing penal interest at 8% on borrowing from Edelweiss AssetsReconstruction Company Limited (EARC) as against the documented rate of 18%

Qualified Opinion

In our opinion and to the best of information and according toexplanations given to us the Company has maintained adequate internal financial controlswith reference to financial statements as at 31st March 2021 based on the internalcontrol with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI andexcept for possible effects of the material weakness described in the Basis of QualifiedOpinion paragraph above on the achievement of the objectives of the Control criteria theCompany's internal financial control with reference to financial statements wereoperating effectively as at 31st March 2021.

A 'material weakness' is a deficiency or a combination ofdeficiencies in internal financial control with reference to standalone financialstatements such that there is a reasonable possibility that a material misstatement ofthe Company's annual financial statements will not be prevented or detected on a timelybasis.

We have considered the material weakness identified and reported abovein determining the nature timing and extent of audit tests applied in our audit ofstandalone financial statements of the Company for the year ended 31st March 2021 andthese material weaknesses do not affect our opinion on the standalone financial statementsof the Company.

For Chaturvedi & Shah LLP Chartered Accountants
Registration No. 101720W/ W100355
Vijay Napawaliya Partner
Membership No. 109859
UDIN : 21109859AAAACZ3105
Place: Mumbai
Date: 30th June 2021

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