Everest Organics Ltd Auditor Reports

TO THE MEMBERS OF EVEREST ORGANICS LIMITED Report on the Audit of the Standalone Financial Statements

We have audited the accompanying financial statements of Everest Organics Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2024, 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 ended on that date, and Notes to Financial Statements including a summary of the significant accounting policies and other explanatory information.

QUALIFIED OPINION

In our opinion and to the best of our information and according to the explanations given to us except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph the aforesaid financial statements give the information required by the Act as amended in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Ind-AS specified under Section 133 of the Act of the state of affairs (financial position) of the Company as at March 31, 2024 and its profit (financial performance including other comprehensive income) its cash flows and the changes in equity for the year ended on that date.

BASIS FOR QUALIFIED OPINION:

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

I. The revocation order of Telangana State Pollution Control Board (TSPCB) dated 4th February 2022 in connection with the closure order dated 22nd Dec 2020, stipulates that, the company cannot exceed its production capacity indicated in its order No. TSPCB/RCP/SRD/CFO& HWA/HO/ 20172714, Dt. 22-11-2017. However, the company is operating at a substantially enhanced level of actual production without necessary approvals from TSPCB in the form of Consent For Establishment (CFE) for starting the establishment, followed by the consequent Consent For Operation (CFO). Such non-compliance could impact the going concern status of the company in the form of Closure Order from TSPCB. According to the explanations given to us, the management of the Company is in the process of addressing the issue. Refer to Note No.32(viii)(a).

ii. During the year under report, certain sales are made by the company on or before 31st March, 2024 for which control over the goods have not been passed on to the respective customers though dispatches were made on or before the aforesaid date and the same is not in accordance with Ind- AS 115 on Income Recognition. Considering the corresponding effect of the previous year 2022-23, the impact on Net Profit after tax for the year ended 31.03.2024 and reserves and surplus under Balance sheet have been overstated by Rs.194.73 Lakhs and the net turnover for the year ended

31.03.2024 have been overstated by Rs.609.45 Lakhs.

iii. In respect of Ind AS-19 Employee Benefits, there is a non-compliance as under

(a) . As stated in the notes to the financial statements of the company, the company has not revised

the provision for the liability on account of gratuity payable which was made in earlier period based on the managements own assessment instead of actuarial valuation and the gratuity liability is shown at 31.03.2024 under report, the liability for payment of gratuity has been shown at Rs. 162.17 Lakhs. As per the valuation obtained from LIC the gratuity liability is coming to Rs.247.03 Lakhs as on 31.03.2024. Thus, there is an understatement of liability and expenditure to the extent of Rs.84.86 Lakhs in the financial statements.

(b) . As per LIC Fund account statement, fund balance as on 31.03.2024 is coming to Rs.191.17

Lakhs, which is shown as Rs.162.17 Lakhs in the financial statements. Thus, the Other Comprehensive Income and reserves are understated by Rs.29.99 Lakhs.

(Refer Note No.32(xii)(a)(ii).

iv. The company has made a turnover of Rs.19,724.13 Lakhs for the year ended 31st March 2024. The sundry debtors as at 31st March, 2024 stood at Rs.10,008.55 Lakhs and out of which in respect of the Sundry debtors outstanding at Rs.2,869.26 Lakhs only confirmations were obtained at any time during the year.

v. During year 2022-23, the company has capitalised expenditure incurred on R&D to the extent of Rs. 209.65 lakhs under the head Intangible Assets-Products under Development instead of treating it as revenue expenditure and charging it in the Statement of Profit & loss Account. Out of this an amount of Rs.41.93 Lakhs has been amortised to profit and loss a/c and balance amount of Rs.167.72 Lakhs has been carried in the balance sheet under the head Intangible Assets-Products under Development. The nature of such expenditure shall be substantiated with tangible basis for certainty of corresponding future revenues against the expenditure being continued in the balance sheet at Rs.167.72 Lakhs. The expenditure shall also be identified and ascertained against each product under development. As the same was not furnished to us, we are of the opinion that the treatment of such expenditure as capital in nature is not in accordance with IND-AS 1 on Presentation of Financial Statements.

Based on the above the financial statements of the Company are not in compliance with the requirements of Ind AS 36, Impairment of Assets, and Ind AS 38, Intangible Assets.

vi. The company has adopted cash basis of accounting, as regards Sales commission payable to the sales agents. Hence the impact on the profit for the year and the consequential impact on the Reserves and Surplus of the Company as on the balance sheet date are not ascertainable.

vii. During the Financial Year 2023-24 there were delays in making payments to the small and micro enterprises. The company is liable to pay interest for the delays in making Payments to these small and Micro enterprises to the tune of Rs.42 Lakhs. Also, this amount of interest payable is not provided in the financial statements.

Our Opinion is modified in respect of the above said matters.

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, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

We draw attention to following matters of the Company.

A) Revenue recognition:

Revenue is recognized when the control over the underlying products has been transferred to the customer. Due to the Companys sales under various contractual terms and across the country, delivery to customers in different regions might take different time periods and may result in undelivered goods at the period end. We consider a risk of misstatement of the Financial Statements related to transactions occurring close to the year end, as these transactions could be recorded in the incorrect financial period (cut-off). Our tests of detail focused on sample of cut-off transactions, to verify that only revenue pertaining to current year is recognized based on terms and conditions set out in sales contracts and delivery documents and performing testing on selected statistical samples of revenue transactions recorded during the year.

B) IT Systems and Controls:

We have identified IT Systems and controls over financial reporting as a key audit matter for the company because its financial and reporting system should be integrated and must be fundamentally reliant on IT systems and controls to process the voluminous data specifically with respect to revenue, debtors, inventory management and raw material consumption. Automated accounting procedures and IT environment controls are required to be modified and implemented to operate effectively to ensure accurate financial reporting to comply with all the reporting requirements under various statues. We have assessed the managements position through discussion with the in-house experts and the Management has informed that they are making efforts to integrate all activities in this regard.

Accordingly, the same is considered as a key Audit matter.

C) Capital Work-in-Progress:

The Company is in the process of executing major project for expansion of its Manufacturing facility. This project takes a substantial period to get ready for intended use. We considered Capital expenditure as a key audit matter due to: (a) Significance of amount incurred on such items during the year ended 31st March, 2024. (b) Judgement involved in determining the eligibility of costs including borrowing cost and other directly attributable costs for capitalization as per the criteria set out in Ind AS 16-Property, Plant and Equipment.

We have obtained an understanding of the Companys capitalization policy and assessed for compliance with the relevant accounting standards. We have performed substantive testing on a sample basis for each element of capitalized costs including inventory issued to contractors for the purpose of this project and understanding nature of the costs capitalized.

Management maintains that, during the period, the interest cost of funds borrowed for the purpose amounting to Rs.113.20 Lakhs has been capitalised. (Refer Note No.32(xix)).

Other Information

The Companys management and Board of Directors are responsible for the other information. The other information comprises the information included in the companys annual report but does not include the financial statements and our auditors report thereon. The Companys annual report is expected to be made available to us after the date of this auditors report.

Our opinion on the financial statements does not cover the other information and we do not express any assurance and 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 financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

MANAGEMENTS AND BOARD OF DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS:

The Companys 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 standalone financial statements that give a true and fair view of the financial position, financial performance, (changes in equity) and cash flows of the Company in accordance with6 the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 statement 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 Companys 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. Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

AUDITORS RESPONSIBILITY:

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 auditors 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 based on these financial statements.

As part of an audit in accordance with standards on auditing we exercise professional judgment and maintain professional scepticism 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 control relevant to the audit to design audit procedures that are

appropriate in the circumstances. Under section 143(3)(I) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to financial statements 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 and Board of Directors.

• Conclude on the appropriateness of management and Board of Directors 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 Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors 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 auditors 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.

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 auditors 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:

1. As required by the Companies (Auditors Report) Order, 2020 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, 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) The Balance Sheet, the Profit and Loss Statement, the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Indian Accounting

Standards) Rules, 2015 except with regard to the compliance requirements under, “IND AS-19- Employee Benefits”, IND AS-36 Impairment of Assets, IND AS-38 Intangible Assets, Ind As-115 Revenue Recognition as stated in Basis for qualified opinion Para.

e) On the basis of the written representations received from the directors as on March 31, 2024, taken on record by the Board of Directors none of the directors are disqualified as on March 31, 2024, 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”.

(g) 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 has disclosed the impact of pending litigations as at 31st March, 2024 on its financial position in its financial Statements. Refer Note No: 32(viii) of the Financial Statements.

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

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

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

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

C) Based on audit procedures which we considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement.

v. The company has not declared dividend during the year F.Y. 2023-24.

vi. The reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 is applicable from 1 April 2023. Based on our examination which included test checks, the Company have

used accounting software for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software. Further during the course of our audit, we did not come across any instance of audit trial feature being tampered with.

The statutory requirement regarding retention of Audit Trail is not applicable since it is the first year of implementation of Audit Trail.

3. Further, with respect to the matter to be included in the Auditors Report under section 197(16):

In our opinion and according to the information and explanations given to us, the remuneration paid by the company to its directors during the current year is in accordance with the provisions of section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under section 197 of the Act.

For P.S.N RAVISHANKER & ASSOCIATES

Chartered Accountants FRN.003228S

	YADAVILLI SAI KARUNAKAR
	Partner
Place: Hyderabad,	Membership No. 207033
Date: 27-05-2024.	UDIN. 24207033BKETWW9540

ANNEXURE - A TO THE INDEPENDENT AUDITORS REPORT DT. 27-05-2024 ISSUED TO THE MEMBERS OF EVEREST ORGANICS LIMITED

(Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements section

of our report of even date)

(i) (a)

(A) The Company has maintained records showing only broad particulars including quantitative details and situation of Property, Plant and Equipment, on the basis of available information. However, as per the information and explanations furnished by the management and based on our examination of records, the system of tagging of fixed assets and computerization of records is to be implemented to be commensurate with the size of the company & level of operations.

(B) The Company has shown intangible assets in the financial statements showing a net Book Value of Rs.167.72 Lakhs after providing for write off for the financial year 2023-24. However, the records showing full particulars of these assets are to be maintained.

(b) As per the information and explanations furnished to us by the management, the Property, Plant and Equipment have been physically verified in a broad manner by the management according to a phased programme designed to cover all the items over a period of 2 years, which in our opinion is reasonable but can be improved, having regard to the size of the Company and nature of its assets. We are informed that, no material discrepancies were noticed on such verification, pending adjustment.

(c) The title deeds of all the immovable properties are pledged with HDFC Bank. As per the information and explanations given to us, the title deeds of all such immovable properties are held in the name of the Company.

(d) The Company has not revalued its assets during the FY 2023-24. Hence the question of change in value by more than 10% does not arise.

(e) Based on the information and explanations furnished to us, no proceedings have been initiated on (or) are pending against the Company for holding benami property under the Prohibition of Benami Property Transactions Act, 1988 (as amended in 2016) (formerly the Benami Transactions (Prohibition) Act, 1988 (45 of 1988)) and Rules made thereunder, and therefore the question of our commenting on whether the Company has appropriately disclosed the details in its financial statements does not arise.

(ii)(a) The physical verification of inventories has been conducted during the year by the management, in respect of majority of the high value items at reasonable intervals. In our opinion, the procedure, coverage and frequency of such verification is reasonable, but the system of verification should be further improved to be commensurate with the size of company & level of operations.

The discrepancies noticed on physical verification of inventory as compared to book records were less than 10% in aggregate for each class of inventory.

(b) During the year, the Company has been sanctioned working capital limits in excess of Rs. 5 crores, in aggregate, from HDFC Bank on the basis of security of current assets. The Company has filed monthly /Quarterly statements of current assets with the bank, which are generally in agreement with the unaudited books of accounts being maintained by the company. However, the differences were generally on account of:

i. Non-inclusion of inventory of stores and spares (except material consumables) in quarterly statements while the same is included in books of accounts.

ii. Non-inclusion of provision for expected credit loss or doubtful debts in monthly/quarterly statements while the same is included in books of accounts.

iii. Non-inclusion of unrealised foreign exchange (gain)/loss on trade receivables and trade payables in quarterly statements while the same is included in books of accounts.

iv. Sundry creditors stated under the stock statements were not reconciled with the Book Balances.

(iii) As per the information and explanations furnished to us by the management and as per the books of account and other documents examined by us, during the year, the company has not, made investments in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or any other parties. Accordingly, our reporting on all other subclauses in this clause is not required.

Further the company has made investments in Equity Shares amounting to Rs. 8.15 lakhs and Rs. 0.30 lakhs in Patancheru Enviro Tech Limited and State Bank of India respectively. These investments made by the company earlier and continuing in the current year, prima facie, appear to be in compliance with Provisions of Section 186 of the Companies Act, 2013.

(iv) As per the information and explanations furnished to us by the management and as per the books of accounts and other documents examined by us, the company has not given any loans, made investments in, or provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured, to companies, Firms, Limited Partnerships or any other parties to which provisions of Sections 185 and 186 of the Companies Act, 2013 are applicable. Hence Clause 3(iv) of CARO, 2020 is not applicable to the Company.

(v) According to the information and explanations given to us, the Company has not accepted any deposits or amounts which are deemed to be deposits to which the directives issued by the Reserve Bank of India and the provisions of Section 73 to 76 or the other relevant provisions of the Companies Act, and the rules framed there under, wherever applicable, from the public.

According to the information and explanations furnished to us by the management, there have been no proceedings before the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in this matter and no order has been passed by any of the aforesaid authorities.

(vi) As per the information and explanations furnished to us, prima facie, it appears that the company broadly meets the requirement prescribed by the Central Government under section 148(1) of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014. However, we have not been provided cost records maintained by the Company.

(vii)(a) As per the information and explanations furnished to us by the management and according to the records examined by us of the Company, undisputed statutory dues including Goods and Services Tax, Provident Fund, Employees State Insurance, Income Tax, sales tax, Service Tax, duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues have been generally deposited on time with the appropriate authorities, with occasional delays. According to the information and explanations given to us, there are undisputed amounts due and payable in respect of the aforesaid dues were outstanding as at 31-03-2024 for a period of more than six months from the date they became payable, except the following :

(b) Name of the Statute	Nature of the dues	Amount (Rs.)	Paid to which the amount related	Date of payment
Income Tax Act	Tax Deducted at Source on Salaries	1,94,331	Upto August, 2023	Not paid by 31.03.2024

(c) As per the information and explanations furnished to us by the management, there are no disputes with the appropriate authorities relating to Statutory dues.

(viii) According to the information and explanations given by the management and based on the procedures carried out during the course of our audit, we have not come across any transactions not recorded in the books of account which have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

(ix) (a) According to the records of the Company examined by us and the information and explanation given to us, the Company has repaid loans or other borrowings or in the payment of interest to the lenders during the year with 1 to 3 days of delay on few occasions and there is no continuing default in repayment of loans or other borrowings with any lender.

(b) According to the information and explanations given to us and on the basis of our audit procedures, we report that the Company has not been declared Wilful Defaulter by any bank or financial institution or government or any government authority.

(c) During the year, the company has obtained unsecured term loans from FedBank Financial Services Ltd, HDFC Bank, Sundaram Finance Ltd amounting to Rs. 30.30 lakhs, Rs.500 lakhs, Rs.49.99 Lakhs respectively. According to the information and explanations given to us, the term loans mentioned above, have been applied for the purposes for which they were obtained.

(d) According to the information and explanations given to us, and the procedures performed by us, and on an overall examination of the financial statements of the Company, we report that no funds raised on short term basis have been used for long-term purposes by the Company.

(e) According to the information and explanations given to us and on an overall examination of the financial statements of the Company, we report that the Company has not taken any funds from any entity or person on account of or to meet the obligations other entity coming under the category of subsidiaries, associates or joint ventures.

(f) According to the information and explanations given to us and procedures performed by us, we report that the Company has not raised loans during the year on the pledge of securities held in its subsidiaries company.

(x) (a) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, the reporting under clause 3(x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or private placement of shares or fully or partially or optionally convertible debentures during the year. Accordingly, the reporting under clause 3(x)(b) of the Order is not applicable to the Company.

(xi) (a) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company, noticed or reported during the year, nor have we been informed of any such case by the Management.

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

(c) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, and as represented to us by the management, no whistle-blower complaints have been received during the year by the Company. Accordingly, the reporting under clause 3(xi)(c) of the Order is not applicable to the Company.

(xii) As the Company is not a Nidhi company and the Nidhi Rules, 2014 are not applicable to it. the provisions of Clause (xii) of para 3 of the order are not applicable to the company.

(xiii) The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Indian Accounting Standard 24 “Related Party Disclosures” specified under Section 133 of the Act.

(xiv) (a) In our opinion and according to the information and explanation given to us, the Company has an internal audit system. The scope and coverage of the same needs to be enlarged to commensurate with the size and nature of its business.

(b) The reports of the Internal Auditor for the period under audit have been considered by us.

(xv) As per the information and explanations given to us and based on our examination of the company records, the Company has not entered into any non-cash transactions with its directors or persons connected with them. Accordingly, the reporting on compliance with the provisions of Section 192 of the Act under clause 3(xv) of the Order is not applicable to the Company.

(xvi) (a) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the reporting under clause 3(xvi)(a) of the Order is not applicable to the Company.

(b) The Company has not conducted non-banking financial / housing finance activities during the year. Accordingly, the reporting under clause 3(xvi)(b) of the Order is not applicable to the Company.

(c) The Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, the reporting under clause 3(xvi) (c) of the Order is not applicable to the Company.

(d) Based on the information and explanations provided by the management of the Company, the Group does not have any CICs, which are part of the Group. We have not, however, separately evaluated whether the information provided by the management is accurate and complete. Accordingly, the reporting under clause 3(xvi)(d) of the Order is not applicable to the Company.

(xvii) The Company has not incurred any cash losses in the financial year or in the immediately preceding financial year. (can be ascertained only after Profit and Loss).

(xviii) There has been no resignation of the statutory auditors during the year and accordingly the reporting under clause (xviii) is not applicable.

(xix) According to the information and explanations given to us and on the basis of the financial ratios (Also refer Note to the financial statements), ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the financial statements, our knowledge of the Board of Directors and management plans and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report that Company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability of the Company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date will get discharged by the Company as and when they fall due.

(xx) As at balance sheet date, the Company does not have any amount remaining unspent under Section 135(5) of the Act. Accordingly, reporting under clause 3(xx) of the Order is not applicable.

(xxi) The reporting under clause 3(xxi) of the Order is not applicable as the company is not required to prepare consolidated financial statements. Accordingly, no comment in respect of the said clause has been included in this report.

For P.S.N RAVISHANKER & ASSOCIATES

Chartered Accountants FRN.003228S

	YADAVILLI SAI KARUNAKAR
	Partner
Place: Hyderabad,	Membership No. 207033
Date: 27-05-2024.	UDIN. 24207033BKETWW9540

ANNEXURE-B TO THE INDEPENDENT AUDITORS REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTS OF EVEREST ORGANICS LIMITED

REPORT ON THE INTERNAL FINANCIAL CONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT, 2013 (“THE ACT”):

(Referred to in clause (f) of paragraph 2 under Report on other Legal and Regulatory Requirement section of our report of even date)

We have audited the internal financial controls over financial reporting of Everest Organics Limited (“the Company”) as of March 31,2024 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

BASIS FOR QUALIFIED OPINION :

We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing issued by the Institute of Chartered Accountants of India and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

1. Material purchased and sent directly for job work from supplier, the company has raised Material Receipt Note (MRN) without actual receipt of goods from supplier.

2. The company has not obtained confirmations from the effected parties for which the outstanding credit balance was set off against the outstanding debit balance.

3. Based on our audit, we observed that, in few instances,

- the company has not obtained authorisation/data for accepted and rejected quantity of material from Quality Control department.

- The company accepted/received quantity in excess of authorised Purchase Order

- The company purchased goods from vendors different from that of recommended vender as per Quotation comparative statement.

- There are instances where Purchases are recognised before e-way bill date.

- Sales are being recognised before dispatch.

- ITC on expenses Paid through credit card are not being claimed.

OPINION :

In our opinion, the company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2024, based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

However, the following internal financial controls are essential and desirable.

a) The system of defining and operationalizing a standard operating procedure for Capitalization of assets and retirement of assets and /or provisioning for impairment (if any) needs to be strengthened to be commensurate with the size of the company & level of operations.

b) The system of physical verification of fixed assets, tagging of fixed assets, and computerization of records needs to be improved to be commensurate with the size of the company & level of operations.

c) The system of physical verification of inventories, tagging of inventories, recognition & valuation of inventories needs to be further improved to be commensurate with the size of company & level of operations.

d) The system of obtaining periodical confirmation of balances from Debtors, Creditors, Advances, Deposits, etc. needs to be improved to be commensurate with the size of company.

e) The system of obtaining comparative quotations from different independent parties and keeping them on record needs to be further strengthened to be commensurate with the size of the company and nature of operations of the Company.

f) The method of customer evaluation needs to be further improved for extending credit to the customers.

g) Sales are being made to parties previously declared as Bad debts, it should be avoided.

MANAGEMENTS RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS :

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

AUDITORS RESPONSIBILITY :

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing issued by the Institute of Chartered Accountants of India and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures

selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING :

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that:

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

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

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys 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 financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

For P.S.N RAVISHANKER & ASSOCIATES

Chartered Accountants FRN.003228S

	YADAVILLI SAI KARUNAKAR
	Partner
Place: Hyderabad,	Membership No. 207033
Date: 27-05-2024.	UDIN. 24207033BKETWW9540