OCL Iron & Steel Ltd Auditors Report.

To the Members of OCL Iron and Steel Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of OCL Iron and Steel Limited (‘The Company), which comprises the Balance Sheet as at 31st March 2018, the statement of Profit and Loss (including other comprehensive income), the statement of Change in Equity and the statement of Cash Flow for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements

The companys board of directors is responsible for the matters specified in section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance [including other comprehensive income,] change in equity and cash flows of the company in accordance with the accounting principles generally accepted in India, including the Indian accounting standards (Ind AS) prescribed under section 133 of the Act, read with relevant rules issued there under.

This responsibility also includes the 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 the 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 control, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. In conducting our audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone Ind AS financial statements are free from material misstatements.

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

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

Emphasis of Matter

(i) The Companys accumulated losses as on 31.03.2018 have resulted in complete erosion of its net worth. Further as on that date, the companys current liabilities substantially exceeded the current assets. These factors raise a substantial doubt about the companys ability to continue as a going concern in the foreseeable future. However, the companys financial statements have been prepared on going concern basis as per the management opinion disclosed in the said note. Our opinion is not modified in respect of this matter.

(ii) The company has classified all its borrowings from banks as current liabilities, being declared as nonperforming assets (NPA) by the lenders. Our opinion is not modified in respect of this matter.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements, give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the company as at March 31, 2018 and its loss, total comprehensive income, the change in equity and its cash flows for the year ended on that date read with the points mentioned in Emphasis of matter paragraph.

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 annexure A , a statement on the matters specified in paragraph • & 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 Balance Sheet, the statement of Profit and Loss including Other Comprehensive Income, and the Statement of Changes in Equity and Statement of Cash Flow dealt with by this Report are in agreement with relevant the books of account;

(d) In our opinion, the aforesaid standalone Ind AS financial statements comply with the Indian Accounting Standards prescribed under section 133 of the Act;

(e) On the basis of the written representations received from the directors as on 31st March 2018 and taken on record by the board of directors, none of the directors is disqualified as on March 31, 2018, from being appointed as a director in terms of Section 164 (2) of the Act;

(f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and the operating effectiveness of the companys internal financial controls over financial reporting; and

(g) 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 standalone Ind AS financial statements [Refer Note no.34.1].

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

iii. There were no amounts which were required to be transferred, to the Investor Education and Protection Fund by the company.

For A. C. Gupta & Associates

Chartered Accountants

Firms registration number: 008079N

A.C. Gupta

Partner

Membership number: 008565

New Delhi

May 30, 2018

Annexure - A to the Independent Auditors Report

The Annexure referred to in Independent Auditors Report to the members of the Company on the standalone financial statements for the year ended 31st March 2018.

(i) In respect of the Companys property, plant and equipment:

(a) The company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.

(b) As explained to us, the property, plant and equipment, according to the practice of the company have been physically verified during the year by the management at reasonable intervals. In our opinion, the frequency of physical verification of property, plant and equipment is reasonable having regard to the size of the Company and nature of its assets. According to the information and explanations given to us, no material discrepancies were noticed on such physical verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the company, the title deeds of immovable properties are held in the name of the company.

(ii) We have been informed that the inventories are physically verified during the period by the management at reasonable intervals. The frequency of physical verification, in our opinion, is reasonable having regard to the size of the company and nature of its business. The discrepancies noticed on verification between the physical inventories and the book records were not material in relation to the operation of the company and the same have been properly dealt with in the books of account.

(iii) The Company has granted unsecured loans to wholly owned subsidiary which is covered in the register maintained under section 189 of the Companies Act, 2013 (Act) during the period under review. Such loan is repayable on demand and as such there is no irregularity with regards to the amount being overdue as on 31st March 2018.

(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 185 and 186 of the Companies Act 2013, in respect of loans, investments, guarantees and security.

(v) Since the company has not accepted any deposit from public, the directives issued by the Reserve Bank of India and the provisions of section 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under with regard to the deposits accepted from the public are not applicable.

(vi) The Central Government has prescribed the maintenance of cost records under section 148 (1) of the Companies Act 2013 (‘the Act). On the basis of records produced before us for our verification, we are of the opinion that, prima facie, the prescribed accounts and cost records have been maintained. However we are neither required to carry out nor have carried out any detailed examination of such accounts & records.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the company, there had been delays in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, sales tax, service tax, GST duty of excise, value added tax, cess and other statutory dues with appropriate authorities during the year ended 31st March 2018.The outstanding amount as on 31st March, 2018 on account of statutory dues being Rs. 5,508.49 Lakh. According to the information and explanations given to us, arrears of undisputed statutory dues outstanding for a period of more than six months as on the date of balance sheet i.e. March 31, 2018, was Rs. 2,662.63 Lakh.

(b) According to the information and explanations given to us, and as per our verification of records of the company, the company has not paid / deposited following statutory dues on account of disputes:

Name of the Statute Nature of Dues Year to which it relates Forum where dispute is pending Amount (in Lakhs)
1 Central Sales Tax CST 2002-03 Tribunal 1.00
2 Central Sales Tax CST 2004-05 Odisha Sales Tax Tribunal 79.33
3 Central Sales Tax CST 2006-07 Odisha Sales Tax Tribunal, Cuttack 8.98
4 Central Sales Tax CST 2007-08 Odisha Sale Tax TRIBUNAL, Cuttack 17.18
5 Central Sales Tax CST 2010-11 Odisha Sales Tax Tribunal, Cuttack 20.30
6 Central Sales Tax CST 2009-10 Joint Commissioner of Central Sales Tax, Jajpur 14.91
7 Central Sales Tax CST 2011-12 Odisha Sales Tax Tribunal, Cuttack 23.67
8 Central Sales Tax CST 2011-13 Odisha Sales Tax Tribunal, Cuttack 58.25
9 Central Sales Tax CST 2013-14 Odisha Sale Tax TRIBUNAL, Cuttack 2.72
10 Central Sales Tax CST 2014-15 Odisha Sale Tax TRIBUNAL, Cuttack 81.45
11 Central Service Tax Service Tax 2006-12 Addl. Commissioner, (Adjn.) Commissionerate Office, Bhubaneswar 30.00
12 Central Service Tax Service Tax 2011-16 Addl. Commissioner (Audit), Rourkela Circle, Bhubaneswar 75.89
13 Central Service Tax Service Tax 2008-10 Commissioner, Commissionerate
Office, Bhubaneswar 275.73
14 Central Excise Tax Cenvat 2005-06 CESTAT 23.68
15 Odisha Entry Tax State Entry Tax 2002-03 Tribunal 0.07
16 Odisha Entry Tax State Entry Tax 2005-06 Joint Commissioner of Sales Tax, Sundergarh 2.66
17 Odisha Entry Tax State Entry Tax 2006-07 Addl. Commissioner of Sales Tax, Odisha, Cuttack 3.05
18 Odisha Entry Tax State Entry Tax 2007-08 Commissioner of Sales Tax, Odisha, Cuttack 23.55
19 Odisha Entry Tax State Entry Tax 2007-10 Addl. Commissioner of Sales Tax, North Zone Sambalpur 4.07
20 Odisha Entry Tax State Entry Tax 2010-12 Commissioner of Sales Tax, Odisha, Cuttack 3.52
21 Odisha Entry Tax State Entry Tax2011-13 Commissioner of Sales Tax,
Odisha, Cuttack 20.58
22 Odisha Entry Tax State Entry Tax2011-13 Odisha High Court 7.38
23 Odisha Entry Tax State Entry Tax2011-13 Odisha High Court 51.30
24 Rajasthan Entry Tax State Entry Tax2011-16 Assistant Commissioner of Commercial Taxes 683.57
25 Odisha Sales Tax VAT 2005-06 Addl. Commissioner of Sales Tax Odisha, Cuttack 473.68
26 Odisha Sales Tax VAT 2006-07 Odisha Sales Tax Tribunal, Cuttack 36.17
27 Odisha Sales Tax VAT 2007-08 Odisha Sales Tax Tribunal, Cuttack 6.57
28 Odisha Sales Tax VAT 2009-10 Commissioner of Sales Tax, Odisha, Cuttack 25.01
29 Odisha Sales Tax VAT 2009-10 Addl. Commissioner of Commercial Taxes, Jajpur Road 8.64
30 Odisha Sales Tax VAT 2010-11 Sales Tax Officer, Keonjhar 3.51
31 Odisha Sales Tax VAT 2010-12 Commissioner of Sales Tax, Odisha, Cuttack 16.77
32 Odisha Sales Tax VAT 2011-13 Commissioner of Sales Tax, Odisha, Cuttack 37.67
33 Odisha Sales Tax VAT 2011-13 Odisha High Court 35.14
34 Odisha Sales Tax VAT 2011-13 Odisha High Court 76.80
TOTAL 2,232.80

(viii) According to the information and explanations given to us and as per our verification of the records of the company, there had been delays in payment of instalments and Interest of term loans and foreign currency loans to the banks during the period. In view of the persisting defaults, entire term loans amounting to Rs. 1,35,985.91 Lakhs [including interest due thereon] is under default.

(ix) According to the information and explanations given to us, and as per our verification of the records of the company, the company has not raised moneys by way of initial public offer or further public offer (Including debt instruments). The term loans availed by the company have been applied for the purpose for which the loans were obtained.

(x) According to the information and explanations given to us, no fraud by the company or on the company by its officers or employees has been noticed or reported during the Year ended 31st March 2018. (xi) According to the information and explanations give to us and based on our examination of the records of the company, the company has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Act. (xii) In our opinion, and according to the information and explanations given to us, the company is not a Nidhi company. Therefore, the provisions of Clause

• (xii) of the Order are not applicable to the company. (xiii) According to the information and explanations given to us and as per our verification of the records of the company all transactions with the related parties are in compliance with the Sections 177 and 188 of the Companies Act, 2013 where applicable and the details have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and as per our verification of the records of the company, the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the period under review. Accordingly, the provisions of Clause

• (xiv) of the order are not applicable to the company.

(xv) According to the information and explanations given to us, and as per our verification of the records of the company, the company has not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisions of Clause

• (xv) of the order are not applicable to the company.

(xvi) In our opinion, the company is not required to be registered under section 45-IA of the reserve Bank of India Act, 1934. Accordingly, the provisions of Clause

• (xvi) of the order are not applicable to the company.

For A.C. Gupta & Associates

Chartered Accountants

Firms registration number: 008079N

A.C. Gupta

Partner

Membership number: 008565

New Delhi

May 30, 2018

Annexure - B to the Independent Auditors Report

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section

• of Section 143 of the Companies Act, 2013 ("the Act") We have audited the internal financial controls over financial reporting of OCL Iron and Steel Limited ("the Company") as of 31st March 2018 in conjunction with our audit of the standalone Ind AS 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.

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 judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

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

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2018, based on the internal control over financial reporting criteria established by the company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For A.C. Gupta & Associates

Chartered Accountants

Firms registration number: 008079N

A.C. Gupta

Partner

Membership number: 008565

New Delhi

May 30, 2018