sathavahana ispat ltd share price Auditors report

To The Members of SATHAVAHANA ISPAT LIMITED Report on the Audit of the Financial Statements

Disclaimer Opinion

We were engaged to audit the accompanying financial statements of SATHAVAHANA ISPAT LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2022, and the Statement of Profit and Loss including Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information.

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

Basis for Disclaimer Opinion

i. About Going Concern

As mentioned in Note No. 33 to the IND AS financial statements, the Company has been referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, ("Code") and the companys obligation towards current borrowings was Rs. 1,74,714.10 Lakhs significantly exceeded its available cash and cash equ ivalents and other financial assets as on the date of balance sheet. The companys financial results and funds availability were adversely affected due to continuing shut down of the ferrous plant since 12th June 2017, very limited operations in the coke oven plant and power plant resulted in a Net Loss of Rs.12,267.10 Lakhs for the year ended resulting into accumulated losses of Rs.1,18,316.26 Lakhs and erosion of its Net worth as at March 31, 2022. These conditions give rise to material uncertainty over the ability of the Company to continue as a going concern.

Since Corporate Insolvency Resolution Process (CIRP) is currently in progress, as per the Code, it is required that the Company be managed as going concern during CIRP. Accordingly, the financial statements are continued to be prepared on going concern basis. However, there exists a material uncertainty about the ability of the Company to continue as a "Going Concern". The same is dependent upon the resolution plan to be approved by NCLT. The appropriateness of the preparation of financial statements on going concern basis is critically dependent upon CIRP as specified in the Code. Necessary adjustments required on the carrying amount of assets and liabilities are not ascertainable at this stage.

The financial statements have been prepared on going concern basis based on the reason as described above. In the absence of forecast plans made available to us, presently not ascertainable about companys ability to repay its borrowings, trade payables, statutory liabilities, other payables and arrangement of funds to resume its operations. We are unable to obtain sufficient and appropriate audit evidence to conclude the company will remain in operation into the foreseeable future and whether the use of the going concern assumption to prepare the financial statements is appropriate.

ii. Minutes of committee of creditors

We have been informed by the Resolution Professional that certain information including the Minutes of meetings of the Committee of Creditors and the outcome of certain procedures carried out as per the CIRP are confidential in nature and could not be shared with anyone other than the Committee of Creditors and NCLT. Accordingly, we are unable to comment on the possible financial impact, presentation and disclosure, if any, that may arise if we have been provided access to those information.

iii. Impairment of Property plan and equipment, capital work in progress

We draw your attention to Note no 42 to the Ind AS Financial statements, As per Indian Accounting Standard 36 on Impairment of Assets, the Company is required to determine impairment in respect of Property, Plant and equipment and capital work in progress as per the methodology prescribed under the said Standard on account of shut down of the ferrous plant and very limited operations in the coke oven plant since 12th June 2017. However, the Management of the Company has not done impairment testing for the reasons explained in the above note. However, In the absence of documents related to working for impairment of the Property, Plant and equipment and capital work in progress as per Ind AS 36, the impact of impairment, if any, on the Ind AS financial statements is not ascertainable.

This matter was also qualified in our report on the financial statements for the year ended March 31, 2021.

iv. Inventories a) Management has not performed the stock verification during the year end due to the reasons described in the said note 8(ii). In the absence of physical verification of stock, we have not able to obtain sufficient, appropriate audit evidence over the existence of inventory of Rs.1SSS.82 Lakhs as at March 31, 2022.

b) We draw attention to Note 40 to the Ind AS Financial statements, regarding non-moving inventories Since shut down of the operations at factory located at Haresamudram amounting to Rs.14S8.67 Lakhs (As at 31st March 2021: Rs.198S.98 lakhs). Management believes that no adjustments to the carrying value of the inventories is required as those are regularly monitored, maintained and in usable/ saleable condition. As per Indian Accounting Standard - 2 Inventories are to be Valued at the lower of cost and net realisable value. Pending corroborative evidence to assess the net realisable value, we are unable to comment on the realisable value of these Inventories together with consequential impact.

This matter was also qualified in our report on the financial statements for the year ended March 31, 2021.

v. Claims against the company a) We draw your attention to Note no 44 to the Ind AS Financial statements, pursuant to commencement of CIRP under the code, there are various claims submitted by the financial creditors, operational creditors, employees and other creditor to the RP. The books balances appears will be recasted upon successful implementation of resolution plan. Pending final outcome of the CIRP, no accounting impact in the books of accounts has been recognised in respect of excess or short claims or non-receipts of claims for above- mentioned creditors.

b) We draw attention to note No 30 to the financial statements where in dues to the micro and small enterprises was disclosed as Rs Nil. We are unable to verify the accuracy of the same due to the lack of related information with the company.

vi. Long outstanding unconfirmed trade receivables, capital and supplier advances and other financial assets a) We draw attention to Note No 37 to the Ind AS Financial statements, where in management has considered outstanding trade receivables of Rs. 3,486.76 Lakhs (March 31,2021 Rs. 3481.82 Lakhs) capital advances of RS.174.01 Lakhs (March 31,2021 Rs. 174.01 Lakhs), supplier advances Rs. 607.63 lakhs (March 31,2021 Rs.

595.27 Lakhs) and other financial assets Rs. 156.42 lakhs (March 31,2021 Rs. 157.02Lakhs), respectively due for a period of more than one year as good and recoverable as at March 31, 2022, for which no provision has been made in the books of account. For reasons said in the aforesaid note, and due to confirmations being not available and pending reconciliation adjustments we are unable to comment on the recoverability of these receivables and its consequential effect on these financial statements. b) We draw attention to Note No 24(c) to the Ind AS Financial statements, where in management written of Rs 1163.77 lakhs during the year as bad debts. We are unable to get sufficient explanation and appropriate evidence to comment about the amount written off as bad debts. vii. Non-Payment of statutory dues

We draw attention to Note no 38 to the Ind AS Financial statements, Statutory dues related to Income tax, Employees provident fund, Employee state insurance act and professional tax, amounting to Rs. 1460.92 Lakhs (March 31,2021 Rs. 1105.80 Lakhs) have become overdue and remain unpaid, interest, penalty if any in respect of the same has remained unascertained and unaccounted for.

This matter was also qualified in our report on the financial statements for the year ended March 31, 2021. viii. Noncompliance with Foreign exchange management act 1999

We draw your attention to Note 41 to the Ind AS Financial statements regarding overdue payables aggregating to Rs.224.15 lakhs as at March 31, 2022 (As at 31st March 2021:-RS.222.45 lakhs), included in Creditor for capital works, which is outstanding to a nonresident company for more than three years, and for which the Company is yet to obtain approval from the Authorised Dealer or Reserve Bank of India (RBI) to remit the aforesaid amounts. Any penalties that may be levied by RBI in the aforesaid liabilities in the financial statements are presently not ascertainable.

ix. Noncompliance with Companies act 2013

a) The company has not taken approval for related party transactions related to Pre CIRP period which are required as per section 177 and 188 of the Act due to the reason specified in note 31(a) to Ind AS Financial Statements.

b) The company had paid donations to charitable trust amounting to RS.l1.02 Lakhs without obtaining prior permission in general meeting as required under section 181 of the Companies Act, 2013.

c) During the year Internal audit was not carried out as per the requirement of section 138 of the Act. penalty if any in respect of above non-compliances has remained unascertained and unaccounted for.

x. Un accounted expenditure

As per the recognition principles mentioned in Indian Accounting Standard (Ind AS) 37, provision shall be recognised when company has a present obligation (legal or constructive) as a result of a past event, which is to be measured by the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. On 20 September 2021 the company entered into a contract for Repairs & Maintenance of Manufacturing Facilities at a contract Price of Rs 26600 lakhs and related work was commenced by the contractor. The company has not accounted any provision for expenses till date of Balance sheet due to the reasons described in note no.24(d) In the absence of any best estimate of the provision to be accounted, we are unable to comment about its consequential effect if any on these financial results.

The same is not in compliance with requirement of Ind AS 37 appropriate recognition, measurement and disclosure of provisions

xi. Non recognition of interest on borrowings

As Mentioned in note no 13(i) to the Ind AS Financial Statements, all borrowings were assigned by the Banks and Financial Institutions to ] C Flower Asset Reconstruction Company Limited along with all rights and privileges. The company has not accounted for accrued interest amounting to RS.21091.17 lakhs from August 2021 to date of balance sheet, which is noncompliance of Indian Accounting Standard (Ind AS) 109 Financial Instruments.

In view of the matters stated above from para i to para xi, of Basis for Disclaimer of Opinion, we are unable to obtain sufficient appropriate audit evidence regarding the ability of the company as going concern for the foreseeable future after the CIRP process and the extent of the loss allowance/impairment or potential liability to be recognised, if any, and the consequential impact on the IND AS financial statements as at and for the year ended March 31, 2022. Accordingly, we form a basis of disclaimer of opinion.

Responsibilities of Management and Those charged with Governance for the Financial Statements

As of March 31, 2022, the Company, M/s Sathavahana Ispat Limited, is currently undergoing corporate insolvency resolution process ("CIRP") pursuant to the order dated July 28, 2021, passed by the Honble National Company Law Tribunal, Hyderabad Bench ("NCLT"), in c.P. No.17/9/H DB/2020 filed by one M/s Thirumala Logistics, an operational creditor of the Company.

Vide the same order, one Mr. Golla Ramakantha Rao, an Insolvency Professional, was appointed as the Interim Resolution Professional. Pursuant to order dated September 08, 2021, passed by the Honble NCLT, Mr. Bhuvan Madan, an Insolvency Professional, was appointed as the Resolution Professional to conduct the CIRP and to manage the affairs of the Company. The copy of the said order was received by Mr. Bhuvan Madan, the Resolution Professional on September 15, 2021.

As such, since September 15, 2021, has been under the control and management of Mr. Bhuvan Madan, the Resolution Professional.

In view of the ongoing Corporate Insolvency Resolution Process CCIRP") as Board has been suspended and these powers are now vested with Mr. Bhuvan Madan in the capacity as the Resolution Professional as per the Provisions of the Insolvency and bankruptcy Code, 2016 (lithe Code")

In view of ongoing Corporate Insolvency Resolution Process (CIRP), The Resolution Professional (RP)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 statements 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 operatlons. or has no realistic alternative but to do so. Under section 20 of the Code, it is incumbent upon Resol ution Professional to manage the operations of the Company as a going concern upon initiation of CIRP and the financial statements which have been prepared on going concern basis.

The Management is responsible for overseeing the Companys financial reporting process.

Auditors Responsibility for the Audit of the Financial Statements

Our responsibility is to conduct an audit of the entitys financial statements in accordance with Standards on Auditing issued by ICAI and to issue an auditors report. However, because of the matters described in the Basis for Disclaimer of Opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

We are independent of the entity in accordance with the ethical requirements in accordance with the requirements of the Code of Ethics issued by ICAI and the ethical requirements as prescribed under the laws and regulations applicable to the entity.

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 sought all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit. However, as described in the Basis for Disclaimer of Opinion paragraph, we are unable to obtain all the information and explanations which to the best of our knowledge and belief were necessary for the audit;

b) Due to the effects/possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether 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 Statement of Cash Flows and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account.

d) Due to the effects/possible effects of the matters described in the Basis for Disclaimer of Opinion paragraph, we are unable to state whether the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act.

e) The matter described in the Basis for Disclaimer of Opinion section and going concern matter described in the material uncertainty related to going concern may have an adverse effect on the functioning of the Company.

f) As at March 31,2022 there are no directors on the companys board. Accordingly reporting on compliance of section 164(2) of the Act is not applicable.

g) The reservation relating to the maintenance of accounts and other matters connected there with are as stated in the Basis for Disclaimer Opinion paragraph;

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 Disclaimer of opinion on the adequacy and 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,

As the company is in default of making payments to secured creditors, prior approval from secured creditors is required pursuant to Part II of Schedule V to section lI(B) of the Companies Act, which is not obtained by the company. Accordingly, the provision of section 197 read with Schedule V has not complied. (Refer Note 31 to the Ind AS financial statements for payments of remuneration to directors)

j) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us: i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements -(Refer Note No 29a to the financial statements).

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 amount required to be transferred, to the Investor Education and Protection Fund by the Company.

iv. (a) The Management has represented that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entity, including foreign entity ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(b) The Management has represented, that, to the best of its knowledge and belief, no funds (which are material either individually or in the aggregate) have been received by the Company from any person or entity, including foreign entity ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;

(c) Based on the audit procedures that have been considered reasonable and appropriate in the Circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (i) and (ii) of Rule !lee), as provided under (a) and (b) above, contain any material misstatement.

v. The Company has not declared or paid any dividend during the year.

2. As required by the Companies (Auditors Report) Order, 2020 ("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.

In Respect of the Companys Property Plant and Equipment and Intangible Assets: a) A) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of Property, Plant and Equipment.

B) The Company has maintained proper records showing full particulars of Intangible Assets.

b) The Property, plant and Equipment are physically verified by the Management according to a phased programme designed to cover all the items on rotation basis which, in our opinion, is reasonable having regard to the size of the Company and the natu re of its assets.

However, The Property, Plant and Equipment of the company have not been physically verified by the Management during the current and previous two years. Accordingly, the discrepancies if any, could not be ascertained and therefore, we are unable to comment on whether the discrepancies, if any have been properly dealt with in the books of account.

c) The title deeds of immovable properties, as disclosed in Note 3 to the financial statements, are held in the name of the Company.

d) The company has not revalued any its Property, Plant and Equipment and Intangible Assets during the year.

e) No Proceeding have been initiated during the year or are pending against the Company as at March 31, 2022 for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

ii a) No physical verification of the inventory has been conducted by the management during the year. Accordingly, the discrepancies if any, could not be ascertained and therefore, we are unable to comment on whether the discrepancies, if any have been properly dealt with in the books of account.

b) As per information and explanation by the management total debt to the Banks and financial institutions was assigned to the company J C Flower asset reconstruction company limited ("JSFARC") on 23 June 2021. Hence reporting under clause 3 (ii)(b) is not applicable.

iii The Company has not made any investments, granted secured/ unsecured loans/advances in nature of loans, or stood guarantee, or provided security to any parties. Therefore, the reporting under 3(iii)(a), (iii)(b),(iii)(c), (iii)(d), (iii)(e) and (iii)(f) of the Order are not applicable to the Company.

iv The Company has not granted any loans or made any investments or provided any guarantees or security to the parties covered under Sections 185 and 186. Therefore, the reporting under clause 3(iv) of the Order are not applicable to the Company.

year amounting to RS.88.14Lakhs in terms of Section 73 of Companies Act, 2013 read together with Companies (Acceptance of Deposits) Rules, 2014, (Rule 2(1)(xii)(a)), such advances are liable to be treated as deposits and hence the Company is in violation of the same. Except for compliance with the aforesaid amount, The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified. According to the information and explanations given to us, no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

vi Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148( 1) of the Act in respect of its products.

We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

vii a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is not regular in depositing undisputed statutory dues, including provident fund, employees state insurance, income tax, Goods and Services Tax and cess and other material statutory dues, as applicable with the appropriate authorities. The extent of the arrears of statutory dues outstanding as at March 31,2022 and outstanding a period of more than six months from the date they became payable are as follows:

Name of the statute	Nature of dues	Outstanding More than six months Amount	Total Amount (Rs. In Lakh)	Period Due to date which it relates	Date of Payment
		(Rs. In Lakh)
Income Tax Act, 1961	Tax Deducted at source	354.15	402.16	April on 7th 2021 day of to next March month 2022	Not Yet Paid
Income Tax Act, 1961	Tax Collected at source	1.35	3.31	April on 7th 2021 day of to next March month 2022	Not Yet Paid
Employees Provident Funds & Miscellaneous Provisions Act, 1952	Provident Fund	498.94	506.10	July on 15th 2017 of next to month March 2022	Not Yet Paid
Employee state Insurance Act	Employees State Insurance	112.52	113.30	March on is= 2017 of next to month March 2022	Not Yet Paid
Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987	Professional Tax	13.72	13.82	April on 10th 2017 of next to Month March 2022	Not Yet Paid
Karnataka Tax on Professions, Trades, Callings and Em ployments Act, 1976	Professional Tax	6.03	6.34	April on 10th 2017 of next to Month March 2022	Not Yet Paid
Telangana Tax on Profes sion, Trades, Callings and Employment A ct, 1987	Professional Tax	1.92	2.04	Februa on 10th ry of next 2018 Month to March 2022	Not Yet Paid
Payment of Gratuity Act, 1972	Gratuity	0.57	413.85	March Immedi 2016 ate to March 2022	Not Yet Paid

b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of service-tax, value added tax which have not been deposited on account of any dispute. The particulars of dues of income tax, sales tax, duty of excise, duty of customs, as at March 31, 2022 which have not been deposited on account of a dispute, are as follows:

viii According to the information and explanations given to us and the records of the company examined by us, there are no transactions in the books of account that has been surrendered ^~=~ )~,., 5- disclosed as income during the year in the tax assessments under the Income Tax Act, , that has not been recorded in the books of account. ix a) According to the records of the Company examined by us and the information explanation given to us, the Company dont have any loan with Banks or financial institution as on the balance sheet date. However, the company has defaulted payments of loans to bank which was sold by bank in a swiss challenge process to Asset Reconstructing company with same stipulations applicable to banks.

(Also Refer note 43 to the Ind AS Financial Statements) b) According to the information and explanations given to us and on the basis of our audit procedures, we report that the company has not been declared wilful Defaulter by any bank or financial institution or government or any government authority.

c) According to the records of the Company examined by us and the information and explanations given to us, the Company has not obtained any term loans during the year.

d) According to the information and explanations given to us, and the procedures performed- by us, and on an overall examination of the financial statements of the Company, we report that no funds raised on short-term basis have been used for long-term purposes by the Company.

e) According to the information and explanations given to us and procedures performed by us, we report that the Company did not have any subsidiaries, joint ventures or associate companies during the year.

f) According to the information and explanations given to us and procedures performed by us, we report that the Company did not have any subsidiaries, joint ventures or associate companies during the year.

x a) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year. Accordingly, the reporting under clause 3(x)(a) of the Order is not applicable to the Company.

b) The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Hence reporting under clause 3(x)(b) is not applicable.

xi a) we have neither come across any instance 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.

b) 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 explanations given to us, a report under Section 143(12) of the Act, in Form ADT-4, as prescribed under rule 13 of Companies (Audit and Auditors) Rules, 2014 was not required to be filed with the Central Government. Accordingly, the reporting under clause 3(xi)(b) of the Order is not applicable to the Company.

c) 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 explanations given to us, and as represented to us by the management, no whistle-blower complaints have been received during the year by the Company. Accordingly, the reporting under clause 3(xi)( c) of the Order is not applicable to the Company.

xii As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to the Company. Hence reporting under clause 3(xii)(a), (b), (c) are not applicable.

xiii Due to possible effects of the Matter described in Basis of Disclaimer of opinion section and due to non-availability of requisite documents we are unable to comment on the compliance with section 177 and 188 of the companies Act, 2013. ( Refer Note No 31 for Related party Disclosure as per Ind AS 24 )

xiv a) In our opinion and based on our examination, though the company is required to have an internal audit system under section 138 of the Act, it does not have the same established for the year.

b) The Company did not have an internal audit system during the year. Accordingly, we are unable to report under this clause.

xv The Company has not entered into any non cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

Bank of India Act, 1934. Accordingly, the reporting under clause 3(xvi)(a) of the Order is not applicable to the Company.

b) The Company has not conducted non-banking financial/housing finance activities during the year. Accordingly, the reporting under clause 3(xvi)(b) of the Order is not applicable to the Company

c) The Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India. Accordingly, the reporting under clause 3(xvi)(c) of the Order is not applicable to the Company

d) Based on the information and explanations provided by the management of the Company, the Group does not have any CICs, which are part of the Group. We have not, however, separately evaluated whether the information provided by the management is accurate and complete. Accordingly, the reporting under clause 3(xvi)( d) of the Order is not applicable to the Company.

xvii The Company has incurred any cash loss of Rs.8170.07 Lakhs during the financial year and the Rs.29,295.72 Lakhs immediately preceding financial year.

xviii There has been no resignation of the statutory auditors during the year and accordingly the reporting under clause (xviii) is not applicable.

xix On the basis of the financial ratios (Refer Note 36 to the Ind AS Financial Statements), ageing and expected dates of realisation of financial assets and payments of financial liabilities, other information accompanying the financial statements, in our opinion and according to the information and explanations given to us, Material uncertainty exists as on the date of audit report that companys capable of meeting its liabilities existing at the date of the balance sheet as and when they fall due with in a period of one year from the balance sheet date.

xx The provisions relating to Corporate Social Responsibility under Section 135 of the Act are not applicable to the Company. Accordingly, reporting under clause 3(xx) of the Order is not applicable to the Company

ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph l(h) under Report on Other Legal and Regulatory Requirements of our report of even date)

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 were engaged to audit the internal financial controls over financial reporting of SATHAVAHANA ISPAT LIMITED ("the Company") as of March 31, 2022, 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 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. In view of ongoing Corporate Insolvency Resolution Process (CIRP), The Resolution Professional (RP)is responsible for the matters stated above.

Auditors Responsibility

Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company based on our audit conducted 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.

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

Meaning of Internal Financial Controls Over Financial Reporting

A companys internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with 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.

The system of internal financial controls over financial reporting with regard to the Company were not made available to us to enable us to determine if the Company has established adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2022. We have been informed that all the payment vouchers post CIRP period have been duly approved which have been verified by us on test basis. Since we have not been provided with risk control matrix, process notes etc, except payment authorisations we are unable to comment on it.

Disclaimer of Opinion

Because of the significance of the matter described in the aasrs for Disclaimer Opinion paragraph above, we are unable to obtain sufficient appropriate audit evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting and whether such internal financial controls were operating effectively as at March 31, 2022. Accordingly, we do not express an opinion on the Companys internal financial controls over financial reporting.

We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the Ind AS financial statements of the Company for the year ended March 31, 2022, and the disclaimer has affected our opinion on the said Ind AS financial statements of the Company, and we have issued a disclaimer of opinion on the Ind AS financial statements of the Company.