Adhunik Metaliks Ltd Directors Report.

TO THE MEMBERS OF "ADHUNIK METALIKS LIMITED"

Report on the Standalone Ind AS Financial Statements

1. We have audited the accompanying standalone Ind AS financial statements of ADHUNIK METALIKS LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2017, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the Standalone Ind AS Financial Statements

2. The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

3. Our responsibility is to express an opinion on these standalone Ind AS financial statements based on our audit. In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the standalone Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companys preparation of the standalone Ind AS financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companys Directors, as well as evaluating the overall presentation of the standalone Ind AS financial statements.

5. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone Ind AS financial statements..

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2017, and its loss, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

7. We draw attention to:

a) Note no 51 of the standalone Ind AS financial statement, stating thereto the matter of the Company incurring losses continuously and consequently the net-worth being eroded completely, the current liabilities exceeding the current assets, due compliance of CDR package not being met with and the lenders having since invoked the Strategic Debt Restructuring(SDR) pursuant to RBI Circulars dated 8th June, 2015 and 24th Sep, 2015 the implementation thereof being under progress. Further the management expect improvement in raw material availability, likely improvement in market scenario, cost synergies from merger, conversion of debts into equity and debt restructuring as may be agreed with lenders, it is expected that the overall financial health of the Company would improve considerably. Considering the above developments and favourable impact thereof on the Companys operations and financials, the Company has prepared the financial results on the basis of going concern basis.

b) Note no 4.1 of the standalone Ind AS financial statement, that the Company has made long term investments in Adhunik Power and Natural Resources Limited amounting to Rs. 1,000.02 lacs. The said investments continue to be valued at cost. As per the latest management certified financial statement for the year ended 31st March 2017, the book value of said investment is significantly lower than cost. However, the company has not made any provision for diminution in value of its investments, as it considers such investment was as long term strategic investment and in view of the management such diminution are temporary in nature. Accordingly, impact, if any, on the standalone Ind AS financials is currently not ascertainable.

c) Note no 4.2 of the standalone Ind AS financial statement, that the Company has made long term investments in Orissa Manganese & Minerals Limited amounting to Rs. 6,309.60 lacs. The said investments continue to be valued at cost. As per the latest audited financial statement for the year ended 31st March 2017, the book value of said investment is fully eroded. However, the company has not made any provision for diminution in value of its investments, as it considers such investment was as long term strategic investment and in view of the management such diminution are temporary in nature. Accordingly, impact, if any, on the standalone Ind AS financials is currently not ascertainable.

d) Note no 43 regarding advances, trade payable and trade receivable other than above, are subject to confirmation from respective parties and consequential reconciliation/adjustment arising there from, if any. Hence financial impact if any cannot be ascertained.

Our opinion is not modified in respect of these matters

Report on Other Legal and Regulatory Requirements

8. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government of India

in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3

and 4 of the Order.

As required by Section 143(3) of the Act, based on our audit, we report, to the extent applicable that:

a. We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

c. the Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account;

d. in our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act;

e. The matter described in Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

f. on the basis of the written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 from being appointed as a director in terms of Section 164(2) of the Act;

g. with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B"; and

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

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements as stated in Note No. 31 to the standalone Ind AS financial statements.

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

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

iv. The Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer Note no 10.1 to the standalone Ind AS financial statements.

Other Matters

We did not audit the financial statements of a foreign branch being included in the standalone Ind AS financial statements of the Company whose financial statements reflect total assets (net) of Rs.68.02 lacs as at 31st March, 2017 and total revenues of Rs. Nil for the period ended on that date, as considered in the standalone Ind AS financial statements. The financial statements of this branch have been audited by the branch auditor whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this branch, is based solely on the report of such branch auditor. Our opinion in respect of said matter is not modified.

For Das & Prasad
Chartered Accountants
(Firms Registration No.303054E)
Anil Kumar Agarwal
Place: Kolkata (Partner)
Date: 26th May, 2017 (Membership No. 062368)

The Annexure referred to in Independent Auditors Report to the members of the Company on the standalone Ind AS financial statements for the period ended 31st March 2017, we report that:

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets;

(b) As explained to us, fixed assets have been physically verified by the management at reasonable intervals; no material discrepancies were noticed on such verification;

(c) As per information and explanation given to us by the management, all the title deeds of the immovable properties are held in the name of the Company;

(ii) As explained to us inventories were physically verified during the period by the management at reasonable intervals. As the Companys inventory of raw material and finished goods mostly include bulk materials which require technical expertise for establishing the quantity thereof, the Company has hired independent agency namely Quality Services & Solutions Private Limited for physical verification of such stocks. Relying on the above verification report by such independent expert agency and according to information and explanation furnished to us by the management, the procedures of physical verification of inventory followed by the management seems to be reasonable and adequate in relation to the size of the Company and the nature of its business. However, we have not made detailed analysis of such procedures of physical verification done by independent expert. Based on the above, we are of the opinion and according to the information and explanation given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. Further we have identified that there are inventories which have no movement or very little movement for over one year amounting to 37,277.32 Lacs. The Company is in process of gettng technical/commercial/ market evaluation in respect of such inventories, realisable value of the same may be lower than carrying value in the financial statement;

(IIi) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has not granted any loans, secured or unsecured, to companies, firms, limited liability partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Consequently, the provisions of paragraph iii(a), iii(b) and iii(c) of the Order are not applicable to the Company and hence, not commented upon;

(iv) In our opinion and according to information and explanations given to us, the Company has not made any loans, investments or guarantees. However company has pledged a part of its investment in the earlier years, for the loans taken by its wholly owned subsidiary from banks and financial institutions, the terms and conditions thereof, in our opinion prima-facie prejudicial to the interest of the Company;

(v) The Company has not accepted any deposit from the public covered under Section 73 to 76 of the Companies Act, 2013. Therefore, the provisions of paragraph 3(v) of the Order is not applicable to the Company;

(vi) According to the information and explanations given to us, in our opinion, the Company have, prima facie, made and maintained the prescribed cost records pursuant to the Companies (Cost Records and Audit) Rules, 2014, as amended, prescribed by the Central Government under subsection (1) of Section 148 of the Companies Act, 2013. We have, however, not made a detailed examination of the cost records with a view to determining whether they are accurate or complete.

(vii) a) According to the information and explanation given to us and on the basis of our examination of the records of the company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Income Tax, Sales Tax, Service Tax, Value Added Tax, cess or other material statutory dues have been generally regularly deposited during the period by the Company with appropriate authorities.

According to the information and explanation given to us no undisputed statutory dues including Provident Fund, Income Tax, Service Tax, Value Added Tax, cess or other material statutory dues were in arrears as at 31st March, 2017 for a period of more than six months from the date they become payable except in following cases:

Name of Statute Nature of Dues Amount (Rs in lacs) Period to which amount relates Due Date Date of Payment
Income tax Act, 1961 Tax Deducted at Source 6.90 April, 2016 07-May-16 Not Paid
7.79 May, 2016 07-Jun-16 Not Paid
0.01 June, 2016 07-Jul-16 Not Paid
6.41 July, 2016 07-Aug-16 Not Paid
21.28 August, 2016 07-Sep-16 Not Paid
6.53 September, 2016 07-Oct-16 Not Paid
Finance Act, 1994 Service Tax 4.58 May, 2015 06-Jun-15 Not Paid
0.37 June, 2015 06-Jul-15 Not Paid
0.02 August, 2015 06-Sep-15 Not Paid
0.03 September, 2015 06-Oct-15 Not Paid
1.18 April, 2016 06-May-16 Not Paid
30.78 May, 2016 06-Jun-16 Not Paid
Employees Provident Fund & Miscelleneous Provisions Act, 1952 Employers and Employees Contribution to Provident Fund 30.98 March, 2016 15-Apr-16 Not Paid
26.04 April, 2016 15-May-16 Not Paid
27.20 May, 2016 15-Jun-16 Not Paid
27.66 June, 2016 15-Jul-16 Not Paid
27.87 July, 2016 15-Aug-16 Not Paid
28.31 August, 2016 15-Sep-16 Not Paid
28.24 September, 2016 15-Oct-16 Not Paid
The Orissa Vale Added Tax Act 2005 Work Contract Tax 0.21 May, 2016 21-Jun-16 Not Paid
0.35 July, 2016 21-Aug-16 Not Paid
0.11 August, 2016 21-Sep-16 Not Paid
0.06 September, 2016 21-Oct-16 Not Paid

b) According to the information and explanation given to us, the following dues of vat, sales-tax, central sales tax, excise, service tax and ESI have not been deposited by the company on account of dispute as at 31st March, 2017:

Name of the Statute Nature of dues Amount (Rs.In Lacs) Period to which the amount relates Forum where dispute is pending
Central Sales Tax Disallowance of Sale against Form-C, Form-H and transfer of stock to branches 179.84 2004-05,2005-06 & 2007-08 Additional Commissioner of Sales Tax, Orissa Sales Tax Tribunal,Cuttack
Sales tax has arisen due to pending C/F/H Forms and Supporting document for Deemed Export. 17.30 2011-12 & 2012-13 Additional Commissioner of Sales Tax, Sambalpur
On assessment for 2005-06 shortfall in Sales tax has arisen due to pending C Forms, H Forms and F Forms. For 2003-04 Demand raised on the basis of discrepancies identified on the basis of fraud investigation conducted by the department. On the basis of fraud investigation report demand has been raised. The Company has filled an appeal on the ground of arbitrary and time barred 34.28 2003-04 & 2005 -06 The Joint. Commissioner of Sales Tax, Rourkela
Disallowance for sale against Form-C 2.30 2009-10 Senior .Joint Commissioner, Chowringhee Circle, Kolkata
Central Excise and Service Tax Dispute towards Cenvat Credit on structural steel used for construction of capital goods, input and disallowance of Service Tax on Commission Income 2121.14 2003-09 C E S T A T ( KOLKATA)
Dispute towards Cenvat Credit on capital goods & input. 1099.96 2006-11 Before Commissioner,Joint Commissioner,Addl. Commissioner, Commissioner(Appeal) Bhubaneswar
Dispute towards Cenvat Credit on input. 16.20 2005-11 Before Deputy Commissioner,Asst. Commissioner, Rourkela
Orissa Entry Tax Entry Tax on machinery & spares and Capital Goods, Interest & Penalty for late filling of return 121.52 2011-12 & 2012-13 Addl. Commissioner of Sales Tax. Sambalpur
Entry Tax on machinery & spares & Capital Goods 59.92 2002-05 & 2007-08 Additional Commissioner of Sales Tax, The Orissa Sales Tax Tribunal, Cuttack
Orissa Value Disallowance of Input Tax credit. 123.27 2005-06 & 2006-07 High Court Of Orissa, Cuttack
Added Tax Disallowance of Input Tax credit. 89.86 2005-06 & 2011-12 The Orissa Sales Tax Tribunal, Additional Commissioner of Sales Tax, Cuttack
Disallowance of Input Tax credit, Interest & Penalty for late filling of return 3.64 2012-13 Additional Commissioner of Sales Tax. Sambalpur
Orissa Sales Tax Demand against discrepancies identified during investigation 12.71 2003-04 & 2004-05 The Jt. Commissioner of Sales Tax, Dy. Commissioner, Rourkela
Dispute on gross turnover vis-a-vis taxable turnover 5.98 2003-04 The Orissa Sales Tax Tribunal, Cuttack
West Bengal Value Added Tax Disallowance of input tax credit, Addition of Turnover 229.31 2007 to 2012 Sr.Joint Commissioner, Chowringhee circle, Kolkata
Employees State Insurance Act, 1948 Non Payment of ESI dues for Companies and Contractors Employees 34.30 2011-12 ESI Commissioner, Rourkela
Total 4,151.53

(viii) Based on the records examined by us and as per the information and explanations given to us, the Company has defaulted in the payment of principal as well as interest dues to the following banks and Financial Institutions:.

Name of The Bank Principal (Amount Rs in Lacs) Period Interest (Amount Rs in Lacs) Period
Bank of Baroda 221.11 From July16 to March 17 336.38 From July16 to March 17
Bank of Maharashtra 244.95 From July16 to March 17 389.60 From July16 to March 17
Corporation Bank 314.00 From July16 to March 17 499.81 From July16 to March 17
HDFC Bank 30.60 From July16 to March 17 - From July16 to March 17
ICICI Bank 1,086.15 From July16 to March 17 1,575.19 From July16 to March 17
Indian Overseas Bank 476.88 From July16 to March 17 707.58 From July16 to March 17
Punjab & Sind Bank 306.74 From July16 to March 17 497.62 From July16 to March 17
Punjab National Bank 1,044.15 From July16 to March 17 1,756.67 From July16 to March 17
State Bank of Bikaner & Jaipur 452.21 From July16 to March 17 579.56 From July16 to March 17
State Bank of India 1,923.38 From July16 to March 17 2,748.60 From July16 to March 17
State Bank of Mysore 203.95 From July16 to March 17 304.14 From July16 to March 17
State bank of Patiala 121.92 From July16 to March 17 122.28 From July16 to March 17
Syndicate Bank 287.48 From July16 to March 17 493.97 From July16 to March 17
UCO Bank 1,108.01 From July16 to March 17 1,637.04 From July16 to March 17
Union Bank of India 76.10 From July16 to March 17 132.60 From July16 to March 17
SREI 112.02 From July16 to March 17 186.83 From July16 to March 17
IFCI 622.67 From July16 to March 17 1,086.58 From July16 to March 17

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instrument) during the year. According to the information and explanations given to us, further disbursement of Term loan received during the year were applied for the purpose they were raised.

(x) Based on the audit procedures performed and the information and explanations given to us, we report that no material fraud on or by the Company has been noticed or reported during the period, nor have we been informed of such case by the management;

(xi) According to information and explanation given to us, the Company has not paid or provided any managerial remuneration and hence paragraph 3(xi) is not applicable;

(xii) In our opinion and according to the information and explanation given to us, the Company is not a Nidhi Company and hence the paragraph 3(xii) is not applicable;

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable Indian accounting standards

(xiv) According to information and explanation given to us the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the period under review;

(xv) According to information and explanation given to us, the Company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly the paragraph 3(xv) is not applicable the Company;

(xvi) In our opinion and on the basis of information and explanation given to us by the management, the Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.

For Das & Prasad
Chartered Accountants
(Firms Registration No.303054E)
Anil Kumar Agarwal
Place: Kolkata (Partner)
Date: 26th May, 2017 (Membership No. 062368)

Annexure - B to the Independent Auditors Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")

We have audited the internal financial controls over financial reporting of Adhunik Metaliks Limited ("the Company") as of 31st March 2017, in conjunction with our audit of the standalone Ind AS financial statements of the Company for the period ended on that date.

Managements Responsibility for Internal Financial Controls

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

Auditors Responsibility

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

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

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

Meaning of Internal Financial Controls over Financial Reporting

A Companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of standalone Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of standalone Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Das & Prasad
Chartered Accountants
(Firms Registration No.303054E)
Anil Kumar Agarwal
Place: Kolkata (Partner)
Date: 26th May, 2017 (Membership No. 062368)