impex ferro tech ltd share price Auditors report


THE MEMBERS OF IMPEX FERRO TECH LIMITED

Report on the Financial Statements

Qualified Opinion

We have audited the accompanying Financial Statements of IMPEX FERRO TECH LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2022, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and a summary of the 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 the 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 generally accepted in India, of the state of affairs of the Company as at 31st March 2022, the loss and total comprehensive loss, changes in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion

We draw your attention to Note No. 35 of the accompanying financial statements regarding non provision of interest expense on the borrowings of the Company amounting to 4,910.44 lacs for the year ended 31stMarch, 2022 (Cumulative Non Provisioning of 22004.74 lacs till 31st March, 2022) 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. In view of pending finalisation of the restructuring plan with Rare Asset

Reconstruction Limited, the financial impact if any pursuant to assignment agreement remain unascertained and not been provided for in the financial result which might have consequential impact on the reported figure of this year as well as earlier periods.

Had the aforesaid interest expense been recognized, the finance cost for the year ended 31st March, 2022 would have been 4,923.68 lacs instead of reported amount of 13.24 lacs. The total expenses for the year ended 31st March, 2022 would have been 37,028.63 lacs instead of 32,118.19 lacs. The Net Loss after tax for the year ended 31st March, 2022 would have been 6,586.65 lacs instead of1676.21 lacs. Total comprehensive Loss for the year ended 31st March, 2022 would have been 6,554.06 lacs instead of reported amount of 1,643.62 lacs. Other equity as on 31st March, 2022 would have been (55,256.44 lacs) instead of reported amount of (33,251.70 lacs) and current financial liability as on 31st March, 2022 would have been 22020.79 lacs instead of reported amount of 16.05lacs.

The above reported interest has been calculated using Simple Interest rate.

We conducted our audit of the Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Material Uncertainty Relating to Going Concern

We draw your attention to Note No. 33 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 the year ended 31st March, 2022. 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 market scenario, the debt resolution of the Company, the Companys ability to raise requisite finance, generation of cash flows in future to meet its obligation and to earn profit in future. Our opinion is not modified in respect of this matter.

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.

Key Audit Matter How our audit addressed the key Audit Matter
1 Claim and exposure relating to taxation and litigation Our audit procedures included the following:
The Company has material uncertain tax positions including matters in respect of disputed claims /levies under various taxes and legal matters. Our audit procedures include the following substantive procedures:
• Obtained understanding of key uncertain tax positions;
The taxes and litigation exposures have been identified as key audit matter due to:
• We have reviewed and analysed key correspondences relating to dispute;
i. Litigation cases require significant judgement due to complexity of the case and involvement of various authorities.
ii. These involve significant management judgment to determine the possible outcome of the uncertain tax positions. • We have discussed the matter for key uncertain tax positions with appropriate senior management;
• We have evaluated managements underlying key assumptions in estimating the tax provisions; and Assessed managements estimate of the possible outcome of the disputed cases;

Emphasis of Matter

i. As per order dated 8th October, 2021 of the Honourable High Court, Kolkata, an amount of 5,161.21 lacs is payable to Damodar Vally Corporation (DVC) towards non payment of electricity bills [including Arrear & Delayed Payment Surcharge (DPS)] for the period prior to February, 2016. As referred in Note 38 to the financial statement, the company has already provided liability amounting to 2,895.95 lacs for the aforesaid period which remain unpaid. Accordingly, differential liability of 2,265.26 lacs has been provided as electricity expenses and disclosed under Exceptional Items during the current financial year 2021-22.

ii. As referred in Note No 36 of the Financial Statements, "Trade Receivables", "Trade payables", "Advances from Customer", "Advances Recoverable In Cash or Kind" and "Advance to Suppliers and Other Parties" etc. includes balances remaining outstanding for a substantial period. The balances are subject to confirmation/reconciliation. The reported Financials might have consequential impact which remains unascertained.

iii. The Company has not deposited undisputed statutory dues to appropriate authority in time and deposit was delayed. Undisputed Statutory dues amounting to 486.63 lacs was in arrears as at 31st March, 2022 for a period of more than six months.

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 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 with respect to the preparation of these financial statements that give a true and fair view of the financial position and financial performance and cash flow of the Company in accordance with the accounting principles generally accepted in India, including the accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate 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 statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.

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

The Board of Directors is 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 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 financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements maybe 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.

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

I. As required by the Companies (Auditors Report ) Order, 2020 ("the Order"), issued by the Central Government Of India in terms of sub-section(ll) of Section 143 of the Companies Act, 2013, we give in the Annexure A, a Statement on the matters specified in paragraphs 3 and 4 of the Order , to the extent applicable.

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

a) Except for the possible effect of the matter described in the basis for 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 purposes of our audit.

b) Except for the possible effect of the matter described in the basis for 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, the Statement of Profit and Loss including other comprehensive income, the cash flow statement and the statement of changes in equity dealt with by this Report are in agreement with the books of accounts.

d) Except for the possible effect of the matter described in the basis for qualified opinion section of our report, in our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

f) On the basis of the written representations received from the directors as on 31st March, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2022 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 paid 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:

a) The Company has disclosed the impact of pending litigations on the financial position in the financial statements. Refer Note 27 to its financial statements.

b) The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses;

c) During the year, the Company has not transferred any amount to Investor Education and Protection Fund pertaining to unpaid dividend.

For R Kothari & Co LLP
Chartered Accountants
FRN: 307069E/E300266
CA. Manoj Kumar Sethia
Partner
Membership No.:- 064308
Date: 30th May, 2022
Place: Kolkata UDIN: 22064308AKIQZV4393

"ANNEXURE A" TO 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 financial statements of the Company for the year ended 31st March, 2022, we report that:

(i) (a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation, of property, plant, and equipment.

(a) (B) The Company is maintained proper records showing full particulars of intangible assets.

(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) The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee), as disclosed in Note 4 on Property, Plant and Equipment to the financial statements, are held in the name of the Company.

(d) The Company has not revalued any of its Property, Plant and Equipment (including Right of Use assets) or intangible assets or both during the year. Hence, reporting of other information under clause 3 (i) (d) of the said order is not required.

(e) Based on the information and explanations furnished to us, no proceedings have been initiated on or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 and Rules made there under. Hence, disclosures of details in this regard under clause 3 (i) (e) of the said Order is not required.

(ii) (a) The inventory has been physically verified by the management at reasonable intervals. In our opinion the frequency of such verification is reasonable. No discrepancies of 10% or more in the aggregate for each class of inventories were noticed on such physical verification of inventories when compared with books of account.

(b) According to the information and explanations given to us, at any point of time of the year, the Company has not been sanctioned any working capital facility from banks or financial institutions on the basis of security of current assets, and hence reporting under clause (ii)(b) of the Order is not applicable.

(iii) In our opinion and according to the information and explanation given to us, the Company during the year has not made investments in, provided any guarantee or security or granted any loans/ advances in nature of loans, secured or unsecured to companies, firms, limited liability partnerships or any other parties. Hence reporting of other information under clause 3 (iii) (a) to (f)of the said Order is not required.

(iv) In our opinion and according to the information and explanation given to us, the Company has not granted any loan, makes investments or provided any guarantees or security to any person specified under section 185 of the Companies Act, 2013. The Company has not given any loans and guarantees or provided any security in connection with a loan, and make investments within the meaning of Section 186 of Companies Act, 2013. Hence reporting of other information under clause 3 (iv) of the said Order is not required.

(v) 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 accepted any deposits from the public and there is no amounts which are deemed to be deposits and consequently, the directives issued by the Reserve Bank of India and provisions of Section 73 to 76 or any other relevant provisions of the Companies Act 2013 and rules made there under [the Companies (Acceptance of Deposit) Rules, 2015] with regard to the deposits are not applicable to the Company.

(vi) Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine 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 books of account, the Company has generally delayed in depositing undisputed statutory dues including Provident Fund, Income tax, sales tax, Service Tax, Duty of customs, value added tax, GST, Cess and other statutory dues during the year with appropriate authorities.

According to the information and explanation given to us, no undisputed amounts payable in respect of the above were in arrears as at 31st March, 2022 for a period of more than six months from the date on when they become payable except the following :

SI No. Nature of Dues Amount (Rs. In Lakhs)
1 GST Payable 375.3
2 Service Tax 105.41
3 TDS 4.26
4 ESI Payable 1.45
5 TCS 0.21
Total 486.63

(b) According to the information and explanations given to us and records of the company examined, and the particulars or statutory dues referred to in sub clause (a) above as on 31st March,2022 which have not been deposited on account of dispute are as follows :

Nature of Statute Nature of Dues Assessment Year Amount (Rs. In lacs) Forum where dispute is pending
2006-07 12.36 Commissioner of Central Excise (Appeals) (HI)
2008-09 15.55 Cestat, Kolkata Branch
Central Excise Act 1994 Excise Duty 2014-15 6.05 Excise, Asansol Division (show cause notice received and reply will be submitted)
2014-15 7.96 Excise, Asansol Division (show cause notice received and reply will be submitted)
2012-13 to 2016-17 1778.07 Write Petition filled and pending under Honble High Court of Calcutta
Total 1819.99
2010-11 4,306.41 Under Appeal pending with CIT Appeal 21,kolkata
2012-13 8,043.52 Under Appeal pending with CIT Appeal kolkata-1
Income Tax Act 1961 Income Tax 2015-16 3,134.64 Under Appeal pending with CIT Appeal 21,kolkata
2016-17 9.97 Under Appeal pending with CIT Appeal 21,kolkata
2017-18 3,410.31 Under Appeal pending with CIT Appeal 21,kolkata
Total 18,904.85
2005-06 304.13 WBCT, Appellate and Revisional Board
2006-07 479.91 WBCT, Appellate and Revisional Board
Central Sales Tax and Local Sales Tax Sales Tax 2008-09 748.45 WBCT, Appellate and Revisional Board
2009-10 211.18 Sr. Joint Commissioner of Commercial Taxes
2014-15 83.64 Sr. Joint Commissioner of Commercial Taxes
2015-16 38.41 Joint Commissioner of Commercial Taxes
Total 1,865.71
W.B Entry Tax Act Entry Tax 2012-13 to 2017-18 504.91 Honble High Court of Calcutta
Total 504.91

(viii) According to the information and explanations given to us and based on our examination of the books of accounts and other records, there were no transactions unrecorded in the books of account and which were surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 during the year.

(ix) (a) 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:

Amount of default as on the Balance Sheet Date : (Rs. Lacs)
Name of Bank Principal/ Interest Funded Interest Term Loan Restructured Term Loan Working Capital Term Loan TOTAL Period of Default
Punjab National Bank Principal 243.65 528.00 1,109.00 1,880.65 February, 2016 to March, 2021
Interest 226.23 522.25 1,029.45 1,777.93 January, 2016 to March, 2021
Grand Total 469.88 1,050.25 2,138.45 3,658.58

 

Note: Various credit facilities availed from banks except Punjab National Bank as above with a book balance ofRs. 26,688.42 as on 31st March,2022 have been assigned in favour of Rare Asset Reconstruction Ltd under assignment agreement.ln view of pending finalization of the restructuring plan with Rare Asset Reconstruction Limited, the company has not provided accrued interest in its books and no repayment of principal and interest has been made. The unprovided liability in respect of interest till 31st March, 2022, amounted to Rs. 22,004.74 Lacs which are also in default on repayment refer note 35)

Note: Pursuant to One Time Settlement (OTS) with respect of borrowings taken from Punjab National Bank (Bank), the company has to pay 1,500 lakhs against outstanding dues. The company has paid Rs. 1,247.63 lakhs till 31st March 2022 and balance ofRs. 252.37 lakhs has been paid post balance sheet date by 4th May, 2022. Delayed period interest charges (DPIC) may arise in line with OTS sanction letter which remain unpaid, (refer note 35)

(b) According to the information and explanations given to us and based on our examination of the other records, the company has not been declared as a willful defaulter by any bank or financial institutions or other lender.

(c) According to the information and explanations given to us and based on our examination of the financial statements of the Company, we report that the company has not taken term loan during the year. Hence reporting of information under clause 3 (ix) (c) of the said Order is not applicable.

(d) As mentioned above, the company not taken any loans or other borrowings from lenders during the year. Hence, reporting of information whether funds raised on short term basis have been utilized for long term purposes under clause 3 (ix) (d) of the said Order is not applicable.

(e) According to the information and explanations given to us and based on our examination of the other records, the company does not have any subsidiaries, associates or joint ventures. Hence reporting of information under clause 3 (ix) (e) & (f) of the said Order is not applicable.

(x) (a) Based upon the audit procedures performed and the information and explanations given to us, the company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Hence, reporting of information under clause 3 (x) (a) of the said Order is not applicable.

(b) According to the information and explanations given to us and based on our examination of the records, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures (fully, partially or optionally convertible) during the year. Therefore, reporting of information under clause 3 (x) (b) of the said Order is not applicable.

(xi) (a) Based upon the audit procedures performed and the information and explanations given by the management, the Company has neither committed any fraud nor has any fraud on the Company by its officers or employees has been noticed or reported during the year.

(b) According to the information and explanations given by the management, no report under sub-section (12) of section 143 of the Companies Act has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government, during the year and up to the date of this report.

(c) According to provision of section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 establishment of Vigil Mechanism or Whistle - Blower Policy under SEBI LODR Regulations is applicable to the Company. As per information and explanation provided to us by the management, no Whistle - Blower Complaints received by the Company during the year.

(xii) As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the reporting under Clause 3(xii)(a) to (c) of the Order is not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us by the management, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 and the details have been disclosed in the financial statements as required by the applicable accounting standards.

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

(b) The Company has furnished us reports of the Internal Auditors for the period under audit which were considered by us in the course of Audit.

(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 him. Accordingly, the reporting in respect of compliance of provisions of section 192 of the Companies Act 2013 is not required.

(xvi) (a) Based upon the audit procedures performed and the information and explanations given by the management, the Company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934.

(b) Based upon the audit procedures performed and the information and explanations given by the management, the Company has not conducted any Non-Banking Financial or Housing Finance Activities without a valid certificate of registration (CoR) from Reserve Bank of India.

(c) Based upon the audit procedures performed and the information and explanations given by the management, the Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve bank of India. Therefore, reporting under clause 3 (xvi) (c) of the said Order is not applicable.

(d) Based upon the audit procedures performed and the information and explanations given by the management, the Group does not have any Core Investment Company (CIC) as part of Group. Therefore, reporting under clause 3 (xvi) (d) of the said Order is not applicable.

(xvii) In our opinion and according to the information and explanations given to us, the Company has incurred cash losses in the financial year and in the immediately preceding financial year. The details of cash losses incurred is as follows:

Financial Year Cash Losses (Rs. in Lakhs)
2021-22 1,019.53
2020-21 223.57

The Company has not provided interest in respect of loans & borrowings amounting to 4910.44 lacs for the year ended 31st March, 2022 (P.Y. 3594.61 lacs). Had the aforesaid interest expense been recognized, the cash losses for the year ended 31st March, 2022 would have been 5,930.0 lacs (P.Y. 3,818.18 lacs).

(xviii) According to the information and explanations given to us and based on our examination of the records of the Company, there has not been any resignation of the statutory auditors of the company during the year. Accordingly, reporting under clause 3(xviii) of the Order is not applicable.

(xix) According to the information and explanations given to us and on the basis of financial ratios, ageing and expected dates of realizations of financial assets and payment of the financial liabilities, other information accompanying the financial statements, management plans and based on our examination of the evidence supporting the assumptions, which causes us to belief that there is material uncertainty exists as on the date of the audit report that company is not capable of meeting its liabilities existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date. We, however, state that this is not an assurance as to the future viability / inability of the company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date will get discharged / not discharged by the company as and when they fall due.

(xx) The section 135 of the Companies Act, 2013 is not applicable to the Company. Accordingly, reporting under clause 3 (xx) (a) & (b) of the said Order is not applicable.

(xxi) The Company is not required to prepare Consolidated Financial Statements. Accordingly, clause 3(xxi) of the Order is not applicable.

For R Kothari & Co LLP
Chartered Accountants
FRN: 307069E/E300266
CA. Manoj Kumar Sethia
Partner
Membership No.:- 064308
Date: 30th May, 2022
Place: Kolkata UDIN: 22064308AKIQZV4393

ANNEXURE B" TO THE INDEPENDENT AUDITORS REPORT

Report on the Internal Financial Controls Over Financial Reporting 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 M/s. IMPEX FERRO- TECH LIMITED ("the Company") as of 31st March, 2022 in conjunction with our audit of the financial statements of the Company for the year 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") issued by the Institute of Chartered Accountants of India and the Standards on Auditing issued by ICAI and 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 financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

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 2022, 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 R Kothari & Co LLP
Chartered Accountants
FRN: 307069E/E300266
CA. Manoj Kumar Sethia
Date: 30th May, 2022 Partner
Place: Kolkata Membership No.:- 064308
UDIN: 22064308AKIQZV4393