Impex Ferro Tech Ltd Auditors Report.

To

The Members of Impex Ferro Tech Limited

Report on the Financial Statements

We have audited the accompanying financial statements of M/S IMPEX FERRO TECH LIMITED ("the Company"), which comprises the Balance Sheet as at March 31, 2016, Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, and a summary of significant accounting policies and other explanatory information.

ManagementRs s Responsibility for the Financial Statements

The CompanyRs s Board of Directors is responsible for the matters stated in section 134(5) of Companies Act, 2013 (Rs Rs the ActRs Rs ) with respect to the preparation of these financial statements that give a true and fair view of the financial position , 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, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; select! on and applicati on of appropriate account! ng policies; making judgments and esti mates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial control, that were operating effectively for ensuring that accuracy and completeness of the accounting records, relevant to the preparation and presentati on of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AuditorRs s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We have taken into account the provision of the Act, the accounting and auditing standards, and matters which are required to be included in the audit report under the provision of the Act and the Rules made there under.

We conducted our audit 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 financial statements are free from material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

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

(a) In the case of Balance Sheet of the state of affairs of the Company as at March 31, 2016;

(b) In the case of statement of Profit & Loss of the loss of the Company for the year ended on that date and

(c) In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

Emphasis of Matter

(a) We draw your attention to Note No. 39 of the Financial Statements which indicate that as at March 31, 2016, the accumulated losses amounting to Rs 14,486.45 lacs has eroded the entire net worth of the Company, indicating the existence of a material uncertainty about the CompanyRs s ability to conti nue as a going concern. These financial statements have been prepared on a going concern basis for the reasons stated in the said note.

(b) Pending confirmations of certain secured loans and advances, trade receivables, trade payables and other liabilities as referred in Note No. 33 of accompanying statements, are subject to confirmations and reconciliation.

Our report is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (AuditorRs s Report) Order, 2016 (Rs the OrderRs ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we enclose in the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. As required by section 143(3) of the Act, we report 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account.

(d) 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) On the basis of written representations received from the Directors as on March 31, 2016, and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2016, from being appointed as a Director in terms of section 164 (2) of the Act.

(f) 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

(g) In our opinion and to the best of our information and according to the explanations given to us, we report as under with respect to other matters to be included in the AuditorRs s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014:

i. The Company has disclosed the impact of pending litigations on the financial position in the Financial Statements - Refer Note - 29 (b) to (f) to its 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 by the Company to the Investor Education and Protection Fund.

For R. Kothari & Company
Chartered Accountants
FRN : 307069E
Manoj Kumar Sethia
Place : Kolkata Partner
Date : May 30, 2016 Membership No. 064308

Annexure to the Independent Auditors Report

The Annexure referred to in paragraph 1 under the heading Rs Report on Other Legal & Regulatory RequirementRs of our report of even date to the financial statements of the Company for the year ended March 31, 2016, we report that:

i. In respect of its fixed assets:

(a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of the fixed assets.

(b) The fixed asset has been physically verified by the management during the year and no material discrepancies were noticed on such verification and the same have been properly dealt with in the books of accounts.

(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 immovable properties are held in the name of the Company.

ii. The inventories have been physically verified during the year by the management and the discrepancies noticed on physical verification of stocks as compared to book records were not material and have been properly dealt with in the books of account.

iii. According to the information and explanations given to us, the Company has not granted loans to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013; and therefore reporting under paragraph 3(iii) of the Order is not applicable.

iv. In our opinion and according to the information and explanati on given to us, the Company has complied with provisions of section 185 and 186 of the Companies Act, 2013 in respect of loans and investments made.

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 Act and the Companies (Acceptance of Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

vi. We have broadly reviewed the books of accounts maintained by the Company in respect of manufacture of iron and Steel product and 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 not however made a detailed examination for the records with a view to determine whether they are accurate & complete.

vii. In respect of statutory dues:

(a) According to the information & explanation given to us and on the basis of examination of the books of account, the Company has generally been irregular in depositing undisputed statutory dues, in respect of Provident Fund, EmployeeRs s State Insurance, Income-tax, Tax deducted at sources, Professional Tax, Service Tax, Cess and other material statutory dues applicable to it, with the appropriate authoriti es. Moreover, the following statutory dues remain overdue as at March 31, 2016:

SI. No. Nature of Dues Rs /Lacs
1 SERVICE TAX 40.42
2 TDS 19.77
3 PF, ESI & OTHER DUES 5.27
TOTAL 65.46

According to the informati on and explanati ons given to us, there were no undisputed amounts payable in respect of Income-tax, Cess and other material statutory dues in arrears/were outstanding as at March 31, 2016 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of Income tax, Wealth 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 :-

Name of the statute Nature of Dues Financial Year Rs /Lacs Forum where Dispute is Pending
2005-06 12.36 Commissioner of Central Excise (Appeals) (III)
Central Excise Act, 1994 Excise Duty 2005-06 and 2006-07 8.26 CESTAT, Calcutta Bench
2006-07 0.50 Commissioner of Central Excise (Appeals) (IV)
2007-08 15.55 CESTAT, Calcutta Bench
Total 36.67 Rs 20.92 Lacs paid under protest
Central Sales Tax and Local Sales Tax Act 2005-06 304.13 WBCT, Appellate and Revisional Board
2006-07 479.91 WBCT, Appellate and Revisional Board
VAT 2008-09 748.45 WBCT, Appellate and Revisional Board
2009-10 211.18 Sr. Joint Commissioner of Commercial Taxes
Total 1,743.67 Rs 104.56 Lacs paid under protest
W.B. Entry Tax Act Entry Tax 2012- 13 and 2013- 14 272.51 HonRs ble High Court of Calcutta
Total 272.51 Rs NIL paid under protest
Income Tax Act, 1961 Income Tax 2011-12 1,606.46 Commissioner of Income Tax (Appeals), Kolkata
Total 1,606.46 Rs NIL paid under protest

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 on borrowings to banks as follows

Particulars Amount of default as at 31st March, 2016 (Rs in Lacs) Period of default Nature of Loan
Union Bank of India 12.09 January, 2016 to March, 2016 FITL
State Bank of India 10.75 March, 2016 FITL
State Bank of Travancore 9.18 February, 2016 & March, 2016 FITL
Bank of Baroda 4.40 February, 2016 & March, 2016 FITL
Punjab National Bank 6.48 January, 2016 to March, 2016 FITL
State Bank of India 66.96 February, 2016 & March, 2016 CC
State Bank of Travancore 18.38 March, 2016 CC
Bank of Baroda 38.39 February, 2016 & March, 2016 CC
Pubjab National Bank 19.81 January, 2016 to March, 2016 CC

ix. Based upon the audit procedures performed and the informati on and explanati ons given by the management, the Company has not raised moneys during the year 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, we report that managerial remuneration has been paid/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, reporting under Paragraph 3 (xii) of the Order are not applicable to the Company.

xiii. Based upon the audit procedures performed and the information and explanations given 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 account! ng standards and Companies Act, 2013.

xiv. The Company has made preferential allotment of 63.35 lacs shares during the year under review. Based upon the audit procedures performed and the information and explanations given by the management the requirement of Section 42 of the Companies Act, 2013 have been complied and the amount raised have been used for the purposes for which the funds were raised.

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 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 and accordingly, reporting under Paragraph 3 (xvi) of the Order is not applicable to the Company and hence not commented upon.

For R. Kothari & Company
Chartered Accountants
FRN : 307069E
Manoj Kumar Sethia
Place : Kolkata Partner
Date : May 30, 2016 Membership No. 064308

Annexure 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 March 31, 2016 in conjunction with our audit of the financial statements of the Company for the year ended on that date.

ManagementRs s Responsibility for Internal Financial Controls

The CompanyRs s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial report! ng criteria established by the Company considering the essenti al 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 (Rs ICAIRs ). 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 CompanyRs s 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.

AuditorsRs Responsibility

Our responsibility is to express an opinion on the CompanyRs s 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 the Institute of Chartered Accountants of India and the Standards on Auditing 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 auditorRs s 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 CompanyRs s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A CompanyRs s internal financial control over financial reporti ng is a process designed to provide reasonable assurance regarding the reliability of financial reporti ng and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companyRs s 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 transacti ons are recorded as necessary to permit preparati on 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 authorizati on 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 CompanyRs s assets that could have a material effect on the Financial Statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitati ons of internal financial controls over financial report! ng, 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 reporti ng 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 March 31, 2016, 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 & Company
Chartered Accountants
FRN : 307069E
Manoj Kumar Sethia
Place : Kolkata Partner
Date : May 30, 2016 Membership No. 064308