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Dhanada Corporation Ltd.

BSE: 531198 Sector: Services
NSE: N.A. ISIN Code: INE041F01015
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NSE 05:30 | 01 Jan Dhanada Corporation Ltd
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OPEN 3.90
CLOSE 3.79
VOLUME 3
52-Week high 8.41
52-Week low 3.50
P/E
Mkt Cap.(Rs cr) 20
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Dhanada Corporation Ltd. (DHANADACORP) - Auditors Report

Company auditors report

To the Members of Dhanada Corporation Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of DhanadaCorporation Limited(“the Company”) which comprise of the Balance sheet as at31st March 2021 and the statement of Profit and Loss (including Other ComprehensiveIncome) the Statement of changes in equity and the Statement of cash flows for the yearended on that date with notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred as‘ financial statements').

Subject to the matters of concern specified in Basis of Opinionparagraph and also in various notes to the financial statements (financial impactmentioned therein wherever ascertainable) in our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid financialstatements 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 IndianAccounting Standards (Ind AS) prescribed under Section 133 of the Act read with theCompanies (Indian accounting standards) Rules 2015 as amended and the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2021 and the loss changes in equity and its cash flows for the year ended on thatdate.

Basis for Qualified Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Act. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit ofthe financial statements section of our report.

We are independent of the Company in accordance with the Code of Ethicsissued by the Institute of Chartered Accountants of India (“ICAI”) together withthe ethical requirements that are relevant to our audit of the financial statements underthe provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion on the financial statements.

Matters of concern:

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

b. During last year in the last week of March 2020 (23rd March 2020)there was lockdown announced due to Covid-19. Further vide the order of SDO dated05.05.2020 the hotel has been declared as a Covid centre for the stay of doctors as perthe order of session judge. The hotel was occupied for the doctors stay till February2021.This created an impact on the operations of the concern; financial implication of thesame is not ascertainable.

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

d. As mentioned in foot note no. 1 of Note no. 1 and foot note no. 2 of Note no. 8pending conveyance of land at Nande pending payment of stamp duty applicable to scheme ofarrangement & amalgamation sanctioned by Hon'ble Bombay High Court vide theirjudgment dated 16th July 2009 and pending legal formalities of allotment ofshares (the subject matter of the aforesaid scheme) accounting has been done of FixedAssets (Land) of Rs. 15965999.74 Issued Subscribed and Paid up Share Capital of Rs.1796254.00 Share Premium of Rs. 10669748.76 and Current Liabilities (Amount payableto Dr. Laxman V. Kulkarni) of Rs. 3499996.98. Pending completion of all legalformalities the respective amounts on the aforesaid accounts are overstated to thatextent.

e. In the absence of the records the nature of Capital Work in Progress (pending sincelong) as mentioned in foot note no. 3 of Note no. 1 could not be ascertained. As suchthe probable accounting thereof capital or revenue is pending. Further the impairmentof Assets (including Capital Work in Progress) if any as per the requirements of Ind AS36 has not been ascertained and as such the consequent financial impact on accounts isnot ascertainable.

f. Details and supporting documents of the amount of Rs. 39100000/- paid as Advanceto Dr. Laxman V. Kulkarni (Foot note 2 of Note no. 4) are not available with the Company.As such we are unable to express our opinion on the genuineness of the paymentrecoverability thereof and correctness of the accounting treatment. Financial impact onaccounts is not ascertainable.

g. As mentioned in foot note no. 6 of Note no. 7 Balances with Banks in currentaccount include as amount of Rs. 17975000/- kept in bank account in the individual nameof a director. As informed to us this amount has been kept in No Lien Account as part ofthe negotiation with a lender bank for One Time Settlement. Further this account issubject to confirmation reconciliation and consequential adjustments if any. Financialimpact on accounts is not ascertainable. The Company has assured us that no such otherbank account (other than those recorded in the books of the Company) has been opened bythe Company on which reliance has been placed.

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

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

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

k. The company's gross investments in equity shares of the then three subsidiarycompanies of Rs. 883.13 lakhs were sold during the Financial Year 2017-18 for an amount ofRs. 0.48 lakh only. The value of these investments was diminished progressively bycharging to profit and loss accounts for the years from 2014-15 to 2017-18. We have notexamined the propriety of this sale which was based on the management's assessmenton the recoverability of these financial assets and of the consequent loss.

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

m. In the earlier years an advance was paid to a Director (outstanding balance as on31st March 2020 Rs. 30144128/- swapped in the name of Dhanada Holding Pvt.Ltd. in earlier year and again transferred during the year in the name of the director)which was in contravention of Section 185 of the Companies Act 2013. As mentioned in noteno. ‘j' of Note no. 22 B the director has cleared this advance by bringing inmoney from his own business activity at various times in the current year.

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

Out of such money brought in by the director the cheques amounting to Rs.25904128/- were lying with the company as at the Balance Sheet date. They are reflectedas Cheques on Hand as at 31st March 2021. However the amounts have actuallybeen credited in the bank account in the months of April and May 2021. Furtherpay-in-slips for these credits have not been produced for our verification. Though thereare actual credits in the bank statements in the ensuing months we are unable toascertain whether really these were the cheques on hand as at 31st March 2021.

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

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

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

Key Audit Matters

Key audit matters (KAM) are those matters that in our professionaljudgment were of most significance in our audit of the financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described herein belowto be the key audit matters to be communicated in our report.

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

Management's Responsibility for the Financial Statements

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

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

Auditor's Responsibilities for the Audit of the FinancialStatements

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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken 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 the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.

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

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

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists 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 Company to cease to continue as agoing concern.

Evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.

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 we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards. From the matters communicatedwith those charged with governance we determine those matters that were of mostsignificance in the audit of the financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's reportunless law or regulation precludes public disclosure about the matter or when inextremely rare circumstances we determine that a matter should not be communicated in ourreport because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

Other Matters

The Company's borrowings from banks and financial institutionshave been classified by the lenders as non-performing assets during the year. We wereinformed that the Company is also in the process of initiating One Time Settlement (OTS)with the banks. As informed to us some of the lenders have approached GovernmentAuthorities in respect of the Company's borrowings. Also the property of the CompanyHotel VITS located at Aurangabad is currently the place of business of the company.Consequent to the Session court order by Additional Sessions Judge Aurangabad dated05.02.2019 the competent authority after attaching VITS Hotel has taken its possession andmanagement of day to day affairs of the said hotel operations. The Sub Divisional Officerand Competent Authority (MPID Act) Aurangabad has issued notice for e-Auction of thehotel property of the Company at Aurangabad. The e-Auction process has been conducted on22nd February 2019 and 8th March 2019. The e-Auction of the said property of the Companycould not reportedly be materialized. The company has assessed the impact of Covid-19pandemic on the financial statements however has not assessed the future impact of thispandemic on the operations of the company. The above factors cast a significantuncertainty on the Company's ability to continue as a going concern. Pending theresolution of the above uncertainties the Company has prepared the aforesaid statementson a going concern basis.

Report on Other Legal and Regulatory Requirements

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

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

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

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) The Balance sheet the Statement of profit and loss (including other comprehensiveincome) Statement of cash flow and the Statement of changes in equity dealt with by thisReport except disclosure of unrealised income on derivatives (financial instruments) arein agreement with the books of account;

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

(e) On the basis of the written representations received from the directors as on 31stMarch2021 taken on record by the Board of Directors none of the directors is disqualified ason 31stMarch 2021 from being appointed as a director in terms of Section 164(2) of the Act;

(f) with respect to the adequacy of the internal financial controls with reference tothe financial statements of the Company and the operating effectiveness of such controlsrefer to our separate report in “Annexure A”. and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with section 197 (16) of the Act in our opinion and to the best of ourinformation and according to the explanations given to us no remuneration is paid by theCompany to its directors during the year. The Ministry of Corporate Affairs has notprescribed other details under Section 197(16) which are required to be commented upon byus.

(h) with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us subjectto Note a of Matters of Concern mentioned in the para Basis for Opinion hereinabove:

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

ii. As informed to us there was no derivative contract outstanding on the date ofBalance Sheet. As informed to us the Company has not ascertained the material foreseeablelosses if any on long-term contracts for proposed project and consultancy for financialarrangements.

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

2. As required by the Companies (Auditor's Report) Order 2016 (“theOrder”) issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure B a statement on the matters specified inthe paragraph 3 and 4 of the order.

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

Annexure - A to the Auditors' Report

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

We have audited the internal financial controls with reference to thefinancial statements of Dhanada Corporation Limited (“the Company”) as of 31stMarch2021 in conjunction with our audit of the said financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management including board of directors isresponsible for establishing and maintaining internal financial controls based on theinternal control with reference to the financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting issued by theInstitute of Chartered Accountants of India (‘ICAI'). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls with reference to the financial statements based on our audit. Weconducted 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 tothe financial statements were established and maintained and if such controls operatedeffectively in all material respects. Our audit involves performing procedures to obtainaudit evidence about the adequacy of the internal financial controls system with referenceto financial statements and their operating effectiveness. Our audit of internal financialcontrols with reference to financial statements included obtaining an understanding ofinternal financial controls with reference to the financial statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system with referenceto financial statements.

Meaning of Internal Financial Controls with reference to financialstatements

A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control withreference to financial statements includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference tofinancial statements

Because of the inherent limitations of internal financial controls withreference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial control with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion the internal financial controls system with referenceto financial statements as of 31st March 2021 especially in respect of:

i. Sale and cash/revenue collection

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

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

iv. Control identification and verification of property plant and equipmentsincluding capital work in progress and/or additions to fixed & intangible assets needto be reviewed and substantially strengthened so as to be commensurate with the size andnature of the business of the Company to be in line with the essential components ofinternal control stated in the Guidance Note on Audit of Internal controls over financialreporting issued by the Institute of Chartered Accountants of India.

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

Annexure - B to the Independent Auditors' Report

With reference to the Annexure referred to in IndependentAuditors' Report to the members of the Company on the standalone financial statementsfor the year ended 31stMarch 2021 we report that:

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

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

(c ) As mentioned in footnote 1 of Note No 1 Property Plant and Equipment the land atNande has not yet been transferred in the name of the Company pending execution ofconveyance deed. As mentioned in footnote 2 of Note No 1 Property Plant and Equipment theproperty at Aurangabad has not yet been transferred in the name of the Company. Accordingto the information and explanations given to us and on the basis of our examination of theavailable records of the Company the title deeds of other immovable properties are heldin the name of the Company.

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

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

(iii) The Company had given advance to a Director of the Company. During the earlieryear as mentioned in Footnote 8 of Note no. 4 Current Assets as on 31st March2020 the entire advance to the director was swapped in the name of the Holding Companyviz. Dhanada Holdings Private Limited again transferred in the name of the directorduring the year. The advance to Director was given without mention of any interest and anyrepayment period. In our opinion the said advance is prima facie prejudicial to theinterest of the Company. The said advance is fully repaid by the director as on 31stMarch 2021. For our detailed qualified opinion please refer to para m of Matters ofConcern under Basis for qualified opinion of this report. As per information andexplanations given to us except these loan transactions the Company has not made anytransaction with the parties mentioned in the register maintained u/s 189 of the Act.

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

(v) On the basis of the available records and as per the information and explanationsgiven to us the Company has not accepted any deposits from the public (as appearing inthe books of the Company) during the year. As such the directives issued by the ReserveBank of India and the provisions of Section 73 to 76 or any other relevant provisions ofthe Companies Act 2013 and the rules framed there under are not applicable.

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

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

Sale Tax Deferment dues of Rs. 254188/- are outstanding for a period of more than sixmonths from the date they became payable. Similarly Sales tax and VAT/CST dues of Rs.359944/- are outstanding pursuant to the final order of Sales Tax Authorities for aperiod of more than six months from the date they became payable. Except this accordingto the information and explanations given to us no undisputed amounts payable in respectof provident fund income tax sales tax value added tax duty of customs service taxcess and other material statutory dues were in arrears as at 31stMarch 2021 fora period of more than six months from the date they became payable.

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

Disputed income tax liability against income tax assessment order passed by Income Taxofficer.

Name of the statute Nature of dues Amount F.Y. Forum where dispute is pending
Income Tax Act 1961 Assessment dues 19601345 201 1-12 Commissioner of Income Tax (Appeals) Aurangabad
Income Tax Act 1961 Assessment dues 7434315 201 2-13 Commissioner of Income Tax (Appeals) Aurangabad
Income Tax Act 1961 Assessment dues 4975050 201 3-14 Commissioner of Income Tax (Appeals) Aurangabad

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

Name of Financial institution/ Govt. Authority Amount defaulted as at the balance sheet date Period of default Remarks
Bank of Maharashtra
- Loan 107460840 Since 2014-15 Symbolic possession has been taken on mortgaged Asset.
- Overdraft 11626046.44 Since 2014-15 No information available but treated as default since credit term expired.
Phoenix ARC Pvt. Ltd 173846368.44 Since 2012-13 Symbolic possession has been taken on mortgaged Asset
HDFC Bank Fixed Deposit
Overdraft 2106101.00 Since 2014-15 Receipt Assigned (Seized under MPID Act)
Overdraft 28788.00 Since 2014-15 Seized by Sales Tax Department
ICICI Bank Fixed Deposit
- Overdraft 1763012.61 Since 2018 Receipt Assigned (Seized under MPID Act)
Sales Tax Deferment 254188.02 Since 2004 Interest over and above this amount not paid nor provided.
Special Incentive 2500000.00 Since 2008 -

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

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

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not paid/provided for anymanagerial remuneration.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

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

(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

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

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

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

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