Prakash Steelage Ltd Auditors Report.

To The Members of Prakash Steelage Limited

(CIN: L27106MH1991PLC061595)

Qualified Opinion

We have audited the accompanying Ind AS financial statements of Prakash Steelage Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2019, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion and emphasis of matters section below, the aforesaid Ind AS financial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the [Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2019, and its profit/loss, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Basis for Qualified Opinion

1) The account of the company with its consortium banks has turned Non-Performing Asset on various dates. In view of uncertainty the company has not provided interest including penal interest and other dues for the year ended March, 2019 on borrowings, to the extent the same have remained unpaid. The impact of the same on the loss for year and its consequent effect on the Liabilities and Reserve & Surplus is not ascertainable. This matter was also qualified in the report of the predecessor auditor on the Ind AS financial statements for the year ended March 31, 2018.

(a) The Company has accumulated losses resulting in erosion of Net Worth and has incurred net cash losses in the previous Financial Years. These conditions cast serious doubt about the companys ability to continue as a going concern. However, the Ind AS financial Statement of the Company has been prepared on a going concern basis. This matter was also qualified in the report of the predecessor auditor on the Ind AS financial statements for the year ended 31stMarch, 2018.

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

Material uncertainty related to Going Concern

We draw attention to Note 37 to the financial statement, which indicates that during the year ended 31st March, 2019, the Companys current liabilities exceeded its current assets by 278.91 Crores. These events or conditions, along with other matters as set forth in Note 37, indicate that a material uncertainty exists that may cast significant doubt on the Companys ability to continue as a going concern. However, the Ind AS financial statements of the Company have been prepared on a going concern basis for the reasons stated in the said Note.

Emphasis of Matter

We draw attention to:-

1) Note no. 35 of Ind AS Financial Statement stating that the company has unfavourable market condition for steel industry, which has resulted in pressure on the realization of receivable, stock and selling prices.

2) Note no. 36 of Ind AS Financial Statement stating that company has submitted its proposal to the consortium banks towards settlement of its borrowing through the assets reconstruction company (ARC) route. This proposal is under active consideration by the consortium bank. Meanwhile the bankers have taken symbolic possession of the collaterals of the company comprising of factory land, factory building, office building and plant and machinery located at Silvassa.

3) Note no. 38 of Ind AS Financial Statement stating that some of the balances of Trade Receivables, Deposits, Loans & Advances, Advances received from customers, Liability for expenses and Trade Payable are subject to confirmation from the respective parties and consequential reconciliation/adjustment arising there from, if any.

Our Conclusion is not modified in respect of these matters.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for Qualified Opinion section and Material Uncertainty Related to Going Concern section of our report, we have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No. Key Audit Matter Auditors Response
1 Provision and Write off of Trade Receivables: Exceptional item represents provision for doubtful debts of Rs. 8,86,00,000. Further the Company had written of some of the debtors amounting to Rs. 30,13,31,015 which has been already provided in the earlier years. We have involved our internal experts to review the nature of amount recoverable and found that company has initiated legal action to recover the debts before providing long outstanding doubtful debts of Rs. 8,86,00,000. In Few cases, the debtors have also initiated case against the company raising quality concerns. As a result the company foresees remote chances of recovery of the said debts and hence has provided for doubtful debts/written off. Further the Company had written of some debtors amounting to Rs. 30,13,31,015 which has been already provided in the earlier years.

Information Other than the Financial Statements and Auditors Report Thereon

• The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management discussion and analysis, Boards report, Corporate governance and Shareholders information, 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.

Managements Responsibility for the Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial 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 Ind AS and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 Responsibility for the Audit of the 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 financial control relevant to the audit in order to design audit procedures that are appropriate in the 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 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.

• 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 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.

Reporting on comparatives in case of Ind AS financial statements

a) The comparative financial information of the Company for the year ended 31 st March 2019 in accordance with Ind AS included in these financial statements have been audited by the predecessor auditor. The report of the predecessor auditor on the comparative financial information and the said opening balance sheet dated 28 th May, 2018 expressed a qualified opinion.

Our opinion on the financial statements is not modified in respect of those matters specified in qualified opinion para for the year ended 31 st March, 2019 the comparative financial information.

Report on Other Legal and Regulatory Requirements

1. As required by section 143(3) of the Act, based on our audit we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) Except for the possible effects of the matters described in the Basis for Qualified Opinion section above, in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

c) The Balance Sheet, the Statement of Profit 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) Except for the possible effects of the matters described in the Basis for Qualified Opinion section above, in our opinion, the aforesaid financial statements comply with the Ind AS specified under Section 133 of the Act.

e) The matters described in the Basis for Qualified Opinion section above and Material uncertainty related to Going Concern section above, in our opinion, may have an adverse effect on the functioning of the Company.

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

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

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 A". Our report expresses unmodified opinion on the operating effectiveness of the Companys internal financial controls over financial reporting for the reasons stated therein

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,

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

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

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 Investor Education and Protection Fund by the Company.

2. As required by the Companies (Auditors Report) Order, 2016 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure B" a statement on the matters specified in paragraphs 3 and 4 of the Order.

FOR, PIPARA & CO LLP
CHARTERED ACCOUNTANTS
(FRN No. 107929W/W100219)
Sd/-
NAMAN PIPARA
Date : 25th May, 2019 PARTNER
Place : Mumbai M.No. 140234

Annexure A to the Independent Auditors Report

Referred to in paragraph 1(h) under the heading Report on other Legal and Regulatory Requirements of the Independent Auditors Report of even date to the members of Prakash Steelage Limited on the financial statements for the year ended 31st March, 2019:

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

We have audited the internal financial controls over financial reporting of Prakash Steelage Limited ("the Company") as of 31st March, 2019 in conjunction with our audit of the 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. 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 respective 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 of the Company 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") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companys internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

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

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Opinion

In our opinion, to the best of our information and according to the explanations given to us, 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, 2019, based on the criteria for internal financial control over financial reporting 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, PIPARA & CO LLP
CHARTERED ACCOUNTANTS
(FRN No. 107929W/W100219)
Sd/-
NAMAN PIPARA
Date : 25th May, 2019 PARTNER
Place : Mumbai M.No. 140234

Annexure B to the Independent Auditors Report

Referred to in paragraph 2 under Report on Other Legal and Regulatory Requirementsof the Independent Auditors Report of even date to the members of Prakash Steelage Limited on the financial statements for the year ended 31st March, 2019

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

(b) According to the information and the explanation given to us, the fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies have been noticed on such verification. In our opinion, the frequency of verification is reasonable.

(c) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed / transfer deed 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.

ii. According to the information and explanations given to us and the records examined by us, the inventories were physically verified during the year by the management at the year end. No material discrepancies have been noticed on such verification.

iii. The company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.

Therefore, the provision of Clause 3(iii), (iii) (a), (iii)(b) and (iii)(c) of the said Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given by Management, the company has complied with the provisions of Section 186 of Companies Act 2013 in respect of making investments. Further company has not grant any loans and advances or given any guarantee or provided any security covered under section 185 of Companies Act 2013, hence the section 185 is not applicable to the company.

v. The Company has not accepted any deposits during the year and does not have any unclaimed deposits within the meaning of section 73 to 76 of the Act and Rules framed there under to extent notified.

vi. We have broadly reviewed the books of accounts maintained by the company pursuant to the order made by Central Government for maintenance of cost records prescribed under sub-section 1 of section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have, however not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

vii. According to the information and explanations given to us and as shown by our examination of the books of accounts:

(a) The Company has generally been regular in depositing undisputed statutory dues including provident fund, employees state insurance, income-tax, good and service tax, Cess and other material statutory dues applicable to it to the appropriate authorities. According to Information and explanations given to us, no undisputed amounts payable in respect of the above were in arrears as at March, 2019 for a period of more than six months from the date on when they become payable.

(b) According to the information and explanations given to us and the records of the Company examined by us, the dues in respect of sales tax , income tax , duty of customs , service tax, GST , entry tax, value added tax, central sales tax, duty of excise , which have not been deposited with the appropriate authority on account of any dispute are as under:

Sr. No. Name of the Statute Nature of the Dues Financial Year to which amount relates Amount (Rs.) Forum where dispute is pending
1 Bombay Sales Tax Act Sales Tax 1994-95 79,202/- Dy. Comm. Sales Tax (Appeal) IV, Mumbai
2 Bombay Sales Tax Act Sales Tax 1995-96 59,317/- Dy. Comm. Sales Tax (Appeal) IV, Mumbai
3 Central Sales Tax Act, 1958 Central Sales Tax 1995-96 2,85,360/- Dy. Comm. Sales Tax (Appeal) IV, Mumbai
4 Central Excise Act,1944 Cenvat Credit & Penalty April 2007 to August 2009 17,23,624/- Customs Excise & Service Tax Appellate Tribunal, Ahmedabad
5 Central Excise Act, 1944 Excise Duty Rebate 2010-2011 5,51,080/- Joint Secretary, Ministry of Finance
6. Central Excise Act, 1944 Cenvat Credit & Penalty 2016-17 43,34,902/- Customs Excise & Service Tax Appellate Tribunal, Ahmedabad

viii. According to the records of the company examined by us and the information and explanation given to us, the company has defaulted in repayment of loans or borrowing to various banks during the financial year 2018-19 and in previous years. The impact of the same on the loss for the current year and its consequent effect on the Liabilities and Reserve & surplus is not ascertainable.

ix. The company has not raised moneys by way of initial public offer or further public offer (including debt instruments) or term loans and hence reporting under clause (ix) of the Order is not applicable.

x. During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanation given to us, we have neither come across any instances of material fraud by the company or on the company by its officers or employees noticed or reported during the year nor have we been informed of any such case by the management.

xi. According to the information and explanation given to us and based on our examination of the records of the company, the Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of sections 197 read with Schedule V to the Act.

xii. The company is not a Nidhi Company and hence reporting under clause (xii) of the order is not applicable.

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

xiv. During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of the Order is not applicable to the Company.

xv. In our opinion and according to the information and explanations given to us, during the year the Company has entered into non-cash transactions with its directors or persons connected with them. The transaction entered by the company is in Compliance with Sec 192 of Companies Act, 2013.

xvi. The company is not required to be registered under section 45–IA of the Reserve Bank of India Act, 1939. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

FOR, PIPARA & CO LLP
CHARTERED ACCOUNTANTS
(FRN No. 107929W/W100219)
Sd/-
NAMAN PIPARA
Date : 25th May, 2019 PARTNER
Place : Mumbai M.No. 140234