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Vadilal Industries Ltd.

BSE: 519156 Sector: Agri and agri inputs
NSE: VADILALIND ISIN Code: INE694D01016
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NSE 00:00 | 25 Jan 880.65 22.70
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OPEN 860.00
PREVIOUS CLOSE 862.40
VOLUME 879
52-Week high 1264.00
52-Week low 773.25
P/E 265.53
Mkt Cap.(Rs cr) 634
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Sell Price 0.00
Sell Qty 0.00
OPEN 860.00
CLOSE 862.40
VOLUME 879
52-Week high 1264.00
52-Week low 773.25
P/E 265.53
Mkt Cap.(Rs cr) 634
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Vadilal Industries Ltd. (VADILALIND) - Auditors Report

Company auditors report

To the members of Vadilal Industries Limited

Report on the Audit of the Standalone Financial Statements Qualified Opinion

We have audited accompanying standalone financial statements of Vadilal IndustriesLimited ("the Company") which comprise the Balance Sheet as at March 31 2021and the Statement of Profit and Loss (including Other Comprehensive Income) the Statementof Cash Flows and the Statement of Changes in Equity for the year then ended and asummary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects / possible effects of the matters described in the‘Basis for Qualified Opinion' section of our report the aforesaid standalonefinancial statements give the information required by the Companies Act 2013 (‘Act')in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India including Indian Accounting Standards (‘IndAS') specified under section 133 of the Act of the state of affairs of the Company as atMarch 31 2021 and its loss (including other comprehensive income) its cash flows andthe changes in equity for the year ended on that date.

Basis for Qualified Opinion

We are unable to comment upon the possible effects of the following matters on thestandalone financial statements of the Company for the year ended March 31 2021. Thematter more fully discussed in Note 50 of the standalone financial statements pertainingto the pending receipt of conclusive reports/findings for the item described therein:

1. Matter involving counter allegations levelled by two Promoter Directors against eachother in respect of potential personal expenses claimed as offcial business expenditureamounting to Rs 25.33 lakh (for financial year 2017-18 and financial year 2018-19) and Rs25.00 lakh (for financial year 2014-15 and financial year 2018-19) respectively by thePromoter Directors.

Pending receipt of the reports/findings as referred above we are unable to concludethe possible effects on the standalone financial statements of any undetectedmisstatements if any and whether it could be material.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing ("SAs") specified under Section 143(10) of the CompaniesAct 2013 as amended ("the Act"). Our responsibilities under those Standardsare further described in the "Auditor's Responsibilities for the Audit of thefinancial statements" section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia ("ICAI") together with the ethical requirements that are relevant to ouraudit of the financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI's Code of Ethics. We believe that the audit evidenceobtained by us is sufficient and appropriate to provide a basis for our qualified opinion.

Emphasis of Matter

We draw attention to

1. Note 51 of the standalone financial statements which describes the management'sassessment of the impact of the outbreak of COVID-19 on the business operations of theCompany.

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

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

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements for the financial yearended March 31 2021. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. In addition to the matters described inthe Basis for Qualified Opinion section we have determined the matters described below tobe the key audit matters to be communicated in our report. For each matter below ourdescription of how our audit addressed the matter is provided in that context.

Key audit matters How our audit addressed the Key Audit Matter
Inventory Existence and Carrying Value
Refer to Note 2(d) (accounting policy) Note 9 to the standalone financial statements. Our procedures included:
Inventory is held by Company's plants and hired locations across India. - Performed inventory count at plant on sample basis which were selected based on financial significance and risk. Where locations were not attended we tested certain controls over inventory existence across the Company.
The Company has significant levels of inventories and significant management judgments are taken with regard to categorization of inventories into obsolete and/or slow moving and which should be therefore be considered for provision. Estimates are then involved in arriving at provisions against cost in respect of slow moving and obsolete inventories to arrive at valuation based on lower of cost and net realizable value. - Observing sample of management's inventory count procedures to assess compliance with the Company process.
- Performing roll forward procedures for the year-end balance from the date of inventory count attended.
- Obtaining inventory confirmations from the hired locations as on balance sheet date and comparing the same with the inventory as per books and obtaining the reconciliations for the variations (if any).
- Challenging the management with regard to the calculation methodology the basis for provision and the process with respect to inventory provision;
Given the level of significant management judgments and estimates involved this is considered to be a key audit matter. - Testing the design implementation and operating effectiveness of the key controls management has established for provision computations and to ensure the accuracy of the inventory provision.
- Assessing the adequacy of and movements in inventory provisions held by recalculating a sample of items included within the provision to ensure appropriate basis of valuation.
- Evaluating on a sample basis whether inventories were stated at the lower of cost or net realizable value at the reporting date by comparing the sales prices of inventories subsequent to the reporting date.
- Evaluating the appropriateness of the assumptions used based on our knowledge and information of the client and the industry.
Assessment of going concern basis
We draw attention to the standalone financial statements which indicates that the Company has incurred loss before tax amounting to Rs 3170.71Lakh for the year ended March 31 202 1 which have resulted in erosion of net worth of the Company and its current liabilities exceeds its current assets by Rs 2689.99 Lakh as at March 31 2021 with a consequent lower credit rating of its borrowings. Our procedures included:
- Obtained an understanding of the management's process for identifying all the events or conditions that could impact the Company's ability to continue as a going concern and the process followed to assess the mitigating factors for such events or conditions. Also obtained an understanding around the methodology adopted and the associated controls implemented by the Company to assess their future business performance to prepare a robust cash flow forecast;
Management has prepared future cash flow forecasts taking into cognizance the above developments and performed sensitivity analysis of the key assumptions used therein to assess whether the Company would be able operate as a going concern for a period of at least 12 months from the date of financial statements and concluded that the going concern basis of accounting used for preparation of the accompanying financial statements is appropriate with no material uncertainty. - Reconciled the cash flow forecast to the future business plans of the Company as approved by the management. In order to corroborate management's future business plans and to identify potential contradictory information we read the minutes of the Board of Directors and discussed the same with the management;
We have considered the assessment of management's evaluation of going concern basis of accounting as a key audit matter due to the pervasive impact thereof on the standalone financial statements and the significant judgements and assumptions that are inherently subjective and dependent on future events involved in preparation of cash flow projections and determination of the overall conclusion by the management. - Tested the appropriateness of key assumptions used by the management including the impact of COVID-19 pandemic on such assumption that had most material impact in preparation of the cash flow forecast;
- Assessed the methodology used by the management to estimate the cash flow projections including the appropriateness of the key assumptions in the cash flow projections for next 12 months by considering our understanding of the business past performance of the Company external data and market conditions apart from discussing these assumptions with the management; and
- Tested mathematical accuracy of the projections and applied independent sensitivity analysis to the key assumptions mentioned above to determine and ensure that there was sufficient headroom with respect to the estimation uncertainty impact of such assumptions on the calculations.

Information Other than the Financial Statements and Auditors' Report Thereon

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report CorporateGovernance and Shareholder's Information but does not include the standalone financialstatements and our auditors' report thereon. The other information is expected to be madeavailable to us after the date of this auditors' report.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the Financial Statements or our knowledge obtained duringthe course of our audit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to communicate the matter to thosecharged with governance as required under SA 720 'The Auditors' responsibilities relatingto other Information'.

Responsibilities of the Management and Board of Directors for the Financial Statements

The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial statements Management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial 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 professional judgment andmaintain professional scepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the Standalone FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional 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 theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditors' report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditors'report. However future events or conditions may cause the Company to cease to continue asa going concern.

- Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant de_ciencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Financial Statements for thefinancial year ended March 31 2021 and are therefore the key audit matters. We describethese matters in our auditors' report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould 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 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

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

(a) We have sought and except for the matter described in the "Basis for QualifiedOpinion" paragraph obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit; (b) Except forthe matter described in the "Basis for Qualified Opinion" paragraph in ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books; (c) The Balance Sheet the Statement ofProfit and Loss including Other Comprehensive Income the Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account; (d) Except for the effects of the matter described in the "Basis forQualified Opinion" paragraph above in our opinion the aforesaid standalonefinancial statements comply with the Accounting Standards specified under Section 133 ofthe Act read with Companies (Indian Accounting Standards) Rules 2015 as amended; (e)The matter described in the "Basis for Qualified Opinion" paragraph in ouropinion may have an adverse effect on the functioning of the Company.

(f) On the basis of the written representations received from the directors as on March31 2021 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2021 from being appointed as a director in terms of Section 164 (2) of theAct; (g) The qualification relating to maintenance of accounts and other matters connectedtherewith are as stated in the "Basis for Qualified Opinion" paragraph above andpara 2(b) (h) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company with reference to these financial statements and theoperating effectiveness of such controls refer to our separate Report in "AnnexureB" to this report; (i) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 as amended in our opinion and to the best of our information and according to theexplanations given to us: I. The Company has disclosed the impact of pending litigationson its financial position in its standalone financial statements – Refer Note 39 tothe standalone financial statements; II. The Company did not have any long-term contractsincluding derivative contracts for which there were any material foreseeable losses; III.There were no amounts which were required to be transferred to the Investor Education andProtection Fund by the Company.

For Arpit Patel & Associates.
Chartered Accountants
[Firm Registration No: 144032W]
Arpit K. Patel
Partner
Place: Ahmedabad [Membership No.: 034032]
Date: June 30 2021 UDIN: 21034032AAAACE8099

Annexure A to the Independent Auditor's Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the members of Vadilal Industries Limited of evendate) The Annexure referred to in Independent Auditor's Report to the members of theCompany on the standalone financial statements for the year ended March 31 2021.

We report that:

(i). (a) The Company has maintained proper records showing full particulars; includingquantitative details and situation of fixed assets.

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

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed/transfer deed/conveyancedeed provided to us we report that the title deeds comprising all the immovableproperties of land and buildings which are freehold are held in the name of the Companyas at the balance sheet date except for the following:

Particulars of the land and building Gross Block (as at March 31 2021) Net Block (as at March 31 2021) Remarks (give reasons for the exception)
Freehold land located at Dwarka admeasuring 58096 sq. mtrs. Rs 338.44 lakh Rs 338.44 lakh The title deeds are not readily available.
Freehold land located at Bareilly admeasuring 94 sq. yards Rs 8.82 lakh Rs 8.82 lakh The title deeds are not readily available.
House Building Located at Pushpak Bungalow Ahmedabad admeasuring 200 sq. yards Rs 13.39lakh Rs 8.21 lakh The title deed is in dispute.
Residential Flat in Maruti Centre Ahmedabad admeasuring carpet area 4750 sq. ft. Rs 13.34 lakh Rs 4.46 lakh The title deeds are not readily available.
Investment property located at Mahalaya Complex Ahmedabad admeasuring 1360 sq. ft. Rs 20.69 lakh Rs 18.72 lakh The title deed is not yet in name of the Company

(ii). As explained to us inventories have been physically verified at reasonableintervals by the management during the period. In our opinion the frequency of suchverification is reasonable. No material discrepancies were noticed during suchverification. (iii). The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013.

(iv). In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Act in respect of loans to directors includingentities in which they are interested and in respect of loans and advances giveninvestments made and guarantees and securities given have been complied with by theCompany as applicable.

(v). In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 73 to 76 or any other relevantprovisions of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules2014 as amended. According to the information and explanations given to us no order hasbeen passed by the Company Law Board or the National Company Law Tribunal or the ReserveBank of India or any Court or any other Tribunal.

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

(vii). According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Income-tax Customs Duty cess Goods and Service Tax and othermaterial statutory dues applicable to it to the appropriate authorities. (b) There were noundisputed amounts payable in respect of Provident Fund Income-tax Customs Duty cessGoods and Service Tax and other material statutory dues in arrears as at March 31 2021for a period of more than six months from the date they became payable

(c) Details of dues of Sales Tax Duty of Excise Value Added Tax Cess Goods andServices Tax and Income-tax which have not been deposited as on 31st March 2021 onaccount of disputes are given below:

Name of Statute Nature of Dues Forum where dispute is pending Period to which the amount relates Amount involved (In Rs Lakh) Amount unpaid (In Rs Lakh)
1 Central Sales Tax Act Sales Tax Acts of Sales tax and penalty High Court 1998-99 39.07 23.24
various states & Goods and Service Tax Additional tax demand JT Comm S. Tax 2000-01 12.49 12.49
Sales tax demand DC Appeal-4 Mehsana 2000-01 20.74 15.74
Sales tax demand Dy. Comm S. Tax 2001-02 1.55 1.55
Sales tax demand Sales Tax Tribunal Bhubaneshwar 2002-03 2.10 0.60
Sales tax asst. dues JC-1 Appeal Ahmedabad 2003-04 2.39 2.39
Purchase tax JC-1 Appeal Ahmedabad 2003-04 0.46 0.46
Sales tax Sales Tax Tribunal 2004-05 3.67 3.67
Sales tax and penalty Sales Tax Tribunal 2010-11 24.81 14.81
Sales tax JC-Corporate Bareilly. 2010-11 8.02 7.25
Sales tax Addnl. Comm. Grade-2 Appeal Bareilly. 2013-14 9.34 4.67
Sales tax Addnl. Comm. Grade-2 Appeal Bareilly 2012-13 0.66 -
Sales tax Addnl. Comm. Grade-2 Appeal Bareilly. 2017-18 0.25 -
Sales tax Addnl. Comm. Grade-2 Appeal Bareilly 2015-16 3.83 1.25
Sales tax Addnl. Comm. Grade-2 Appeal Bareilly 2016-17 2.07 -
Sales tax Addnl. Comm. Grade-2 Appeal Bareilly 2016-17 0.19 -
Sales tax Addnl. Comm. Grade-2 Appeal Raigadh 2014-15 14.62 13.98
GST Gujarat Authority for Advance Ruling 2017-18 to 2020-21 43.16 43.16
GST Gujarat Authority for Advance Ruling 2017-18 to 2020-21 22.36 22.36
Excise Act Excise duty Asst. Commissioner 1988-89 4.58 4.58
_ Excise duty Asst. Commissioner 2003-04 4.28 4.28
_ Excise duty Customs Excise & Service Tax Appellate Tribunal 2011-12 to 2014-15 34.14 34.14
Income tax_ Income tax ITAT 1996-97 1.93 1.93

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

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

(x). We refer to the matter described in the Basis for Qualified Opinion section of ouraudit report the outcome of which is inconclusive as on date of this report. Read withthe above to the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the Company by its officersor employees has been noticed or reported during the year.

(xi). According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the CompaniesAct 2013.

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

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

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

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

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

For Arpit Patel & Associates.
Chartered Accountants
[Firm Registration No: 144032W]
Arpit K. Patel
Partner
Place: Ahmedabad [Membership No.: 034032]
Date: June 30 2021 UDIN: 21034032AAAACE8099

Annexure B to the Independent Auditor's Report

(Referred to in paragraph 3(h) under ‘Report on Other Legal and RegulatoryRequirements' section of our report to the members of Vadilal Industries Limited of evendate)

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

We have audited the internal financial controls over financial reporting of the Companyas of March 31 2021 in conjunction with our audit of the standalone financial statementsof the Company for the year ended on that date.

Management and Board of Directors' Responsibility for Internal Financial Controls

The Management and the Board of Directors of the Company are responsible forestablishing and maintaining internal financial controls based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to respective company'spolicies the safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to standalone financial statements based on our audit conducted inaccordance with the Guidance Note on Audit of Internal Financial Control over FinancialReporting (the "Guidance Note") and the standard on Auditing deemed to beprescribed under Section 143(10) of the Act 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 and the Standards onAuditing prescribed under Section 143(10) of the Act to the extent applicable to an auditof internal financial controls. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Basis for Qualified Opinion

According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified in the Company's internal financialcontrols over financial reporting as at 31 March 2021: We draw attention to Note 50 of thestandalone financial statements relating to the counter allegations levelled by twoPromoter Directors against each other in respect of potential personal expenses claimed asoffcial business expenditure amounting to Rs 25.33 lakh (for financial year 2017-18 andfinancial year 2018-19) and Rs 25.00 lakh (for financial year 2014-15 and financial year2018-19) respectively by the Promoter Directors. without following the process of theCompany. Pending receipt of the reports/findings as referred above we are unable toconclude whether the Company's financial reporting process did have controls to identifythe nature of the expenses and the procedures to be followed for the payments made forcertain travelling expenses.

A ‘material weakness' is a de_ciency or a combination of de_ciencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.

Qualified Opinion

In our opinion to the best of our information and according to the explanations givento us except for the possible effect of the material weakness described in Basis forQualified Opinion paragraph above on the achievement of the objectives of the controlcriteria the Company has maintained in all material respects adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as of 31 March 2021 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by the ICAI.

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the standalonefinancial statements of the Company for the year ended March 31 2021 and this materialweakness has affected our opinion on the said standalone financial statements of theCompany and we have issued a qualified opinion on the standalone financial statements ofthe Company.

For Arpit Patel & Associates.
Chartered Accountants
[Firm Registration No: 144032W]
Arpit K. Patel
Partner
Place: Ahmedabad [Membership No.: 034032]
Date: June 30 2021 UDIN: 21034032AAAACE8099

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