Independent Auditors’ Report

To the members of
Dharani Finance LimitedReport on the audit of the Standalone Financial
Statements

Qualified Opinion

We have audited the accompanying financial
statements of Dharani Finance Limited, (“the
Company”), which comprise of the Balance Sheet as
at March 31, 2023, and the statement of profit and
loss (including other comprehensive income), the
statement of changes in equity and the statement of
cash flows for the year then ended, and notes to the
standalone financial statements, including a summary
of significant accounting policies and other explanatory
information.

In our opinion and to the best of our information and
according to the explanations given to us, subject to
the effects of the matter described in the Basis for
Qualified Opinion section of our report, the aforesaid
standalone financial statements give the information
required by the Companies Act 2013 (“the Act”) in
the manner so required and give a true and fair view
in conformity with the Indian Accounting Standards
prescribed under Section 133 of the Act read with
the Companies (Indian Accounting Standards) Rules,
2015, as amended, (“Ind AS”) and other accounting
principles generally accepted in India, of the state of
affairs of the Company as at March 31, 2023, and
its loss, total comprehensive income, the changes in
equity and its cash flows for the year ended as on that
date.

Basis for Qualified Opinion

We draw attention to the following matters:

a) Note 40 which explains that a corporate insolvency
resolution process (CIRP) and the appointment
of a resolution professional were admitted in
the case of one of the major customers of the
Company by the Hon'ble National Company Law
Tribunal (NCLT), Chennai Bench vide its order
dated May 5, 2020. The total amount due from the
above referred major customer to the Company
as at March 31,2023 is Rs. 544.30 Lakhs (net of
provisions). The Company has filed its claims with
the Resolution Professional of the said customer.

However, we were informed by the management
that a major part of the assets of the customer
comprises of land and commercial buildings
(including a well-known brand name in the hotel
industry), whose liquidation value is much higher
than the total dues to its financial and operating
creditors (including that of the Company) and the
resolution plan approved is not in line with the
actual value of the assets. The management also
confirmed that the resolution professional has not

followed the due process of CIRP and accordingly,
the resolution plan approved is not proper as per
law. It was also informed to us that the customer
has filed an application before the Hon'ble National
Company Law Appellate Tribunal (“NCLAT”)
praying for quashing the order of the Hon'ble NCLT.
The Hon'ble NCLAT has set aside the resolution
plan approved and ordered to recommence the
CIRP process, including the consideration of 12A
application filed by the promoters of the customer
company. On an appeal against the order of
the Hon'ble NCLAT, the Hon'ble Supreme Court
has delivered their judgement on May 3, 2023
seeking the Adjudicating Authority to deal with
fresh settlement proposal of the promoter, as
approved by the CoC in its Nineteenth meeting
dated October 12, 2022 while keeping in view
the law applicable and the facts of the present
case as also the observations as provided in the
Judgement.

Accordingly, in the opinion of the management,
as per the promoters' settlement proposal u/s.
12A of the IBC, the dues of all the secured and
unsecured financial creditors, operational creditors
and all other stake holders including shareholders
have been fully accommodated. The major part
of the assets of the customer comprises of land
and commercial buildings (including a well-known
brand name in the hotel industry), whose liquidation
value is much more than the total dues to its
financial and operating creditors (including that of
the Company) and accordingly, the Company will
be able to recover the entire outstanding dues from
the customer, based on the developments in the
CIRP proceedings. Based on the above estimate
and based on the fact that the customer's account
was a fully performing asset before the admission
of the CIRP, no provision towards allowance for
expected credit loss in respect of the dues from
the aforesaid customer was considered by the
Company in the financial statements.

Due to uncertainties involved in the CIRP process
as detailed above, the impact, if any, on the
financial statements are not presently determinable
in respect of the above matter.

b) Note 41 which explains that the Hon'ble National
Company Law Tribunal, Chennai Bench vide its
order dated July 29, 2021 admitted a corporate
insolvency resolution process (CIRP) and
approved the appointment of an interim resolution
professional, in one of the investee companies.
The carrying amount of investments as at March
31, 2023 is Rs. 21.99 Lakhs. In the opinion of
the management, the major part of the assets
of the investee company comprises of factory
land, buildings and plant and machinery, whose
liquidation value is much higher than the total
dues to its financial and operating creditors.
Accordingly, the Company will be able to recover
the entire carrying value of the investments, even
in the aforesaid CIRP conditions. Based on the
above estimate made by the management, no
adjustment has been made in the fair value of such
investment.

In the absence of a comprehensive external
valuation/ appraisal report of the resolution
professional of the Investee company supporting
the management's estimate of possible full
recovery of the carrying value of the investments,
we are unable to comment on the appropriateness
of not making any provision for the possible
decrease in fair value of the aforesaid investment.

c) Had the Company considered making provision for
the outstanding balance referred to in (a) above,
the net owned funds of the Company as at March
31, 2023 will be lower than the limits prescribed
under Section 45-IA of the Reserve Bank of India
Act, 1934 for a Non-Banking Financial Services
Company (NBFC). Thus, the Company's ability
to continue as an NBFC and as a going concern
may depend on infusion of further capital to meet
the minimum net owned funds criteria as per RBI
norms within the prescribed time limit and on
identification of alternative business plans.

d) The matters referred to in (a) to (c) also cast
a significant doubt on the Company's ability to
continue as a going concern and accordingly, we
are unable to comment on the appropriateness
of management's assumption of preparing the
standalone financial statements on a going
concern basis.

Our opinion on the financial statements is qualified
in respect of the matters (a) to (d) referred above.
The above matters have also been qualified in the
audit opinion on the financial statements of the
earlier years audited by previous auditors.

We conducted our audit in accordance with the
standards on auditing (SAs) specified under
section 143(10) of the Act. Our responsibilities
under those standards are further described in
the Auditor's responsibilities for the audit of the
financial statements section of our report. We
are independent of the Company in accordance
with the code of ethics issued by the Institute of
Chartered Accountants of India (“ICAI”) together
with the ethical requirements that are relevant to
our audit of the financial statements under the
provisions of the Act and the Rules thereunder, and
we have fulfilled our other ethical responsibilities in
accordance with these requirements and the ICAI's
code of ethics. We believe that the audit evidence
we have obtained is sufficient and appropriate to
provide a basis for our opinion.

Material Uncertainty Related to Going Concern

The matters more fully explained in the Basis for
Qualification Section of our opinion cast a significant
doubt on the Company's ability to continue as a going
concern. Considering the management estimate
of recovering the entire outstanding from the major
customer, we were informed that these financial
statements have been prepared on a going concern
basis. This is a matter of qualification in our opinion on
these financial statements.

Key audit matters

Key audit matters are those matters that, in our
professional judgment, were 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 a whole, and
in forming our opinion thereon, and we do not provide
a separate opinion on these matters.

Dues from a major customer

In our opinion and based on the information and
explanations given to us, there are no other key audit
matters to be communicated in our report, other than
those morefully described in the basis of qualified
opinion paragraph of our report which describes the
uncertainties arising from the order of the Hon'ble
Company Law Tribunal in respect of a major customer.

Information other than the financial statements
and auditors’ report thereon

The Company's board of directors is responsible for
the preparation of the other information. The other
information comprises the information included in the
Management Discussion and Analysis, Board's Report
including Annexures to Board's Report, Business
Responsibility Report, Corporate Governance and
Shareholder's Information, but does not include the
financial statements and our auditor's report thereon.

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

In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the standalone financial
statements or our knowledge obtained during the
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 material misstatement of this other
information, we are required to report that fact. We
have nothing to report in this regard.

Management’s responsibility for the financial
statements

The Company's board of directors is responsible for
the matters stated in Section 134 (5) of the Companies
Act, 2013 (“the Act”) with respect to the preparation of
these financial statements that give a true and fair view
the financial position, financial performance including
other comprehensive income, cash flows and changes
in equity of the Company in accordance with the Indian
Accounting Standards (Ind AS) prescribed under
Section 133 of the Act read with the Companies (Indian
Accounting Standards) Rules, 2015, as amended, and
other accounting principles generally accepted in India.

This responsibility also includes maintenance of
adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of
the Company and for preventing and detecting frauds
and other irregularities; selection and application of
appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and
design, implementation and maintenance of adequate
internal financial controls, that were operating
effectively for ensuring the accuracy and completeness
of the accounting records, relevant to the preparation
and presentation of the financial statements that
give a true and fair view and are free from material
misstatement, whether due to fraud or error.

In preparing the financial statements, management
is responsible for assessing the Company's ability to
continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless management
either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.

The board of directors are also responsible for
overseeing the Company's financial reporting process.

Auditors’ responsibility for the audit of the financial
statements

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

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

• Identify and assess the risks of material
misstatement of the financial statements, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from
fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal controls
relevant to the audit in order to design
audit procedures that are appropriate in the
circumstances. Under section 143(3)(i) of the
Companies Act, 2013, we are also responsible for
expressing our opinion on whether the company
has adequate internal financial controls system
in place and the operating effectiveness of such
controls.

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

• Conclude on the appropriateness of management's
use of the going concern basis of accounting and,
based on the audit evidence obtained, whether
a material uncertainty exists related to events or
conditions that may cast significant doubt on the
Company's ability to continue as a going concern.
If we conclude that a material uncertainty exists,
we are required to draw attention in our auditor's
report to the related disclosures in the 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 auditor's report. However, future events or
conditions may cause the Company to cease to
continue as a going concern.

• Evaluate the overall presentation, structure and
content of the financial statements, including the
disclosures, and whether the financial statements
represent the underlying transactions and events
in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in
the financial statements that, individually or in
aggregate, makes it probable that the economic
decisions of a reasonably knowledgeable user of the
financial statements may be influenced. We consider
quantitative materiality and qualitative factors in (i)
planning the scope of our audit work and in evaluating
the results of our work; and (ii) to evaluate the effect
of any identified misstatements in the financial
statements.

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

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

From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the financial
statements of the current period and are therefore the
key audit matters. We describe these matters in our
auditor's report unless law or regulation precludes
public disclosure about the matter or when, in
extremely rare circumstances, we determine that a
matter should not be communicated in our report
because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest
benefits of such communication.

Report on Other Legal and Regulatory
Requirements

As required by the Companies (Auditor's Report)
Order, 2020 (“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 clauses 3 and 4 of the Order.

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 our
knowledge and belief were necessary for the
purposes of our audit;

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

c) In our opinion, subject to our comments in the basis
for qualified opinion section above, the balance
sheet, the statement of profit and loss (including
other comprehensive income), the statement of
changes in equity and the statement of cash flows
comply with the Companies (Indian Accounting
Standards) Rules, 2015 (Ind AS), as amended
from time to time, prescribed under Section 133 of
the Companies Act, 2013;

d) The balance sheet, the statement of profit and
loss (including other comprehensive income), the
statement of changes in equity and the statement
of cash flows dealt with by this report are in
agreement with the books of account;

e) On the basis of the written representations
received from the directors of the Company as
on March 31, 2023 taken on record by the board
of directors, none of the directors are disqualified
as on March 31, 2023 from being appointed as a
director in terms of Section 164 (2) of the Act;

f) With respect to the adequacy of the internal
financial controls over financial reporting of the
Company and the operating effectiveness of such
controls, refer to our separate report in Annexure
“B”. Our report expresses an unmodified opinion
on the adequacy and operating effectiveness of
the Company's internal financial controls over
financial reporting;

g) With respect to the other matters to be included
in the Auditor's Report in accordance with the
requirements of section 197 (16) of the Act, as
amended, in our opinion and to the best of our
information and according to the explanations
given to us, the remuneration paid by the Company
to its directors during the year is in accordance
with the provisions of Section 197 of the Act; and

h) With respect to the other matters to be included in
the auditors' report in accordance with rule 11 of
the Companies (Audit and Auditors) Rules, 2014,
as amended, in our opinion and to the best of our
information and according to the explanations
given to us:

i. The Company does not have any pending
litigation which would impact its financial
position;

ii. The Company did not have any long-term
contracts including derivative contracts for
which there were any material foreseeable
losses; and

iii. There has been no delay in transferring
amounts, required to be transferred, to the
investor education and protection fund by the
Company.

iv. The management has represented that, to the
best of its knowledge and belief, other than as
disclosed in the notes to the accounts,

a) no funds have been advanced or loaned
or invested (either from borrowed funds
or share premium or any other sources
or kind of funds) by the company to or in
any other person(s) or entity(ies), including
foreign entities ‘Intermediaries', with the
understanding, whether recorded in writing
or otherwise, that the Intermediary shall,
whether, directly or indirectly lend or invest
in other persons or entities identified in any
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; and

b) no funds have been received by the
company from any person(s) or entity(ies),
including foreign entities ‘Funding Parties',
with the understanding, whether recorded in
writing or otherwise, that the company shall,
whether, directly or indirectly, lend or invest
in other persons or entities identified in any
manner whatsoever by or on behalf of the
Funding Party ‘Ultimate Beneficiaries' or
provide any guarantee, security or the like
on behalf of the Ultimate Beneficiaries.

c) Based on the audit procedures that
have been considered reasonable and
appropriate in the circumstances, nothing
has come to our notice that has caused us
to believe that the representations under

sub-clause (i) and (ii) of Rule 11(e), as
provided under (a) and (b) above, contain
any material misstatement.

v. The Company has not declared or paid any
dividends during the year and accordingly
reporting on the compliance with section 123 of
the Companies Act, 2013 is not applicable for
the year under consideration.

For Srivatsan & Associates

Chartered Accountants
Firm Registration Number 014921S

N Srivatsan

Partner

Place: Chennai Membership Number 230195

Date: May 26, 2023 UDIN:23230195BGUNMU9280