Mercator Auditors Report


To

The Liquidator

In the matter of Mercator Limited

IBBI Reg. No.: IBBI/IPA-001/IP-P00999/2017-2018 /11646

Report on the Audit of Standalone Fifinancial Statements

Disclaimer Opinion

We have audited the accompanying Standalone Fifinancial Statements of Mercator Limited (hereinafter referred as “the Company”), which comprise the Balance Sheet as at March 31 2023, the Statement of Pro t and Loss, [including Other Comprehensive Income], the Statement of Cash Flow and the Statement of Changes in Equity for the year then ended, and notes to the Standalone Fifinancial Statements, including a summary of signi cant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, because of the signi cance of the matter(s) described in the ‘Basis for Disclaimer Opinion section of our report, the accompanying Standalone Fifinancial Statements do not give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of a airs of the Company as at March 31, 2023, its pro t [including other comprehensive income], its cash flows and the statement of changes in equity for the year ended on that date.

The Honble National Company Law Tribunal, Mumbai (NCLT) had admitted the petition of Fifinancial Creditors under Insolvency and Bankruptcy Code (IBC) 2016 (hereinafter referred to as the “Code”) vide its Order dated February 8, 2021. As per Section 17 of the IBC, the powers of the Board of Directors of the Company had been suspended and such powers had been vested with Mr. Girish Siriram Juneja as the Resolution Professional, by the NCLT vide its aforesaid order to manage the a airs of the Company as per the provisions of IBC. The Resolution Plans submitted by the Resolution Applicants (RAs) were placed before the Committee of Creditors for their consideration and voting but failed to receive the requisite votes in terms of the provisions of the code. Accordingly, an application for liquidation had been led in terms of section 33 of the Code. Pursuant to the said application, the Company has been ordered to be liquidated as going concern vide order dated February 21, 2023 of the aforesaid bench of NCLT and Mr. Girish Siriram Juneja has been appointed as Liquidator of the company vide its order dated February 21, 2023.

Basis for Disclaimer of Opinion

We draw attention to

a. The management has prepared these Fifinancial Statements on a going concern basis in spite of following facts and circumstances:

i. NCLT, Mumbai has ordered the company to be liquidated as going concern. The Management has obtained an external legal opinion to prepare the accounts with going concern assumption.

ii. The net-worth of the company has been fully eroded and is Rs. (-) 9,787.50 million as at March 31, 2023 and Rs (-) 9,791.60 million as at March 31, 2022;

iii. There are no operations during the current and previous financial year and no revenue is earned except for interest on xed deposits;

iv. The Company had substantially disposed-o its Property, Plant and Equipment and currently doesnt have any operating revenue and operating assets.

v. Legal proceedings are pending before various Judicial Authorities seeking claims / compensations;

vi. The financial statements and other details in respect of various subsidiaries, associates and joint ventures of the company are not available due to which we are unable to comment on the impact it may have on the carrying amount and the impairment, if any, in respect of investments, loans, advances, receivables and payable, the requirement of provisioning for guarantees provided, disclosures for liabilities crystalized or contingent. Interest earned on loans granted to related parties are subject to reconciliation

vii. No documentary evidences are available for bank balances, trade receivables loans granted

viii. Recoverability of Income Tax Assets, Security and Judicial Deposits, Insurance Receivable, Other Fifinancial Assets, Other Current and Non-Current Assets being remote

The above mentioned conditions cast signi cant doubt about the Companys ability to continue as a going concern. The Company may be unable to discharge its liabilities and realise its assets at book values since the amount could di er signi cantly from the amounts. Due to these conditions at the date of this report, we are unable to ascertain the impacts of the same on the standalone financial Statements.

b. Note No. 3.19 of the Standalone Fifinancial Statements, regarding the balances restated in the books of accounts pursuant to admission of the claims submitted by the financial creditors as on March 31, 2023 post aforementioned NCLT order for liquidation. As con rmed by Liquidator, the claims are in the process of being received and shall be duly veri ed upon receipt of the same. We have relied on the adjustments, if any, made by the erstwhile Resolution Professional w.r.t. the claims received during Corporate Insolvency Resolution Process and are unable to comment on the adjustment, if any, arising on any pending claim or claim not received on the standalone financial statements of the Company.

c. Note No. 3.20 of the Standalone Fifinancial Statements, regarding interest or any other charges not being accrued in the books of accounts from the date of commencement of CIR process, i.e., February 8, 2021 onwards till date on account of Section 14 of the Code. We have relied on the erstwhile Resolution Professional and Liquidator regarding the same and are unable to comment on the adjustment, if any, on the standalone financial statements of the Company. The Management has accounted for Bank Guarantee commission as Finance Costs.

d. Note No. 3.21 of the Standalone Fifinancial Statements, regarding the Companys investments in preference shares in its wholly owned foreign subsidiary Mercator International Pte Ltd. (MIL), (which is under liquidation as per the Singapore laws), has been impaired in full, amounting to Rs. 4,649.41 million. The Company has not made any provision on investment in equity shares Rs. 2.88 million) as on March 31, 2023. The signi cant investment of MIL is in its coal mines and related infrastructure in Indonesia and the valuation of these assets was conducted on December 31, 2020 by an independent valuer. We have been informed by the Management/Liquidator the same is the only and latest information available. Further, as informed to us, a liquidator has been appointed on MIL effective April 9, 2021. No audited financial statement of MIL are available with the Company. We are further informed that ICICI Bank which was the major lender having a charge on the coal assets of the subsidiary has assigned its loan and the securities that they held on the coal assets to a third party.

In view of the non availability of the financials statement / financial information and updates on other matters as stated above, we are unable to comment on the value or recoverability of the said investment in subsidiary.

e. Note No. 3.05(iii) of the Standalone Fifinancial Statements, regarding unprovided current tax demands under dispute to the tune of Rs. 867.50 million pending at various judicial forums of the Income Tax department, which are treated as contingent liabilities. In the absence of the required supporting documents justifying the stand of the Company we are unable to comment on nal outcome of such contested statutory demands and the potential financial impact of the same.

f. Note No. 3.22 of the Standalone Fifinancial Statements, regarding termination of Sagar Samrat Conversion Project (SSCP), undertaken by a subsidiary Mercator Oil

& Gas Ltd. (hereinafter referred as “MOGL” or “subsidiary”), by ONGC, which is currently under arbitration. The Company has investments in equity amounting to Rs. 1.50 million, which has been fully impaired in previous years and loans amounting to Rs. 1,042.36 million (which includes un-serviced interest, excluding impairment of Rs. 414.28 million), and the balance as per the financial results net of impairment amounts to Rs. 628.06 million as at March 31, 2023 in MOGL, which in the view of the management / Liquidator is recoverable.

The petition led in NCLT, Mumbai Bench by an operational creditor against MOGL was admitted vide Order dated June 30, 2021 and a Resolution Professional has been appointed. Further, the Resolution Professional had updated that the last date of submission of Expression of Interest (EOI) by Prospective Resolution Applicants (PRAs) was October 13, 2021. The Resolution Plan was placed before Committee of Creditors (‘COC). However, the plan did not secure a majority vote of the CoC and accordingly an application for approval of liquidation of the Company has been led with Honourable NCLT, Mumbai.

We have been informed by the management / Liquidator that no financial statement / financial results / financial information of MOGL as on March 31, 2023 is being made available to the Company.

Further, the Company have also accounted for Rs. 28.64 million as interest income after impairment during the year.

In view of the non availability of the financials statement / financial information and updates on other matters as stated above of MOGL as on March 31, 2023, we are unable to comment on the recoverability of such investment and loan amount.

g. Note No. 3.23 of the Standalone Fifinancial Statements, regarding the Companys investments in its Indian subsidiary Mercator Petroleum Ltd. (hereinafter referred to as “MPL”) amounting to Rs. 479.30 million, (excluding impairment of Rs. 161.75 million during the year) and loan (including Debentures) given amounting to Rs. 1,274.75 million (including un-serviced interest and excluding impairment of Rs. 292.26 million) as on March 31, 2023, and the balance as per the standalone financial statements including investments and loans amounts to Rs. 1,300.04 million, which are considered recoverable. Further, the petition led in NCLT, Mumbai

Bench by an operational creditor against MPL was admitted vide Order dated August 31, 2020 and a Resolution Professional (RP) has been appointed. We have been informed by the management / Liquidator that no financial statement / financial results / financial information/Resolution Process of MPL as on March 31, 2023 is being made available to the Company. We are informed that a Resolution Plan has been approved by the Committee of Creditors of MPL and has been led for approval with the adjudicating authority by the Resolution Professional of MPL.

Further, the Company has also accounted for Rs. 66.03 million as interest income which is fully impaired during the year

In view of the non availability of the financials statement / financial information and updates on other matters as stated above of MPL as on March 31, 2023, we are unable to obtain su cient appropriate evidence about the recoverability of such investment and loan given.

h. Note No. 3.24 of the Standalone Fifinancial Statements, regarding the fact that no Fifinancial Statement / Fifinancial Information (including balance con rmations) of any of the subsidiaries have been made available to the management / Liquidator for the year ended March 31, 2023. In the view of the non availability of any financial information, we are unable to obtain su cient appropriate evidence about the recoverability of such investments and loans and advances given which are outstanding as on March 31, 2023.

i. Note No. 3.25 of the Standalone Fifinancial Statements, regarding balance con rmations not been received in respect of any secured / unsecured loans, bank balance, trade receivables, trade and other payables, and loans and advances as a result of which reconciliation process and consequential adjustments, if any, has not been carried out. In the view of the management / Liquidator, all the balances outstanding to be receivable are to be considered as good and no additional provisioning on account of non recoverability or expected credit loss is required.

Further, bank statements (except for one bank account) are also not available. In the view of the non availability of balance con rmation or documents substantiating balances, we are unable to comment on the impact of the same on the Fifinancial Statements of the Company and compliance of relevant Ind-AS.

Further, the balances related to Input Tax Credit of Goods and Service Tax as per books of accounts as on March 31, 2023 are under reconciliation with the available regulatory records and any impact of the same is not known as on the date of Fifinancial Statements.

j. Note No. 3.26 of the Standalone Fifinancial Statements, all the directors are disquali ed from being appointed as director in terms of Section 164 (2) of the Act.

k. Note No. 3.28 of the Standalone Fifinancial Statements, regarding receivable from an insurance Company amounting to Rs. 542.80 million pertaining to a total loss claim on a vessel pertaining to the year 2012-13, which is under litigation and has been considered fully recoverable by the management / RP and is supported by a legal opinion. In the view of the non availability of any information, we are unable to obtain su cient appropriate evidence about the recoverability of such claim which are outstanding as on March 31, 2023.

We conducted our audit of the Standalone Fifinancial Statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Companies Act, 2013 (“the Act”). Our responsibilities under those Standards are further described in the ‘Auditors Responsibilities for the Audit of the Standalone Fifinancial 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 Standalone Fifinancial Statements under the provisions of the Act and the Rules thereunder, and we have ful lled our other ethical responsibilities in accordance with these requirements and the Code of Ethics.

In the absence of su cient and appropriate audit evidence, we have issued disclaimer of opinion on the Standalone Fifinancial Statements.

Information Other than the Standalone Fifinancial Statements and Auditors Report thereon

The Companys Management / Liquidator is responsible for the other information. The other information comprises of the information included in the Annual report, but does not include the Standalone Fifinancial Statements and our auditors report thereon.

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

In connection with our audit of the Standalone Fifinancial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Fifinancial Statements or our knowledge obtained during the audit or otherwise appears to be materially misstated. When we read the Other Information if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions necessitated by the circumstances and the applicable laws and regulations. In the absence of su cient and appropriate audit evidence, we are unable to comment on the same.

Responsibilities of the Management / Liquidator and Those Charge with Governance for the Standalone Fifinancial Statements

The Companys Management/Liquidator are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation of these Standalone Fifinancial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (IND-AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. 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 the design , implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Fifinancial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Fifinancial Statements, the Companys Management/Liquidator are responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to the going concern concept and using the going concern basis of accounting unless the Companys Management/Liquidator either intends to liquidate the Company or cease its operations, or has no realistic alternative but to do so.

The Companys Management/Liquidator are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Standalone Fifinancial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Fifinancial 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 Standards on Auditing 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 in uence the economic decisions of users taken on the basis of these Standalone Fifinancial Statements.

As part of an audit in accordance with Standards on Auditing specified under section 143(10) of the Act, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the Standalone Fifinancial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is su cient 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 an internal control.

Obtain an understanding of the internal controls relevant to the audit in order to design audit procedures that are appropriate in those circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system with reference to financial statement 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, Board of Directors and Liquidator.

Conclude on the appropriateness of the management, Board of Directors and Liquidator 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 signi cant 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 results or, if such disclosures are inadequate, to modify our opinion.

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

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and signi cant audit ndings, including any signi cant de ciencies in internal control that we identi ed during our audit.

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

Because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain su cient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2020 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the “Annexure A” a statement on the matters specified in paragraphs 3 and 4 of the Order, which is subject to the possible effect of the matters described in the Basis for Disclaimer of Opinion section above and our separate Report on the Internal Controls over Fifinancial Reporting

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

(a) As described in the basis for disclaimer of opinion paragraph, we sought but were unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit

(b) Due to the possible effects of the matter described in the basis for disclaimer of opinion paragraph, we are unable to state whether 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) Subject to the possible effects of matters described in Basis of Disclaimer of Opinion paragraph, we are unable to the Balance Sheet, the Statement of Pro t and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account;

(d) Due to the matters described in the Basis for Disclaimer Opinion paragraph above, in our opinion, we are unable to comment whether the aforesaid Standalone Fifinancial Statements comply with the IND AS specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;

(e) We have not received any written representations for any of the directors as on March 31, 2023 in terms of Section 164 (2) of the Act. However, considering the fact, that the Company has defaulted in repayment of Non Convertible Debentures in earlier years, in our opinion, all the directors are disquali ed from being appointed as director in terms of Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls with reference to the financial statements of the Company with reference to these Standalone Fifinancial Statements and the operating effectiveness of such controls, we request you to refer to our separate Report in “Annexure B” to this report; which expresses Disclaimer opinion on the adequacy of and operating effectiveness of the Companys internal financial controls for the reasons stated therein.

(g) Due to the matters described in the Basis for Disclaimer Opinion paragraph above, we are unable to state that the Company has paid/ provided for managerial remuneration in accordance with the provisions of and as per the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

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

i. In view of the related matters described in the basis for disclaimer of opinion paragraph, we are unable to state whether the standalone financial statements discloses the complete impact of pending litigations on its financial position;

ii. In view of the related matters described in the basis for disclaimer of opinion paragraph, we are unable to state whether the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts. The Company does not have any derivative contract;

iii. We have been informed by the Liquidator, there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended.

iv. (a) The Management / Liquidator has represented that no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identi ed in any manner whatsoever by or on behalf of the Company ("Ultimate Bene ciaries") or provide any guarantee, security or the like on behalf of the Ultimate Bene ciaries (Refer Note 3.41 to Standalone Fifinancial Statements);

(b) The Management / Liquidator has represented that no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identi ed in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Bene ciaries”) or provide any guarantee, security or the like on behalf of the Ultimate Bene ciaries (Refer Note 3.41 to Standalone Fifinancial Statements); and

(c) Due to the matters described in the Basis for Disclaimer Opinion paragraph above we are u n a b l e t o c o m m e n t w h e t h e r t h e representations under sub-clause (i) and (ii) of Rule 11(e), as provided under (a) and (b) above, contain any material misstatement.

v. The Company has not declared / paid any dividend during the year and hence clause related to compliance with Section 123 of the Act is not applicable.

vi. The effective date of feature of recording audit trail (edit log) facility in accounting software for maintaining its books of account and the audit trail feature has been deferred till 01St April, 2023 and hence the same is not being commented upon.

For G. P. Sharma & Co LLP

Chartered Accountants

Firm Registration No. 109957W/W100247

CA Utkarsh Sharma

Partner

Membership No: 147906

UDIN: 23147906BGUNVG3536

Place: Mumbai

Dated: May 30, 2023

Annexure A to the Independent Auditors Report

Annexure A referred to in paragraph 1 of the Independent Auditors Report of even date to the members of Mercator Limited (the “Company”) in the Standalone Fifinancial Statements as of and for the year ended March 31, 2023 under the heading “Report on other Legal and Regulatory requirements”.

According to the information and explanations sought by us and given by the Company and subject to the possible effect of matters described in the Basis for Disclaimer Opinion paragraph above, we state that:

i. In respect of the Companys Property, Plant & Equipment:

(a) We are unable to comment whether the Company has maintained proper records showing full particulars including quantitative details and situation of Property, Plant and Equipment.

(b) As per the information and explanations provided to us, no physical veri cation of xed assets of the Company has been done during the year. Hence, we are unable to comment on the reasonableness on the periodicity of such activity and any impact on the Standalone Fifinancial Statements.

(c) According to explanations given to us, the title deeds of the immovable properties included in xed assets are held in the name of the Company. However, the o ce premise of the Company was charged to the lender of Mercator Petroleum Limited and the Company has received possession notice u/s 13 (4) of Securitization and Reconstruction of Fifinancial Assets and read with Rule 8 of Enforcement of Security Interest (Second) Act, 2002, wherein the symbolic possession of the o ce premises has been obtained by the said, lender on September 9, 2020.

(d) According to the information and explanations given to us, the Company has not revalued its Property, Plant and Equipment (including Right of Use assets) or Intangible Assets during the year.

(e) According to the information and explanations given to us, no proceedings have been initiated or is pending against the Company during the year for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder

ii. (a) According to the information and explanations given to us, the Company doesnt hold any inventory as on March 31, 2023. Accordingly, provisions of the paragraph 3(ii) of the Order are not applicable to the Company.

(b) The Company has been sanctioned working capital limits in excess of ve crore rupees, in earlier years in aggregate, from banks or financial institutions on the basis of security of current assets. Basis the information and explanation provided to us, we note that no quarterly returns / statements led have been led by the company with such banks or financial institutions. Hence, we are unable to comment on this clause.

iii. (a) During the year, the Company has not provided loans or advances in the nature of loans, or guarantee, or security to any entity. Accordingly, provisions of the paragraph 3(iii)(a) of the Order are not applicable to the Company.

(b) During the year, the Company has not made any investments or provided any guarantee or given any security provided to any entity. Accordingly, provisions of the paragraph 3(iii)(b) of the Order are not applicable to the Company.

In our opinion, on account of Basis of Disclaimer of Opinion, the rate of interest and other terms and conditions on which loans had been granted to the bodies corporate listed in the register- maintained u/s 189 of the Act, we are unable to comment whether the terms and conditions are prejudicial to the interest of the Company at the time these were granted. The Company has however impaired Rs. 94.68 million during the year towards the loans granted in earlier period and interest thereon.

(c) According to the information and explanations given to us, in case of the loans granted to the body corporate listed in register-maintained u/s 189 of the Act in earlier years, are repayable on demand, which have not been recalled and hence we are unable to comment on whether the repayment of principal or interest amounts are regular.

(d) Due to the possible effect of matters described in the Basis for Disclaimer Opinion paragraph above, we are unable to comment whether there is no overdue amount for more than ninety days in respect of loans given in earlier years.

(e) Due to the possible effect of matters described in the Basis for Disclaimer Opinion paragraph above, we are unable to comment whether there is no loan given falling due during the year, which has been renewed or extended or fresh loans given to settle the overdues of existing loans given to the same party.

(f) According to the information and explanations given to us, no fresh loan has been granted during the year which are either repayable on demand or without specifying any terms or period. Accordingly, provisions of the paragraph 3(iii)(f) of the Order are not applicable to the Company.

iv. According to the information and explanations given to us, the Company has complied with the provisions of Section 185 and Section 186 of the Companies Act, 2013, with respect to Loans and Advances made, guarantee given and investments made. However, on account of Disclaimer of Opinion paragraph, we are unable to comment on the same. Further, the Company has impaired substantial part of its investments and loans and advances, hence the interest accrued on such loans and advances has been impaired on account of threat of recoverability.

v. According to the information and explanations gives to us, the Company has not accepted any deposit from the public within the meaning of section 73 to 76 of the Act and Rules framed thereunder to the extent noti ed. Therefore, the provisions of clause (v) of the Order is not applicable.

vi. According to the information and explanations given to us, the Central Government has not prescribed the maintenance of Cost Records by the Company u/s 148 (1) of the Companies Act 2013.

vii. According to the information and explanations given to us, in respect of Statutory dues:

(a) Amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including Provident Fund, Employees State Insurance, Income-tax, Goods and Service Tax, Cess and other material statutory dues have not been regularly deposited with the appropriate authorities and there have been serious delays in large number of cases.

Name of the Statute

Nature of Dues Amount (RsRs in Million) Period to which the amount relates Due Date Date of Payment Remarks, if any
Goods and Service Tax (Various States) CGST / SGST / IGST 129.10 (excluding Input Tax Credit) May 2018 to September 2021 Various due dates Not paid until date of Signing of Fifinancial Statements
Goods and Service Tax (Tax Collected at Source) GST TDS 1.66 October 2018 to March 2020 Various due dates
Income tax (Tax Collected at Source) TCS 0.48 Nov-19 Various due dates
Service Tax Service Tax 102.24 (excluding Input Tax Credit) August 2010 to August 2019 Various due dates
Withholding Tax TDS 1.14 Various due dates
Profession Tax Profession Tax 0.00 Upto September 2021 Various Due Dates

(b) According to the information and explanations given to us, the dues of, Income Tax, Service Tax and Cess which have not been deposited on account of any dispute and the forum where the dispute is pending as on March 31, 2023 are as under

Name of the Statue

Nature of Dues Amount (Rs.Rs in Million) Period to which the amount relates Forum where the disputes are pending
Service Tax under Finance Act, 1994 Service Tax 640.29 2006-07 to 2015-16 CESTAT & CCE(A), Mumbai
Income Tax Income Tax 4.43 AY 2003 04 Commissioner of Income Tax (A)
41.67 AY 2007 08 ITAT
236.34 AY 2008 09 ITAT
122.16 AY 2009 10 ITAT
5.38 AY 2010 11 ITAT
27.43 AY 2011 12 ITAT
15.47 AY 2012 13 ITAT
43.65 AY 2013 14 ITAT
42.75 AY 2014 15 ITAT
92.51 AY 2015 16 Commissioner of Income Tax (A)
85.49 AY 2016 17 Income Tax Officer
56.84 AY 2017 18 Dispute Resolution Panel
93.40 AY 2018 19 Dispute Resolution Panel

The aforesaid details are based solely on the details made available by the company which could not be independently veri ed.

viii. According to the information and explanations given to us, there are no transactions which have not been recorded in the books of account but have been surrendered or disclosed as income in the tax assessments under the Income Tax Act, 1961 (43 of 1961) during the year.

(a) As per the information and explanations provided to us, the Company has defaulted in repayment of loans or borrowings to financial institutions, banks or government including interest thereon.

A) Defaults in repayment of loans or borrowings and Interest thereon:

Sr.

Name of Lender Borrowings Interest

No.

Amount Period Amount Period
(Rs.Rs in Million) (in days)# (Rs.Rs in Million)

(in days)#

Long Term

1 Axis Bank Limited 2,248.32 679 439.60

Ranging between

91 679 days

2 Export and Import Bank of India 616.95 569 67.10 313
3 ICICI Bank Limited 1,864.89 679 412.10 679
4 AION Direct Private Limited 1,165.80 313 188.90 614
5 UTI Capital Private Limited 1,475.70 313 1,687.50 712

Short Term

6 ICICI Bank Limited 30.64 444 45.30 679
7 Other Fifinancial Lenders # 205.00 679 96.90 679
8 State Bank of India 1,659.70 Ranging between 614.30

Ranging between

640-649 days

640 649 days

9 Yes Bank Limited 200.00 456 81.30 314

# Defaults w.r.t loan from various NBFCs / Fifinancial Institutions have been consolidated under “Other Fifinancial Lender” and not disclosed case wise.

#Period of default has been computed up to the Insolvency Commencement Date (ICD) i.e. February 8, 2021 as these dues are under moratorium as per section 14 of Insolvency and bankruptcy code 2016.

The aforesaid details are based solely on the details made available by the company which could not be independently veri ed.

(b) According to the explanation provided to us, the Company has not been declared a wilful defaulter by any bank or financial institution or other lender.

(c) According to the explanations given to us and to the best of our knowledge and belief, in our opinion, no term loans has been availed by the Company during the year. Accordingly, reporting under paragraph 3(ix)(c) of the Order is not applicable to the Company.

(d) According to the explanations given to us, no funds were raised on short-term basis during the year. Accordingly, reporting under paragraph 3(ix)(d) of the Order is not applicable to the Company.

(e) According to the explanations given to us, we report that the company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associates or joint ventures.

(f) According to the explanations given to us, we report that the company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies.

x. (a) The Company has not raised any money by way of initial public o er or further public o er (including debt instruments) during the year and hence reporting under paragraph 3 (x)(a) of the Order is not applicable to the Company.

(b) The Company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year and hence reporting under paragraph 3 (x) (b) of the Order is not applicable to the Company.

xi. (a) According to the information and explanations given to us, we have neither come across any instances of material fraud by the Company or on the Company by its o cers or employees, noticed or reported during year nor have been informed of any such case by the Management / Liquidator.

(b) During the year, as informed, no report under subsection (12) of section 143 of the Companies Act, 2013 has been led by us in Form ADT 4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014 with the Central Government.

(c) According to the explanations given to us, the Company has not received any whistle- blower complaints during the year.

xii. The Company is not a Nidhi company and hence reporting under paragraph 3 (xii) of the Order is not applicable to the Company.

xiii. As per the information and explanations given by the management / Liquidator, transactions as per books of account with related parties are in compliance with sections 177 and 188 of the Act, where applicable and the details of such related party transactions have been disclosed in the Standalone Fifinancial Statements as required by the applicable accounting standards.

xiv. (a) In our opinion and based on our examination, though the Company has appointed Internal Auditor, however the same doesnt commensurate with the size and nature of the Companys business.

(b) We were unable to obtain Quarter 4 internal audit report of the Company, hence the internal audit reports have not been entirely considered by us.

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

xvi. (a) According to the information and explanations given to us, The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

(b) According to the explanations given to us, the Company has not has conducted any Non-Banking Fifinancial or Housing Finance activities without a valid Certi cate of Registration (CoR) from the Reserve Bank of India as per the Reserve Bank of India Act, 1934;

(c) According to the explanations given to us, the Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India, Accordingly, the requirement to report on clause 3(xvi)(c) of the Order is not applicable to the Company

(d) According to the explanations provided to us during the course of audit, the Group (as per the provisions of the Core Investment Companies (Reserve Bank) Directions, 2016) does not have any CIC.

xvii. The Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year. Accordingly, paragraph 3(xvii) of the Order is not applicable to the Company.

xviii. There has been no resignation of the statutory auditors during the year and accordingly the reporting under Clause (xviii) is not applicable

xix. According to the information and explanations given to us and based on our examination of records of the Company including evaluation of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the financial statements, to be read with point Para “Basis for Disclaimer Opinion”, we are of the opinion that on account of NLCT order a rming liquidation, the Company doesnt have any ability to continue as a Going Concern entity.

xx. According to the information and explanations given to us, the Company was not required to spend any amount u/s 135 of the Companies Act, 2013 for the year ended March 31, 2023. Further, there is no unspent amount related to earlier years, which is outstanding as on March 31, 2023. Accordingly, paragraph 3(xx) of the Order is not applicable to the Company.

xxi. The reporting under clause 3(xxi) of the Order is not applicable in respect of audit of Standalone Fifinancial Statements. Accordingly, no comment in respect of the said clause has been included in this report.

For G. P. Sharma & Co LLP

Chartered Accountants

Firm Registration No. 109957W/W100247

CA Utkarsh Sharma

Partner

Membership No: 147906

UDIN: 23147906BGUNVG3536

Place: Mumbai

Dated: 30th May, 2023

Annexure - B to The Independent Auditors Report

(Referred in paragraph 2(h) under ‘Report on Other Legal and Regulatory Requirements section of our report of even date)

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

We have audited the internal financial controls with reference to the financial statements of MERCATOR LIMITED (“the Company”) as of March 31, 2023 in conjunction with our audit of the Standalone Financial Statements of the Company for the year ended on that date.

Managements / Liquidators Responsibility for Internal Financial Controls

The Companys Management /Liquidator is responsible for establishing and maintaining internal financial controls based on internal control financial reporting criteria established by the Company considering the essential components of internal control stated in the guidance note on audit of Internal Fifinancial Control over Financial Reporting (“the Guidance Note”) 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 e cient conduct of the Companys business, including adherence to the 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 Act.

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 Fifinancial Controls Over Fifinancial Reporting (the “Guidance Note”) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Fifinancial 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

Because of the matter described in Disclaimer of Opinion paragraph below, we were not able to obtain su cient appropriate audit evidence to provide a basis for an audit opinion on internal financial controls system over financial reporting of the Company.

Meaning of Internal Fifinancial Controls Over Fifinancial Reporting

A companys internal financial controls with reference to financial statements 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 controls with reference to financial statements include those policies and procedures that:

(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reffect 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;

(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.

Disclaimer of Opinion

The system of internal financial controls over financial reporting with regard to the Company were not made available to us to enable us to determine if the Company has established adequate internal financial control over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2023

We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the Standalone financial statements of the Company, and the disclaimer has a ected our opinion on the Standalone financial statements of the Company and we have issued a disclaimer of opinion on the standalone financial statements.

For G. P. Sharma & Co LLP

Chartered Accountants

Firm Registration No. 109957W/W100247

CA Utkarsh Sharma

Partner

Membership No: 147906

UDIN: 23147906BGUNVG3536

Place: Mumbai

Dated: 30th May, 2023