Ankit Metal & Power Ltd Auditors Report.

TO

THE MEMBERS OF

ANKIT METAL & POWER LIMITED

Report on the Audit of Financial Statements

Qualified Opinion

We have audited the accompanying Financial Statements of ANKIT METAL & POWER LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and a summary of significant accounting policies and other explanatory information (hereinafter referred to as "the Financial Statements").

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effect of matter described in the basis for qualified opinion section of our report, the aforesaid Financial Statements give the information required by the Companies Act, 2013 (‘the Act") in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended ("Ind AS") and other accounting principles accepted in India, of the state of affairs of the Company as at 31st March, 2019 and the loss including Other Comprehensive Income, the Statement of Changes in Equity and its Cash Flow Statement for the year ended on that date.

Basis for Qualified Opinion

We draw your attention to note no. 28 of the accompanying Financial Statements regarding non provision of interest expense on the borrowings of the Company amounting to र 12,297.85 Lacs for the year ended 31st March, 2019 (cumulative non provision of र 39,937.90 Lacs and penal interest and charges thereof (amount remaining unascertained) which is not in accordance with the requirements of Ind AS 23: Borrowing Costs read with Ind AS 109: Financial Instruments. During the period the Company has also reversed interest amounting to र 2,229.95 Lacs relating to earlier period.

Had the aforesaid interest expense been recognized, the finance cost for the year ended 31st March, 2019 would have been र 14,793.40 Lacs instead of reported amount of र 265.60 Lacs. The total expenses for the year ended 31st March, 2019 would have been र 64,673.50 Lacs instead of र 50,145.70 Lacs. The Net Loss after tax for the year ended 31st March, 2019 would have been र 23,754.30 Lacs instead of reported amount of र 9,226.50 Lacs. Total Comprehensive Loss for the year ended 31st March, 2019 would have been र 23,761.29 Lacs instead of reported amount of र 9,233.49 Lacs. Other equity as on 31st March, 2019 would have been र (1,12,341.08) Lacs instead of reported amount of र (72,403.18) Lacs and Other Current Financial Liability as on 31st March, 2019 would have been र 85,451.95 Lacs instead of reported amount of र 45,514.05 Lacs.

We conducted our audit of the Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the Financial Statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAIs Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the financial statements.

Material uncertainty relating to Going Concern

We draw your attention to note no. 29 of the Financial Statements regarding preparation of the Financial Statements on going concern basis, for the reason mentioned therein. The Company has accumulated losses during year ended 31st March, 2019. As on date the Companys current liabilities are substantially higher than its current assets and net worth has also been fully eroded. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companys ability to continue as going concern. The appropriateness of assumption of going concern is critically dependent upon the debt resolution of the Company which is under process, the Companys ability to raise requisite finance, generation of cash flows in future to meet its obligation and to earn profit in future.

Key Audit Matters

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We have determined the matters described below to be the key audit matters to be communicated in our report.

Sl. No. Key Audit Maer How our audit addressed the Key Audit Maer
1 Accuracy of recognion, measurement, presentaon and disclosures of revenues and other related balances in view of adopon of Ind AS 115 "Revenue from Contracts with Customers" (new revenue accounng (standard) w.e.f. 1st April, 2018 Our audit procedures included the following:
The applicaon of the new revenue accounng standard involves certain key judgements relang to idenficaon of disnct performance obligaons, determinaon of transacon price of the idenfied performance obligaons, the appropriateness of the basis used to measure revenue recognized over a period. We have assessed the Companys process to idenfy the impact of adopon of the new revenue accounng standard. Our audit approach consisted tesng of the design and operang effecveness of the internal controls and substanve tesng as follows :
• Evaluated the design of internal controls relang to recording of efforts incurred and esmaon of efforts required to complete the performance obligaons.
Addionally, new revenue accounng standard
contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be sasfied subsequent to the balance sheet date. • Selected a sample of contracts and through inspection of evidence of performance of these controls, tested the operating effectiveness of the internal controls relating to efforts incurred and estimated.
2 Claim and exposure relang to taxaon and ligation The Company has material uncertain tax posions including maers in respect of disputed claims/ levies under various taxes and legal maers. The taxes and ligaon exposures have been idenfied as key audit maer due to: Our audit procedures included the following:
Our audit procedures include the following substanve procedures:
• Obtained understanding of key uncertain tax posions;
• We have reviewed and analysed key correspondences relang to dispute;
i. Ligaon cases require significant judgement due to complexity of the case and involvement of various authories. • We have discussed the maer for key uncertain tax posions with appropriate senior management;
ii. These involve significant management judgment to determine the possible outcome of the uncertain tax posions. • We have evaluated managements underlying key assumpons in esmang the tax provisions; and assessed managements esmate of the possible outcome of the disputed cases.

Emphasis of Matter

i. As referred in note no. 32 of the Financial Statements, the balance of Trade Receivables, Advances, Trade Payables etc. includes balances remaining outstanding for a substantial period. The balances are subject to confirmations and reconciliation. The reported Financials might have consequential impact which remains unascertained

ii. As referred in note no. 27 of the Financial Statements, various credit facilities availed from UBI, IOB, SBI, IDBI and Allahabad Bank have been assigned by the respective banks in favour of Asset Reconstruction Companies under various assignment agreements between the respective banks and Asset Reconstruction Companies. In absence of information about the terms of assignments, the company is carrying the various credit facilities as appearing in the books and as per the previous terms with the respective banks. This may have consequential impact on the reported financials.

Our report is not modified in these matters.

Information other than the Financial Statements and Auditors Report thereon

The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Companys Annual Return but does not include the Financial Statements and our Auditors report thereon.

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

In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility of the Management for the Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of the Financial Statements that give a true and fair view of the financial position, financial performance including Other Comprehensive Income, the Statement of Changes in Equity and Cash Flow Statement in accordance with the Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate implementation and maintenance of accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate Internal Financial Controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

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

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

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

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

• Conclude on the appropriateness of managements use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

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

Independent Auditors Report

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

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

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors Report) Order, 2016 (the order) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the "Annexure A", a statement on the matters specified in the paragraphs 3 and 4 of the order, to the extent applicable.

I. As required by section 143(3) of the Act, we report that:

a. Except for the possible effects of the matters described in the basis of qualified opinion section of our report, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. Except for the possible effects of the matters described in the basis of qualified opinion section of our report, 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, Statement of Profit and Loss including Other Comprehensive Income, the Statement of Changes in Equity and the Cash Flow Statement dealt with by this Report are in agreement with the books of accounts.

d. Except for the effects of the matters described in the basis of qualified opinion paragraph above, in our opinion, the aforesaid Financial Statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e. The matter described in the basis for qualified opinion section of our report, may have adverse effect on the functioning of the company.

f. On the basis of written representations received from the directors as on 31st March, 2019, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2019, 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".

h. With respect to the other matters to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended :

In our opinion and to the best of our information and according to the explanations given to us, the remuneration payable by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

i. 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, 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 the financial position in the Ind AS Financial Statements - Refer note no. 30 (a) to (f) to its 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 were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For J.B.S & Company
Chartered Accountants
FRN:323734E
C.A. Gouranga Paul
Place: Kolkata Partner
Date: : 1st day of June 2019 Membership No.063711

Annexure A to the Independent Auditors Report

The Annexure A referred to in paragraph 1 under the heading Report on Other Legal & Regulatory Requirements of our report of even date to the Ind AS Financial Statements of the Company for the year ended 31st March, 2019, we report that:

(i) (a) The Company is maintaining proper records showing full Particulars, including quantitative details and situation of property, plant and equipment.

(b) The property, plant and equipment of the Company have been physically verified by the management at reasonable intervals and no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of freehold immovable properties are held in the name of the Company. The Leasehold deeds of immovable properties are in the name of Company.

(ii) The inventory has been physically verified by the management at reasonable intervals. In our opinion the frequency of such verification is reasonable. The discrepancies noticed on verification between the physical stocks and the book records were not material having regard to the size of the operations of the Company and the same have been properly dealt with in the books of account.

(iii) The Company has not granted any loans, secured or unsecured, to Companies, Firms or other parties listed in the register maintained under section 189 of the Companies Act, 2013. Therefore, the reporting under Paragraph 3 (iii) of the said order is not applicable to the Company.

(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

(v) The Company has not accepted any deposits from the public and consequently, the directives issued by Reserve Bank of India and provisions of section 73 to section 76 or any other relevant provisions of the Companies Act 2013 and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable to the Company.

(vi) We have broadly reviewed the books of account maintained by the Company in respect of manufacture of Iron & Steel product & Power generation unit pursuant to the Rules made by the Central Government for the maintenance of cost records under section 148(1) of the Companies Act, 2013, and we are of the opinion that prima facie, the records have been maintained. We have however not made a detailed examination of the records with a view to determining whether they are accurate and complete.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company has generally delayed in depositing undisputed statutory dues including Goods & Service Tax, Provident Fund, Income Tax, Sales Tax, Service Tax, Duty of Customs, Value Added Tax, Cess and other statutory dues during the year with appropriate authorities.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at 31stMarch, 2019 for a period of more than six months from the date on when they become payable except the following:

Sl. No. Nature of Dues Amount Involved (र in Lacs)
1. Income Tax Deducted at Source 121.19
2. Sales Tax Deducted at Source 0.32
3. Provident Fund 88.70
4. Service Tax 370.62
5. Excise Duty 952.34
6. Withholding Tax 1.39
7. Professional Tax on Salary 0.42
Total 1,543.97

(c) According to the information and explanations given to us, there are no dues of Income Tax, Goods & Services Tax, Sales Tax, Value Added Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited with the appropriate authorities on account of any dispute except the following cases:

Name of the Statute Nature of Dues Amount (र in Lacs ) Period to which the amount relates Forum where the dispute is pending
Income Tax Act, 1961

Income

Tax

354.58 A. Y. 2008-09 Commissioner of Income Tax-Appeal (Kolkata)
41.39 A. Y. 2009-10 Commissioner of Income Tax-Appeal (Kolkata)
9,299.55 A. Y. 2011-12 Commissioner of Income Tax-Appeal (Kolkata)
6,692.78 A. Y. 2012-13 Income Tax Appellate Tribunal (ITAT)
5,007.30 A. Y. 2013-14 Commissioner of Income Tax-Appeal (Kolkata)
7151.07 A.Y 2015-16 Commissioner of Income Tax-Appeal (Kolkata)
W.B. VAT Act, 2003

Sales

Tax

222.89 F.Y. 2005-06 Sr. Joint Commissioner of Commercial Taxes, Dharmtala Circle.
917.91 F.Y. 2006-07 Sr. Joint Commissioner of Commercial Taxes, Dharmtala Circle.
92.94 F.Y. 2006-07 Joint Commissioner of Commercial Taxes, Purulia Range
358.17 F.Y. 2007-08 Sr. Joint Commissioner of Commercial Taxes, Dharmtala Circle.
87.95 F.Y. 2007-08 Joint Commissioner of Commercial Taxes, Durgapur Range
1,946.82 F.Y. 2008-09 Deputy Commissioner of Commercial Taxes
683.63 F.Y. 2014-15 Add. Commissioner of Commercial Taxes, Dharamtala Circle
3,068.82 F.Y. 2015-16 Special Commissioner of Commercial Taxes, Dharamtala Circle
Entry Tax

Entry

Tax

403.60 F.Y. 2012-13 Sr. Joint Commissioner of Commercial Taxes, Dharamtala Circle
385.05 F.Y. 2013-14 Sr. Joint Commissioner of Commercial Taxes, LTU Govt. of India
353.95 F.Y. 2014-15 Sr. Joint Commissioner of Commercial Taxes, LTU Govt. of India
210.24 F.Y. 2015-16 Joint Commissioner of Commercial Taxes, LTU Govt. of India
The Central Excise Act, 1944

Excise

Duty

36.66 September 2007 and January 2008 CESTAT
14.95

(15.00 paid as duty under protest)

2011-12 CESTAT
10.15

(5.00 paid as duty under protest)

01.08.2011 to 08.08.2011 Commissioner of Central Excise- Bolpur
30.91 01.02.2012 to 27.12.2012 Commissioner Appeal, Siliguri
75.74 2008- 2009

2009- 2010

CESTAT
132.60 2008- 2009

2009- 2010

CESTAT
73.42 August 2009 to February 2011 CESTAT
1,809.48 2010-2014 DGCEI, New Delhi
0.65 2010-11 Bolpur Commissionerate
59.36 2010-11 CESTAT
50.87 2015-16 CESTAT
4.51 2011-2012 Commissioner of Central Excise, Kolkata-IV
984.17 2014-17 CESTAT
66.17 2013-14 Durgapur Commissionerate
156.41 2013-14 Durgapur Commissionerate
310.05 2012-13 CESTAT
Service Tax Rules, 2012 Service

Tax

4.33 2007-08 Durgapur Commissionerate

There were no other dues of duty which have not been deposited as at 31st March, 2019 on account of dispute.

(viii) Based upon the audit procedures performed and according to the records of the Company examined by us and the information and explanation given to us, the Company has defaulted in payment of interest and repayment of principal on borrowings to banks as follows:

(र in Lacs)
Parti culars Nature Principal Interest (Net of Reversal) Period of default
UCO Bank FITL 486.00 109.60 October, 15 to March, 19
Syndicate Bank 126.00 90.93 October, 15 to March, 19
Corporation Bank 750.00 522.78 January, 16 to March, 19
Financial Institution-ACRE 6,426.00 719.65 October, 15 to March, 19
Financial Institution-RARE 384.00 72.32 October, 15 to March, 19
TOTAL 8,172.00 1,515.28
UCO Bank WCTL-1 482.00 174.48 February, 16 to March, 19
Syndicate Bank 113.00 197.98 February, 16 to March, 19
Corporation Bank 3.00 4.46 March, 16 to March, 19
Financial Institution-ACRE 1,764.00 748.61 December, 15 to March, 19
Financial Institution-RARE 35.00 12.52 November,15 to March,19
TOTAL 2,397.00 1,138.05
UCO Bank WCTL-2 185.00 71.42 February, 16 to March, 19
Corporation Bank 191.00 341.26 March, 16 to March, 19
Financial Institution-ACRE 2,065.00 81.27 January, 16 to March, 19
Financial Institution-RARE 167.00 60.47 December, 15 to March, 19
TOTAL 2,608.00 554.42
Corporation Bank TERM LOAN 1,238.00 - March,17 to March, 19
Financial Institution-ACRE 7,620.00 2,124.01 November, 15 to March, 19
Financial Institution-RARE 459.00 166.04 December, 15 to March, 19
TOTAL 9,317.00 2,290.05
GRAND TOTAL 22,494.00 5,497.80

In absence of the settlement agreement with ARC (RARE & ACRE) the maturity period is continued to be shown as per earlier terms with respective banks and outstanding amount till March, 2019 is shown as default and the un-provided liability amounting to 39,937.90 Lacs, as referred in note no. 28 of the Financial Statements, also continued to be a default. The Company does not have any loans and borrowings from Government and has not issued any debentures.

(ix) Based upon the audit procedures performed and the information and explanations given by the management, the Company has not raised moneys by way of initial public issue/follow-on offer (including debt instruments) and term loans.

(x) Based upon the audit procedures performed and the information and explanations given by the management, we report that no fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.

(xi) Based upon the audit procedures performed and the information and explanations given by the management, the managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Therefore, the reporting under Paragraph 3 (xii) of the Order is not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the Ind AS Financial Statements as required by the applicable Accounting Standards.

(xiv) According to the information and explanation given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares of fully or partly convertible debentures and hence reporting under paragraph 3(xiv) of the order is not applicable to the Company.

(xv) Based upon the audit procedures performed and the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with them. Accordingly, the reporting under Paragraph 3 (xv) of the order is not applicable to the Company and hence not commented upon.

(xvi) In our opinion, the Company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934.

For J.B.S & Company
Chartered Accountants
FRN:323734E
C.A. Gouranga Paul
Place: Kolkata Partner
Date: : 1st day of June, 2019 Membership No.063711