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Vardhman Polytex Ltd.

BSE: 514175 Sector: Industrials
NSE: VARDMNPOLY ISIN Code: INE835A01011
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OPEN 20.50
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VOLUME 2240
52-Week high 34.00
52-Week low 17.00
P/E
Mkt Cap.(Rs cr) 44
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Vardhman Polytex Ltd. (VARDMNPOLY) - Auditors Report

Company auditors report

To The Members of Vardhman Polytex Limited

Report on the Audit of the Standalone Financial Statements Qualified Opinion

We have audited the accompanying standalone financial statements of Vardhman PolytexLimited ("the Company") which comprise the standalone Balance Sheet as at March31 2022 and the standalone Statement of Profit and Loss (including Other ComprehensiveIncome) the standalone Statement of Changes in Equity and the standalone Statement ofCash Flows for the year ended and notes to the standalone financial statement includinga summary of the 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 of the matter stated in the "Basis for QualifiedOpinion" section of this report the aforesaid standalone financial statements givethe information required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2022 the profit and total comprehensive income changes in equity and its cash flowsfor the year ended on that date.

Basis for Qualified opinion

Note No. 48 of the Standalone Ind AS financial statements regarding crediting a profitof Rs 396.44 lakhs due on payment of FCCB liability to the statement of profit & lossduring the year ended March 312017 which should have been credited in the statement ofprofit & loss on payment of FCCB liability which is still outstanding to the tune of554160 USD as on March 312022 is not in compliance with the requirements of para 27 ofthe Ind AS 1- Presentation of Financial Statements w.r.t. preparation of financialstatements on accrual basis. Consequently the profit and loss has been overstated by theabove mentioned amount. We further report that had the impact of our observations made inpara above been considered the net loss and the net worth for the period ended wouldhave increased and decreased respectively by Rs 396.44 lakhs.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Ind As Financial Statements section ofour report. We are independent of the Company in accordance with the Code of Ethics issuedby the Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our qualified audit opinion on the standalone Ind AS financialstatements.

Key audit matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended March 31 2022. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. We have determined the mattersdescribed below to be the key audit matters to be communicated in our report.

We have determined the matter described below to be the key audit matter to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone Ind AS financial statementssection of our report including in relation to this matter. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matter below providethe basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Sr. No. Key Audit Matter Auditor's Response
1. Evaluation of uncertain tax positions: The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes.Refer Notes to the Standalone Ind AS Financial Statements Principal Audit Procedures:Obtained details of completed tax assessments and demands till the year ended March 31 2022 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors are responsible for the preparation of the otherinformation. The other information comprises the information included in the Management

Discussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone Ind AS financial statements and our auditor's report thereon.

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

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the Standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Financial Statements

The Company's Management and Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone Ind ASfinancial statements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the Ind AS and other accounting principles generally accepted in India.The respective Management and Board of Directors of the companies are responsible formaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements the respective Management andBoard of Directors are responsible for assessing the Company's ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCompany or to cease operations or has no realistic alternative but to do so.

The respective Board of Directors are responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone 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 standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone 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 misrepresentations or the override of internalcontrols.

• Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act 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 reasonablenessof accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting 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 auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

• Evaluate the overall presentation structure and content of the standalone IndAS financial statements including the disclosures and whether the standalone Ind Asfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial informationof the Company of which we are the independent auditors to express an opinion on theStatement. We are responsible for the direction supervision and performance of the auditof the financial information of the Company of which we are the independent auditors.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

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 of India in terms of Sub-Section (11) of Section 143 ofthe Act we give in the "Annexure 1" a statement on the matters specified inparagraphs 3 and 4 of the Order.

2. A) As required by Section 143(3) of the Act based on our audit we report that : a)We have sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit. b) In our opinionproper books of account as required by law have been kept by the Company so far as itappears from our examination of those books. c) The standalone Balance Sheet thestandalone Statement of Profit and Loss (including Other Comprehensive Income) thestandalone Statement of Changes in Equity and the standalone Statement of Cash Flow dealtwith by this Report are in agreement with the relevant books of account. d) In ouropinion the aforesaid standalone financial statements comply with the Ind AS specifiedunder Section 133 of the Act. e) On the basis of the written representations received fromthe directors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164 (2) of the Act. f) With respect to the adequacy of the internal financialcontrols with reference to financial statement of the Company and the operatingeffectiveness of such controls refer to our separate Report in "Annexure 2".

(B) 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 as amended inour opinion and to the best of our information and according to the explanations given tous: a) The standalone financial statements disclosed the impact of pending litigations asat 31 March 2022 on the financial position of the company. Refer note 39 to the standalonefinancial statements.

b) The Company has long-term contracts as at March 31 2022 for which there were nomaterial foreseeable losses. The Company did not have any derivative contracts as at March31 2022. c) There has been no delay in transferring amounts required to be transferredto the Investor Education and Protection Fund by the company 31 March 2022. d) (i) Themanagement has represented that to the best of its knowledge and belief that no fundshave been advanced or loaned or invested (either from borrowed funds or share premium orany other sources or kind of funds) by the Company or its joint operation companiesincorporated in India to or in any other persons or entities including foreign entities("Intermediaries") with the understanding whether recorded in writing orotherwise that the intermediary shall: directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever ("UltimateBeneficiaries") by or on behalf of the Company or its joint operation companiesincorporated in India or provide any guarantee security or the like to oron behalf of the Ultimate Beneficiaries.

(ii) The management has represented that to the best of its knowledge and beliefthat no funds have been received by the Company or its joint operation from any persons orentities including foreign entities ("Funding Parties") with theunderstanding whether recorded in writing or otherwise that the Company or its jointoperation companies incorporated in India shall: • directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever ("UltimateBeneficiaries") by or on behalf of the Funding Party or • provide any guaranteesecurity or the like from or on behalf of the Ultimate Beneficiaries.

(iii) Based on such audit procedures as considered reasonable and appropriate in thecircumstances nothing has come to our notice that has caused us to believe that therepresentations under sub clause (d) (i) and (d)(ii) contain any material misstatement.

(e) The Company has neither declared nor paid any dividend during the year.

(C) With respect to the matter to be included in the Auditors' Report under section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) which arerequired to be commented upon by us.

For Romesh K Aggarwal & Associates
Chartered Accountants
FRN - 000711N
Sd/-
Ruchir Singla
Place - Ludhiana Partner
Dated - 30th May 2022 M. No. 519347
UDIN - 22519347AJWRKX8441

Annexure 1 referred to in paragraph 1 under the heading "Report on other legal andregulatory requirements" of our report of even date

(i) In respect of the Company's fixed assets:

(a) (A) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment.

(B) The company has maintained proper records showing full particular of intangibleassets (b) According to the information and explanation given to us and on the basis ofour examination of records of the company the company has a regular programme of physicalverification of its property plant and equipment by which all property plant andequipment are verified in a phased manner over a period of three years. In accordance withthis programme certain property plant and equipment were verified during the year. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the company and the nature of its assets. No material discrepancies were noticedon such verification. (c) According to the information and explanation given to us and onthe basis of our examination of record of the company title deeds of immovable propertyare held in name of company except for the following :

Title deeds held in the name of Whether title deed holder is a promoter director or relative# of promoter*/ director or employee of promoter/director Property held since which date Reason for not being held in the name of the Company**
Mr. Subhash Sharma No 22.06.2011 State Government rules
Mr. Subhash Sharma No 01.02.2011 State Government rules
Mr. Subhash Sharma No 13.12.2010 State Government rules

In this respect the Company has already paid full consideration as per agreement ofPurchase of said property. However approval of Himachal Pradesh Government forregistration of Property in the name of Company is yet to be received.

(d) According to the information and explanation given to us and on the basis of ourexamination of the records of the company the company has not revalued its PropertyPlant and Equipment or Intangible assets or both during the year.

(e) According to the information and explanation given to us and on the basis of ourexamination of the records of the company there are no proceeding initiated or pendingagainst the company for holding any benami property under the Prohibition of BenamiProperty Transaction Act 1988 and rule made thereunder. ii. (a) As explained to us theinventories were physically verified during the year by the management at reasonableinterval. In our opinion the frequency of such verification is reasonable and proceduresand coverage as followed by management were appropriate.

No discrepancies were noticed on such verification between the physical stocks and thebook records that were more than 10% in the aggregate of each class of inventory.

(b) According to the information and explanation given to us and on the basis of ourexamination of the records during the year the company has not been sanctioned workingcapital limits in excess of five crore rupees in aggregate from a consortium of banks onthe basis of the security of current assets. The accounts of the company have beenclassified as NPA and the same has been appropriately disclosed in relevant clauses below.Therefore no quarterly statements are required to be submitted to the bank. iii.According to the information and explanation given to us and on the basis of ourexamination of the records of the company the company during the year has not made anyinvestment in or provided guarantees or security or granted any loan or advances in thenature of loan secured or unsecured to companies firm limited liability partnership.

The company has granted unsecured loan and advances in the nature of loan to otherparties in respect of which requisite information is as below. a) Based on the auditprocedures carried on by us and as per information and explanation given to us the companyhas provided loans to employee and advance in the nature of loan as below:

Particulars Loans Advance in the nature of Loans
Aggregate amount during the year
- Employees 15.05 Loan
- Others

c) According to the information and explanations given to us and on the basis of ourexamination the records of the Company in the case of loans given in our opinion therepayment of principal has been stipulated and the receipt have been regular except Rs7.25 Lacs which is not received regularly. This amount pertains to those employees wholeft and the same will be adjusted when full and final payment is made. d) According tothe information and explanations given to us and on the basis of our examination of therecords of the company Rs 7.25 Lacs is overdue amount for more than ninety days inrespect of loan given. e) According to the information and explanations given to us and onthe basis of our examination of the records of the Company there is no loan or advance inthe nature of loan granted falling due during the year which has been renewed or extendedor fresh loans granted to settle the overdues of existing loans given to same parties. f)According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company has not granted any loans oradvances in the nature of loans either repayable on demand or without specifying any termsor period of repayment.

(iv) The Company has not granted any loans or provided any guarantees or security tothe parties covered under Section 185 of the Act. Further the Company has not providedany loans guarantees or security to the parties covered under Section 186 of the Act.

(v) The company has not accepted any deposits or amounts which are deemed deposit fromthe public. Accordingly clause 3(v) of the order is not applicable.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe (Cost Records and Audit) Rules 2014 as amended prescribed by the Central Governmentunder sub-section (1) of Section 148 of the Act and are of the opinion that prima faciethe prescribed cost records have been made and maintained. However we have not carriedout detailed examination for the same.

(vii) According to information and explanations given to us in respect of statutorydues: (a) The Company has been generally regular in depositing undisputed statutory duesincluding Goods and service tax Provident Fund Employees State Insurance Income-TaxSales tax Service Tax Duty of Customs Duty of Excise Value added Tax Cess and anyother statutory dues with the appropriate authorities.

There were no undisputed amounts payable in respect of Provident Fund Employees' StateInsurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2022 for a period of more than six months fromthe date they became payable.

(b) Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value AddedTax which have not been deposited as at March 31 2022 on account of dispute are givenbelow:

Name of the statute Nature of dues Period to which it pertains Amount in dispute Forum where dispute is pending Amount deposited Matter of disputed
Central Excise Act1944 Excise Duty 1997-98 42.34 Hon'ble Punjab & Haryana High Court Chandigarh 42.34 Difference on account of loose and packed yarn
Excise Duty 2004-05 28.93 CESTAT New Delhi - Cenvat credit on input has been reversed.
Excise Duty 2008-09 103.2 Additional Commissioner C.E. Commissionerate Chandigarh 7.74 Rebate on exports.
Excise Duty 2009-10 1.14 Joint Secretary to Govt. of India Ministry of Finance New Delhi - Rebate on exports.
Excise Duty 2014-15 168.55 Hon'ble Punjab & Haryana High Court Chandigarh - Rebate on exports.
Excise Duty 2014-15 22.42 Joint Secretary to Govt. of India Ministry of Finance New Delhi -
Excise Duty 2017-18 50.63 Joint Secretary to Govt. of India Ministry of Finance New Delhi
Service tax act Service tax 2004 – 05 2005 – 06 and 2006 – 07 14.11 CESTAT New Delhi 1.41 Service Tax on Overseas commission
Service tax 2009-10 1.27 CESTAT New Delhi - SCN for Service Tax refund claimed.
Income Tax Act Income tax 1998-99 to 2002-2003 2007-2008 2016-2017 2017-2018 779.59 CIT (Appeals) Ludhiana 25.69 Disallowance of deduction under section 80HHC & 80M 44AD & 68 of Income Tax Act Disallowance of Interest u/s 36(1)(iii) for investment in subsidiary companies Disallowance of depreciation on profit on buy back of FCCB Bonds.
Income tax 2004-2005 2005-2006 2006-2007 2011-2012 to 2015-16 528.22 ITAT Chandigarh 41.66 Disallowance of Interest u/s 36(1)(iii) for investment in subsidiary companies computation u/s 14A Interest disallowance on advances to subsidiary companies u/s 36(1)(iii) Disallowance of depreciation on profit on buy back of FCCB Bonds Subscription of Share Capital - Section 68
Income tax 1998-99 to 2001-2002 2003-2004 2004-2005 2008-09 to 2010-2011 527.14 Hon'ble Punjab & Haryana High Court Chandigarh 152.65 Disallowance of deduction under section 80HHC 80IB & 80M Disallowance of Interest u/s 36(1)(iii) & as revenue expenditure or capital expenditure though matter decided by Hon'ble SC in our favor and levy of interest u/s 234 D Disallowance u/s 14-A.
Punjab General Sales Tax Act Punjab Vat 2000-01 2001-02 17.61 DETC Appeal 4.4 Incremental production in respect of additional fixed capital investment.
Punjab Vat 2005-06 0.48 DETC Patiala 0.12
Punjab Vat 2006-07 33.08 DETC (Appeals) Faridkot (Pb.) - Disallowance of ITC in respect of purchases from M/s Chabra Ind. & ITC on Diesel.
Punjab Vat 2008-09 62.14 VAT Tribunal Punjab - Disallowance of ITC on Diesel & reversal of entry tax in respect of branch transfer & 19(5)
Punjab Vat 2009-10 79 VAT Tribunal Punjab - ITC on diesel Reversal of 19(5) in exempted units reversal of entry tax in respect of branch transfer & 19(5).
Punjab VAT 2011-12 18 DETC Appeals Faridkot 4.5 Interest on additional demand.
Punjab VAT 2012-13 8.72 DETC Appeals Faridkot 4.02 Interest on additional demand.
Wealth Tax Act Wealth Tax A.Y. 1998-99 2.47 ITAT Chandigarh - Dispute on valuation of land

(viii) According to the information and explanation given to us and on the basis of ourexamination of the records of the company the company has not surrendered or disclose anytransaction previously unrecorded as income in the books of account in the taxassessment under the Income Tax act 1961 as income during the year. Clause 3(viii) arenot applicable to the company hence not commented upon.

(ix) (a) In our opinion and according to the information and explanations given to usthe Company has defaulted in the repayment of dues to banks as follows:

Name Date of NPA Sanction amount Principle in default Overdue interest Total Oustanding as at 31.03.2022
Allahabad Bank 30.11.2017 471.74 313.45 183.05 496.50
Andhra Bank (Phoenix) 31.01.2018 3437.00 3473.96 933.51 4407.47
Axis Bank 30.09.2014 749.00 383.10 54.00 437.10
Bank of Baroda (Phoenix) 30.06.2017 4643.91 3778.39 1925.02 5703.41
Bank of India 30.06.2017 2095.00 1590.08 1220.62 2810.70
Bank of Maharashtra (Phoenix) 30.06.2017 2344.80 1805.50 1140.80 2946.30

 

Name Date of NPA Sanction amount Principle in default Overdue interest Total Oustanding as at 31.03.2022
Canara Bank (Phoenix) 30.10.2017 9399.00 2420.85 4935.02 7355.87
Corporation Bank (Phoenix) 31.01.2018 1413.00 1265.46 880.60 2146.06
J&K Bank 30.12.2017 2362.50 1565.42 913.37 2478.79
Punjab National Bank 31.10.2017 5685.00 4302.25 1540.90 5843.15
Punjab & Sind Bank 28.02.2018 820.00 476.40 237.80 714.20
State Bank of India (Phoenix) 21.09.2017 5446.00 5639.87 1271.55 6911.42
State Bank of India - Formerly SBOP (Phoenix) 21.09.2017 911.82 1801.08 968.86 2769.94
United Bank of India (Phoenix) 30.06.2017 5120.55 3952.99 3221.22 7174.21
Total 44899.32 32768.80 19426.32 52195.12

As the company accounts have been declared as NPA therefore no interest is beingcharged by the lenders post the NPA classification. Keeping the accrual concept inconsideration the company has provided for interest based upon terms of the CDR package.The lenders had issued notices U/S 13(2)& 13(4) of Securitisation and Reconstructionof Financial Assets and Enforcement of Security Interest (SARFESI)Act 2002 which wereduly replied and proceedings are pending before Debt Recovery Tribunal (DRT) Chandigarh.Two of the lenders namely Punjab National Bank & Jammu and Kashmir Bank and 5(Five)operational/financial creditors have filed applications under Insolvency and BankruptcyCode 2016 with NCLT Chandigarh for initiating Corporate Insolvency Resolution Process(CIRP) but the same have not been admitted till date. State Bank of India United Bank ofIndia Canara Bank Bank of Baroda Bank of Maharashtra Union Bank of India (for AndhraBank and Corporation Bank) have assigned our debt to Phoenix ARC Private Limited throughAssignment Agreements. Further the company has received an OTS sanction letter from Bankof India and the complete amount of OTS with Bank of India has been paid till 21.04.2022.However no dues certificate from Banks is yet to be received.

(b) According to the information and explanation given to us and on the basis of ourexamination of the records of the company the company is not declared willful defaulterby any bank or financial institution or government or government authority or any otherlender.

(c) In our opinion and according to the information and explanations given to us by themanagement the company has not been granted any term loan during the year.

(d) According to the information and explanation given to us and on the basis ofoverall examination of the balance sheet of the company we report that no fund has beenraised on short basis.

(e) According to information and explanation given to us and on overall examination offinancial statement of the company we report that Company has not taken fund from anyentity or person on account of or to meet the obligation of its subsidiaries associate orjoint venture.

(f) According to information and explanation given to us and procedure performed by uswe report that the company has not raised loans during the Year on pledge of securitiesheld in its subsidiaries joint ventures or associate company (as defined under the act).

(x) (a) The company has not raised money by way of initial public offer or furtherpublic offer (including debt instruments) during the year Accordingly Clause 3(x)(a) ofthe Order is not applicable to the company. b) During the year the company has not madeany preferential allotment or private placement of shares convertible debenture (fullypartially or optionally) during the year and hence reporting under clause 3(x)(b) of theorder is not applicable to the company. (xi) (a) Based on the examination of the books andrecords of the company and according to the Information and explanation given to usconsidering the principle of materiality outline in the standard of auditing we reportthat no fraud by the company or on the company has been noticed during the course of theaudit.

(b) According to information and explanation given to us no report under sub- section(12) of section 143 of the act has been filed by the auditors in form ADT-4 as prescribedUnder Rules 13 of Companies (Audit and Auditor) Rules 2014 with the central government.(c) The auditor has not received any complaints from whistle -blower during the year.Therefore reporting under clause 3(xi)(c) of the order is not applicable to the company.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to usthe Company is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) (a) Based on information and explanation provided to us and our audit proceduresin our opinion the company has an internal audit system commensurate with the size andthe nature of its business.

(b) We have considered the internal audit report of the company issued till date forthe period Under audit.

(xv) According to information and explanations given to us and based on our examinationof the records of the company the company has not entered into any non-cash transactionswith directors or persons connected with him and hence the provision of section 192 of thecompanies act 2013 are not applicable.

(xvi) (a) According to information and explanations given to us the company is notrequired to be registered under section 45 IA of the Reserve Bank of India Act1934.Therefore provision of clause 3(xvi)(a) and (b) of the order are not applicable tocompany hence not commented upon.

(c) The company is not a Core Investment company (CIC) as defined in the regulationmade by Reserve Bank of India. Accordingly clause 3(xvi)(c) of the order are notapplicable.

(d) According to the information and explanation provide to us during the course ofaudit the Group does not have any CICs.

(xvii) Based on the procedure performed and information and explanation given by themanagement the company has incurred cash losses in the current financial year and inimmediately preceding financial year as disclosed below : Current Financial Year – Rs205.69 Lacs Preceding financial year – Rs 4276.64 Lacs (xviii)There has been noresignation of the statutory auditors during the year. Accordingly clause 3(xviii) of theOrder is not applicable.

(xix) According to the information and explanation given to us and on the basis offinancial ratio ageing and the expected dates of realization of the financial assets andpayment of financial liabilities other information accompanying the financial statementour knowledge of the board of director and management plans and based on our examinationof evidence supporting the assumption nothing has come to our attention which cause us tobelieve that any material uncertainty exists on the date of audit report and the companyis not capable meeting its liabilities existing at the date of balance sheet as and whenthey fall due within a period one year from the Balance Sheet date. We however statethat this is not assurance as to the future viability of the company. We further statethat our reporting is based on facts up to the date of the audit report and we neithergive any guarantee nor any assurance that all liabilities falling due within a period ofone year from the balance sheet date will get discharged by the company as and when theyfall due.

(xx) In our opinion and according to the information and explanations given to ussection 135 of the Act is not applicable to the Company. Accordingly clauses 3(xx)(a) and3(xx)(b) of the Order are not applicable.

(xxi) The reporting under clause 3(xxi) of the Order is not applicable in respect ofaudit of Standalone Financial Statements. Accordingly no comment in respect of the saidclause has been included in this report.

For Romesh K Aggarwal & Associates
Chartered Accountants
FRN - 000711N
Sd/-
Ruchir Singla
Place - Ludhiana Partner
Dated - 30th May 2022 M. No. 519347
UDIN - 22519347AJWRKX8441

ANNEXURE 2 to the Independent Auditor's Report of even date on the Standalone Ind AsFinancial statements

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 haveaudited the internal financial controls over financial reporting of Vardhman PolytexLimited ("the Company") as of March 31 2022 in conjunction with our audit ofthe standalone Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting 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 respective company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143(10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects. Our audit involves performingprocedures to obtain audit evidence about the adequacy of the internal financial controlssystem over financial reporting and their operating effectiveness. Our audit of internalfinancial controls over financial reporting included obtaining an understanding ofinternal financial controls over financial reporting assessing the risk that a materialweakness exists and testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thefinancial 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 audit opinion on the internal financial controls system overfinancial reporting of the Company.

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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial 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.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2022 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.

For Romesh K Aggarwal & Associates
Chartered Accountants
FRN - 000711N
Sd/-
Ruchir Singla
Place - Ludhiana Partner
Dated - 30th May 2022 M. No. 519347
UDIN - 22519347AJWRKX8441

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