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Sainik Finance & Industries Ltd.

BSE: 530265 Sector: Financials
NSE: N.A. ISIN Code: INE584B01013
BSE 00:00 | 03 Feb 32.75 1.55
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NSE 05:30 | 01 Jan Sainik Finance & Industries Ltd
OPEN 32.75
PREVIOUS CLOSE 31.20
VOLUME 593
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Mkt Cap.(Rs cr) 36
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OPEN 32.75
CLOSE 31.20
VOLUME 593
52-Week high 52.40
52-Week low 24.50
P/E
Mkt Cap.(Rs cr) 36
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sainik Finance & Industries Ltd. (SAINIKFINANCE) - Auditors Report

Company auditors report

To the Members of

Sainik Finance & Industries Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying Ind AS financial statements of SainikFinance & Industries Limited comprising of the Balance Sheet as at 31 March 2022 theStatement of Profit and Loss including other comprehensive income the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and notes to theInd AS financial statements including a summary of significant accounting policies andother explanatory information (hereinafter referred to as ‘the Ind AS financialstatements').

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended (‘the Act') in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2022their losses including other comprehensive income their cash flows and the statement ofchanges in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the Ind AS financial statements in accordancewith the Standards on Auditing (SAs) as specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor'sresponsibilities for the audit of the Ind AS Financial Statements' section of ourreport. We are independent of the Company in accordance with the ‘Code ofEthics' issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the Ind AS financial statements.

Emphasis of Matter

a) We draw attention to note no. 39 to the Ind AS financial statementsin terms of which it has been reported that in certain cases the Company has advancedloans on which no amount has been received against the principal and interest accruedthereon but the same is in accordance with the loan agreements entered by the Companywhich provides for payment of interest along with principal amount or at the expiry of thesaid loan agreements. Although the Company is confident of the recovery of the saidamounts as per respective terms of the loan agreements and has obtained declarations andconfirmations from the respective parties. Our report is not modified in respect of thismatter.

b) We draw attention to note no. 40 to the Ind AS financial statementsin terms of which it has been reported that in respect of loan given to Tejswi ImpexPrivate Limited as per the ICD agreement dated 30 November 2011 expired on 30 November2021. Tejswi Impex Private Limited has offered a settlement amount of Rs.6.50 crore asagainst total outstanding loan of Rs.8.34 crore and the Company has agreed to settle theloan vide agreement dated 01 May 2022. Accordingly during the month of May'22 &June'22 amount of Rs.6.5 crore has been recovered. Hence no interest has beenprovided during the FY 2021-22 as per the above settlement.

Also in respect of loan given to TRN Energy Private Limited (Borrower)as per ICD agreement dated 31 May 2021 it is specified therein that the payment ofinterest on ICD or repayment of ICD shall be made by the Borrower upon clearing the duesof its term lenders as per financing agreement entered between the Borrower and its termlenders who have sanctioned term facilities to TRN Energy Private Limited which will berepaid up to 30 June 2038. Hence the Company entered into a Novation Agreement dated 31March 2022 with ACB (India) Power Limited the holding company of the Borrower wherein itwas agreed that ACB (India) Power Limited shall take over the loan of TRN Energy PrivateLimited from the Company by way of novation on cash basis with total consideration ofRs.76.75 crore as against total outstanding loan of Rs.84.09 crore in full and finalsettlement. Accordingly during the month of June 2022 an amount of Rs.76.75 crore hasbeen paid by ACB (India) Power Limited in full and settlement of the ICD given to TRNEnergy Private Limited.

c) We draw attention to note no. 13 to the Ind AS financial statementsin terms of which it has been reported that ICD agreement w.r.t. to ICD received from MKJEnterprises Limited has been expired and is therefore due for repayment.

Key Audit Matters

Key Audit matters are those matters that in our professional judgmentwere 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 the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters. We have determined the matters described below to be the key audit mattersto be communicated in our report.

We have fulfilled the responsibilities described in the Auditor'sresponsibilities for the audit of the Ind AS financial statements section of our reportincluding in relation to these matters. Accordingly our audit included the performance ofprocedures designed to respond to our assessment of the risks of material misstatement ofthe Ind AS financial statements. The results of audit procedures performed by usincluding those procedures performed to address the matters below provide the basis forour audit opinion on the accompanying Ind AS financial statements.

Sl. Key Audit matter Auditors' Response
1. Impairment on financial assets (expected credit losses). We read and assessed the Company's accounting policies for impairment of financial assets and their compliance with Ind AS 109.
Ind AS 109 requires the Company to recognise impairment loss allowance towards its financial assets (designated at amortised cost and fair value through other comprehensive income) using the expected credit loss (ECL) approach. Such ECL allowance is required to be measured considering the guiding principles of Ind AS 109 including: We tested the criteria for staging of loans based on their past-due status to check compliance with requirement of Ind AS 109. Tested a sample of performing (stage 1) loans to assess whether any loss indicators were present requiring them to be classified under stage 2 or 3 and vice versa.
unbiased probability weighted outcome under various scenarios; time value of money; impact arising from forward looking macro-economic factors and; availability of reasonable and supportable information without undue costs. We evaluated the reasonableness of the Management estimates by understanding the process of ECL estimation and tested the controls around data extraction and validation.
Applying these principles involves significant estimation in various aspects such as: Tested the ECL model including assumptions and underlying computation.
grouping of borrowers based on homogeneity by using appropriate statistical techniques; staging of loans and estimation of behavioral life; Assessed the floor/minimum rates of provisioning applied for loan products with inadequate historical defaults.
determining macro-economic factors impacting credit quality of receivables; estimation of losses for loan products with no/minimal historical defaults. Audited disclosures included in the Ind AS financial statements in respect of expected credit losses.
Considering the significance of such allowance to the overall financial statements and the degree of estimation involved in computation of expected credit losses this area is considered as a key audit matter.

Information other than the Financial Statements and Auditors'Report thereon

The Company's Board of Directors is responsible for thepreparation of other information which comprises the Director's Report includingannexures to Director's Report Management Discussion and Analysis Report and Reporton Corporate Governance but does not include the financial statements and ourauditor's report thereon. Our opinion on the financial statements does not cover theother information and accordingly we do not express any form of assurance conclusionthereon. In connection with our audit of the financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with financial statements or our knowledge obtained during thecourse of audit or otherwise appears to be materially misstated. Based on the work we haveperformed if we conclude that there is a material misstatement of this other information;we are required to report the fact. We have nothing to report in this regard.

Responsibility of Management for Financial Statements

The Company's Board of Directors is responsible for thepreparation and presentation of these Ind AS financial statements in terms of therequirements of the Act that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and statement ofchanges in equity in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) specified under Section 133 ofthe Act. The respective Board of Directors of the Companies are responsible formaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Ind AS financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error which havebeen used for the purpose of preparation of the Ind AS financial statements by theDirectors of the Company as aforesaid.

In preparing the Ind AS financial statements the respective Board ofDirectors of the companies are responsible for assessing the ability of the Company tocontinue as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless Management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso.

That respective Board of Directors of the Companies are alsoresponsible for overseeing the financial reporting process of the Company.

Auditor's Responsibilities for the Audit of the FinancialStatements

Our objectives are to obtain reasonable assurance about whether the IndAS financial statements as a whole are free from material misstatement whether due tofraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Ind AS financial statements.

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

x Identify and assess the risks of material misstatement on the Ind ASfinancial 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 misrepresentation or the override of internalcontrol.

x Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under Section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether the company has adequate internal financial controls system in place and theoperating effectiveness of such controls.

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

x 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 Ind AS financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditionsmay cause the Company to cease to continue as a going concern.

x Evaluate the overall presentation structure and content of the IndAS financial 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 charge with governance wedetermine those matters that were of most significance in the audit of Ind AS financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicbenefits of such communication.

Other Matters

The financial statements of the Company for the year ended 31 March2021 were audited by the predecessor auditor who resigned due to casual vacancy haveexpressed an unmodified opinion on those financial statement. Our report is not modifiedin respect of this matter.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in the “Annexure A” a statement on the matters specified inparagraphs 3 and 4 of the said Order to the extent applicable.

2. As required by Section 143(3) of the Act we report to the extentapplicable 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 our auditof the aforesaid Ind AS financial statements;

b) In our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account maintainedfor the purpose of preparation of the Ind AS financial statements;

d) In our opinion the aforesaid Ind AS financial statements complywith the Ind AS specified under Section 133 of the Act.

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

f) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in “Annexure (B)”.

g) With respect to the other matters to be included in theAuditors' Report in accordance with the requirements of Section 197(16) of the Actas amended In our opinion and to the best of our information and accordingly to theexplanations given to us no remuneration has been paid by the company to its directorsduring the year.

h) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:

i. There is no pending litigation which would have its impact on Ind ASfinancial statement of the Company.

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

iii. There are no amounts required to be transferred to the InvestorEducation and Protection Fund by the Company during the year ended 31 March 2022.

iv. (a) The management has represented that to best of its knowledgeand belief no funds have been advanced or loaned or invested (either from borrowed fundsor share premium or any other sources or kind of funds) by the Company to or in any otherpersons(s) or entity(ies) including foreign entities (“Intermediaries”) withthe understanding whether recorded in writing or otherwise that the Intermediator shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”)or provide any guarantee security or the like on behalf of the Ultimate Beneficiaries;

(b) The management has represented that to best of its knowledge andbelief no funds have been received by the Company from any other persons(s) orentity(ies) including foreign entities (“Funding Parties”) with theunderstanding whether recorded in writing or otherwise that the Company shall whetherdirectly or indirectly lend or invest in other persons or entities identified in anymanner whatsoever by or on behalf of the Funding Party (“UltimateBeneficiaries”) or provide any guarantee security or the like on behalf of theUltimate Beneficiaries;

(c) Based on such audit procedures that we considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under clause (a) and (b) contain any materialmisstatement. v. The Company has neither declared nor paid any dividend during the year.

ANNEXURE (A) TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ONTHE FINANCIAL STATEMENTS OF SAINIK FINANCE & INDUSTRIES LIMITED

The Annexure referred to in Independent Auditors' Report to themembers of the Company on the financial statements for the year ended 31 March 2022 wereport that:

(i) (a) According to the information and explanations given to us theCompany has maintained proper records showing full particulars including quantitativedetails and situation of property plant and equipment. Further the Company does not haveany intangible assets as on 31 March 2022.

(b) According to the information and explanations given to us theCompany has a regular programme of physical verification of its property plant andequipment by which all property plant and equipment are verified at periodic intervals.In our opinion the period of verification is reasonable having regard to the size of theCompany and the nature of its assets. No material discrepancies were noticed duringphysical verification of property plant and equipment.

(c) According to the information and explanations given to us theCompany does not have any immovable properties as on 31 March 2022.

(d) According to the information and explanations given to us and onthe basis of our examination of the records of the Company no Property Plant andEquipment (including Right of Use assets) or has been revalued during the year. Furtherthe Company does not have any intangible assets as on 31 March 2022.

(e) According to the information and explanations given to us noproceedings have been initiated or are pending against the Company for holding any benamiproperty under the Benami Transactions (Prohibition) Act 1988 and rules made thereunder.

(ii) The company does not hold any inventory as at year end.Accordingly paragraph 3(ii) of the order is not applicable to the company.

(iii) In our opinion and according to the information and explanationsgiven to us the Company has not made investments or provided any guarantees or securitiesduring the year. Although the company has granted unsecured loans to companies andindividuals.

a) As the Company is a Non-Banking Financial Institution (NBFC) and itsprincipal business is to give loans and advances. Accordingly paragraph 3(iii)(a) is notapplicable to the Company.

b) Based on our examination and the information and explanations givento us in our opinion the terms and conditions under which such loans were granted arenot prejudicial to the Company's interest. Further no investments guarantees andsecurity have been provided by the Company to any person.

c) In our opinion the borrowers have been regular in the repayment ofthe principal and payment of interest on loans where so stipulated unless the arrangementsdoes not contain any such schedule for repayment of principal/interest except for theparties which have been declared Non-Performing Assets. The terms of arrangement in caseof loans given to Companies do not stipulate any repayment schedule and the loans arerepayable on demand along with interest in most of the cases.

d) Detail of amount overdue for more than 90 days along with necessarysteps taken by Company are as follows:

(amount in rupees lakhs)
S.No. Party Name Principal Amount Overdue Interest Overdue Total Overdue
1 Ambience Private Limited-NPA - 18.11 18.11
2 Ambience Projects & Infr. Pvt. Ltd.- NPA - 4.14 4.14
3 Sainik Automobiles-NPA 23.68 23.38 47.06
4 Samarth Erectors And Developers- NPA - 6.50 6.50
5 SRC And Associates-NPA 200.00 97.43 297.43
6 Anil Kumar Sachdeva-NPA 1.25 0.45 1.70
7 Mr Rajesh Kumar-NPA 0.69 0.23 0.92
8 Usha Phogut w/o Sukhbir Phogut- NPA 35.00 6.30 41.30
9 Shailesh Sindhu-NPA 2.11 1.24 3.35
10 Mr Rajesh Kumar-NPA 1.65 1.40 3.05
Total 264.38 159.18 423.56

In relation to cases where terms of arrangement do not stipulate anyrepayment schedule and loans are repayable on demand no question of overdue amounts willarise in respect of the loans granted to parties. Further the Company has takenreasonable steps for recovery of principal and interest amount.

e) As the Company is a Non-Banking Financial Institution (NBFC) and itsprincipal business is to give loans and advances. Accordingly paragraph 3(iii)(e) is notapplicable to the Company.

f) Detail of loans and advances repayable on demand or withoutspecifying any terms or period of repayment are as follows:

(amount in rupees lakhs)

All Parties Promoters Related Parties
Aggregate amount of loans/ advances in nature of loans:
-Repayable on demand (A) 14769.75 - 298.16
-Agreement does not specify any terms or period of repayment (B) - - -
Total (A+B) 14769.75 - 298.16
Percentage of loans/ advances in nature of loans to the total loans 57.59% - 1.16%

(iv) In our opinion and according to the information and explanationsprovided to us the Company has complied with provisions of Section 185 and 186 of theAct with respect to loans given. Further no investments guarantees and security havebeen provided by the Company to any person.

(v) According to the information and explanations provided to us theCompany has not accepted any deposits from the public. Accordingly the directives issuedby Reserve Bank of India and the provisions of Section 73 to 76 or any other relevantprovisions of the Act and rules framed thereunder in this regard are not applicable. (vi)According to the information and explanations provided to us the Central Government hasnot specified for maintenance of cost records under Section 148(1) of the Companies Act2013 in respect of the activities carried on by the Company. Hence the provisions ofparagraph 3(vi) of the Order is not applicable to the Company.

(vii) In respect of statutory dues;

(a) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the amounts deducted/accruedin the books of accounts in respect of undisputed statutory dues including provident fundemployees' state insurance income-tax goods and service tax and other materialstatutory dues as applicable have been deposited with slight delays in few cases duringthe year by the Company with the appropriate authorities. Further there are no undisputedamounts payable outstanding as at 31 March 2022 for a period of more than six months fromthe date they become payable.

(b) According to the information and explanations given to us theCompany has not deposited outstanding demand amount of INR 9.90 lakhs with the appropriateauthorities on account of demand pertaining to the A.Y. 2008-09.

(viii) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the Company has notsurrendered or disclosed any transactions previously unrecorded as income in the books ofaccount in the tax assessments under the Income-tax Act 1961 as income during the year.

(ix) (a) In our opinion and according to the information andexplanations given to us The Company has not taken any loan from bank financialinstitutions and government. Further in case of other lenders the terms and conditionsfor payment of loan and interest thereon have been stipulated in such a way that they arefurther extended from time to time and in rest of the cases payment of loan and interestare payable on demand such loans and interest thereon have been paid as and when demandedfor payment during the financial year under reporting.

(b)According to the information and explanations given to us and on thebasis of our audit procedures we report that the Company has not been declared willfuldefaulter by any lender.

(c)According to the explanation and information given to us and on thebasis of our audit procedures no money has been obtained by the Company by way of termloans during the year. Accordingly paragraph 3 (ix) (c) of the Order is not applicable tothe Company.

(d)According to the explanation and information given to us and on thebasis of our audit procedures the Company has not obtained any term loans. Accordinglyparagraph 3 (ix) (d) of the Order is not applicable to the Company.

(e)According to the explanation and information given to us and on thebasis of our audit procedures the Company does not have any investment in subsidiaryassociate or joint ventures. Accordingly paragraph 3 (ix) (e) and (f) of the Order is notapplicable to the Company

(x) (a) According to the information and explanations provided to usthe company has not raised any moneys by way of initial public offer or further publicoffer (including debt instruments) during the year under audit and therefore paragraph3(x) (a) of the Order is not applicable.

(b)According to the information and explanations given to us and basedon our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year under audit & therefore paragraph 3 (x) (b) of thereforeorder is not applicable.

(xi) (a) Based on examination of the books and records of the Companyand according to the information and explanations given to us we have neither come acrossany instance of material fraud by the Company or on the Company during the year nor havewe been informed of any such case by the management.

(b) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us a report underSection 143(12) of the Act in Form ADT-4 as prescribed under rule 13 of Companies (Auditand Auditors) Rules 2014 was not required to be filed with the Central Government.Accordingly the reporting under Clause 3(xi)(b) of the Order is not applicable to theCompany.

(c) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us the Company has notreceived whistle-blower complaints during the year.

(xii) 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) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 188 of the Act where applicable and details ofsuch transactions have been disclosed in the financial statements as required by theapplicable accounting standards. Further according to the information and explanationsgiven to us the Company has complied with the provisions of Section 177 of the Act.

(xiv) (a) In our opinion and according to the information andexplanation given to us the Company has an internal audit system commensurate with thesize and nature of its business. (b)The reports of the Internal Auditor for the periodunder audit have been considered by us.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.

(xvi) (a) The Company is required to and has been registered underSection 45-IA of the Reserve Bank of India Act 1934 as a Non-deposit takingnon-systemically important Company.

(b) As the Company has registration under Section45-IA of the ReserveBank of India Act 1934. Accordingly paragraph 3(xvi) (b) is not applicable to theCompany.

(c) According to the explanation and information given to us forverification Company is not a Core Investment Company. Accordingly paragraph 3(xvi) (c)is not applicable to the Company.

(d)Based on the information and explanations provided by the managementof the Company the Group has three CICs as part of the Group. We have not howeverseparately evaluated whether the information provided by the management is accurate andcomplete.

(xvii) The Company has incurred cash loss during the current financialyear amounting to Rs. 300.40 lakhs. However the Company has not incurred any cash loss inthe proceeding financial year.

(xviii) According to the information and explanations given to usthere has been resignation of the statutory auditor due to dissolution of firm resultingin casual vacancy and outgoing auditor has not raised any issues objections or concerns.

(xix) On the basis of the financial ratios ageing and expected datesof realization of financial assets and payment of financial liabilities other informationaccompanying the financial statements and our knowledge of the Board of Directors andManagement plans and based on our examination of the evidence supporting the assumptionsnothing has come to our attention which causes us to believe that any materialuncertainty exists as on the date of the audit report indicating that Company is notcapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date. We however state thatthis is not an assurance as to the future viability of the Company.

We further state that our reporting is based on the facts up to thedate of the audit report and we neither give any guarantee nor any assurance that allliabilities falling due within a period of one year from the balance sheet date will getdischarged by the Company as and when they fall due.

(xx) In our opinion and according to the information and explanationsgiven to us the Company has during the year spent the amount of Corporate SocialResponsibility as required under subsection (5) of Section 135 of the Act. Accordinglyreporting under clause 3(xx) of the Order is not applicable to the Company.

(xxi) The Company is not required to prepare consolidated financialstatement. Accordingly reporting under paragraph 3 (xxi) of the Order is not applicableto the Company.

ANNEXURE- (B) TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ONTHE FINANCIAL STATEMENTS OF SAINIK FINANCE & INDUSTRIES LIMITED

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (“the Act”)

We have audited the internal financial controls over financialreporting of Sainik Finance & Industries Limited (“the Company”) asof March 31 2022 in conjunction with our audit of the financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit with reference to these IndAS financial statements. We conducted our audit in accordance with the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting (the “GuidanceNote”) and the Standards on Auditing issued by ICAI and deemed to be prescribedunder Section 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting 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 system overfinancial reporting with reference to these Ind AS financial statements and theiroperating effectiveness.

Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment ofthe risks of material misstatement of the Ind AS financial statements whether due tofraud 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 internalfinancial controls system over financial reporting with reference to these Ind ASfinancial statements.

Meaning of Internal Financial Controls over Financial Reporting

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 Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol over financial reporting includes those policies 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 financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; 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 Ind AS financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2022 basedon “the internal control over financial reporting 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 Institute ofChartered Accountants of India”.

For V P G S & Co.
Chartered Accountants
ICAI Firm Registration No. : 507971C
Gulshan Gaba
Partner
Membership No. : 088726
UDIN: 22088726AOGATY8881
Place: New Delhi
Date: 29 July 2022

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