metalyst forgings ltd share price Auditors report

To,

Members,

METALYST FORGINGS LIMITED

Report on the Audit of the Financial statements

Qualified Opinion

We have audited the accompanying Financial Statements of METALYST FORGINGS LIMITED (‘the Company), which comprise the Balance sheet as at 31^st March 2023, the statement of Profit and Loss including other comprehensive income, the statement of cash flows and the statement of changes in equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "Financial Statements")

We do not express an opinion on the accompanying financial statements. Because of the significance of the matters described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for Qualified Opinion

(a) As per "IND AS 36 Impairment of Assets", the Company should assess at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the entity shall estimate the recoverable amount of the asset. The company should assess recoverability of following assets:

Particulars	Classified under	Amount (In Lakhs)
Balance with revenue authorities	Other non-current Assets	856.72
TDS receivableA	Other non-current Assets	105.13
Advance to suppliers*	Other Current assets	942.04
Balance with revenue authorities	Other Current assets	11.49

*Out of total balance of Rs 942.04 lakhs, 398.61 lakhs is overdue for more than a year. In absence of relevant ageing reports, exact overdue period cannot be calculated.

AOut of total balance of Rs 105.13 lakhs, 49.92 lakhs are adjusted against old demands. No appeal has been made with respect to such adjustments. In absence of any appeal, company should impair such assets.

Such assets are not realised for substantial period. Due to non-availability of ageing reports for following assets, it was not possible to determine since when the said balances were due to be realised. There is an indication that such asset might be

impaired. Management has not determined fair value/ recoverable value of such assets. Accordingly, we are unable to ascertain the possible effects of the same on the statements.

(b) As per "IND AS 109 Financial Instruments" the Company should recognize a loss allowance for expected credit losses on all financial assets of the company. Since the Company is still under the CIRP process and RP and COC are in the process of finalization of successful resolution, the Company and the management has not determined value of these assets in use. Accordingly, we are unable to ascertain the possible effect of the same on the Statements.

(c) As required under "IND AS 36- Impairment of Assets", the company has not done impairment testing on Property, plant and equipment having net block value of Rs 1,25,514.20 lakhs and Capital Work in Progress having closing value of Rs 14,060.03 Lakhs. We are informed by the management that since the company is under CIRP process, it is not possible for them to determine value in use and hence impairment testing has not been carried out. Accordingly, we are unable to ascertain the possible effects of the same on the financial statements.

(d) The company has not maintained Fixed Asset register. Accordingly, we cannot comment on accuracy of the carrying value of Property, Plant and Equipment, current & Accumulated depreciation and its possible impact on the financial statements.

(e) Refer Note No. to the financial statements where it is mentioned that there is

total VAT refund receivable of Rs 707.73 lakhs for FY 2014-15, FY 2015-16 and FY 2016-17 in the books of accounts. As per the Assessment orders received in January 2023 for these years, the refund amount is assessed at Rs 300.47 Lakhs. The company has not filed any appeal against the said orders. As represented by management the company is in the process of filing an appeal for reassessment. However, the company has not reduced the balance in books of accounts. Thus, the loss for the period is overstated to the extent of Rs 407.26 lakhs.

(f) Certain current accounts having aggregate balance of Rs. 351.23 Lakhs are not confirmed due to non-availability of confirmation as well as relevant bank statements from respective Banks. In absence of these details, we are unable to ascertain the possible impact on financial statements. (Only to be taken for amount on which banks statements is not available)

(g) Balance of Trade receivables, loans and advances and Trade payables are subject to confirmations and consequent adjustments, if required. In absence of balance confirmations, financial impact on financial results is not ascertainable. As per the Insolvency and Bankruptcy code, the RP has to receive, collate and reconcile all the claims submitted by the creditors of the company. The RP has verified and admitted the claims submitted by the creditors as per the code. Pending - finalisation of

resolution plan, the impact of such claims if any, have also not been considered in the preparation of the financial statements.

(h) We have not been provided with any inventory records containing information related to inwards, outwards, consumption and closing stock in quantity as well as valuation of cost. We have been provided with physical verification reports of M/s SR MALU & Co. wherein there are qualifications regarding provisions required in valuation of inventory. In absence of these complete data, we cannot verify accuracy of cost of inventory. Furthermore, we cannot ascertain whether the cost of inventory is stated at lower of cost or NRV and possible impact on the financial statements.

(i) As per IND AS 19, company has to take independent actuarial valuation under IND AS to calculate gratuity and leave encashment provision. Since the same is not taken by the company, total comprehensive income is overstated to an extent of 48.24 lakhs.

Emphasis of Matter

We draw attention to the following:

1. Refer note no. where it is mentioned that considering the ongoing corporate

insolvency resolution process, the certainty as to realization of unused tax losses and MAT credit cannot be ascertained at this stage. Consequently, adjustment to deferred tax (net) and available MAT credit have not been given effect to.

2. Refer note no. Considering the ongoing corporate insolvency resolution process,

interest on the financial debt from the date of commencement of CIRP i.e. from December 15, 2017 till March 31, 2023 have not been provided in the books of accounts and charged to profit and loss account.

Material Uncertainty Related to Going Concern

The company has accumulated losses of Rs. 256884.63 Lakhs and its net worth is fully eroded. It has incurred net loss during the year ended March 31, 2023, amounting to Rs. 31,341.81 Lakhs. It is unable to repay its debts and meet other financial obligations/commitments. The application of Financial Creditors under section 9 of the Insolvency and Bankruptcy Code (IBC) had been admitted by Honble National Company Law Tribunal ("NCLT"), Mumbai Bench. The company has been in the CIRP process under the code since December 15, 2017, and till date no resolution has been arrived at.

All these indicate material uncertainty about the Companys ability to continue as a Going Concern. However, the financial statements are prepared on a going concern basis.

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.

Except for the matters described in the Basis for qualified opinion we have determined that there are no other key audit matters to communicate in our report

Information other than the financial statements and Auditors Report thereon

The Companys Board of Directors are responsible for the other information. The other information comprises the information included in the Directors Report, including annexure thereto, Report on Corporate Governance and Management Discussion and Analysis Report, but does not include the Financial Statements and our auditors report thereon.

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

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

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

Responsibility of Managements and Those Charged with Governances Responsibility for the Financial Statements

The Resolution Professional of the company is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (‘the act) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance 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, read with Companies (Indian Accounting Standards) Rules, 2015.

The company has gone into Corporate Insolvency Resolution Process ("CIRP") vide order of the National Company Law Tribunal, Mumbai Bench ("NCLT") dated December 15, 2017, under the provision of the Insolvency & Bankruptcy Code 2016 ("Code"). Pursuant to the Order, the powers of the Board of Directors stand suspended and such powers are exercisable by Mr. Dinkar T. Venkatasubramanium, who has been appointed as Resolution Professional ("RP") by NCLT vide order dated December 15, 2017, and was consequently confirmed as Resolution Professional (RP) by the Committee of Creditors (COC) in its meeting held on January 12, 2018. The members of the COC (vide the meeting held 18 May 2018) authorized RP to file an application to NCLT for extension of CIRP period by 90 days (i.e., from 180 days to 270 days) as per the Code.

Accordingly, Mr. Dinkar T. Venkatasubramanium took control of the man operations of the company. As the powers of the Board of Directors had been s financial statements have not been adopted by Board of Directors however, t been signed by Mr. Dinkar T. Venkatasubramanium (Resolution Professiona Kapur (Director), Mr. Arun Maiti (CFO) and Ms. Pratibha Chaudhary (CS) confirming accuracy and completeness of the results. These Financial Stateme signed by the RP.

This responsibility also includes maintenance of adequate accounting records with the provisions of the Act for safeguarding the assets of the Company and f and detecting frauds and other irregularities; selection and application o accounting policies; making judgments and estimates that are reasonable design, implementation and maintenance of adequate internal financial contr operating effectively for ensuring the accuracy and completeness of the accou relevant to the preparation and presentation of the financial statements that g fair view and are free from material misstatement, whether due to fraud or er:

In preparing the financial statements, Resolution Professional is responsible the Companys ability to continue as a going concern, disclosing, as applic related to going concern and using the going concern basis of accounting unless either intends to liquidate the Company or to cease operations, or has no realis but to do so.

Auditors Responsibility for the audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the Financi as a whole are free from material misstatement, whether due to fraud or erro an auditors report that includes our opinion. Reasonable assurance is a assurance but is not a guarantee that an audit conducted in accordance with Auditing will always detect a material misstatement when it exists. Misstatem from fraud or error and are considered material if, individually or in aggrega reasonably be expected to influence the economic decisions of users taken o these Financial Statements.

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

• Identify and assess the risks of material misstatement of the Financia whether due to fraud or error, design and perform audit procedures those risks, and obtain audit evidence that is sufficient and appropriat basis for our opinion. The risk of not detecting a material misstatement r fraud is higher than for one resulting from error, as fraud may invo forgery, intentional omissions, misrepresentations, or the overrid control.

• Obtain an understanding of internal control relevant to the audit in oi audit procedures that are appropriate in the circumstances. Under Sect of the Act, we are also responsible for explaining our opinion on Company has an adequate internal financial controls system in p

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

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

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

Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements 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 audit work; and (ii) to evaluate the effect of any identified misstatements in the Financial Statements.

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

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2020 ("the Order") issued by the Central Government of India in exercise of powers conferred by sub section (11) of section 143 of the act, we give in "annexure A", a statement on the matters specified in paragraph 3 & 4 of the Order, to the extent applicable.

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

(a) Except for the matter described in Basis of Qualified opinion paragraphs, we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) Except for the matter described in Basis of Qualified Opinion paragraphs, 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. It was not possible to verify if daily backups were being taken in the absence of any evidence to that effect;

(c) Except for the matter described in Basis of Qualified Opinion paragraphs, the Balance sheet, the statement of Profit and Loss including other comprehensive income, the cash flow statement and the statement of changes in equity dealt with by this report are in agreement with the relevant books of account;

(d) Except for the matter described in Basis of Qualified Opinion paragraphs, the aforesaid Financial Statements comply with the Indian Accounting Standards specified under section 133 of the Act, read with the relevant rules there under;

(e) In our opinion the matters described in the Basis of Qualified Opinion paragraphs above may have adverse effect in the functioning of the Company.

(f) Since the company is under CIRP under the provisions of the Insolvency and Bankruptcy Code, the powers of board are suspended and RP is managing the operations of the company. Thus, written representations of the directors are not received and taken on record by the company and

(g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion paragraph above; and

(h) 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". Our report expresses disclaimer opinion on the adequacy and the operating effectiveness of the companys internal financial controls over financial reporting. An internal audit has also not been undertaken by company.

(i) 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, we report, that the managerial remuneration for the year ended 31st March, 2023 has not been paid to its directors.

(j) 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. The company has disclosed the impact of pending litigations on its financial position in its Financial Statements [Refer Note no. 3.26.4 of financial statements].

ii. The company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. The company has Rs 17.84 lakhs pending to be transferred to Investor Education and Protection Fund which is unclaimed for period 2012-13 and 2013-14.

iv. Further,

a) The management has represented that, to the best of its knowledge and belief, 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 persons or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall:

• directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Company or

• provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

b) The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any persons or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall:

• directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalf of the Funding Party or

• provide any guarantee, security or the like from or on behalf of the Ultimate Beneficiaries;

c) Based on the audit procedures that have been considered reasonable and, in the circumstances, nothing has come to our notice that has caused us to believe that the 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 or paid any dividend during the year.

vi. With respect to the matter to be included in the Auditors Report under Section 197(16) of the Act

In our opinion and according to the information and explanations given to us, no remuneration is paid by the Company to directors during the current year. In absence of such remuneration paid, reporting under this clause is not applicable.

vii. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023.

For Jayesh Sanghrajka & Co. LLP

Chartered Accountants

ICAI Firm Registration No. 104184W/W100075

Rishikesh Nasikkar

Designated Partner

Membership No. 166493

Date: Oct 28th 2023

Place: Mumbai

UDIN:- 23166493BGYASR7490

ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1 under "Report on other legal and regulatory requirements" section of our report to the members of Metalyst Forgings Ltd.)

i. In respect of Property Plant and equipment:

a) (A)The Company has not maintained proper records showing full particulars including quantitative details and situation of Property, Plant and Equipment. Refer clause "d" in "Basis for qualified Opinion" paragraph where it is mentioned that fixed asset register is not maintained by the company.

(B)The company does not have any intangible assets. Hence para 3(i)(a) (B) of the order is not applicable to the company.

b) During the year, the management has not physically verified Property, Plant and equipment. Further, the company does not have any program for verification of assets. We are informed by the management that since the company is in CIRP, assets are not verified this year. In absence of physical verification of assets, we cannot comment on existence of any material discrepancies on verification. Please refer clause "C" of Basis of Qualified Opinion paragraph where it is mentioned that company has not undertaken impairment testing for determining value in use and whether the same is less than carrying value.

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.

d) According to the information and explanations given by the management, the company has not revalued Property, Plant and Equipment (including right of use assets) or Intangible assets or both during the year. Hence paragraph 3 (i) (d) of the order is not applicable to the company.

e) According to the information and explanations given by the management, no proceedings have been initiated or are pending against the company for holding any benami property under the benami transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

ii. In respect of Inventories: -

a) We have been informed by the management that the inventories were physically verified by an external agency appointed by the company at the end of each quarter and no major discrepancies were noticed in the quantity of inventory. However, refer para "h" in "Basis of qualified opinion" where we have commented on valuation of inventory. Due to it, we cannot comment on whether any discrepancy

was identified and whether the same has been properly dealt with in the books of accounts.

b) According to the information and explanations given by the management, during any point of time during the year, the company has not been sanctioned working capital limits in excess of Rs 5 crores, in aggregate, from banks or financial institutions on the basis of security of current assets.

iii. The company.has not made investments in, provided any guarantee or security or granted any loans or advances in nature of loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties during the year. Therefore, the provisions of clause3(iii) of the Order are not applicable to the company.

iv. During the year, the company has not granted loans, made investments, given guarantee or securities for loan taken by others where provision of section 185 and 186 are applicable. Therefore, the provisions of clause 3(iv) of the Order are not applicable to the company.

v. In our opinion and according to the information and explanations given to us, the company has not accepted any deposit from the public covered under Section 73 to 76 of the Companies Act, 2013. In our opinion and according to the information and explanations given to us, no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any other court or any other tribunal with respect to the company. Therefore, the provisions of clause 3(v) of the Order are not applicable to the Company.

vi. According to the information and explanations given to us, the company is required to maintain cost records specified by central government under sub-section (1) of Section 148 of the companies act 2013. However,_we have not been provided with these records. In absence of such records, we are unable to comment about availability of the same.

vii. As regards statutory dues,

a. Except the matter stated in para ( e ) of basis for qualified opinion, according to the information and explanations given to us and based on the records of the company examined by us, the company is regular in depositing the undisputed statutory dues, including Provident Fund, Employees State Insurance, Income-tax, Goods & Service Tax, Custom Duty, and other material statutory dues, as applicable, with the appropriate authorities in India. As at the Balance sheet date, there have no dues which are outstanding for the period of more than 6 months from the date they become payable

b. According to the information and explanation given to us and based on the verification of records, there are no applicable statutory dues other than as specified in table below which have not been deposited on account of any disputes.

Nature of Dues	Amount (In Lakhs)	Period to which amount relates	Forum where dispute is pending
VAT	38.85	2020	Tribunal, Mumbai
	63.36	2013
Excise Duty	6.5	2002	Supreme Court, Delhi
	74.58	2008	High Court, Mumbai
	10.72	2008	CESTAT, Mumbai
	41.68	2013-2015	Commissioner, Central Excise (Appeal) Nashik
Income Tax (Appeal against demand raised under section 271(1) (c))	2.36	2006-07	ITAT, Mumbai
	18.31	2008-09	ITAT, Mumbai
	119.46	2010-11	ITAT, Mumbai
Income Tax (Appeal against demand raised under section 153A)	3.13	2005-06	ITAT, Mumbai
	4.34	2006-07	ITAT, Mumbai
	1.86	2007-08	ITAT, Mumbai
	33.60	2008-09	ITAT, Mumbai
	0.15	2009-10	ITAT, Mumbai
	0.23	2010-11	ITAT, Mumbai
	0.73	2011-12	ITAT, Mumbai

viii. According to the information and explanations given to us and based on the audit procedures performed by us, there are no transactions which are not recorded in books of accounts and have been surrendered or disclosed as income during the year in tax assessments under the Income Tax act, 1961 (43 of 1961).

ix. In respect of loans:

a. Since the company had defaulted in repayment of loans, the financial creditors of the company had filed a case under the provisions of the Insolvency and Bankruptcy Code 2016 and the Company has been under the CIRP period since December 15, 2017.As per the provisions of the Code, all the repayments of loans are stopped, and no repayments have been made during the year.

b. According to the information received by us from CIBIL and on the basis of our audit procedures, we report that the company has been declared willful defaulter by some banks. Details of the bank, amount of default and last date when they have been declared as wilful defaulter are provided in table below:

Name of Bank Last date Amount

Reported (In

Lakhs)

ALLAHABAD BANK (MERGED WITH INDIAN 31/03/2020 6866.82

BANK)

CORPORATION BANK (MERGED WITH UNION 31/03/2020 13443.56

BANK)

UNION BANK OF INDIA 31/07/2023 62127.38

BANK OF MAHARASHTRA 31/03/2023 13654.39

IDBI BANK LIMITED 31/08/2023 44697.31

c. According to information and explanations given to us and on the basis of our audit procedures, no term loans were obtained by the company during the year.

d. According to information and explanations given to us and on the basis of our audit procedures, no funds were raised by the company on a short-term basis during the year.

e. According to information and explanations given to us and on the basis of our audit procedures, 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 information and explanations given to us and on the basis of our audit procedures, the company has not raised loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies.

x. In respect of money raised:

a. As per information and explanations given to us, the company has not raised any money by way of public offer (including debts instruments) during the year. Hence para 3(x)(a) of the order is not applicable to the company.

b. As per the information and explanations given to us, the company has not made any preferential allotment or private placement of shares or convertible debentures (fully, partially or optionally convertible) during the year. Hence para 3(x)(b) of the order is not applicable to the company.

xi. In respect of frauds:

a. As per information and explanations given to us and procedures performed by us, no fraud by the company and no fraud on the company has not been noticed or reported during the year.

b. As per information and explanations given to us by the management, no report has been filed by us in form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014

c. As per information and explanations given to us by the management, no whistleblower complaints were received during the year.

xii. Since the company is not a Nidhi company, para 3 (xii) of the order is not applicable to the company.

xiii. In our opinion and according to the information and explanations given to us, the Company is in compliance with Section 177 and 188 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the Financial Statements as required by the applicable accounting standards.

xiv. In respect of Internal audit:

a. In our opinion and according to information and based on our examination, though the company is required to have an internal audit system under section 138 of the act, it does not have the same established for the year. Furthermore, the company has not made any provision for penalty leviable under companies act for non-compliance of such clause.

b. The company did not have an internal audit system for the period under audit.

xv. In our opinion and according to the information and explanations given to us, the company has not entered into any non-cash transaction with directors or persons connected with them.

xvi.

a. The Company is not required to be registered under Section 45-IA of the

Reserve Bank of India Act, 1934. Hence para 3(xvi)(a) of the order is not

applicable to the company.

b. The Company is not required to be registered under Section 45-IA of the

Reserve Bank of India Act, 1934. Hence para 3(xvi)(b) of the order is not

applicable to the company.

c. The Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Hence para 3(xvi)(c) of the order is not applicable to the company.

d. According to the information and explanations given to us and on overall examination of the Financial Statements of the company, para 3(xvi)(d) is not applicable to the company.

xvii. The company has incurred cash losses of Rs 33.47 lakhs during the year and Rs 116.47 lakhs during the immediately preceding previous year.

xviii. There is no resignation of the statutory auditors during the year. Hence para 3 (xviii) of the order is not applicable to the company.

xix. On the basis of the financial ratios, ageing and expected dates of realization of financial assets and payment of financial liabilities, other information accompanying the Financial Statements, we are of the opinion that material uncertainty exists as on the date of audit report that the company may not be able to meet its liabilities

existing at the date of balance sheet as and when they fall due within a period of one year from the balance sheet date.

xx. Section 135 of the act is not applicable to the company. Hence para 3 (xx) of the order is not applicable to the company.

xxi. The company does not have any subsidiary, associate or joint venture and consolidation is not required to be done. Therefore, para 3 (xxi) of the order is not applicable to the company.

For Jayesh Sanghrajka & Co. LLP

Chartered Accountants

ICAI Firm Registration No. 104184W/W100075

Rishikesh Nasikkar

Designated Partner

Membership No. 166493

Date: Oct 28th 2023

Place: Mumbai

UDIN:- 23166493BGYASR7490

Annexure - B to Independent Auditors Report

(Referred to in paragraph 2 (h) under "Report on other legal and regulatory requirements ‘section of our report to the members of Metalyst Forgings Ltd.)

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

We were engaged to audit the internal financial controls over financial reporting of METALYST FORGINGS LIMITED as of 31^st_-March 2023 in conjunction with our audit of the Financial Statements of the Company for the year ended on that date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI).

These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the "Guidance Note") 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 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.

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

Meaning of Internal Financial Controls over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Financial Statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with Authorizations of management and directors of the company; and (3) provide reasonable Assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the Financial Statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected.

Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Basis for Disclaimer of Opinion

The company has no documented Risk assessment and control matrix which enlists processes, sub-processes, risk faced by them, and controls implemented to mitigate such risks. During the CIRP period, the power of board has been suspended and the RP is managing all the affairs of the Company. However, the revised control matrix for all the processes has not been shared with us for our verification. The company has thus not established its internal financial control over financial reporting on criteria based on or considering the essential components of internal control stated in the guidance note issued by the Institute of Chartered Accountants of India.. We were unable to obtain sufficient appropriate audit evidence on which to base our opinion on the effectiveness of the companys internal financial controls with reference to financial statements.

Disclaimer of opinion

As described in the basis of disclaimer paragraph above, because of the significance of the matters , we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion on whether the company had adequate internal financial controls with reference to financial statements and whether such internal financial controls were operating effectively for the year ended March 31, 2023 based on the internal control with reference to financial statements criteria established by the company considering the essential

components of internal controls stated in the guidance note on audit of Internal Financial controls over financial reporting issued by the ICAI.

We have considered the disclaimer reported above in determining the nature, timing and extent of audit tests applied in our audit of the financial statements of the company for the year ended March 31,2023, and the disclaimer has affected our opinion on the financial statements of the company, and we have issued a "Qualified Opinion" on the financial statements for the year ended on that date.

For Jayesh Sanghrajka & Co. LLP

Chartered Accountants

ICAI Firm Registration No. 104184W/W100075

Rishikesh Nasikkar

Designated Partner

Membership No. 166493

Date:

Place: Mumbai

UDIN:-