Winsome Yarns Ltd. — Annual Report 2021

Jul 3, 2021

WYL/SECT/NSE/ 03.07.2021

• TfIsJ • i Yarns Limited Regd. Office : SCO # 191-192, Sector 34-A, Chandigarh - 160 022 INDIA CIN L17115CH1990PLC010566 Phones : +91-172-2603966 4612000, 4613000 Fax: +91-172-4614000 e-mail: info©winsomegroup.com website: www.winsomegroup.com

To, NATIONAL STOCK EXCHANGE OF INDIA LTD "EXCHANGE PLAZA"

BANDRA-KURLA COMPLEX BANDRA (E), MUNIBAI - 400051

Script Code: WINSOME

Sub: Audited Financial Results for the year 2020-21

Dear Sir,

This is to inform you that after approving the financial results and other documents by the Board of Directors in their meeting held on 29.06.2021, we had uploaded the same on the portal, but now we observed that some documents were missing in the pdf.

In this regard, we are very sorry for that and now the complete set of following documents are sending herewith.

• 1. Audited Financial Results of the Company for the Quarter and year ended March 31, 2021.
• 1. Statement of Assets and Liabilities for the half year ended March 31, 2021.
• 3.. Cash flow statement on standalone and consolidated basis, pursuant to Regulation 33(3)(g) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
• 1. Auditors Report and Statement of Impact of audit qualifications on the basis of standalone and consolidated financials for the year 31.03.2021.

We are again very sorry for inconvenience.

We hope, you will find the same in order.

Thanking you,

Yours fPAE) ihfll For W LIMITED

(RAJPAL S. Dy. Manager (Legal & Secretarial) Mobile No. 9855601267 Email: csharewinsomegroup.com

End: as above.

Works : Village Kurawala, Barwala Road, Derabassi-140507, Distt. Mohali (Pb.) Ludhiana : Office No. 3, MD Complex, Near Samrala Chowk, Ludhiana -141008 Tirupur : No.2, First Floor, Mahaveer Colony, Valipalayam Main Road, Tiruur - 6416n1

			WINSOME YARNS LIMITED
		Regd.Office: SCO # 191-192, Sector 34-A, Chandigarh - 160022
	CIN: L17115CH1990PLC010566,Email - cshare@winsomegroup.com, Website - www.winsomegroup.com Phone No.91-172-4613000, Fax No.91-172-4614000
	AUDITED FINANCIAL RESULTS FOR THE QUARTER AND YEAR ENDED ON 31ST MARCH 2021
PART-I											Rs.in Lakhs
				Standalone					Consolidated
Sr. No.	Particulars	Audited	Unaudited	Audited	Audited		Audited	Unaudited	Audited	Audited
			Quarter Ended		Year Ended			Quarter Ended		Year Ended
										31.03.2021 31.12.2020 31.03.2020 31.03.2021 31.03.2020 31.03.2021 31.12.2020 31.03.2020 31.03.2021 31.03.2020
	Revenue
	Income from operations	1,013	1,211	1934	3571	10,686	1,013	1211	1934	3571	10686
$\overline{2}$	Other Income	3	$\boldsymbol{\Lambda}$	53	$\overline{17}$	119	3		53	17	119
$\overline{3}$	Total Revenue(1+2)	1,016	1,215	1.987	3588	10,805	1.016	1.215	1,987	3588	10,805
4	Expenses
	(a) Cost of Material consumed	64	106	259	504	4208	64	106	259	504	4208
	(b) Purchase of stock-in-trade			285		285			285	n	285
	(c) Excise Duty
	(d) Changes in Inventories of finished goods, Work in progress & stock in trade	(77)	292	615	87	1,268	(77)	292	$-615$	87	1268
	(e) Employee Benefit expense	527	483	553	1780	2.594	527	483	553	1780	2594
	(f) Finance cost	$\mathbf 0$	6		6	6	0	6	$\mathfrak{p}$		6
	(g) Depreciation & Amortisation expenses	375	372	381	1493	1,525	375	372	381	1493	1525
	(h) Other expenses	618	554	1002	1839	4,327	618	555	1003	1839	4333
	Total Expenses	1,507	1,813	3.097	5709	14,213	1,507	1,814	3,098	5,709	14,219
5۰	Profit /(Loss) from Operations before Exceptional Items and tax.(3-4)	(491)	(598)	(1, 110)	(2, 121)	(3, 408)	(491)	(599)	(1, 111)	(2, 121)	(3, 414)
6	Exceptional Items					(1, 414)					(1, 414)
$\overline{7}$	Profit /(Loss) before Tax (5+6)	(491)	(598)	(1, 110)	(2, 121)	(4, 822)	(491)	(599)	(1, 111)	(2, 121)	(4,828)
8	Tax Expense
	- Current Tax
	- Earlier years Tax
	- Deferred Tax Liability/(Asset)			44		44			44		44
9	Profit/(Loss) after tax (7-8)	(491)	(598)	(1, 154)	(2, 121)	(4, 866)	(491)	(599)	(1, 155)	(2, 121)	(4, 872)
10	Other Comprehensive income			65		65	ΩI		65		65
11	Total Comprehensive income(9+10)	(491)	(598)	(1,089)	(2, 121)	(4, 801)	(491)	(599)	(1,090)	(2, 121)	(4, 807)
12	Paid - up Equity Capital (Face Value - Rs. 10/- each)	7.071	7.071	7,071	7.071	7.071	7,071	7,071	7,071	7,071	7,071
$\overline{13}$	Reserve excluding revaluation reserve as per Balance Sheet of Previous accounting year				(43,929)	(41, 807)				(43,919)	(41, 798)
14	Earnings Per Share of Rs 10/- each (Not Annualised) - Basic & Diluted (Rs.)	(0.69)	(0.85)	(1.54)	(3.00)	(6.79)	(0.69)	(0.85)	(1.54)	(3.00)	(6.80)

EVART. AST E

Notes:
-1	The above unaudited financial results were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on June 29, 2021.
$\overline{2}$	The Statutory Auditors of the Company have carried out the audit of the aforesaid financial results for the quarter and year ended on March 31, 2021 in accordance with Regulation 33 of the SEB! (Listing Obligation and Disclosures Requirements) Regulations, 2015,
3	In line with the provisions of Ind AS-108 'Operating Segments' as notified under the Companies (Ind AS) Rules, 2015, and as provided in section 133 of the Companies Act, 2013, the operations of the Company fall under one line of business activity namely, Textiles (Yarn, Knitwear & related revenue), which is considered to be the only reportable segment by the management.
4	COVID-19 pandemic has caused serious disruptions on the global economic and business environment and there is a huge uncertainty with respect to its severity, which cannot be reasonably ascertained. However, the Company has evaluated and factored the possible effects in its working to the extent possible, including likely impact that may result from the COVID-19 pandemic as well as all events and circumstances upto the date of approval of these financial results on the carrying value of its assets and liabilities as at 31st March 2021. In order to mitigate the uncertainty due to frequent lock-down of operations for reasons of observing a high level of health and safety, the Company has undertaken manufacturing operations on job work basis. The operations of the Company are running at substantially below optimal levels. The operations are expected to remain impacted until customer orders return to normal levels, and supply chain stabilises, and the availability of manpower is consistent. The impact of any event and developments occurring after the financial results for the quarter and year ended March 31, 2021 may differ from that estimated as at the date of approval of these financial results and will be recognised prospectively. COVID-19 pandemic has caused serious disruptions on the global economic and business environment and there is a huge uncertainty with respect to its severity, which cannot be reasonably ascertained. However, the Company has evaluated and factored the possible effects in its working to the extent possible, including likely impact that may result from the COVID- 19 pandemic as well as all events and circumstances upto the date of approval of these financial results on the carrying value of its assets and liabilities as at 31st March 2021 In order to mitigate the uncertainty due to frequent lock-down of operations for reasons of observing a high level of health and safety, the Company has undertaken manufacturing operations on job work basis. The operations of the Company are running at substantially below optimal levels. The operations are expected to remain impacted until customer orders return to normal levels, and supply chain stabilises, and the availability of manpower is consistent. The impact of any event and developments occurring after the financial results for the quarter and year ended March 31, 2021 may differ from that estimated as at the date of approval of these financial results and will be recognised prospectively.
5	Auditors remarks on accounts for the quarter and year ended March 31, 2021: (1) Regarding preparation of accounts on going concern basis despite accumulated losses of the Company being substantially in excess of its net worth: Management Response: Consolidated response as part of Note No. 6 hereinbelow; (2) Regarding non-provision for interest and penalty on Borrowings and long outstanding receivable: Management response: The interest on borrowings of the Company to the extent not accounted in books of account of the Company will be considered on settlement / restructuring of borrowings and efforts are being made to recover the outstanding receivable, Provision will be made upon finalisation; (3) Regarding pending receipt of part money of GDR invested in money market instrument outside India, non accounting of the same at fair value and non-recognition of exchange fluctuation in respect thereto: Management response: Consolidated response as part of Note No. 7 hereinbelow; (4) Regarding provisions made in books of account in case of investments in subsidiaries, amounts to be written off/written back and adjustment/set off of payment of receivables/payable from/to overseas parties/suppliers, which are pending necessary approval of the competent authority: Management Response: The Company has filed uptodate returns, and approvals for adjustments will be effected in due course; (6) Regarding pending confirmation/reconciliation of balances of certain receivables, bank balances, payables, secured loans, contingent and other liabilities, loans and advances - impact unascertainable): Management response: Confirmation and reconciliation of balances is carried out on an ongoing basis and adjustments, if any, arising therefrom are accounted from time to time.
6	Edelweiss Assets Reconstruction Company Limited (EARC), an Asset Reconstruction Company, has claimed that it is an assignee of debt payable by the Company to certain banks. In determination and recovery proceedings brought by Banks and EARC against the Company, the amount claimed was disputed by the Company and not acknowledged as its liability. The Company has also disputed the claim as being barred by limitation. Additionally, the Company has preferred a counter claim against the claimants for the losses caused by them to the Company. The Company initiated settlement discussions with certain banks, which were without prejudice to its rights, and the offer proposed by the Company was not accepted. The Financial Commissioner of the State of Punjab has since determined that the Agreements for Assignment of debt by lenders of the Company to EARC are insufficiently stamped, and therefore, defective EARC had filed a Petition to initiate insolvency proceedings against the Company, which was been dismissed by the Hon'ble NCLT vide its order dated 14th March 2020 upon an observation that the assignment deed is unenforceable.An appeal has been filed by EARC against this order Indian Overseas Bank has initiated insolvency proceedings against the Company before NCLT which is being contested by the Company. The Company does not consider itself liable towards Claims against it, and accounting of Claims by and against the Company will be accounted on resolution thereof. The Management expects that cash flows of the Company in future will be sufficient to meet its admitted liabilities, and the accounts of the Company have therefore, been prepared on 'Going Concern' basis.
$\overline{7}$	GDR issued earlier by the Company, listed on Luxemburg Stock Exchange, were delisted. USD 48,19,980 (Rs. 2568.41 Lakhs without exchange adjustment) is invested in money market instruments outside India to use the amount for earmarked purposes, i.e., setting up a Yarn Dying Plant. The Plant could not be implemented as requisite support was then not extended by the lenders. The final effect of $\left[$ exchange rate fluctuation will be accounted at the time when the amount is repatriated. The Company is filing an Appeal against the order of SEBI imposing penalty in relation to matters connected with issue fCDR
8	The NSE and BSE had suspended trading of Equity shares of the Company due to delay in payment of certain amounts to the NSE and BSE. The delay occurred due to a technical glitch in the banking network wherefrom the payment was initiated by the Company. The Company has represented to the Stock Exchanges for review and revocation of their decision to suspend trading, and has also filed an appeal against the decision of the Stock Exchanges before SAT.
9	The figures of last quarter are the balancing figures between audited figures in respect of the full financial year and the published year-to-date figures upto the thind quarter of the current financial year.
10	The figures of last quarter are the palanting rightes between publics in the context of the confirm to the current period's classification.
	EN EN SIBILE Chandigarh
Place:	Manish Bagrodia

$\sim 10^6$

$\label{eq:2} \frac{1}{\sqrt{2\pi}}\left(\frac{1}{\sqrt{2\pi}}\right)^{1/2}\frac{1}{\sqrt{2\pi}}\,.$

Winsome Yarns Limited
SCO -191,192 Sector 34-A, Chandigarh -160022
Statement of Asset and Liabilities as on 31.03.2021

		(Rs. In Lakhs)
Particulars	Standalone		Consolidated
	Auidted		Auidted
	31.03.2021	31.03.2020	31.03.2021	31.03.2020
ASSETS
(1) Non-current assets
(a) Property, plant and equipment	17,674	19,162	17,674	19,162
(b) Capital Work In Progress	0	.∙
(c) Other Intangibles Assets	17	22	17	22
(d) Financial assets	0
(e) Investments	0
(f) Loans		2	$\overline{2}$	$\overline{2}$
(g) Deferred tax assets (net)			2,731	2,905
(h)Other Non- Current assets	2.731	2,905	20,423	22,091
Sub Total - non current assets	20,423	22,091
(2) Current assets	1,070	1,159	1,070	1,159
(a)Inventories
(b) Financial assets (i) Loans	38	38	38	38
(ii) Investment	2,568	2,568	2,568	2,568
(iii) Trade receivables	1,391	1,519	1,436	1,564
(iv) Cash and cash equivalents	152	186	158	$\overline{192}$
(v) Other bank Balance	31	31	31	31
(vi) Other financial assets	0
(vii) Current Tax Assets	136	122	136	$\overline{122}$
(viii) Other current assets	753	671	753	671
Sub Total - current assets	6,139	6,294	6,190	6,345
Total of assets (1+2)	26,562	28,385	26,614	28,436
B. EQUITY AND LIABILITIES
1. Equity
(a) Equity share capital	7,071	7,071	7,071	7,071
(b) Other equity	(43, 929)	(41,808)	(43, 918)	(41, 798)
Sub total - Total equity	(36, 858)	(34, 737)	(36,847)	(34, 727)
LIABILITIES
2. Non-current liabilities
(a) Deferred grant income	69	69	69	69
(b) Provisions	234	164	234	164
Sub total - Non current liabilities	303	233	303.	233
(3) Current liabilities
(a) Financial liabilities
(i) Borrowings	55,658	55,658	55,658	55,658
(ii) Trade Payables
(a) Total outstanding dues of Micro and small enterprises	98	124	98	124
(b) Total outstanding dues of creditors other than Micro and small
enterprises	3,282	3,483	3,291	3,492
(iii) Other financial liabilities (iv) Deferred grant income	3,703 9	3,391 9	3,735 9.	3,423 9
(v) Other current liabilities	346	203	346	203
(b) Provisions	21	21	21	21
Sub Total - current liabilities	63,117	62,889	63,158	62,930
(4) Total of liabilities (2+3)	63,420	63,122	63,461	63,163
Total of equity and liabilities (1+4)	26,562	28,385	26,614	28,436

D.P

Winsome Yarns Limited Regd. Office: SCO 191-192, Sector 34-A, Chandigarh -160022 STATEMENT OF STANDALONE CASH FLOW FOR THE YEAR ENDED ON MARCH 31, 2021

	Particulars		Year Ended March 31, 2021	Year Ended March 31, 2020
A.	CASH FLOW FROM OPERATIONS
	Loss before tax		(2, 121.17)	(4,756.61)
	Adjustment for:
	Depreciation		1,493.28	1.525.26
	Amortisation of lease hold land		3.31	3.31
	Prorata capital subsidy			(9.23)
	(Profit)/Loss on sale of fixed assets
	Interest expense		6.03	5,95
	Interest income		(12.17)	(27.03)
	Operating profit before working capital changes		(630.73)	(3, 258.35)
	Adjustment for working capital changes:
	Increase/(Decrease) in financial liabilities
	Trade payables		(226.69)	(697.23)
	Revenue received in advance			(123.92)
	Other payables		311.86	583.56
	Increase/(Decrease) in other current liabilities		142.75	130.82
	Increase/(Decrease) in provisions (Increase)/Decrease in financial assets		70.60	(47.13)
	Trade and other receivables		127.58	216.47
	Loans		0.06	(13.39)
	Investment
	Interest accrued but not due
	Other Ioan			1,012.34
	(Increase)/Decrease in other current assets		(81.35)	254.43
	(Increase)/Decrease in other non current assets		171.27	251.76
	(Increase)/Decrease)in inventories		88.97	1,710.08
			(25.64)	19.44
	Current tax liabilities (Net)		(14.55)	(12.06)
	Net cash flow from operating activities	(A)	(40.19)	7.38
В.	CASH FLOW FROM INVESTING ACTIVITIES
	Additions to property, plant and equipment			(13.80)
	Reductions to property, plant and equipment
	Interest receipts		12.17	27.03
	Net cash used in investing activities	(B)	12.17	13.23
C.	CASH FLOW FROM FINANCING ACTIVITIES
	Interest paid		(6.03)	(5.95)
	Increase/(Decrease) in financial liabilities
	Proceeds from borrowings			(0.00)
	Repayment of borrowings
	Net cash used in financing activities	(C)	(6.03)	(5.95)
	NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENT!	$(A+B+C)$
	Cash and cash equivalents - Opening balance		(34.05)	14.66
	Cash and cash equivalents - Closing balance		216.80 182.75	202.14 216.80
	(Figures in bracket represents cash outflow)

Winsome Yarns Limited Regd. Office: SCO 191-192, Sector 34-A, Chandigarh -160022
STATEMENT OF CONSOLIDATED CASH FLOW FOR THE YEAR ENDED ON MARCH 31, 2021

	Particulars		Year Ended March 31, 2021	Year Ended March 31, 2020
A.	CASH FLOW FROM OPERATIONS
	Loss before tax		(2, 121.17)	(4,762.84)
	Adjustment for:
	Depreciation		1,493.28	1,525.26
	Amortisation of lease hold land		3.31	3.31
	Prorata capital subsidy			(9.23)
	(Profit)/Loss on sale of fixed assets
	Interest expense		6.03	5.95
	Interest income		(12.17)	(27.03)
	Operating profit before working capital changes		(630.73)	(3, 264.58)
	Adjustment for working capital changes:
	Increase/(Decrease) in financial liabilities
	Trade payables		(226.69)	(696.69)
	Revenue received in advance			(123.92)
	Other payables		311,86 142.75	591.81 130.82
	Increase/(Decrease) in other current liabilities Increase/(Decrease) in provisions		70.60	(47.13)
	(Increase)/Decrease in financial assets
	Trade and other receivables		127.58	213.72
	Loans		0.06	(13.39)
	Investment
	Interest accrued but not due
	Other loan ·			1,012.34
	(Increase)/Decrease in other current assets		(81.35)	254.43
	(Increase)/Decrease in other non current assets		171.27	251.75
	(Increase)/Decrease)in inventories		88.97	1,710.08
			(25.64)	19.24
	Current tax liabilities (Net)		(14.55)	(12.06)
	Net cash flow from operating activities	(A)	(40.19)	7.18
В.	CASH FLOW FROM INVESTING ACTIVITIES
	Additions to property, plant and equipment			(13.80)
	Reductions to property, plant and equipment
	Interest receipts		12.17	27.03
	Net cash used in investing activities	(B)	12.17	13.23
C.	CASH FLOW FROM FINANCING ACTIVITIES
	Interest paid		(6.03)
	Increase/(Decrease) in financial liabilities			(5.95)
	Proceeds from borrowings
	Repayment of borrowings
	Net cash used in financing activities	(C)	(6.03)	(5.95)
D,	CHANGE IN CURRENCY TRANSLATION RESERVE ARISING ON CONSOLIDATION
	Effect of currency translation on bank balance	(D)		0.62
	NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENT Cash and cash equivalents - Opening balance	$(A+B+C)$	(34.05)	15.08
	Cash and cash equivalents - Closing balance		223.49 189.44	208.41
				223.49

(Figures in bracket represents cash outflow)

Independent Auditor's Report on Standalone Financial Result of the Winsome Yarn Limited Pursuant to the Requisition 33 of the SEBI (Listing Obligations and Disclosure Requirements) Requisions, 2015

To Board of Director of Winsome Yarn Limited

Oualified Opinion

We have audited the accompanying Standalone annual financial result ("the statement") of Winsome Yams Limited ("the Company"), for the year ended 31^st March 2021, attached herewith, being submitted by the company pursuant to the requirements of regulations 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial results.

• $\langle 1 \rangle$ Present financial results in accordance with the requirements of Regulation 33 of the Listing Requiations, except for the effects/possible effects of the matters described in paragraph under 'Basis for Qualified Opinion',
• $(i)$ give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the standalone net loss after tax and other comprehensive income/loss of the Company as at March $31^{\text{st}}$ , 2021, except for the effects/possible effects of the matters described in paragraph under 'Basis for Qualified Opinion'.

Basis for Qualified opinion

1. In view of accumulated losses of the Company as at the end of March 31, 2021, the net worth of the Company as at that date being negative, continuous losses, negative cash flows and due to financial constraints, resignation of KMP and non-deposit of statutory dues on time, material uncertainty exists about the company ability to continue as going concern. The decision of management of the Company to prepare the accounts of the Company on going concern basis for reasons that, frefer to note no. 6 of standalone financial result) The Management expects that its cash flows of the Company in the near future will be sufficient to meet the resulting payment and repayment obligations as may arise as a result of restructuring agreement, and the accounts of the Company have therefore, been prepared on Going Concern basis, there would arise a need to adjust the realizable value of assets and liabilities in the event of failure of assumptions as to going concern, and in the absence of impact of aforesaid assumptions having been un-ascertained, we are unable to comment thereon,

1. South-Ex Plaza II, South Extension 2. New Delhi 110 019. India | +91 1141649733 | info@ks-ca.com | www.ks-ca.com Dietapul Agrat Peer Review Certificate No. 011580 Dated 05thMarch 2019

2. 1. The Financial result for the year ended on March 31, 2021 are understated due to:
3. a.) Non provisioning of interest cx cn.es.,. on borrowings, of Rs. 14852.97 Lakhs for the year ended on March 31, 2021. •(Rs.. 12990.29 lakhs for the year ended on March 31, 2020), and Rs. 67556,26 Lakhs being aggregate amount of interest unprovided till the year ended March 31, 2021 (Rs, 52703.29 Lakhs Ull the year ended March 31, 2020), and further am>urttowrdn penal in¹ te•rest., penalty, interest to E.ARC payabk. etc. as maybe charged by the e. . (In the :abSeice of statement of account, the above amount has been arrived at es per estimates of the Company, and the aggregate unprovided amount in books of account of the Company is not ascertainable with accuracy)
4. b) Non provisioning against long outstanding receivables of Rs.602.50 Lakhs (Rs. 521.57 Lakhs as at Mar.h 31, 2U20):iiid.uding of oVerseas overdue trade receivables, Further Re-instatement of feVi nbkors, advance from customers, creditors for export, etc on exchange fluctuation is not recognized in line with Ind AS - 21 "The Effects of changes in Foreign Exchange Rates" the effect of which we are unable to comment.
5. 7, As stated in note no. 7 of.standalooe. financial statement, investment in USD 48,19,980 in Aris.e Money Market Fund. Aoper iofotmation.give•n..to us, the balance above is as per rate of exchange prevaRing .a thø• tLne & investment, and is subject to adjustment in rete of foreign exchange and. .n:nr.ua:ls On rnOfly market investments. The nonaccounting of investment at fair value and non-recognition of exchange fluctuation in respect thereto is not in line with Lod AS 109 "9n:a:ridal Instruments' and Ind A&21 The Effects of Changes in Foreign Exchange Rates". in the absence of any confirmation and working, the effect of over/under valuation of investment and over/under statement, we are unable to cornrent
6. 1. Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/ set off of payment of receivables/payables from/to overseas parties/suppliers, which is ...ending nOc.ernery approval of the competent authority.
7. 1. The Internal Control Systems need to be further strengthened in order that they are comrnesurate with the size oi the ChlTtpafly and the nature of its business more piticukJy in areas e, purchL .s and consumpt'on of materials, allocation of overheads, ehargin7 of expenses.set-ff of and invoicing of sale of goods and services.
8. 1. Confirmation of balances. and .recenc.4iatio.n thereof with respective parties are pending, which include balances pertainih to.,. accounts receivable and accounts payable, bank balances (including FDR), other ..nnrrent assets, advance for leasing, security deposit with government, loans and .advenees recoverable, secured loans, other liabilities, provisions, and contingent haL' es All balances have been certified by the nianagemer'E of the Company In the absence of the Company having aforementioned

details and confirmations, being commented. Furthr provide greater reliability, the in:.nc t threof is un:ascert.ain.able, and therefore, not strenqtiientrtg of internal controls by the Company will

1. In earlier year, management noticed and found fraud in the nature of shortage/misappropriation of goods stored at its Ludhiana Branch during the financial year 2017-18 by its employee/si list which the .management took action by lodging F.I.R. with the concerned Police. SttIa and investigation in the matter is pending. The misappropriation Of .goods has been valued at Rs. 70 Lakhs. against which some of the parties to whom goods. were sold by the concerned employees have confirmed having received the goods and also confirmed to the Company as having made payment against the same. The Cmp.ahy also ed its claim to insurance company under Employee Fidelity Insurance, effect rvhorebf has been accounted in the books of account of the Company, considering the Qflfi0h1g recovery process of its claims and as per information given to us by.man..gbent the matter is still pending and same as it is previous financial

We conducted our audit in accordftec. .rLh the standard on auditing ('SA") specified under section 143(10) of the Act Cur esporrsiLUties under those standards are further describes in the Auditor's Responsibilities for the..aCt of the statement section of our report. We are independent. of the company in adOprdance ruith the code of ethics issued by the Institute of Chartered Accountants of I:ndC1 (the .IcAr:)igetli;e:r with the ethical requirements that are relevant to our audit of the financir statements under the provisions of the act and the rules thereunder, and we have fUlfilled ...... other ethical responsibilities in accordance with these requirements and the code of ethics. We believe that the audit evidence obtained by us is sufficient and appropri:atv rd provIdo a basis for our qualified opinion.

Emphasis of matter

• ) As per information given to us, the company has made advance payment of Rs, 2268.50 Lakhs to Ede.lweis .Av;nts Rcconstru.cttdn Company for advance against restructuring of loah Loan eutrtCm.d.irg from Edelweiss Assets Reconstruction Company amountinç of Re. 4771..08 .Lakhs
• iii) The company has not rndde ru\,inir.n for the jmd raised by various authorities as the matters are p:OndirbOfOrC Van.0U5 apieliate forum. We are unable to comment upon •possible impactcin...the standalone, fiancial statements for the year 31 March, 2021.
• iii) We draw attention to the users of the finaflcial statement o.f the company ended on 1st March, 2021 that the lender Edelweiss Assets Reconstruction Company Limited arid Indian Overseas bank has filed an application against company under section 7 of the Insolvency & Bankruptcy Code, 2016 before National Company Law Tribunal, Chan.d.iga:rh Branch.. The Company Petition filed by .Edelweiss Asset Reconstruction Company Limi the Company for irñation of Corporate Insok/ency Resolution: Process t(-tki') under rnsolvery arid BaiiKrptcy Code (18C),

3

:1'

2016 has been rejected by National Company Law Tribunal, Chandigarh Bench vide its Order dated 17.03.2020 and the matter is pending before the National Company Law Appellate Tribunal.

Our opinion is not modified in respect of these matters.

Responsibilities of Management and Those Charged with Governance for the Statement

This Statement has been prepared on the basis of the standalone annual audited financial statements and has been approved by the Company's Board of Directors. The Company's Board of Directors is responsible for the preparation and presentation of the Statement that gives a true and fair view of the net profit/loss and other comprehensive income and other financial information of the Company in accordance with the accounting principles generally accepted in India, including find AS prescribed under Section 133 of the Act, read with relevant rules issued thereunder and other accounting principles generally accepted in India, and in compliance with Regulation 33 of the Listing Regulations. 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 Statement that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the Statement, the Board of Directors 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 the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic. alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Statement

Our objectives are to obtain reasonable assurance about whether the Statement as a whole is 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 Standards on Auditing, specified under section 143(10) of the Act, 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 this Statement.

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

· Identify and assess the risks of material misstatement of the Statement, 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 in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3) (1) of the Act, we are also responsible for expressing our opinion on whether the Company has in place adequate internal financial controls with reference to financial statements 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 the management.

• Conclude on the appropriateness of the management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to exents 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 Statement 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 Statement, including the disclosures, and whether the Statement represents the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the Company to express an opinion on the Statement. We are responsible for the direction, supervision and gerformance of the audit of financial information of the Company of which we are the independent auditors, For the subsidiaries included in the Statement, which have been audited by other auditors or not have been audited by other auditors, such other auditors or management remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

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 requir.em.e.nt\$. r ..J:ing independe.n., and to communicate with them all relationships and other matters that may reasonably be th.ought to bear on our independence, and where plJ.d related safeguards

Other Matter

The annual financial resuftc included the results for the quarter ended 31St March 2021 being the balancing dgu.re between the audited fi.gu1rés in respect of the full financial year and the published unaudited ; year to date figures up to the third quarter of the current financial year which were subject tO limited review by us.

For Khandelia & Sharma Chartered .Accountants Arm Registration No S1O!75C

( 1 TffT -

Arun Khandeha Pace New Delhi Partner Datem 2June-2021 rrnbershp No.: 089126 ICAl ODIN No.: 210891:25AAAAFO712

STATEMENT OF IMPACT OF AUDIT QUALIFICATIONS (FOR AUDIT REPORT WITH MODIFIED OPINION) SUBMITTED ALONG-WITH ANNUAL AUDITED FINANCIAL RESULTS - STANDALONE BASIS - WINSOME YARNS LIMITED

Statement of Impact of Audit Qualifications for the Financial Year ended March 31, 2021 [See Regulation 33/52 of the SEBI (LODR) (Amendment) Regulations 20161

							(Rs. in Lakhs)
1.	SI.	Particulars		Audited Figure	(as	Adjusted	Figures
	No.			reported	before	(audited	figures
				adjusting	for	after adjusting for
				qualifications)		qualifications)*
	1	Turnover! Total income			3588		3588
	2	Total Expenditure			5709		26873
	3	Net Profit/(Loss)			(2121)		(23285)
	4	Earnings Per Share			(3.00)		(32.93)
	5	Total Assets			26562		27,863
	6	Total Liabilities			63420		130976
	7	Net Worth			(36858)		(105016)
	8	Any other financial item(s) (as felt					-
		appropriate by the management)			-
		* all adjustments are without tax effect.
II.		Audit Qualifications
	(a)	of Details Audit	Reference	invited to is	Para (4)		of Independent
		qualification	Auditor's	Report on	Standalone	audited	financial
			results:
			(i)	of view In	accumulated	losses	of the
				Company as at the end of March 31, 2021, the
				net worth of the Company as at that date
				being negative, continuous losses, negative
				cash flows and due to financial constraints,
				resignation	of KMP	non-deposit and	of
				statutory dues on time, material uncertainty
				exists about the company ability to continue
				going as	concern.	The	of decision
				management of the Company to prepare the
				accounts of the Company on going concern
				basis for reasons that, (refer to note no. 6 of
				standalone financial result) The Management
				expects that its cash flows of the Company in

the near future will be sufficient to meet the resulting payment and repayment obligations as may arise as a result of restructuring agreement, and the accounts of the Company have therefore, been prepared on 'Going Concern' basis, there would arise a need to adjust the realizable value of assets and liabilities in the event of failure of assumptions as to going concern, and in the absence of impact of aforesaid assumptions having been un-ascertained, we are unable to comment thereon. absence of impact of aforesaid assumptions having been Unascertained, we are unable to comment thereon

(ii) The results for the quarter ended on March 31, 2021 and the year ended on March 31, 2021 are understated due to:

• (a) Non provisioning of interest expenses on borrowings of Rs. 3888.11 Lakhs for the quarter ended and Rs. 14852.97 Lakhs for the year ended on March 31, 2021 (Rs. 3384.63 Lakhs for the quarter ended and Rs. 12890.28 Lakhs for the year ended on March 31, 2020, and Rs. 67556.26 Lakhs being aggregate amount of interest unprovided till the year ended March 31, 2021 (Rs. 52703.29 Lakhs till the year ended March 31, 2020), and further amount towards penal interest, penalty, etc. as may be charged by the lenders. (In the absence of statement of account, the above amount has been arrived at as per estimates of the Company, and the aggregate unprovided amount in books of account of the Company is not ascertainable with accuracy).
• (3) Non provisioning against long outstanding receivables of Rs. 602.50 Lakhs (Rs. 521.57 Lakhs as at March 31, 2020) including of overseas overdue trade receivables.Further the accounting for exchange fluctuation in respect of overseas trade receivables and export advances is

Page 2of8

not in line with Ind AS-21 "The Effects of Changes in Foreign Exchange Rates" and accordingly, we are unable to comment its impact on financial statement.

• (iii) As stated in note no. 7 of standalone financial statement, investment in USD 48,19,980 in Arise Money Market Fund. As per information given to us, the balance above is as per rate of exchange prevailing at the time of investment, and is subject to adjustment in rate of foreign exchange and accruals on money market investments. The nonaccounting of investment at fair value and non-recognition of exchange fluctuation in respect thereto is not in line with Ind AS 109 "Financial Instruments" and Ind AS-21 "The Effects of Changes in Foreign Exchange Rates". In the absence of any confirmation and working, the effect of over/under valuation of investment and over/under statement, we are unable to comment.
• (iv) Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/set off of payment of receivables/payable from/to overseas parties/suppliers, which is pending necessary approval of the competent authority.
• (v) The Internal Control Systems need to be further strengthened in order that they are commensurate with the size of the Company and the nature of its business, more particularly in areas of, purchases and consumption of materials, charging of expenses, set-off of balances, and invoicing of sale of goods and services.
• (vi) Confirmation of balances and reconciliation thereof with respective parties are pending, which include balances pertaining to, accounts receivable and accounts payable, bank balances (including FDR), other current assets, advance for leasing, security deposit with government, loans and advances recov-

Page3of8

		erable, secured loans, other liabilities, provi sions, and contingent liabilities. All balances have been certified by the management of the Company. In the absence of the Company having aforementioned details and confirma tions, the impact thereof is unascertainable, and therefore, not being commented. Further strengthening of internal controls by the Com pany will provide greater reliability.
		earlier year,' management (vii) noticed In and found fraud in the nature of shortage/misap propriation of goods stored at its Ludhiana Branch during the financial year 2017-18 by its employee/s against which the management took action by lodging F.I.R. with the con cerned Police Station and investigation in the matter is pending. The misappropriation of goods has been valued at Rs. 70 Lakhs against which some of the parties to whom goods were sold by the concerned employees have confirmed having received the goods and also confirmed to the Company as having made payment against the same. The Compa ny also filed its claim to insurance company under Employee Fidelity Insurance, effect whereof has been accounted in the books of account of the Company, considering the on going recovery process of its claims and as per information given to us by management the matter is still pending and same as it is
(b)	of Type Audit	previous financial year. Qualified Opinion
	Qualification	_______
(c)	of Frequency Qualification	In case of point no (i), (iv) and (v) - Appeared since F.Y. 2014-15 In case of point no (ii)(a) - Appeared since F.Y. 2013-14 (However, there is change in amount) - Appeared since F.Y. In case of point no (ii)(b) 2003-04 (However, there is change in amount) In case of point no (iii) - Appeared since F.Y. 2013- 14

Page 4 of 8

			• In case of point no (vi) - Appeared since F.Y. 2003- 04 • In case of point no. (vii)—Appeared in F.Y. 2017-18
	(d)	For Audit	With regard to Auditors Qualification No. (ii)(a), (ii)
		Qualification(s) where	(b), (iii), (iv) and (viii):-
		the impact is quantified
		by the Auditor,	(ii)(a) Regarding non-provision of interest expenses,
		Management views	of penal penalty, interest, in respect etc.
			borrowings of the Company from banks - As
			stated in Note No. 3.24 of the Audited Financial
			Statement, due to continuous losses and financial
			tightness, the Company has not been able to fully
			pay due installments & interest on term loan on
			due dates, which resulted into classification of
			credit facilities as Non-Performing Assets couple
			with recall of facilities by lenders of the Company
			& certain overdue amount is continuing/ unpaid till date (as detailed in note no. 3.24 of audited
			financial statement for the year ended March 31,
			2021). Interest on term loans and working capital
			including overdue amount, penal interest etc.
			(amount unascertained) has not been provided and
			as the same will be provided / accounted for as and
			when paid/settled as the company is in process of
			discussion/applying be for getting loans to
			restructured by the lenders/ARC. Six of banks
			have assigned and transferred the total debts due
			from the Company along with the underlying
			rights, title and interests in financial assistances granted the Company an Asset to to
			Reconstruction Company (ARC).
			Regarding non-provision (ll)(b) against a)
			long outstanding receivables-As also ex
			plained in Note No. 3.8(a) of Audited Fi
			nancial Statements, management view is
			that the receivables for period over one year
			of Rs 602.50 Lakhs till 31.03.2021 (Rs.
			521.57 Lakhs till 31.03.2020), including of
			overseas overdue trade receivables. Further

the accounting for exchange fluctuation in • respect of overseas trade receivables and export advances is not in line with Ind AS-21 "The Effects of Changes in Foreign Exchange Rates" and accordingly, we are unable to comment its impact on financial statement.

• (iii) Regarding non accounting of investment at fair value and non-recognitiOn of exchange fluctuation in respect thereto, the management is of view that the money lying outside India is part of GDRs proceeds of the Company and is earmarked for utilization for setting up a Yarn Dying Plant, which could not be implemented for want of support of lenders. The Management of the Company is engaged in firming an active plan for implementation of its proposal for setting up of a Yarn Dying Plant, and upon its finalization, the aforesaid amount will be utilized for investment and on that date effect of any gain shall be accounted in the books of account of the Company.
• (iv) Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/set off of payment of receivables/payable from/to overseas parties/suppliers, which is pending necessary approval of the competent authority. The management is in the process of. obtaining necessary approvals from the competent authority
• (v) Regarding further strengthening the system of internal controls -. Necessary steps have been initiated by the Company to further strengthen the system of internal controls w.r.t. purchases and • consumption of inventory, booking of expenses, set off of balances, for the sale of goods and services, etc.
• (vi) Regarding pending confirmation / reconciliation of

Page 6 of 8

balances of certain receivables (including overseas overdue receivables), bank balances, payable (including of an Associate Coinpany/ies), secured loans, other, liabilities, loans and advances etc; and contingent liability - The management is of the opinion that adjustment, if any, arising out of such reconciliation would not be material. Further, necessary steps have been initiated to further strengthen system of internal controls w.r.t. accounting of expenses, accounting of income (including sale of licenses and provision written back), payroll payments and of balance reconciliation/confirmation.

	(iii)	Auditors' comments on (i) or (ii) above	Refer details of audit qualification [para 11(a) above]
III.	Signatories
	•	andManaging Chariman Director of the Company
	• Chief	- Financial Officer Sanjay Sharma
	•	Audit Committee Chairman - Rajiv Chadha DIN 08793211

Page 7of8

			:.KdeL & Sk
			:flb :Fist ion No 5.1 4-1 125C
			-
			KJ1L1
			1;o (•}1) 125

A

Place; New Delhi Date: June 29. 2021

Independent Auditor's Report on Consolidated Financial Result of the Winsome Yarn Limited Pursuant to the Requistion 33 of the SEBI (Listing Obligations and Disclosure Requirements) Requlations, 2015

To Board of Director of Winsome Yam Limited

Qualified Opinion.

We have audited the accompanying Consolidated annual financial result ("the statement") of Winsome Yarns Limited ("the Holding Company") and its subsidiaries (the Holding Company and its Subsidiaries together referred to as "the Group"), for the year ended 31^st March 2021, attached herewith, being submitted by the holding Company pursuant to the requirements of requisions 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In our opinion and to the best of our information and according to the explanations given to us, and other financial information of subsidiary as referred to in "Other Matter" paragraphs of the aforesaid financial result.

• Includes the annual financial results of the following subsidiaries $(1)$ Subsidiary Holding Company Country Winsome Yarns (Cypurs) Ltd Cyprus Winsome Yams FZE United Arab Emirates
• $(ii)$ Present financial results in accordance with the requirements of Requlation 33 of the Listing Regulations, except for the effects/possible effects of the matters described in paragraph under 'Basis for Qualified Opinion',
• (iii) give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the consolidated net loss after tax and other comprehensive income/loss of the Holding Company as at March 31³, 2021, except for the effects/possible effects of the matters described in paragraph under 'Basis for Qualified Opinion:

Basis for qualified opinion

I. In yiew of accumulated losses of the Group as at the end of March 31, 2021, the net worth of the Holding Company as at that date being negative, continuous losses, negative cash flows and due to financial constraints, resignation of KMP and non-deposit of statutory dues on time, material uncertainty exists about the Holding Company ability to continue as going concern. The decision 407, South Ex Plaza II, South Extension 2, New Delhi 110049, India | +01 11 44643733 | Info@ks-ca.com | Awww.

Dingsurf Agral

management of the Holding Company to prepare the accounts of the Holding Company on going concern basis for reasons that, (refer to note no. 6 of standalone financial result) The Management of Holding Company expects that its cash flows of the Company in the near future will be sufficient to meet the resulting payment and repayment obligations as may arise as a result of restructuring agreement, and the accounts of the Company have therefore, been prepared on 'Going Concern' basis, there would arise a need to adjust the realizable value of assets and flabilities in the event of failure of assumptions as to going concern, and in the absence of impact of aforesaid assumptions having been un-ascertained, we are unable to comment thereon.

• 1. The Financial result for the year ended on March 31, 2021 are understated due to:
• a) Non provisioning of interest expenses, or borrowings, of Rs. 14852.97 Lakhs for the year ended on March 31, 2021 (Rs. 12890.29 lakhs for the year ended on March 31, 2020), and Rs. 67556.26 Lakhs being aggregate amount of interest unprovided till the year ended March 31, 2021 (Rs. 52703.29 Lakhs till the year ended March 31, 2020), and further amount towards penal interest, penalty, interest payable to EARC etc. as may be charged by the lenders. (In the absence of statement of account, the above amount has been arrived at as per estimates of the Holding Company, and the aggregate unprovided amount in books of account of the Holding Company is not ascertainable with accuracy)
• b) Non provisioning against long ourstanding receivables of Rs.602.50 Lakhs (Rs. 521.57 Lakhs as at March 31, 2020) including of overseas overdue trade receivables. Further Re-instatement of few debtors, advance from customers, creditors for export, etc on exchange fluct lation is not recognized in line with Ind AS - 21 "The Effects of changes in Foreign Exchange Rates" the effect of which we are unable to comment.
• 1. As stated in note no. 7 of consolidated financial statement, investment in USD 48,19,980 in Arise Money Market Fund. As per information given to us, the balance above is as per rate of exchange prevailing at the time of investment, and is subject to adjustment in rate of foreign exchange and accruals on money market investments. The non-accounting of investment at tair value and nonrecognition of exchange fluctuation in respect thereto is not in line with Ind AS 109 "Financial Instruments" and Ind AS-21 Time Effects of Changes in Foreign Exchange Rates". In the absence of any confirmation and working, the effect of over/under valuation and over/under statement, we are unable to comment.
• 1. Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/ set off of payment of receivables/payables from/to overseas parties/suppliers, which is pending necessary approval of the competent authority.

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• 1. The Internal Control Systems need to he furher strengthened in order that they are commensurate with the size of the Holding Company and the nature of its business, more particularly in areas of, purdases and consumption of materials, charging of expenses, setoff nf balances, and invoicing of sate of goods and sorvices.
• G. Confirmation of balances and recondU.ation ftheof with rer;psctive parties are pending, which include balances pertaining to, accounts receivable and payable, bank balances (including PR), other cut -ent assets, advance for leasing, security deposit with g.ovrn•mert, loans. .hd .advances recoverable, secured loans, other kabilities, pro..i:S[.d, and contingent !iabil.ities. All balances have been certified by the man& it of the Holding Company In the absence of the Holding Company ai"ord.mentioried. : cTetils and confirmations, the impact thereof is u:nascermien and therore,. not being commented. Further strengthening of internal contrhr, by the H.odiig Company will provide greater reliability.
• 1. In earlier year, management of .Hnlding conijatiy noticed and found fraud in the nature of s.hortage/niisap:pnp.riatlon of go4d.s stored at its Ludhiana Branch. during the financial year 2017r18 mployee/s against which the management of Holdin 3Ortipan.y took action by lodgiri.g F.I.R. with the concerned Police Station nd 1vestig.at10.r in the matter is pending. The misappropriation ol goods has been valued qt Re. 70 La.khs against which some of the parties to whom. qc,were sold. by the concerned employees have confirmed having recOiv.ed.the goods and aLsO confirmed to the Holding Company as having made payment against the same. Ithe Holding Company also filed its claim to insurance Company under Emp1oye Fidelity Insurance, effect whereof has been accounted in the:books:.of account of the Holding Company, considering the o.ngo.in.g recovery process of its. claims al. as per information given to us by management the matter Is still pending and sme as it is previous financial year.
• ^R. We have not boon provided the financial statemenl/flnahcini information of subsidiary Companies .( 1) WinSorte Yarn (CypIrus) Ltd, (2) Winsome Yarns FZE. Therefore we are unable to comment a:*ut any possible effect of these subsidiary companies in conso.IidateC hnan:cil statement for the period ending 31 March 2021..

We conducted crr audit in aco: .h..n.o: with the skndard on audit irig ('SA") specified under section 143(10) of the Act. Our respori:sjbiliths under those standards are further describes in the .AudiirorS Respens.i.bilitFs for the audit of the statement section of our report. We are independent of thip company in accordance with the code of ethics is rued by the Insi te of Chartered Accounwnts of India ('the ICAI") together with the ethical requirements that are rlevant to our audit of the financial s aterrents under the provisions of t act and the rules thereunder we have ...

fulfilled our other ethical responsibilities in accordance with these requirements and the code of ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our qualified opinion.

Emphasis of matter

• i) As per information given to us, the Holding Company has made advance payment of Rs. 2268.50 Lakhs to Edelweiss Assets Reconstruction Holding Company for advance against restructuring of loan. Loan outstanding from Edelweiss Assets Reconstruction Holding Company amounting of Rs. 47071.08 Lakhs.
• 1) The holding company has not made provision for the demand raised by various authorities as the matters are pending before various appellate forum. We are unable to comment upon possible impact in the consolidated financial statements for the year 31^st March, 2021.
• (i) We draw attention to the users of the financial statement of the Holding Company ended on 31st March, 2021, that the lender Edelweiss Assets Reconstruction Holding Company Limited and Indian Overseas Bank has filed an application against Holding Company under section 7 of the Insolvency & Bankruptcy Code, 2016 before National Holding Company Law Tribunal, Chandigarh Branch. The Holding Company Petition filed by Edelweiss Asset Reconstruction Holding Company Limited against the Holding Company for initiation of Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code (IBC), 2016 has been rejected by National Company Law Tribunal, Chandigarli Bench vide its Order dated 17.03.2020 and the matter is pending before National Company Law Appellate Tribunal.

Our opinion is not modified in respect of these matters.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statement

This Statement has been prepared on the basis of the consolidated annual audited financial statements and has been approved by the Holding Company's Board of Directors. The Holding Company's Board of Directors is responsible for the preparation and presentation of the Statement that gives a true and fair view of the net profit/loss and other comprehensive income and other financial information of the Holding Company in accordance with the accounting principles generally accepted in India, including Ind AS prescribed under Section 133 of the Act, read with relevant rules issued thereunder and other accounting principles generally accepted in India, and in compliance with Regulation 33 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Holding Company and for preventing and detecting frauds and other thegularities;

$\mathbf{A}$

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 Statement that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the Statement, the Board of Directors is responsible for assessing the Holding 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 the Board of Directors either intends to liquidate the Holding Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Holding Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statement

Our objectives are to obtain reasonable assurance about whether the Statement as a whole is 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 Standards on Auditing, specified under section 143(10) of the Act, 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 this Statement.

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

· Identify and assess the risks of material misstatement of the Statement, 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 in order 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 Holding Company has in place adequate internal

Ġ.

financial controls with referance to finalicial statements and the operating effectiveness of such controls.

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

. Conclude on the appropriateness of the 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 Holding 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 Statement 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 Holding Company to cease to continue as a going concern.

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

. Obtain sufficient appropriate audit evidence regarding the financial information of the Holding Company to express an opinion on the Statement. We are responsible for the direction, supervision and performance of the audit of financial information of the Holding Company of which we are the independent auditors. For the subsidiaries included in the Statement, which have been audited by other auditors of not have been audited by other auditors, such other auditors or management remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the sudit and significant audit findings, including any significant deficiencies in internal control that we identify during our $201$ dir

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.

Ł,

Other Matters

Wc were not provided with th. fLriãnd& statements of subsidiaries of the Holding Company included in consol ed Ind .AS fi nclal statements for the year ended March 31 2021, whose financi statements as prepared and consolidated by the management reflect total assets of Rs 51.20 Lakhs as at March 31, 2021, as well as total revenue of R\$ NiL tot& loss after tax of Rs Nil and net cash flow decrease by Rs 3433 lakh for the year ended on that date. These financial statements and other financial information have been approved by management of holding company. Our opinion on the consolidated Ind AS financial results, to the extent have been derived from such wianagernerc certified financial statements as at March 31, 2021.

7

For Khandeha & Shanna Charte'red Accountants Firm Registration No-

CA. Arun Khandek Pace New Delhi Partner Date 29)uñe2021 Membership No 089125 ICAI tWIN No.,21.0 125AJAFt2.0:30

STATEMENT OF IMPACT OF AUDIT QUALIFICATIONS (FOR AUDIT REPORT WITH MODIFIED OPINION) SUBMITTED ALONG-WITH ANNUAL AUDITED FINANCIAL RESULTS - CONSOLIDATED BASIS - WINSOME YARNS LIMITED

Statement of Impact of Audit Qualifications for the Financial Year ended March 31, 2021 [See Regulation 33/52 of the SEBI (LODR) (Amendment) Regulations 20161

					(Rs. in Lakhs)
1.	Si. No.	Particulars		Audited Figure (as reported before adjusting for qualifications)	Adjusted Figures (audited figures after adjusting for qualifications)*
	1	Turnover! Total income		3588	3588
	2	Total Expenditure		5709	26873
	3	Net Profit/(Loss)		(2121)	(23285)
	4	Earnings Per Share		(3.00)	(32.93)
	5	Total Assets		26614	26011
	6	Total Liabilities		63461	131017
	7	Net Worth		(36847)	(105006)
	8	Any other financial item(s) (as felt appropriate by the management)		-	-
		* all adjustments are without tax effect.
II.	(a)	Audit Qualifications of Audit Details qualification	(i)	Reference is invited to Para (4) of Independent Auditor's Report on consolidated audited financial results: In view of accumulated losses of the Company as at the end of March 31, 2021, the net worth of the Company as at that date being negative, continuous losses, negative cash flows and due to financial constraints, resignation of KMP and non-deposit of statutory dues on time, material uncertainty exists about the company ability to continue as decision of management of the Company to prepare the accounts of the Company on going concern basis for reasons that, (refer to note no. 6 of financial result) The Management expects that its cash flows of the Company in the near future will be sufficient to meet the resulting payment and repayment obligations as may	going concern. The

arise as a result of restructuring agreement, and the accounts of the Company have therefore, been prepared on 'Going Concern' basis, there would arise a need to adjust the realizable value of assets and liabilities in the event of failure of assumptions as to going concern, and in the absence of impact of aforesaid assumptions having been un-ascertained, we are unable to comment thereon. absence of impact of aforesaid assumptions having been unascertained, we are unable to comment thereon

(ii) The results for the quarter ended on March 31, 2021 and the year ended on March 31, 2021 are understated due to:

(a) Non provisioning of interest expenses on borrowings of Rs. 3888.11 Lakhs for the quarter ended and Rs. 14852.97 Lakhs for the year ended on March 31, 2021 (Rs. 3384.63 Lakhs for the quarter ended and Rs. 12890.28 Lakhs for the year ended on March 31, 2020, and Rs. 67556.26 Lakhs being aggregate amount of interest unprovided till the year ended March 31, 2021 (Rs. 52703.29 Lakhs till the year ended March 31, 2020), and further amount towards penal interest, penalty, etc. as may be charged by the lenders. (In the absence of statement of account, the above amount has been arrived at as per estimates of the Company, and the aggregate unprovided amount in books of account of the Company is not ascertainable with accuracy).

( ³ ) Non provisioning against long outstanding receivables of Rs. 602.50 Lakhs (Rs. 521.57 Lakhs as at March 31, 2020) including of overseas overdue trade receivables. Further the accounting for exchange fluctuation in respect of overseas trade receivables and export advances is not in line with Ind AS-21 "The Effects of Changes in Foreign Exchange Rates" and accordingly, we are unable to comment its impact on financial statement.

	As stated in note no. 7 of standalone financial (iii) statement, investment in USD 48,19,980 in Arise Money Market Fund. As per information given to us, the balance above is as per rate of exchange prevailing at the time of investment, and is subject to adjustment in rate of foreign exchange accruals money market and on investments. The non-accounting of investment at fair value and non-recognition of exchange fluctuation in respect thereto is not in line with Ind AS 109 "Financial Instruments" and Ind AS-21 "The Effects of Changes in Foreign of any Exchange Rates". the absence In of confirmation and working, the effect of investment over/under valuation and statement, unable over/under we are to comment.
	Regarding provisions in case of investments in (iv) subsidiaries, written off/written back and adjust ment/set off of payment of receivables/payable from/to overseas parties/suppliers, which is pend ing necessary approval of the competent authority.
	The Internal Control Systems need to be further (v) strengthened in order that they are commensurate with the size of the Company and the nature of its business, more particularly in areas of, purchases and consumption of materials, charging of expens es, set-off of balances, and invoicing of sale of goods and services.
	Confirmation of balances and reconciliation (vi) thereof with respective parties are pending, which include balances pertaining to, accounts receivable and accounts payable, bank balances (including FDR), other current assets, advance for leasing, security deposit with government, loans and advances recoverable, secured loans, other liabilities, provisions, and contingent lia bilities. All balances have been certified by the management of the Company. In the absence of the Company having aforementioned details thereof and confirmations, the impact is unascertainable, and therefore, not being corn

		mented. Further strengthening of internal con trols by the Company will provide greater relia bility.
		In earlier year, management noticed and found (vii) fraud in the nature of shortage/misappropria tion of goods stored at its Ludhiana Branch during the financial year 2017-18 by its em ployee/s against which the management took action by lodging F.I.R. with the concerned Po lice Station and investigation in the matter is pending. The misappropriation of goods has been valued at Rs. 70 Lakhs against which some of the parties to whom goods were sold by the concerned employees have confirmed having received the goods and also confirmed to the Company as having made payment against the same. The Company also filed its claim to insurance company under Employee Fidelity Insurance, effect whereof has been ac counted in the books of account of the Compa ny, considering the ongoing recovery process of its claims and as per information given to us by management the matter is still pending and
(b)	of Type Audit Qualification	same as it is previous financial year. Qualified Opinion
(c)	Frequency Qualification	of •In case of point no (i), (iv) and (v) - Appeared since F.Y. 2014-15 MIn case of point no (ii)(a) - Appeared since F.Y. 2013- 14 (However, there is change in amount) - Appeared since F.Y. •In case of point no (ii)(b) 2003-04 (However, there is change in amount) •In case of point no (iii) - Appeared since F.Y. 2013- 14 •In case of point no (vi) - Appeared since F.Y. 2003- 04 •In case of point no. (vii)—Appeared in F.Y. 2017-18
(d)	For Audit Qualification(s) where the impact is quantified by the Auditor, Management views	With regard to Auditors Qualification No. (ii)(a), (ii)(b), (iii), (iv) and (viii):- (il)(a) Regarding non-provision of interest expenses, penal interest, penalty, etc. in respect of borrowings

of the Company from banks - As stated in Note No. 3.24 of the Audited Financial Statement, due to continuous losses and financial tightness, the Company has not been able to fully pay due installments & interest on term loan on due dates, which resulted into classification of credit facilities as Non-Performing Assets couple with recall of facilities by lenders of the Company & certain overdue amount is continuing/ unpaid till date (as detailed in note no. 3.24 of audited financial statement for the year ended March 31, 2021). Interest on term loans and working capital including overdue amount, penal interest etc. (amount unascertained) has not been provided and as the same will be provided / accounted for as and when paid/settled as the company is in process of discussion/applying for getting loans to be restructured by the lenders/ARC. Six of banks have assigned and transferred the total debts due from the Company along with the underlying rights, title and interests in financial assistances granted to the Company to an Asset Reconstruction Company (ARC).

(ii)(b) Regarding non-provision against long outstanding receivables-As also explained in Note No. 3.8(a) of Audited Financial Statements, management view is that the receivables for period over one year of Rs 602.50 Lakhs till 31.03.2021 (Rs. 521.57 Lakhs till 31.03.2020), including of overseas overdue trade receivables. Further the accounting for exchange fluctuation in respect of overseas trade receivables and export advances is not in line with Ind AS-21 "The Effects of Changes in Foreign Exchange Rates" and accordingly, we are unable to comment its impact on financial statement.

(iii) Regarding non accounting of investment at fair value and non-recognition of exchange fluctuation in respect thereto, the management is of view that the money lying outside India is part of GDRs proceeds of the Company and is earmarked for utilization for setting up a Yarn Dying Plant, which could not be implemented for want of support of lenders. The Management of the Company is

etc.

engaged in firming an active plan for implementation of its proposal for setting up of a Yarn Dying Plant, and upon its finalization, the aforesaid amount will be utilized for investment and on that date effect of any gain shall be accounted in the books of account of the Company.

• (iv) Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/set off of payment of receivables/payable from/to overseas parties/suppliers, which is pending necessary approval of the competent authority. The management is in the process of obtaining necessary approvals from the competent authority
• (v) Regarding further strengthening the system of internal controls - Necessary steps have been initiated by the Company to further strengthen the system of internal controls w.r.t. purchases and consumption of inventory, booking of expenses, set off of balances, for the sale of goods and services,
• (vi) Regarding pending confirmation / reconciliation of balances of certain receivables (including overseas overdue receivables), bank balances, payable (including of an Associate Company/ies), secured loans, other liabilities, loans and advances etc; and contingent liability - The management is of the opinion that adjustment, if any, arising out of such reconciliation would not be material. Further, necessary steps have been initiated to further strengthen system of internal controls w.r.t. accounting of expenses, accounting of income (including sale of licenses and provision written back), payroll payments and of balance reconciliation/confirmation.
• (vii) In previous year with regard to noticed fraud in the nature of shortage and misappropriation of

goods stored at its Ludhiana Branch by the employee/s of the Company, the effect whereof

			has been accounted in the books of account of the considering the ongoing recovery Company, process and its claim.
	(e)	For Audit Qualification(s) where the impact not is quantified by the Auditor:
	(i)	Management's estimation on the impact of audit qualification	Not ascertainable
	(iii)	Auditors' comments on (i) or (ii) above	Refer details of audit qualification [para 11(a) above]
III.	Signatories
	•	Chariman Managing and Director of the Company - Manish Bagrodia	VA
	Chief •	- Financial Officer Sanjay Sharma	cz4
	•	Audit Committee Chairman - Rajiv Chadha DIN 08793211

Page 7 of 8

Statutory Auditor	For Khandelia & Sharma, Chartered Accountants
	Firm Registration No. 5105236
	(Arun Khandelia)
	Partner
	Membership No. 089125

Analysis

Place: Chandigarh
Date: June 29, 2021