Notes to Accounts of Droneacharya Aerial Innovations Ltd.

Mar 31, 2024

iv) Provision and Contingent Liabilities

The company exercises judgement in measuring and recognising provisions and the exposures to contingent liabilities which is related to pending litigation or other outstanding claims. Judgement is necessary in assessing the likelihood that a pending claim will succeed, or a liability will arise, and to quantify the possible range of the financial settlement. Because of the inherent uncertainty in this evaluation process, actual liability may be different from the originally estimated as provision or contingent liability.

v) Allowance for Trade Receivables

Trade receivables are typically unsecured and are derived from revenue earned from customers. Credit risk has been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss or gain. The company uses a provision matrix and forward-looking information and an assessment of the credit risk over the expected life of the financial asset to compute the expected credit loss allowance for trade receivables.

The company has a system of identifying amounts due to Micro Enterprises or Small Enterprises on the basis of the entrepreneurs memorandum number (EM Number) printed on their invoices, supply orders, letterheads, other relevant documents . Majority of the suppliers (Identified on the Sampling basis) of the company have not furnished status under Micro Enterprises or Small Enterprises under the Micro Small and Medium Enterprises Development Act, 2006. Therefore, disclosures under section 22 of the said act are not furnished.

1.6 Additional regulatory information

I Title deeds of immovable Property not held in name of the Company

The company does not own any immovable properties

II Where the Company has revalued its Property, Plant and Equipment, the company shall disclose as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017

The Company has not revalued its Property, Plant and Equipment.

III Where Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as

(a) repayable on demand or

(b) without specifying any terms or period of repayment

The Company has not granted Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person.

IV Capital Work In Progress (CWIP)

The Company has no Capital Work In Progress (CWIP).

V Intangible assets under development:

The Company has no Intangible assets under development. The Website under development has been completelty developed and deployed.

VI Details of Benami Property held

The Company has no Benami Property held by itself or through others

VII Borrowings from banks or financial institutions on the basis of current assets.

The Company has no borrowings from banks or financial institutions on the basis of current assets.

VIII Wilful Defaulter

The Company has not defaulted in repayment of Loan

IX Relationship with Struck off Companies

The Company has no Relationship with Struck off Companies

X Registration of charges or satisfaction with Registrar of Companies

The company does not have any charge created

XI Compliance with number of layers of companies

The company has complied with the number of layers prescribed under regulations

Note 3 : Earnings available for debt service = Net Profit before taxes Non-cash operating expenses like depreciation Interest other adjustments like loss on sale of Fixed assets etc. Note 4 : Debt service = Interest & Lease Payments Principal Repayments

Note 5 : Cost of Goods Sold = Cost of Material Consumed Purchases Changes in Inventory Manufacturing Expenses Note 6 : Working Capital = Current Assets - Current Liabilities Note 7 : Earnings before interest and tax = PAT Tax Interest

Note 8 : Capital Employed = Tangible net worth Deferred tax liabilities Long-term borrowings Other Long term Liabilities

II Compliance with approved Scheme(s) of Arrangements

There is no Scheme of Arrangements that has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.

III Utilisation of Borrowed funds and share premium (either borrowed funds or share premium or any other source or kind of funds) :

(A) The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(B) The company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding

(i) 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

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries,

34 Additional Notes and Disclosures:

i Regarding Expenses Debited to Securities Premium Account

The company has debited the amount to the tune of Rs. 490.29 Lacs to Securities Premium acccount. The amount includes the expenses in the nature of travelling expenses, Hotel, lodging and boarding expenses, Professional Fees and other expenses. The Company has claimed that such expenses is incurred on account of secring the funding through private placement and for securing funding through IPO. However, the nexus of proving that such amount has been incurred for the specified purpose of issuing the securties as per section 52 of the companies act 2013, has not been verified through any documentary evidence. However the managamenent representation letter has been received by us stating the details and the expenditure has been incurred for the purpose of issue of equity shares. Hence, we have considered the same and debited the amount to the Securities premium account. The internal auditor has also specified the same in the report issued by them. The same is stated as below: Securities premium must be used for the purpose as prescribed in Companies Act 2013. It can be used to write off expenses of issue of shares also. The expenses like hotel expenses, trip expenses, contractual and professional expenses are written off through securities premium account. The supporting documents to the expenses have direct nexus with the issue of shares is not provided. The said documents needs to be keep in place to justify the utilisation of securities premium reserve

ii Notes on Statutory Compliances :

The input tax credit availed and utilised by the company is subject to the GSTR 2A and GSTR 2B _a Reconciliation. The company and the auditors have not vouched and reconciled the Input Tax credit as per GSTR 2A and GSTR 2B as required by the GST Act, 2017. it will be subject to the annual return to be filed by the company.

b TDS Return for the Q4 is yet to be filed by the company as the due date for the same is 31st May 2023. c

The Professional Tax Returns have not been furnished by the company till the date of finalisation of the audit

The TDS claimed by the company for the period of Q4 is subject to the TDS return to be filed by the parties and d

the reflection of the same in the 26AS of the company

TDS Late Filing (Late fees) is incurred by the company but the same has not been paid by the company and e hence we have not debited the expenditure in the P & L and also have not considered the same in the financial statements

iii Cash Expenses above 10,000

The company has paid for the expenses above Rs. 10,000 in cash which is not allowed as per section 40A(3) of Income tax act

The Company has given advance to Tera Drone India Private Limited for the purchase of drones and the

iv company has not filled its fiinacial statements & annual returns since 2019 it means company has entered into an transactions with dormant Company as per section 455 of the Companies Act 2013.

The company has deposited significantly material amount of cash in bank in start of the year which is out of

v the closing balance of 31.03.2022. The same has been Taken as per the management representation letter received .

vi The balances of Loans and advances, debtors & Creditors are subject to the confirmation.

Previous year''s figures has been regrouped and rearranged wherever required for the purpose of fair presentation of the financial statements

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Mar 31, 2023

The company has a system of identifying amounts due to Micro Enterprises or Small Enterprises on the basis of the entrepreneurs memorandum number (EM Number) printed on their invoices, supply orders, letterheads, other relevant documents . Majority of the suppliers (Identified on the Sampling basis) of the company have not furnished status under Micro Enterprises or Small Enterprises under the Micro Small and Medium Enterprises Development Act, 2006. Therefore, disclosures under section 22 of the said act are not furnished.

1.6 Additional regulatory information

I Title deeds of immovable Property not held in name of the Company

The company does not own any immovable properties

II Where the Company has revalued its Property, Plant and Equipment, the company shall disclose as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017

The Company has not revalued its Property, Plant and Equipment.

III Where Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as

(a) repayable on demand or

(b) without specifying any terms or period of repayment

The Company has not granted Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person.

IV Capital Work In Progress (CWIP)

The Company has no Capital Work In Progress (CWIP).

V Intangible assets under development:

The Company has no Intangible assets under development. The Website under development has been completely developed and deployed.

VI Details of Benami Property held

The Company has no Benami Property held by itself orthrough others

VII Borrowings from banks or financial institutions on the basis of current assets.

The Company has no borrowings from banks or financial institutions on the basis of current assets.

VIII Wilful Defaulter

The Company has not defaulted in repayment of Loan

IX Relationship with Struck off Companies

The Company has no Relationship with Struck off Companies

X Registration of charges or satisfaction with Registrar of Companies

The company does not have any charge created

XI Compliance with number of layers of companies

The company has complied with the number of layers prescribed under regulations

II Compliance with approved Scheme(s) of Arrangements

There is no Scheme of Arrangements that has been approved by the Competent Authority in terms of sections 230 to 237 ofthe Companies Act, 2013.

III Utilisation of Borrowed funds and share premium (either borrowed funds or share premium or any other source or kind of funds):

(A) The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf ofthe company (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf ofthe Ultimate Beneficiaries

(B) The company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding

(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party (Ultimate Beneficiaries) or

(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries,

a) Terms / Rights attached to Equity shares

The Company has only one class of shares referred to as Equity Shares having par value of Rs 10/- each. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders. None of the above shares are reserved for issue against contract / commitments for sale of

charpc nr Hicirn/^ctm^nt

b) Issue of Bonus Shares

The Company has issued the Bonus shares to the existing share holder in the ratio of 99:1, i.e. the company has issued 99 shares for every one equity share held. The special resolution has been passed by the company for issue of the Bonus equity shares to the existing equity share holders.

c) Issue of Preference Shares

The company has issued the 9% optionally convertible cumulative preference shares throug the private palcementofficer.The Preference shares are issued at the Rate of Rs. 5359/- per share includuing face value of Rs. 10. The Premium valuation is taken as per the Valuation Report proviede by the company. All the optionally convertible preference shares are fully converted into equity shares.

* The Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unabsorbed tax losses and depreciation is an evidence that future taxable profits may not be available. Therefore, in the case of history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profits will be available against which such deferred tax asset can be realised. Deferred tax assets (recognised or unrecognised) are reviewed at each reporting date and recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised. Therefore in previous year carry forward business losses and unabsorbed depreciation were restricted to an amount, so that deferred tax assets did not exceed deferred tax liabilities.

The company has sold/ redeemed the Mutual funds of Rs. 3 Crores where the capital gain ofRs. 2.97lakhshasearnedby the company.The amountisconsideredin the Statement ofprofitandloss asthemutualfundsare classifiedasFVTPL

The company has sold/ redeemed the Mutual funds of Rs. 3 Crores where the capital gain of Rs. 2.97 lakhs has earned by the company. The amount is considered in the Statement of profit and loss as the mutual funds are classified as FVTPL

34 Additional Notes and Disclosures:

i Regarding Expenses Debited to Securities Premium Account

The company has debited the amount to the tune of Rs. 490.29 Lacs to Securities Premium acccount. The amount includes the expenses in the nature of travelling expenses, Hotel, lodging and boarding expenses, Professional Fees and other expenses. The Company has claimed that such expenses is incurred on account of secring the funding through private placement and for securing funding through IPO. However, the nexus of proving that such amount has been incurred for the specified purpose of issuing the securties as per section 52 of the companies act 2013, has not been verified through any documentary evidence. However the managamenent representation letter has been received by us stating the details and the expenditure has been incurred for the purpose of issue of equity shares. Hence, we have considered the same and debited the amount to the Securities premium account. The internal auditor has also specified the same in the report issued by them. The same is stated as below: Securities premium must be used for the purpose as prescribed in Companies Act 2013. It can be used to write off expenses of issue of shares also. The expenses like hotel expenses, trip expenses, contractual and professional expenses are written off through securities premium account. The supporting documents to the expenses have direct nexus with the issue of shares is not provided. The said documents needs to be keep in place to justify the utilisation of securities premium reserve

ii Notes on Statutory Compliances :

_a The input tax credit availed and utilised by the company is subject to the GSTR 2A and GSTR 2B Reconciliation. The company and the auditors have not vouched and reconciled the Input Tax credit as per GSTR 2A and GSTR 2B as required by the GST Act, 2017. it will be subject to the annual return to be filed by the company, b TDS Return for the Q4 is yet to be filed by the company as the due date for the same is 31st May 2023.

c

The Professional Tax Returns have not been furnished by the company till the date of finalisation of the audit The TDS claimed by the company for the period of Q4 is subject to the TDS return to be filed by the parties and the reflection of the same in the 26AS of the company

TDS Late Filing (Late fees) is incurred by the company but the same has not been paid by the company and hence e we have not debited the expenditure in the P & L and also have not considered the same in the financial statements

Hi Cash Expenses above 10,000

The company has paid for the expenses above Rs. 10,000 in cash which is not allowed as per section 40A(3) of Income tax act

The Company has given advance to Tera Drone India Private Limited for the purchase of drones and the company

iv has not filled its fiinacial statements & annual returns since 2019 it means company has entered into an transactions with dormant Company as per section 455 ofthe Companies Act 2013.

v The company has deposited significantly material amount of cash in bank in start of the year which is out of the closing balance of 31.03.2022. The same has been Taken as per the management representation letter received .

vi The balances of Loans and advances, debtors & Creditors are subject to the confirmation.

Previous year''s figures has been regrouped and rearranged wherever required for the purpose of fair presentation

vii

ofthe financial statements