psl Auditors report

The Members,

PSL LIMITED MUMBAI

Report on the Audit of the Standalone Ind AS financial statements

Corporate insolvency Resolution Process ("CIRP")

The Honble National Company Law Tribunal, Ahmedabad ("NCLT") by an order dated 15th February, 2019 admitted the Corporate insolvency Resolution Process ("CIRP") consequent upon an application filed by PSL Limited u/s 10 of IBC Code and appointed Mr. Nilesh Sharma as the Interim Resolution Professional ("IRP") and subsequently by virtue of NCLT order dated 29th August, 2019, Mr. Nitin Jain as Resolution Professional ("RP") in term of the Insolvency and Bankruptcy Code, 2016 ("Code") to manage the affairs of the Company as per the provisions of the Code. The CIRP is ongoing.

The NCLT order also provided for a moratorium with effect from Feb 15.02.2019, till the completion of the Corporate Insolvency Resolution process (CIRP) or until it approves the resolution plan under section 31(1) or passes an order for liquidation of the company under section 33, whichever is earlier. Recently Committee of Creditors took a decision to file an application for initiation of Liquidation Process of the Company in CIRP.

Opinion

We have audited the accompanying standalone financial statements of PSL LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2020, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as "the standalone financial statements").

Except the matters described in Emphasis of matters, which may have an adverse effect on the functioning of the Company, 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 ("the Act") in the manner so required and give a true and fair view in conformity with the Accounting Standards specified under Section 133 of the Act and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st Match, 2020 and its loss and its cash flows

for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditors Responsibilities for the Audit of the Standalone 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 independence requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules made thereunder, 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 we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Material Uncertainty Related to Going Concern

In spite of negative net worth of the Company, the standalone financial statements of the Company have been prepared on a going concern basis for the reasons stated in Note No. 41 and 42 of the standalone financialstatements.

Our opinion is not modified in respect of the same.

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 for the financial year ended March 31,2020. 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. For each matter below, our description of how our audit addressed the matter is provided in thatcontext.

We have determined the matters described below to be the key audit matters to be communicated in our report. We have fulfilled the responsibilities described in the Auditors responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of audit procedures performed by us, including those procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

Sr. No. Key Audit Matter	Auditors response
	Principal Audit Procedures
1 Accuracy of recognition, measurement, presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers"	We assessed the Companys process to identify the impact of adoption of the revenue accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
The application of the revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used tomeasure revenue recognised over a period. Additionally, the revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.	• Evaluated the design of internal controls relating to implementation of the new revenue accounting standard.
	• Selected a sample of continuing and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation, reperformance and inspection of evidence in respect of operation of these controls.
	• Selected a sample of continuing and contracts and performed the following procedures:
	• Read, analysed and identified the distinct performance obligations in these contracts.
	• Compared these performance obligations with that identified and recorded by the Company.
	• Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
2. Recoverability of indirect taxes	Principal Audit Procedures
As at March 31,2020, other current assets include indirect taxes amounting to Rs. 37,624.42 lacs which are shown as receivables. (refer note no 10 of the standalone financial statement)	We have reviewed the nature of the amounts recoverable, the reconciliation, sustainability and the likelihood of recoverability of the same.
3. Contingent liabilities in relation to tax litigations	Principal Audit Procedures
The Company has received certain demand orders and notices relating to Income Tax, excise, custom duty and Service Tax matters. The Company is contesting these demands. Significant judgments and estimates are required to assess impact of these litigations on the financial position, results of operations and cash flows.	• We obtained an understanding and tested the internal controls relating to the identification, recognition and measurement of provisions for disputes and disclosures of contingent liabilities in relation to tax;
	• We obtained details of completed tax assessments, demands issued by tax authorities, orders/notices received with respect to other litigations from the management;
The evaluation of managements judgments supported by the assessments received from external tax and legal specialists (‘managements expert), including those that involve estimations in assessing the likelihood that a pending claim will succeed, or a liability will arise, complexity of the cases, time period for resolution have been a matter of significance during the audit and hence considered as a key audit matter.
	• We obtained confirmation from managements expert on ongoing litigations along with risk assessment;
	• We held discussions with management to understand their assessment of the quantification and likelihood of significant exposures and the provision required for specific cases; and
	• We assessed the disclosures in the financial statements.

Emphasis of matter

i. As a consequence, to acute financial stress being faced by the Company in recent years, the Companys net worth has been eroded due to accumulated losses. Keeping in view the current status of companys operations it is likely that the accumulated losses are further enhanced creating a further adverse impact on its net worth.

ii. The Company is undergoing Corporate Insolvency Resolution Process(CIRP) under the provisions of Insolvency & bankruptcy Code, 2016 (Insolvency Code) in terms of Order dated. 15th February 2019 passed by Honble NCLT, Ahmedabad Bench. In terms of Section 20 of Insolvency code, the management and operations of the Company are being managed by Resolution Professional (RP).

iii. The financial statements have been prepared on a going concern basis although consequent upon severe financial crises faced by the company its net worth is eroded. Moreover, due to the

said reason, Company is unable to procure adequate fresh orders which in-turn has resulted into reduced income and profitability. Servicing of companies debts has also accordingly been adversely affected.

iv. These events cast significant doubt on the ability of the Company to continue as a going concern under the present circumstances. The appropriateness of the said basis is inter-alia dependent on the Companys ability to infuse requisite funds for meeting its obligations (including statutory liabilities and those in respect of contracts entered into for purchase of goods and assets), rescheduling of debt/other liabilities and resuming normal operations.

v. Attention is invited to Note No. 43 to the accompanied financial statements, which describes the uncertainties and potential impact of the Covid-19 pandemic on the Companys operations and results as assessed by the management. The actual results may differ from such estimates depending on future

developments.

vi. The company has not carried out detailed assessment of the useful life of Companys assets and hence depreciation has not been adjusted, as per the notification to Schedule II of the Companies Act, 2013. We are therefore unable to comment on the impact on statement of Profit & LossAccount.

vii. It has been observed that the Company is unable to deposit the provident fund amount with PF authorities in time, as a result of which Rs. 13742 lacs is the amount which yet to be deposited.

viii. Actuarial valuation certificate has not been obtained for gratuity and other post-employment benefits.

ix. The Company has reported a Net Loss of Rs. 9,682.27 lacs for the year ended on 31st March, 2020 as against the net loss of Rs. 9,808.50 lacs for the previous year ended on 31st March, 2019. The loss is largely due to the depreciation.

x. Since most of the banks which had extended financial facilities to the company have already treated the outstanding from the company as "Non-Performing Assets" they as a usual practice have discontinued making provisions of interest on such loss as accrued income in their books. In order to achieve the desired congruency on this issue the Company has also not provided for any interest amounting to Rs. 4,3573 lacs on such outstanding facilities for the year ended 31st March, 2020 due to various banks. Had the said interest been provided in the books in the normal course, the current year losses of Rs. 9,682.27 lacs would have raised to Rs. 53,255.27 lacs.

xi. The agreement with Kandla Port Trust had not renewed w.e.f. 31.072007 onwards for different plots at Kandla leased by them to the company due to non-payment of their heavy invoices for bills for compensation and, possession of the same was taken over by Kandla Port Trust on 31st March, 2015. PSL Limited has filed appeal before the District Court, Gandhidham for the same. The matter is pending at Gandhidham District Court.

xii. Inventory

The closing inventory as on 31st March, 2020 of Rs.1,630.79 lacs (valued at realizable value) excludes disputed Working In Progress of a Building at Coimbatore for Rs.1,707 lacs which is currently in arbitration stage.

xii. Operations Maintenance and Management Agreement with Jindal Tubular (India) Limited.

a. Although companys three plants earlier handed over to Jindal Tubular (India) Limited (JTIL) in mid 2015 were returned to the company during September to November, 2016, JTIL has yet to return to the company one Pipe Mill having capacity of 75000MT, one IPC plant having capacity of 18000Sqr Meter and other spares and consumable shifted by it contrary to the provisions of their agreement with the company.

b. As per the advice of Edelweiss, JTIL is transferring Rs 9.80 lacs after deducting tax of Rs 0.20 lacs every month to Companys bank account, though there was no agreement for the same.

c. Jindal Tubular (India) Limited has claimed Non legacy and legacy payment from PSL amounting to Rs. 437 lacs. The Company has not accepted their claim and the accounts are under reconciliations.

d. The Excise Department has issued following notices to the company directing to show cause as to why the Cenvat credit taken on the capital goods and machineries removed from the factory premises of notices under the provisions of

Rule 3(5A)(a), Rule 2 and Rule 4(5)(a)(ii) of Cenvat Credit Rules, 2004, should not be demanded and recovered under Section 11A with interest u/s 11AA and penalty u/s 11AC of the Central Excise Act, 1944 read with Rule 14 of the Cenvat Credit Rules, 2004

Sl. No. Show Cause Notice	Amount in Rs lacs
1. Varsana 1	72/-
2. Varsana 2 Coating	486/-
3. Varsana 2 Pipe Mill	552/-
Total Rs.	1,110/-

The Company has submitted that the allegations made in the show cause notices are not correct in law as well on facts. The matter is pending before the appellant authority.

xiv. Settlement with JSW

The Company has created pari passu charge with respect to some of the immovable and movable properties of the Company in favour of JSW and CDR lenders by way of mortgage by deposit of title deeds in favour of IDBI Trusteeship Services Limited, in pursuance of the Bombay High Court Order.

xv. Lender Banks Balance Confirmation as on 31st March, 2020

We have been informed by the officials of the company that although the company has requested its various bankers to issue their confirmation letters confirming the balances with respect to various Bank Accounts/Bank Guarantee/Letter of Credit/ Corporate Guarantee given by company for its subsidiaries company as on 31st March, 2020 but the same have not yet been received the said confirmations. Pending the receipt of balance confirmations, book balances as on 31st March, 2020 have been taken in the accounts of the Company.

xv. Sundry Debtors

a. The break up of Companys Sundry Debtors amounting to Rs. 381.38 lacs as on 31st March, 2020 is as follows: -

Less than Six Months	Rs. 9.95 lacs
More than Six Months	Rs. 371.43 lacs

b. The Company has not produced confirmation of balances from sundry debtors confirming the amount outstanding as on 31st March 2020. In the absence of adequate evidence and information made available to us supporting the recoverability of this amount, we are further unable to comment on the financial impact of this matter on the profit / loss for the year ended 31st March 2020.

xvi. Trade payable & Loans and Advances:

In the absence of pending confirmation of balances from Trade Payables, Trade receivable and Other Loans & Advances as on 31.03.2020, provision for any adverse variation in the balances is not quantified.

xvii. Impairment of Assets: The Management has not carried out evaluation of impairment of assets and no provision for impairment has been recorded, as required by Indian Accounting Standard.

xviii. Investment in Subsidiaries:

A. Foreign Subsidiaries:

i) PSL FZE (Sharjah) (Step down Subsidiary of Pipeline Systems Limited, Mauritius,(Subsidiary of the Company)).

a) The Company had invested Rs. 14,163 lacs in a wholly owned subsidiary namely Pipeline Systems

Limited Mauritius which in turn had invested AED 1,50,000 in PSL FZE being its subsidiary. However due to cumulative losses in the subsidiary, the aforesaid investment is eroded.

The Company has not provided for the diminution in the value of investment as per Indian Accounting Standard issued by institute of Chartered Accountants of India.

PSL Limited has also not provided for amounts due from PSL FZE being doubtful of recovery on account of losses incurred by PSL FZE.

b) The shareholding of PSL FZE, Sharjah held by PSL Limited indirectly through the above said Company, amounting to 100% of the Equity Share Capital of the Company have been pledged in favour of National Bank of Oman S.A.O.G. acting as Security Agent of ICICI Bank Limited, Bahrain.

c) During the year PSL FZE has incurred loss of 22.626 Million AED. The Company was not able to make the payment on due date of installment due to the banks. The bank balance confirmations were not available.

d) PSL FZE has executed a project received from SWCC. Bank of Baroda has given guarantee in favour of State Bank of India, Bahrain to issue performance guarantee in favour of the client to the extent of USD 4.5 million. This is contingent liability of PSL FZE as on 31-3-2020.

e) A creditor namely Petromac, Abudhabi-UAE has filed a suit for his dues of USD 2.26 million. The matter is sub-judice.

f) PSL has given Corporate Guarantee covering facilities sanctioned by lender bankers for working capital outstanding of 114.96 Million AED against Plant &Machinery, assignment of receivable and inventory as the security and the subordination of unsecured loans advances by PSL Ltd. and assets on pari passu basis with one of the banker.

g) Term Loan 154.89 million AED - The Term Loan due to ICICI Bank, Bahrain is secured by charge on the fixed asset of PSL FZE and Corporate Guarantee issued by PSL Limited.

ii) PSL USA INC (USA), PSL NA LLC (USA) (Step down

Subsidiary)

a) The Company had invested Rs. 13,034 lacs in a wholly owned subsidiary namely PSL USA Inc. Due to cumulative losses in the stepdown subsidiary the value of investment iseroded.

b) Due to continuous losses suffered by the companys step-down subsidiary namely PSL North America LLC, it was directly affecting the financial position of PSL USA Inc. (the holding Company of PsL North America LLC). The Company voluntary petitioned for relief under chapter XI of the Title 11 of United States code were filed in United States Bankruptcy court for the district of Delaware.

B. Indian Subsidiaries:

i) PSL Infrastructure and Ports PrivateLimited

- Total investment in PSL Infrastructure and Ports Private Limited is Rs. 2,821 lacs.

- The company was awarded the construction of Jetty

at Kandla Port. Till date the company has incurred construction Expenses of Rs. 6,511 lacs.

- Due to restrictions imposed by CDR package of PSL Ltd, the parent company, could not inject/ contribute funds for the construction of the jetty.

- The Kandla Port authorities have given notice for the cancellation of the agreement.The matter is in dispute and under Arbitration. At present, project isincomplete.

ii) PSL Corrosion Control Services Limited.

The total Revenue for the year stood at Rs. 11,915 lacs against previous year of Rs. 10,833 lacs. The Net Profit before tax is Rs. 828 lacs against previous year of Rs. 751 lacs.

In our opinion and explanation given to us, the Guarantees given by the Company for Loan taken by its subsidiaries from banks / financial institution and the terms and conditions of such guarantees are not prejudicial to the interests of the Company.

iii) PSL Gas Distribution Private Limited

The company was incorporated on 31st December 2010 and has not commenced any business activity.

xix. Legal Matters:

a. Initially five complaints were filed by two banks Syndicate Bank and Kotak Mahindra Bank Ltd. under the relevant provisions of Negotiable Instruments Act but after the order of Addl. Sessions Court of Bombay, one complaint has been scrapped with respect to some of the Directors and matters are now pending for disposal. These matters are still pending in 16th/63rd MM Court, Andheri, Mumbai and the next date of hearing arefixed.

Next date of Syndicate Bank hearing on 0709.2020 & Kotak Mahindra Bank is on 0708.2020.

b. Petitions have been filed before the High Court of Gujarat at Ahmedabad challenging the order issued by Kandla Port Trust (KPT) in respect of evacuation of five plots of land of PCD-I unit located in East of NH No. 08A, Kandla Road, Gandhidham and two plots of land of PCD-II in Plot No. 5&6 in Block D, Sector 12, Gandhidham. The matters are pending at High Court.

c. Companys petition against Andhra Pradesh Industrial Infrastructure Corporation (APIIC).

Having felt aggrieved by the decision of APIIC to resume the possession of two plots earlier allotted by it to the company has filed writ petitions in Hyderabad High Court challenging APIICs decision. While the Honble High Court having examined the companys grievance has granted a stay in companys favour, the matter is still pending for final adjudication.

Information Other than the Standalone 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 including Annexures to Boards Report, but does not include the standalone financial statements and our auditors report thereon.

Our opinion on the standalone 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 standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone 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 Standalone financial statements

The Companys Board of Directors is responsible for the matters 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 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.. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision 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 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone 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.

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

Auditors Responsibility for the Audit of the Standalone financial statements

Our objectives are to obtain reasonable assurance about whether the standalone 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 standalone 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 standalone 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 controls 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 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 standalone 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 goingconcern.

- Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of areasonably knowledgeable user of the standalone 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 standalone 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, if any, that were of most significance 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.

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 A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

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 appears from our

examination of those books.

c) The standalone Balance Sheet, the standalone Statement of Profit and Loss including the Statement of Other Comprehensive Income, the standalone Cash Flow Statement and standalone Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d) Except the matters described in Emphasis of Matters Paragraphs (i) to (xx) and annexure A Para No. vii(a), in our opinion, may have an adverse effect on the functioning of the Company, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) on the basis of written representations received from the directors as on 31st March, 2020, taken on record by the Board of Directors, none of the directors is disqualified as on 31St March, 2020, 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 operating effectiveness of the Companys internal financial controls over financial reporting.

g) 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 Company has not paid/ provided for managerial remuneration during the year.

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) Rule, 2014, 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 financial statements - Refer Notes to the financial statements;

ii. the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses.

iii. unpaid dividend which is required to be transferred, to the Investor Education and Protection Fund by the Company, however the same has not been transferred by the Company.

	FOR V. PAREKH & ASSOCIATES
	CHARTERED ACCOUNTANTS
	FIRM REGN NO. 107488W
MUMBAI,	RASESH V. PAREKH PARTNER
DATED : 30th JULY, 2020	MEMBERSHIP NO. 38615
	UDIN: 20038615AAAAHU5963

ANNEXURE-A to the 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, 2020, we report that:

(i) (a) The Company has maintained Fixed Assets Register.

However, the fixed assets register is not updated properly.

(b) During the year, physical verification was done by the management of all the factory units of the Company. As the Asset Register is not updated, the full particulars including total quantitative details could not be ascertained. Pending completion of reconciliations which has not been completed discrepancies if any cannot be ascertainable. Pending updating of records and reconciliation books balances as at 31-3-2020 have been adopted.

(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 the immovable properties are held in the name of the Company.

(ii) (a) Subject to our remark in point No. (xii) in "Emphasis of

Matter the physical verification of inventory has been conducted at reasonable intervals by the management; and the procedures of physical verification of inventory followed by the management is reasonable and adequate in relation to the size of the Company and nature of its business. The stock is maintained on Excel Sheets. On line package is not installed and not integrated with books of accounts.

In our opinion and according to the explanations given to us, the procedures for physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

In our opinion and according to the explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were observed during the course of physical verification.

(iii) (iii) The Company has not granted loans, secured/unsecured

to companies, firms or other parties covered in the register maintained under section 189 of the Companies Act.

(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 Act, with respect to the loans and investments made.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government of India, regarding the maintenance of cost records under subsection (1) of Section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained. We have, however not made a detailed examination of the records with a view to determine whether they are accurate or complete. The cost audit is completed up to the year ended 31st March, 2018. The Cost Audit Report is mandatory u/s 148(1) of the Companies Act 2013.

(vii) a. According to the records of the Company, the Company is

generally regular in depositing undisputed Statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Duty of Excise, valued added tax, Cess and any other statutory dues with the appropriate authorities, however there is some delay in depositing Govt. dues due to financial difficulties. According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Sales Tax, Customs Duty, Service Tax, Excise Duty and Cess were outstanding, at the financial reporting period ending on 31st March, 2020 for a period of more than six months from the date they became payable. Except the amount of provident fund payable of Rs. 137.42lacs.

b. As on 31st March, 2020 according to the records of the Company the following are the particulars of disputed dues on account of Excise duty, Customs/DGFT, Service Tax, Sales Tax and Civil Cases have not been deposited/adjusted:-

Sr. No.	Amount under Dispute# (Rs. In Lacs)	Facts of the Case	Period	Forum where the dispute is pending
EXCISE DUTY
1.	765700	Demand of Duty on exempted orders	2006	The Customs Excise and Service Tax Appellate Tribunal
2.	1832.00	Duty on Fusion Bonded Epoxy Coating	2008
3.	16.22	Duty on Fusion Bonded Epoxy Coating	2010
4.	118.72	Demand of differential Excise Duty	2011
5.	33.95	Demand of interest & penalty for wrong availment of Cenvat Credit	2010
6.	108.22	Demand of Central Excise Duty	2012
7.	202.79	None Payment of Excise Duty	2013
8.	113.22	Short Reversal of Cenvat Credit	2013
9.	71.71	Non reversal of Cenvat Credit on Capital goods & machinery	2016
10.	552.21	Non reversal of Cenvat Credit on capital goods and machinery	2016
11.	486.29	Non reversal of Cenvat Credit on capital goods and machinery	2016
12.	181.00	Short paid Excise Duty on Transportation	2013	Commissioner of Central Excise, Vizag
13.	16.50	Interest Claimed on Central Excise Duty	2017	Commissioner (Appeal)-GST
14.	10.00	Relating to interest on incorrect Cenvat Credit	2010	The Customs Excise and Service Tax Appellate Tribunal
Sr. No.	Amount under Dispute# (Rs. In Lacs)	Facts of the Case	Period	Forum where the dispute is pending
15.	0.32	Demand of Central Excise Duty	2013	Dy. Commissioner, Central Excise, Vizag.
16.	29.85	Recovery of Refund erroneously paid to us by Ex.Deptt	2014	High Court of Gujarat
17.	28.25	Goods cleared without payment of Excise Duty	2012	Supreme Court
CUSTOMS / DGFT
1.	15.19	Demand of differential amount of duty on import of HDPE disallowing benefits of exemption notification.	2012	The Customs Excise and Service Tax Appellate Tribunal
SERVICE TAX
1.	45.90	Tax on construction of Mall	2008	The Customs Excise and Service Tax Appellate Tribunal. Chennai.
2.	2.00	Service Tax	2009	Asst. Commissioner (Appeals), Service-tax, Vizag
3.	2.54	Demand of Service, Tax BAS	2010	The Customs Excise and Service Tax Appellate Tribunal
4.	32.00	Service Tax on ECB Loan	2011	The Customs Excise and Service Tax Appellate Tribunal
5.	41.80	Wrong availment of Cenvat Credit	2012	The Customs Excise and Service Tax Appellate Tribunal
6.	30.45	Cenvat credit availed on service tax paid on agency commission	2013	The Customs Excise and Service Tax Appellate Tribunal
7.	11.46	Interest not paid on belated payment of service-tax	2016	The Customs Excise and Service Tax Appellate Tribunal
SALES TAX
1.	49.03	Sales tax on Freight - Appeal No. Appeal No. 1348/15	2009-10	Rajasthan Tax Board - Ajmer
2.	1.80	Sales tax on Freight - Appeal No. Appeal No. 1349/15	2010-11	Rajasthan Tax Board - Ajmer
3.	268.02	Sales tax on Freight - Appeal No. Appeal No. 1350/15	2010-11	Rajasthan Tax Board - Ajmer
4.	81.22	Sales tax on Freight - Appeal No. Appeal No. 1351/15	2011-12	Rajasthan Tax Board - Ajmer
5.	2708	Sales tax on Freight - Appeal No. Appeal no.1352/15	2012-13	Rajasthan Tax Board - Ajmer
6.	3.42	Sales tax on Freight - Appeal No. Appeal no.1353/15	2013-14	Rajasthan Tax Board - Ajmer
7.	144.01	Sales in Course of Import	2002 03	Sale Tax Appellate Tribunal
8.	460.68	Levy of tax @ 12.5% on pipes instead of 4%	2003 04	High Court of Andhra Pradesh
9.	306.76	Levy of tax @ 12.5% on pipes instead of 4%	2004 05	High Court of Andhra Pradesh
10.	125.01	Work Contract	2008 09	Sale Tax Appellate Tribunal
11.	110.00	ST Exemption	2000-01	High Court of Gujarat
12.	9.65	Interest & Penalty	2000-01	High Court of Gujarat
13.	2109.00	CST Re Assessment & Bombay High Sales- Limit Exhausted.	2005 06	Joint Commissioner of Commercial Tax (Appeals)
14.	83.00	WCT/Form - C Addl. Int/Penalty	2007-08	Joint Commissioner of Commercial Tax (Appeals)
15.	2691.00	WCT/Form - C Addl. Int/Penalty	2008 09	Joint Commissioner of Commercial Tax (Appeals)
16.	65.00	Export Sales (Bombay High) treated as Interstate sales	2010-11	Joint Commissioner of Commercial Tax (Appeals)
17.	52.72	CST Tax & interest on demand payment on OGS freight and sale to Siemens Ltd under SEZ disallowed	2012-13	Joint Commissioner of Commercial Tax (Appeals)
18.	38.33	CST tax & interest on delayed payment on OGS freight and consumables transferred to our PSLsite	2014-15	Joint Commissioner of Commercial Tax (Appeals)
19.	156.00	Sales to Siemens Ltd under SEZ, disallowed and Export Sales (Bombay High) treated as Interstate Sale	2011-12	Joint Commissioner of Commercial Tax (Appeals)
20	38.00	CST Tax & Interest on delayed payment on OGS Freight and consumables	2014-15	Joint Commissioner of Commercial Tax (Appeals)
	Entry Tax
1.	766	Entry Tax Jaipur	2008 09
2.	1766	Entry Tax Jaipur	2009-10	Commercial Tax Officer, Jaipur
3.	6.44	Entry Tax Jaipur	2010-11
4.	8.22	Entry Tax Jaipur	2011-12
5.	11.14	Entry Tax Jaipur	2012-13

Under Income Tax Laws also, appeals at various Income Tax Authorities are pending, however the amounts of disputes have been adjusted against the refund of other years.

# includes amount of interest and penalty.

- According to information and explanation given to us by the management, there are numerous Civil and Criminal cases are pending against the Company.

- DGFT:

The Company has taken 3 Advance Licences and one Annual Advance Licence from DGFT. The Company has already done the export obligation and submitted the relevant papers to DGFT. However, the above Licences are not closed and the matter is pending with DGFT. The Company has shown contingent liability of Rs. 402.71Lacs.

(viii) In our opinion and according to information and explanation given to us, The Company has defaulted in repayment of loan and borrowings to financial institution, banks. The lenders balance confirmations were not available.

(ix) The Company did not raise any money by way of initial public offer or further public offer, term loan (including debt instruments) during the year.

(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not paid/provided for managerial remuneration during theyear.

(xii) In our opinion and according to the information and explanations given to us, The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of the Order is not applicable to the Company.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us and based on our examination of the records of the Company, During the year, the Company has not made any preferential allotment

or private placement of shares or fully or partly paid convertible debentures and hence reporting under clause 3 (xiv) of the Order is not applicable to the Company.

(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly reporting under clause 3 (xv) of the Order is not applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.

	FOR AND ON BEHALF OF
	V. PAREKH & ASSOCIATES
	CHARTERED ACCOUNTANTS
	FIRM REGN NO. 107488W
	RASESH V. PAREKH PARTNER
MUMBAI,	MEMBERSHIP NO. 38615
DATED : 30th JULY, 2020	UDIN: 20038615AAAAHU5963

ANNEXURE-B to the Auditors Report

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

We have audited the internal financial controls over financial reporting of PSL LIMITED ("the company") as of 31st March 2020 in conjunction with our audit of the standalone 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 standalone Ind AS 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 standalone 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 standalone 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 2020, 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. However, such internal financial controls over financial reporting need to be improve and strengthened further in future.

	FOR AND ON BEHALF OF
	V. PAREKH & ASSOCIATES
	CHARTERED ACCOUNTANTS
	FIRM REGN NO. 107488W
	RASESH V. PAREKH PARTNER
MUMBAI,	MEMBERSHIP NO. 38615
DATED : 30th JULY, 2019	UDIN: 20038615AAAAHU5963