MMTC Ltd Auditors Report.

TO THE MEMBERS OF MMTC LTD.

Report on the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of MMTC Limited ("the Company"), which comprises the Balance Sheet as at 31st March, 2019, the statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and Statement of Changes in Equity for the year then ended, and notes to the financial statements including a summary of significant accounting policies and other explanatory information, in which are incorporated the financial statements for the year ended on that date audited by the Branch Auditors of the Companys Regional Offices at Mumbai, Kolkata, Ahmedabad, Vizag, Chennai, Hyderabad, Bhubaneshwar and Jaipur.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 in the manner so required and 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, 2019 and its profit for the year ended on that date.

Basis for Opinion

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

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.

Sl. No Key Audit Matter Auditors Response
1. Refer note 36(b) regarding need for replacing the existing old ERP with integrated and atest ERP system. In the absence of the one, the recent changes in laws such as Depreciation Schedule in Companies Act, introduction of GST etc. are not seamlessly captured in the system. We performed following test in detail to ensure that all the entries passed in different accounting packages / software have been duly mapped in the preparation of financial statements as on Balance Sheet date:
Performed cut off procedure
Performed reconciliation of entries passed in different platforms
2. Refer note no. 34 on the claims not acknowledged as debt incorporating therein claims on account of pending legal cases. There are large number of cases pending before various adjudicating authorities. These legal cases involve significant judgement to determine the possible outcome of those disputes and independent legal assessment to pursue the case. We obtained list of all the pending legal cases handled at Corporate office legal division on 31st March 2019 with a note from management on the changes in the status of the cases from that of last year. We considered the effect of information provided by the management and analysed the impact of financial obligation of the Company.
The company has 8 regional o ces and different divisions to handle the trade activities including accounting of that particular activity. However, in lot of cases the legal cases are pursued at corporate office level while related financial information / transactions are dealt at RO level, thereby difficulties are faced in giving a comprehensive and holistic treatment to the transaction. It was suggested to management to have legal cases and financial obligation if any at the same location in order to have clarity in reporting in financial statement.
3 Refer Note no. 34(i)(j) regarding contingent liability of the company on account of coal supplied by a foreign supplier for NINL. The company has been representing that the liability, if any, is to be borne by NINL but due to continuous pendency of confirmation f r o m NINL and precarious financial condition of NINL, there is an uncertainty of recovery, in case liability is crystallised. Considering the fact that appeal is pending before division bench of Delhi High court and representations of the management provided to us on the issue, this requires significant management judgement on the continuing support to and recovery of dues / claims from NINL. Managements key judgements about recovery of dues / claims from NINL would be a factor for determining future financial stability of the Company.
4 Advance given for development of free trade warehousing project to and investment in Haldia Free Trade warehousing Private Limited and Kandla Free Trade warehousing Private Limited. (Ref Note No. 9(ii)) We discussed the matter with the management to understand the possibility of implementation / completion of the project that resulted in creation of provision for doubtful recoveries.

Emphasis of Matters

a. We draw attention to Note No. 36 (C) to the Standalone Financial Statements in respect of fund based and non-fund based exposure of the Company in M/s Neelachal Ispat Nigam Limited (NINL) - a joint venture Company.

b. We draw attention to Note No. 34(i)(j), where the company has stated that any liability arising out of appeal pending for final decision, is to be borne by NINL, however there is no confirmation from NINL

Our opinion is not modified in respect of these matters.

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, changes in equity and cash flows of the Company in accordance 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 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.

Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the audit of Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

Identify and assess the risks of 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.

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.

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.

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 signifficance in the audit of the standalone 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.

Other Matters

We did not audit the financial statements / financial information of 8 Regional Offices included in the standalone financial statements of the Company whose financial statements / financial information reflect total assets of INR 3,508.15 Crores as at March 31, 2019 and total revenue of INR 16,894.92 Crores for the year ended on that date, as considered in the standalone financial statements. The financial statements / financial information of these branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016 ("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-1" a statement on the matters specified in the paragraph 3 and 4 of the Order, to the extent applicable.

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

a) We have sought and obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The reports on the accounts of the branch o ces of the Company audited under section 143 (8) of the Act by the Branch auditors have been sent to us and have been properly dealt with by us in preparing this report;

d) The Balance Sheet, the Statement of Profit and Loss, the Cash Flow Statement and Statement of Changes in Equity dealt with by this report are in agreement with the books of account;

e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 as amended;

f) Being a Government Company pursuant to the Noti cation No. GSR 463(E) dated 5 June 2015 issued by the Ministry of Corporate A airs, Government of India, provisions of sub-section (2) of Section 164 of the Act, are not applicable to the Company;

g) With respect to the adequacy of internal financial controls over financial reporting of the company and operating effectiveness of such controls, refer to our separate Report in

"Annexure-2"

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

i. There are pending litigations including matters relating to sales tax, custom duty and excise duty which are disclosed as contingent liability - refer to Note 34 and 36 to the standalone financial statements, the impact of the same is unascertainable as the matters are sub-judice.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts.

iii. There has been no delay in transferring amounts required to be transferred to the investors Education and Protection Fund by the Company.

3. As required by C & A G of India through directions, issued under Section 143 (5) of the Companies Act, 2013, we give our report in the attached "Annexure-3"

For O.P. Tulsyan & Co.
Chartered Accountants
FRN: 500028N
Rakesh Agarwal
Place: New Delhi Partner
Date: 30.05.2019 M No.: 081808