Sathavahana Ispat Ltd Auditors Report.

To the Members of SATHAVAHANA ISPAT LIMITED

Report on the Audit of the Financial Statements Qualified Opinion

We have audited the accompanying financial statements of SATHAVAHANA ISPAT LIMITED ("the Company"), which comprise the Balance Sheet as at March 31,2019,and the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Cash Flows 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 section below, the aforesaid 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, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2019, and its loss, total comprehensive loss, its cash flows and the changes in equity for the year ended on that date.

Basis for Qualified Opinion

i. Note no. 36 to the Ind AS financial statements, where in management has considered outstanding trade receivables, Supplier advances, capital advances and other financial assets of Rs.44,27,13,012/-, Rs.4,40,12,281/-, Rs 2,15,30,656/- and 3,21,56,145/- respectively for period more than one-year as good and fully recoverable as at the balance sheet date. For reasons stated 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, advances and its consequential effect on these financial statements.

This matter was also qualified in our report on the financial statements for the year ended March 31, 2018.

ii. Substantial amount of statutory dues related to Income tax, Employees provident fund, Employee state insurance act and professional tax, amounting to Rs. 4,90,45,618/- have become overdue and remain unpaid, interest, penalty if any in respect of the same has remained unascertained and unaccounted for.

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 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 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 obtained by us is sufficient and appropriate to provide a basis for our qualified opinion on the financial statements.

Material uncertainty related to Going Concern

We draw attention to Note 33 to the financial statements, which indicates that the Company has incurred a net loss of Rs. 227,77,76,344/- during the year ended March 31, 2019 and, as of that date, the Companys current liabilities exceeded its current assets by Rs. 1023,26,97,002/-. These events or conditions, along with other matters as set forth in Note 33, 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.

Our opinion is not modified in respect of this matter.

Emphasis of Matters

i. We draw attention to Note no 38 included in Ind AS financial statements, wherein the company had accounted Rs. 29,83,97,641/- as inventory loss identified based on the physical verification process during the year end. Management identified the physical inventory loss due to the reasons in the aforesaid note.

Our opinion is not modified in respect of this matter.

ii. We draw attention to Note no 13 (1) of Ind AS financial statements included in Statement of Financial Results, where in company choose to classify the term loans as long term and short term in accordance with the existing loan covenants until the revised restructure payment schedule finalised by consortium bankers as mentioned in note no 33.

Our opinion is not modified in respect of this matter.

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 year. 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 Impairment of Plant and Equipment: Principal audit procedures performed:
Refer to note no 33 of the IND AS financial statements, Company operations at ferrous division have been impacted and the plant was under shut down since 12th June 2017. The operations of Metallurgical Coke facility and power generation is also partially operated. Our procedures included discussion with management and those charged with governance on the reasonableness of the assumptions, along with performing the following procedures:
The company has plant and machinery with net book value of Rs.5,93,73,76,909/- as at March 31, 2019. (Refer note no: 3 of the IND AS financial statements) With challenging financial conditions continuing, the Companys performance and prospects could be impacted increasing the risk that Plant and Equipment may impaired. • Reviewed the Techno economic Viability study report performed by the management expert appointed by the companys management and also reviewed the assumptions carried out in preparation of cash flow projections prepared and sensitive analysis for changes in assumptions used in cash flows .
For the Cash generating units that contain Financial constraints, the determination of recoverable amount, being the higher of fair value less costs to sell and value-in-use. (Impairment of Assets(Ind AS) 36). • Verified the Valuation certificates obtained by the company from two independent registered valuers for the entire Plant and machinery of the company.
• Management obtained the Valuation certificates from two independent registered valuers. And, • We further challenged management regarding the appropriateness of the judgments/ assumptions w.r.t to timing of cash flows and discount rate applied.
• Management also carried out Techno economic Viability study of entire plant by appointing Independent technical experts. The study would be assessing the techno economic viability of the Project through a detailed techno financial analysis of the venture and evaluation of the constraints and future potential of the unit and assessing the technical, commercial and financial viability study of the proposed Debt Restructuring proposal of the company. Based on the above procedures management concluded no impairment of plant and machinery required.
These conclusions are dependent upon significant management judgements, in respect of:
– Estimated resale values, provided by an independent external valuer; and
– Estimated discount rates applied to future cash flows and on timing and approval of future capital by lenders.

Information Other than the Financial Statements and Auditors Report Thereon

• The Companys Board of Directors is responsible for the other information. The other information comprises the information included in the Directors report including the annexures to directors report, Corporate governance and Management Discussion and analysis (MD & A) but does not include the financial statements and our auditors report thereon. The Directors report including the annexures to directors report, Corporate governance and Management Discussion and analysis (MD & A) report is expected to be made available to us after the date of this auditors report.

• Our opinion on the financial statements does not cover the other information and we do not and will 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 identified above when it becomes available 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.

• When we read the Directors report including the annexures to directors report, Corporate governance and Management Discussion and analysis (MD & A), if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance as required under SA 720 ‘The Auditors responsibilities Relating to Other Information.

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 Loss, 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 Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The 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 scepticism 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.

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 and except for the matter described in the Basis for Qualified Opinion section above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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.

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. 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 March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 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 qualified 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 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 29 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 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 MAJETI & CO
Chartered Accountants
Firm Registration Number: 015975S
Kiran Kumar Majeti
Place: Hyderabad Partner
Date: May 30, 2019 Membership No.: 220354

ANNEXURE "A" TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 1(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 have audited the internal financial controls over financial reporting of SATHAVAHANA ISPAT LIMITED ("the Company") as of March 31, 2019 in conjunction with our audit of the 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.

Auditors Responsibility

Our responsibility is to express an opinion on the 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 qualified 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.

Basis for Qualified opinion

According to the information and explanations given to us and based on our audit, the following material weaknesses have been identified in the operating effectiveness of the Companys internal financial controls over financial reporting as at March 31, 2019: a. Refer note no 36 of the financial statements, in respect of long outstanding overdue trade receivables and advances, whereby evidences of control over monitoring /assessing recoverability of such over dues, including assessment of provision of provision for doubtful trade receivables and advances were not operating effectively. This could potentially result in the company not recognising a provision for doubtful/old overdue trade receivables. b. The Companys internal financial controls over monitoring the Physical Inventories located at Factory and third-party locations are not operating effectively, which could potentially result in loss of inventory which may not be timely detected and may lead to material misstatements in the Companys financial statements. c. The Companys internal financial controls over updating the customers /vendors master data with present addresses were not operating effectively. A ‘material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.

Qualified 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, maintained adequate internal financial controls over financial reporting as of March 31, 2019, 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", and except for the possible effects of the material weaknesses described in Basis for Qualified Opinion paragraph above on the achievement of the objectives of the control criteria, the Companys internal financial controls over financial reporting were operating effectively as of March 31, 2019.

We have considered the material weaknesses identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the financial statements of the Company for the year ended March 31, 2019, and these material weaknesses do not affect our opinion on the said standalone Ind AS financial statements of the Company.

For MAJETI & CO
Chartered Accountants
Firm Registration Number: 015975S
Kiran Kumar Majeti
Place: Hyderabad Partner
Date: May 30, 2019 Membership No.: 220354

ANNEXURE B TO THE INDEPENDENT AUDITORS REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and Regulatory Requirements section of our report of even date)

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

(b) The fixed assets 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 nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

(c) The title deeds of immovable properties, as disclosed in Note 3 on Property, Plant and Equipment to the financial statements, are held in the name of the Company.

ii. The physical verification of inventory excluding stocks with third parties have been conducted at reasonable intervals by the Management during the year, except ores, coal & Coke which will be carried out only at year end. We were informed that physical verification of the same was difficult due to its volume and loose nature. In respect of inventory lying with third parties, these have been confirmed by them except for Rs 5,22,43,383/- for which we performed alternative testing procedures on sample basis by verifying subsequent good received notes. Discrepancies amounting to Rs. 29,83,97,641/-, noticed on physical verification of inventory by Management, as compared to book records were material and have been appropriately dealt with in the books of accounts. (Refer note 38 to the financial statements).

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 Act. Therefore, the provisions of Clause 3(iii), (iii)(a), (iii)(b) and (iii)(c) of the said 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 Section 185 and 186. Therefore, the provisions of Clause 3(iv) of the said Order are not applicable to the Company.

v. 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.

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 31,2019 are as follows:

Name of the statute Nature of dues Amount (Rs.) Period to which it relates Due date Date of Payment
Income Tax Act, 1961 Tax Deducted at source 2,45,13,389 April 2018 to March 2019 on 7th day of next month Not Yet Paid
Income Tax Act, 1961 Tax Collected at source 43,99,806 July 2017 to March 2019 on 7th day of next month Not Yet Paid
Employees Provident Funds & Miscellaneous Provisions Act, 1952 Provident Fund 1,61,18,130 September 2017 to March 2019 on 15th of next month Not Yet Paid
Employee state Insurance Act Employees State Insurance 24,85,163 April 2018 to March 2019 on 15th of next month Not Yet Paid
Andhra Pradesh Tax on Professions, Trades, Callings and Employments Act, 1987 Professional Tax 9,74,880 July 2017 to March 2019 on 10th of next Month Not Yet Paid
Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976 Professional Tax 3,93,800 July 2017 to March 2019 on 10th of next Month Not Yet Paid
Telangana Tax on Profession, Trades, Callings and EmploymentAct, 1987 Professional Tax 1,60,450 July 2017 to March 2019 on 10th of next Month 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, 2019 which have not been deposited on account of a dispute, are as follows:

Name of the statute Nature of dues Amount (Rs.) Period to which the amount relates Forum where the dispute is pending
Central Sales Tax, 1956 Sales Tax 23,29,595 2005-06 Sales Tax Appellate Tribunal, Hyderabad
Income Tax Act, 1961 Interest on Dividend Distribution Tax 13,79,100 2009-10 Deputy Commissioner of Income Tax, Hyderabad
Central Excise Act, 1944 Excise duty and penalty 2,53,99,502 September 2011- March 2015 The commissioner of central excise and customs, Belgaum
Customs Act, 1962 Customs duty and penalty 10,47,95,907 2012-13 The Customs, Excise and Service Tax Appellate Tribunal, Hyderabad
Andhra Pradesh Value Added tax Act, 2005 Penalty on Late Payment 4,47,276 March 2017 to May 2017 High court of Andhra Pradesh, Amaravati
Central Sales Tax, 1956 Penalty on Late Payment 20,04,728 March 2017 to May 2017 High court of Andhra Pradesh, Amaravati
Central Sales Tax, 1956 Non-submission of C-Forms 52,82,708 2014-15 to 2015-16 Appeal Pending Before Hble App. Dep. Commissioner (CT) , Tirupathi
Andhra Pradesh Tax on Entry of Goods into Local Areas Act, 2001 Dues of Entry Tax 4,46,229 2014-15 to 2016-17 Appeal Pending Before Hble App. Dep. Commissioner (CT) , Tirupathi
The Karnataka Value Added Tax Act, 2003 Excess availment of Input tax credit 6,48,501 2012-13 Appeal Pending before JCCT/Davangere
Central Sales Tax, 1956 Non- submission of C-Forms 3,88,623 2011-12 Commercial Taxes Officer- Enforcement, Bellary
The Karnataka Value Added Tax Act, 2003 Excess availment of Input tax credit 24,11,901 2011-12 Appeal Pending before JCCT/Davangere

viii. According to the records of the Company examined by us and the information and explanations given to us, The Company has delayed in repayment of principle and interest as mentioned below for the period from March 2017 to March 2019 aggregating Rs. 293,32,64,028/-

Term Loans (Refer note 13 to the financial statements) Nature of dues Amount of default (Rs.) Period of default and remains unpaid as at balance sheet date
From Banks
Canara Bank Principal 50,92,03,487 59-730 Days
Canara Bank Interest 35,89,14,468 59-789 Days
State Bank of India Principal 42,94,96,471 1-731 Days
State Bank of India Interest 28,74,02,974 1-730 Days
Andhra Bank Principal 36,26,43,795 1-731 Days
Andhra Bank From Financial Institutions Interest 27,44,50,435 1-730 Days
Industrial Finance Corporation of India Principal 42,33,68,877 60-700 Days
Industrial Finance Corporation of India Interest 28,77,83,521 60-700 Days

 

Working capital Borrowings (Refer note 13 to the financial statements) Fund based limit (Sanctioned) (Rs.) Balance outstanding as at March 31, 2019 (Rs.) Overdrawn balance* (Rs.)
From Canara Bank 26,40,00,000 267,21,11,970 240,81,11,970
From State Bank of India 40,20,00,000 205,01,79,673 164,81,79,673
From Andhra Bank 26,40,00,000 216,86,20,619 190,46,20,619
Total 93,00,00,000 6,89,09,12,263 596,09,12,263

*Overdrawn balance mainly on account of devolvement of letters of credit and interest accrued there on. ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.

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 explanations given to us, 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.

xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Indian Accounting Standard (IND AS) 24, Related Party Disclosures specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

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.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For MAJETI & CO
Chartered Accountants
Firm Registration Number: 015975S
Kiran Kumar Majeti
Place: Hyderabad Partner
Date: May 30, 2019 Membership No.: 220354