ISMT Ltd Directors Report.

TO THE MEMBERS OF ISMT LIMITED

Report on the Audit of the Standalone Financial Statements

1. Qualified Opinion

We have audited the standalone financial statements of ISMT Limited (“the Company”), which comprise the Balance Sheet as at March 31, 2019 and the statement of Profit and Loss (including Other Comprehensive Income), statement of changes in equity and the statement of cash flows for the year ended and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (hereinafter referred to as “the standalone financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid standalone 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 the accounting principles generally accepted in India including Indian Accounting Standards (“Ind AS”) prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules as amended and other accounting principles generally accepted in India, of the state of affairs (financial position) of the Company as at 31 March 2019, and its loss (financial performance including other comprehensive income), the changes in equity and its cash flows for the year ended on that date.

2. Basis for Qualified Opinion

A. The Company has outstanding Minimum Alternate Tax (MAT) entitlement, classified as Deferred Tax Asset as per Ind AS- 12, Income Taxes, of Rs. 82.05 Crores as on March 31, 2019. Taking into consideration the loss during the period ended March 31,2019 and carried forward losses under the Income Tax, in our opinion, it is not probable that the MAT entitlement can be adjusted within the specified period against the future taxable profits under the provisions of Income Tax Act, 1961. In view of the same, in our opinion, the MAT entitlement cannot be continued to be recognised as an asset in terms of Ind AS-12 and “Guidance note on accounting for credit available in respect of MAT under the Income Tax Act, 1961”. Non-writing off of the same has resulted in understatement of loss for the year ended March 31, 2019 and overstatement of other equity by Rs. 82.05 Crores and its consequential effect on the Earnings per Share of the Company.

B. The Company, through its subsidiary, has invested Rs. 48.43 Crores in Structo Hydraulics AB Sweden (SHAB). Net receivables (net of write offs) to the Company from SHAB against supplies made is Rs. 15.41 Crores and payment made towards invocation of guarantee given by the Company in respect of loans availed by SHAB is Rs. 33.33 Crores (USD 5 Million). The Company has received the approval from regulatory authorities for treating said payment against invocation as equity investment in SHAB (considered as investment on adoption of Ind AS) andthe Company is taking steps for implementation of the same. SHAB has been incurring losses and its net worth is also partially eroded due to continuing losses. No provision for diminution in value of investment and net receivable against supplies is made by the Company as explained in Note No.3.16. We are unable to comment on the same and ascertain its impact, if any, on net loss for year ended March 31 2019, carrying value of investment and other equity as at March 31, 2019 in respect of above matters.

C. The Company had recognized claim in earlier years, of which outstanding balance as on March 31, 2019 is Rs. 39.53 Crores, against Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) for non-implementation of Energy Banking Agreement. The Company had appealed to Appellate Tribunal (APTEL) against the order passed by Maharashtra Electricity Regulatory Commission (MERC) and the same has been dismissed by the APTEL. The Company has preferred appeal before the Honble Supreme Court against the order of APTEL. The realization of this claim is contingent and dependent upon the outcome of the decision of the Supreme Court. In our opinion the recognition of above claim, being contingent asset in nature, is not in conformity with Ind AS-37, Provisions, Contingent liabilities and Contingent assets. Recognition of the above claim has resulted into overstatement of carrying value of non -current assets and other equity by Rs.39.53 Crores as at March 31, 2019. Refer Note No. 3.20 (i).

D. The Company has reclassified 40 MW Captive Power Project (CPP) at Chandrapur, Maharashtra, which was asset held for sale to Property Plant & Equipment for reasons stated in Note No. 3.20(ii). The Company has expressed its inability to determine recoverable value of CPP on re-classification on account of the uncertainty on the alternatives available and for the reasons stated in said note; hence, the CPP is measured on the Balance sheet date at the adjusted carrying amount of Rs. 236.08 Crores and not at lower of the adjusted carrying amount and the recoverable amount as required by Ind AS 105 “Non-current Assets Held for Sale and Discontinued Operations”. In view of the aforesaid, we are unable to determine the impact of the same, if any, on net loss for year ended March 31 2019, carrying value of the CPP and other equity as at March 31,2019.

E. The Company is unable to determine the recoverable value of investment (including advances) in Tridem Port and Power Company Private Limited (TPPCL), wholly owned subsidiary company, of Rs 116.08 Crores on Balance Sheet date for the reasons stated in Note No.3.17. Hence impairment loss, if any, is not recognised as required by Ind AS 36 “Impairment of the Assets”. In view of the aforesaid, we are unable to determine the impact of the same, if any, on the net loss for the year ended March 31 2019, carrying value of the investment and other equity as at March 31, 2019.

F. Pending approval/ sanction of debt restructuring scheme by lenders and balance confirmation from lenders, the Company has not provided for the overdue /penal interest, if any. The quantum and its impact, if any, on the net loss for the year ended March 31 2019, carrying value of the Borrowings (i.e. Current Financial Liabilities) and other equity as at March 31,2019 is unascertainable. Refer Note No 3.19.

We conducted our audit in accordance with Standards on Auditing (“SAs”) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in 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 ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and Rules made there under, 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 audit opinion on the standalone financial statements.

3. Material uncertainty Related to Going Concern

The Company has accumulated losses and its net worth has been fully eroded due to continuous losses and the Companys current liabilities exceeded its current assets as at March 31, 2019. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companys ability to continue as a going concern. However, the financial statements of the Company have been prepared on a going concern basis for the reasons stated in the Note No. 3.18.

Our opinion is not modified in respect of this matter.

4. Emphasis of Matter(s)

We draw attention to Note No. 1.31 of standalone financial statements regarding remuneration payable to Managing Director and Executive Director amounting to Rs. 3.16 Crores for the year ended March 31, 2019 (Rs. 6.02 Crores cumulative up to March 31, 2019) is subject to approval of Lenders.

Our opinion is not qualified in respect of this matter.

5. 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. In addition to the matters described in the Basis for Qualified Opinion section referred in para 2 above and Material Uncertainty Related to Going Concern section in para 3 above, We have determined the matters described in Annexure A to be the key audit matters to be communicated in our report.

6. Information Other than the Standalone 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 Companys Annual Report, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone 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 standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditors report, 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.

7. Managements Responsibility for the Standalone 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 these standalone financial statements that give a true and fair view of the financial position, financial performance, total comprehensive income, changes in equity and cash flows 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 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 standalone 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 are also responsible for overseeing the Companys financial reporting process

8. Auditors Responsibilities for the Audit of the Standalone 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:

a) Identify and assess the risks of material misstatement of the financial statements, 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.

b) Obtain an understanding of internal control 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.

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

d) 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.

e) 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 standalone 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.

9. Report on Other Legal and Regulatory Requirements

a) As required by The Companies (Auditors Report) Order, 2016 issued by the Central Government of India (Ministry of Corporate Affairs) in terms of sub section (11) of section 143 of the Companies Act, 2013, we give in Annexure B, a statement on the matters specified in paragraphs 3 and 4 of the Order.

b) 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 except to the extent referred in Annexure III to this report.

c) As required by section 143 (3) of the Act, we report, to the extent applicable, that:

i) We have sought and obtained all the information and explanations, except for the matter described in the Basis for Qualified Opinion paragraph above, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) except for the effects/possible effects of the matters described in the Basis for Qualified Opinion paragraph above, 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;

iii) The Company has no branch offices whose accounts are audited by branch auditors;

iv) except for the effects/possible effects of the matters described in the Basis for Qualified Opinion paragraph above, The Balance Sheet, the Statement of Profit and Loss (Including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account;

v) In our opinion, except for the effects/possible effects of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid standalone financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act and the rules prescribed there under;

vi) The matters described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the Company.

vii) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of section 164 (2) of the Act.

viii) The qualifications relating to maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above.

ix) 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 C”; and

x) 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. Refer Note No. 3.1 on Contingent Liabilities disclosing the impact of pending litigation on the financial position of the Company.

ii. The Company does not have any long-term contracts including derivative contracts, having any material foreseeable losses, for which provision was required.

iii. There has been 3 days delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

For DNV & Co.

Chartered Accountants

Firms registration No.:102079W

CA Bharat Jain

Partner

Membership No.: 100583

Place: Pune

Date: June 14, 2019

Annexure A: KEY AUDIT MATTERS as referred in Para 5 of the Standalone Auditors Report:

KEY AUDIT MATTER RESPONSE TO KEY AUDIT MATTER
Revenue Recognition:
(Refer Note No. 2.4 for policies in respect of revenue recognition) Our procedures in respect of recognition of revenue included the following:
Revised Ind AS 115 is applicable w.e.f. April 1, 2018 which, inter alia, brings in concept of “Transfer of control” with five step model as against “Transfer of Risk & Reward” in revenue recognition. a) Assessing the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards.
Revenue from sale of Product is recognised when the control over the products have been transferred to the customer based on the terms and conditions of the sales contracts entered into with the customers across geographies. b) Testing the design, implementation and operating effectiveness of the Companys general IT controls and key IT application/manual controls over the Companys systems which govern recording of revenue in the general ledger accounting system.
c) Performing substantive testing (including year-end cutoff testing) by selecting samples of revenue transactions recorded during the year (and before and after the financial year) and verifying the underlying documents, which includes sales invoices/contracts and shipping documents.
We have identified recognition of revenue as a key audit matter as revenue is a key performance indicator and there is a risk of revenue being fraudulently overstated arising from pressure to achieve performance targets as well as meeting external expectations. d) Assessing manual journals posted to revenue to identify unusual items other than already identified.
e) Evaluating the adequacy of the standalone financial statement disclosures, including disclosures of key assumptions, judgments and sensitivities.
Property Plant and Equipment:
Refer Note No. 2.5 and 2.21 for policies in respect of Property, Plant and Equipment In view of the significance of the matter our procedures in this area included the following :
The carrying amount of Property, Plant and Equipment is Rs1359.58 Crores, which represents 55% of the total assets of the Company. a) Testing the design, implementation and operating effectiveness of key controls over the impairment review process including the review and approval of forecasts and review of valuation models.
The value in use of these Property, Plant and Equipment have been determined based on certain assumptions and estimates of future performance. b) assessing the valuation methodology used by management and testing the mechanical accuracy of the impairment models
The value in use so determined of each Cash Generating Unit (CGU) identified by the management have been used for the impairment evaluation of the Property, Plant and Equipment. c) evaluating the reasonableness of the valuation assumptions, such as discount rates, used by management through reference to external market data;
Due to the significance of the value of the PPE, the inherent uncertainty and judgment involved in forecasting performance and the estimates involved in discounting future cash flows, we have considered these estimates to be significant to our overall audit strategy and planning. d) challenging the appropriateness of the business assumptions used by management, such as sales growth and the probability of success of new products;
e) evaluating the past performances where relevant and assessing historical accuracy of the forecast produced by management;
f) Considering whether events or transactions that occurred after the balance sheet date but before the reporting date affect the conclusions reached on the carrying values of the assets and associated disclosures.
g) Evaluating the adequacy of the disclosures made in the standalone financial statements
h) Also refer para 2D of the Auditors Report regarding inability to determine net realizable value of some of the assets.
Impairment of Trade Receivables:
Trade Receivables, net of impairment allowance, amounts to Rs.295.04 Crores as on 31st March 2019, which constitutes about 12% of the total Assets of the Company. We have performed the following processes in relation to Managements Judgment in identification of impairment of value of Receivables and adequacy of impairment provision:
Managements judgment is involved in identifying impairment in the value of the receivable which has an adverse impact on the profits of the Company. a) We have referred to the defined policy in place stipulating the methodology of making impairment provision in respect of overdue Receivable amounts.
b) We have also reviewed age-wise analysis in respect of Receivables and ensured that the provisioning is made according to such policy. The above referred provisioning policy stipulates different provisioning norms for Receivables with confirmations and without confirmations
c) We have sought information and explanations from the department Heads regarding the status of receivable for the purpose of ensuring adequate impairment provisions.
d) We have also tested subsequent collections made from the overdue receivables
Evaluation of Uncertain outcome of pending litigation
Refer Note No. 3.1 for policies in respect of contingent liabilities The Company is subject to periodic challenges by local tax authorities during the normal course of business in respect of indirect tax Matters. The company is having indirect tax liability in dispute amounting to Rs 51.73 Crores. Our audit procedures include the following substantive procedures:
a) Obtained understanding of key issues involved in pending tax and other litigations
b) Read and analysed select key correspondences, external legal opinions / consultations by management;
Further the company is having pending legal cases filed against the company with the claim amount involved of Rs 107.75 Crores (net of deposit). c) Discussed with appropriate senior management and evaluated managements underlying key assumptions in assessing managements estimate of the possible outcome of the disputed matters.
These litigations involve significant management judgment to determine the possible outcome of the uncertain tax positions and legal cases, consequently having an impact on related accounting and disclosures in the standalone financial statements.

ANNEXURE ‘B TO THE INDEPENDENT AUDITORS REPORT

Referred to in paragraph 9 A under the heading “Report on Other legal and Regulatory Requirements” of our report on even date:

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

b) The Company has a program of verification to cover all the items of fixed assets in a phased manner which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the records examined by us and based on the examination of the conveyance deeds provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Company as at the balance sheet date. In respect of immovable properties of land and building that have been taken on lease and disclosed as fixed assets in the financial statements, the lease agreements are in the name of the Company.

(ii) a) As explained to us, the inventories including majority of the goods lying with third parties have been physically verified by the management at reasonable intervals during the year.

b) In our opinion and according to the information and explanations given to us, the discrepancies noticed on physical verification between physical stock and the book records were not material and have been properly dealt with in the books of account.

(iii) As per the records of the Company, it 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 Act.

(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 Act, with respect to the loans, investments, guarantees and securities.

(v) The Company has not accepted any Deposit from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for maintenance of cost records under subsection (l) of section 148 of the Act & we are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of records with a view to determine whether they are accurate and complete.

(vii) a) According to the records of the Company, the Company is regular in depositing undisputed statutory dues including Provident Fund, Employee State Insurance, Income Tax, Goods and Service Tax, Central Sales Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues with the appropriate authorities. According to the information and explanations given to us, there are no undisputed amounts payable in respect of such statutory dues which have remained outstanding as at March 31, 2019 for a period of more than six months from the day they become payable.

b) The disputed statutory dues that have not been deposited on account of disputes pending before the appropriate authorities are as mentioned in the Annexure- I to this report.

(viii) According to the information and explanations given to us, the Company has defaulted in repayment of dues to banks and Government. Details of defaults are mentioned in Annexure- II to this report. The Company does not have any debenture holders.

(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and the term loans.

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

(xi) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act except to the extent referred in Annexure III to this report.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order 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 sections 177 and 188 of the Act wherever applicable and the details of such transactions have been disclosed in the Ind AS financial statements as required by the applicable Accounting Standards.

(xiv) According to the information and explanations 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 or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

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

For DNV & Co.

Chartered Accountants Firms registration No.:102079W

CA Bharat Jain

Partner

Membership No.: 100583

Place: Pune

Date: June 14, 2019

Annexure - I

Particulars of dues of Sales Tax/ Excise Duty/ Custom Duty/ Income Tax not deposited on account of disputes:

Rs. in Crore
Nature of Statue Nature of Dues Amount Disputed Forum where dispute is pending
Central Sales Tax Act, 1956 Sales Tax 0.09 Tribunal
6.42 Dy. Commissioner (Appeals)
0.01 High Court, Mumbai
0.41 Dy. Commissioner
2.18 Joint Commissioner (Appeal)
Maharashtra Sales Tax Act, 1959 Sales Tax 0.81 Tribunal
0.47 High Court, Bombay
5.76 Dy. Commissioner (Appeals)
2.11 Joint Commissioner ( Appeal)
Central Excise Act, 1944 Excise Duty 15.89 CESTAT
6.89 High Court, Bombay
1.96 Commissioner
0.08 Asst. Commissioner
1.00 Add. Commissioner
Customs Act,1962 Custom Duty 1.49 Dy. Commissioner
2.50 Asst. Commissioner
Income Tax Act, 1961 Income Tax 0.20 Tribunal, Pune

Annexure II

Installments due including interest outstanding as at March 31, 2019:

Rs. in Crore
Name of the Lenders/ Government 0-30 Days 31-60 Days 61- 90 Days More than 90 Days Total
Andhra Bank 3.93 0.84 0.93 77.95 83.65
Bank of Baroda 9.66 2.57 2.85 279.68 294.76
Central Bank of India 0.57 0.33 0.36 43.77 45.03
ICICI Bank Limited 0.80 79.03 79.83
*Edelweiss Asset Reconstruction Co. Ltd. 1.91 0.68 0.75 30.47 33.81
IKB Deutsche Industrie Bank AG 62.41 62.41
**Asset Reconstruction Company India Ltd. 27.14 20.30 28.49 842.54 918.47
*** SC Lowy Primary Investment Limited 0.43 49.75 50.18
State Bank of India 1.28 0.67 0.74 65.20 67.89
Total 45.72 25.39 34.12 1530.80 1636.03

* Loans Assigned by ICICI Bank Limited

** Loans Assigned by Indian Overseas Bank, Bank of India, IDBI Bank and Bank of Maharashtra. ***Loans Assigned by Bank of India

Annexure III

Details of Managerial Remuneration paid / provided in excess of requisite approval:

Rs. in Crores
Designation Amount paid / provided Amount paid / provided in excess of the limit prescribed Amount due as recoverable from Balance Sheet Steps taken for recovery
Managing Director
Remuneration: Paid 1.23 1.23 #1.23 -
Provided 0.45 0.45 -
Executive Director
Remuneration:
Paid 0.84 0.84 #0.84 -
Provided 0.64 0.64 -
Total 3.16 3.16 2.07

# Recoverable subject to approval of Lenders. Rs.2.86 Crores up to F.Y. 2017-18 paid/ provided

ANNEXURE ‘C TO THE INDEPENDENT AUDITORS REPORT

(Referred to in para 9C(i) under ‘Report on Other Legal & Regulatory Requirements section of our report of even date) 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 ISMT Limited (“Company”) as of March 31, 2019 in conjunction with our audit of standalone 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. 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 (“Guidance Note”) issued by the Institute of Chartered Accountants of India & 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. 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 judgement, 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 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 31 March 2019, 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 DNV & Co.

Chartered Accountants Firms registration No.:102079W

CA Bharat Jain

Partner

Membership No.: 100583

Place: Pune

Date: June 14, 2019