Visa Steel Ltd Directors Report.

To the Members of VISA Steel Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

QUALIFIED OPINION

1. We have audited the standalone financial statements of VISA Steel Limited ("the Company") which comprise the standalone balance sheet as at March 31, 2020 and the standalone statement of profit and loss (including other comprehensive income), standalone statement of changes in equity and standalone statement of cash flows for the year then ended, and notes to the standalone financial statements, including a summary of the 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 effect of matter referred to in Basis of Qualified Opinion paragraph 2 below, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2020, and loss and other comprehensive income, changes in equity and its cash flows for the year ended on that date.

BASIS FOR QUALIFIED OPINION

2. We draw attention to Note 16D of the accompanying Standalone Financial Statements with regard to non-recognition of interest expense on the borrowings of the Company. The accumulated interest not provided as on March 31, 2020 is Rs. 5,920.84 million (including Rs. 1,459.69 million for FY 2016-17, Rs. 1,552.29 million for FY 2017-18, Rs. 1,465.46 million for FY 2018-19 and Rs. 1,443.40 million for the FY 2019-20 respectively) which is not in accordance with the requirement of Ind AS 23: ‘Borrowing Cost read with Ind AS 109: ‘Financial Instruments.

Had the aforesaid interest expense been recognized, finance cost for the year ended March 31, 2020 would have been Rs. 1,611.46 million instead of the reported amount of Rs. 168.06 million. Total expenses for the year ended March 31, 2020 would have been Rs. 6,167.87 million instead of the reported amount of Rs. 4,724.47 million. Net loss after tax for the year ended March 31, 2020 would have been Rs. 2,291.86 million instead of the reported amount of Rs. 848.46 million. Total Comprehensive Income for the year ended March 31, 2020 would have been Rs. (2,297.51) million instead of the reported amount of Rs. (854.11) million, other equity would have been Rs. (6,726.31) million against reported Rs. (805.47) million, other current financial liability would have been Rs. 16,522.99 million instead of reported amount of Rs. 10,602.15 million and Loss per share for the year ended March 31, 2020 would have been Rs. 19.79 instead of the reported amount of Rs. 7.33.

The above reported interest has been calculated using Simple Interest rate.

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those SAs 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 together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

MATERIAL UNCERTAINTY RELATING TO GOING CONCERN

4. We draw attention to Note - 37 to the standalone financial statements regarding the preparation of the statement on going concern basis, for the reason stated therein. The Company has accumulated losses and has also incurred losses during the year ended March 31, 2020. As on date, the Companys current liabilities are substantially higher than its current assets and the Companys net worth has also been fully eroded after considering unprovided interest. Further the State Bank of India (financial creditor) had filed an application before National Company Law Tribunal (NCLT) Kolkata Bench for initiating Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code (IBC), which stands dismissed by NCLT, Cuttack Bench. SBI has preferred an Appeal before National Company Law Appellate Tribunal (NCLAT) New Delhi which is pending and the matter is sub-judice. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Companys ability to continue as going concern and therefore it may be unable to realise its assets and discharge its liabilities including potential liabilities in the normal course of business.

All the assets including non-current assets and liabilities are still being carried at their book value. The appropriateness of assumption of going concern, and evaluation of recoverable value of its non-current assets is critically dependent upon the debt resolution of the Company which is under process, the Companys ability to raise requisite finance, generate cash flows in future to meet its obligations and to earn profits in future.

The ability of the Company to continue as a going concern is solely dependent on the successful outcome of these conditions, which are not wholly within the control of the Company.

Management of the Company has prepared the statement on going concern basis based on their assessment of the successful outcome of the debt resolution which will enhance the Companys viability and accordingly no adjustments have been made to the carrying value of the assets and liabilities. Our opinion is not qualified in respect to the above matters.

EMPHASIS OF MATTER

5. We draw your attention to the following matters:

Refer Note 36 to the Statement regarding accounting for transfer of Special Steel Undertaking, pursuant to the Scheme of Arrangement ("the scheme") approved by the National Company Law Tribunal vide its order dated July 8, 2019, all the assets and liabilities of the Special Steel Undertaking of Visa Steel Limited ("transferor Company" or "the Company") has been transferred to and vested in the Visa Special Steel Limited, (a wholly owned step down subsidiary) ("VSSL" "transferee Company") at their respective book values on a going concern basis from April 1, 2013 being the appointed date. Effective date of the scheme is July 13, 2019 being the date on which certified copy of the order sanctioning the said scheme is filed with the Registrar of Companies, Cuttack.

On January 17, 2020, Honble Supreme Court of India vide its ex-parte order in Civil Appeal No. 56 of 2020 filed by State Bank of India, has ordered issuance of notice and in the meanwhile stayed the aforesaid NCLT Order. The NCLT Order had been given effect to and stood implemented by the Company prior to January 17, 2020.

To give the impact of the sanctioned scheme, the Standalone Financial Statement of the Company for the year ended March 31, 2019 were revised and the same were approved by the Board of Directors in their meeting held on October 18, 2019 and audited by us on which we have issued our audit report dated October 18, 2019 and same were approved by the members in their meeting held on December 23, 2019. In compliance to the sanctioned schemes, the company has transferred various income, expenses, assets and liabilities related to special steel undertaking to VSSL from 1st April 2013 resulting in accumulated receivable of Rs. 3,742.89 million from VSSL as on March 31, 2020 (previous year Rs. 3,718.64 million). Since the matter is pending with Honble Supreme Court, the impact of the sanctioned scheme considered as above on financial statements including aforesaid receivable from a subsidiary VSSL is dependent on the final judgment of the Honble Supreme Court.

Our opinion is not qualified in respect to the above matter.

INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS REPORT THEREON

6. The Companys management and Board of Directors are responsible for the preparation of other information. The other information comprises the information included in the Management Discussion and Analysis, Boards Report including Annexures to Boards Report, Corporate Governance Report, Shareholders Information, but does not include the standalone financial statements and our auditors report thereon. The other information is expected to be made available to us after the date of this auditors report.

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 identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the other information if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

KEY AUDIT MATTERS

7. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone 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 that context.

INDEPENDENT AUDITORS REPORT

The key audit matter How the matter was addressed in our audit
A. Related Party Transactions
Refer to Note 44 to the financial statements. A significant part of the Companys Revenue and purchases of coal and coke relates to transactions with related party. The details of Related Party Transactions have been disclosed in note no 44 Related Party Transactions. Transactions with other related party for revenue generation is 87% of total revenue and coal and coke purchased is almost 98% of total coal and coke purchased. Transactions with related parties are significant for audit due to the materiality of revenue and purchase of coal and coke which are from other related parties and possible transfer price risk associated with transactions with related parties. We addressed the Key Audit Matter as follows :-
1) We reviewed the policy of the Company with respect to related party transactions.
2) We reviewed the minutes of the meeting of the Audit Committee and Board.
3) We reviewed the list of Related party identified by the Company.
4) We performed the sales process / procurement process walk through and tested the controls.
5) We obtained the transfer pricing document prepared by the Company and assessed the Key Assumptions.
6) We have assessed the application of transfer price documents in executing the transactions.
7) We reviewed compliance with Section 177 & 188 of the Companies Act 2013 for related party transaction.
8) We reviewed whether transactions between related parties are on normal commercial terms and conditions no more favorable than those otherwise available to other parties considering the present financial position of the Company.
9) We reviewed the disclosure of related party transactions as per Ind AS 24.
Conclusion :
Our audit procedures did not lead to any reservations regarding the related party transactions and its disclosure.
B. Valuation of Inventories How our audit addressed the key audit matter:
Refer to Note 7 to the financial statements. As described in the accounting policies in note 2.2.7 to the financial statements, inventories are carried at the lower of cost and net realisable value. As a result, the management applies judgment in determining the appropriate provisions for obsolete stock based upon a detailed analysis of old inventory, net realisable value below cost based upon future plans for sale of inventory. We obtained assurance over the appropriateness of the managements assumptions applied in calculating the value of the inventories and related provisions by:-
1. Completed a walkthrough of the inventory valuation process and assessed the design and implementation of the key controls addressing the risk.
2. Verifying the effectiveness of key inventory controls operating over inventories; including sample based physical verification.
3. Verifying for a sample of individual products that costs have been correctly recorded.
4. Comparing the net realisable value to the cost price of inventories to check for completeness of the associated provision.
5. Reviewing the historical accuracy of inventory provisioning, and the level of inventory write-offs during the year.
6. Recomputing provisions recorded to verify that they are in line with the Company policy.
Conclusion:
Based on the audit procedures performed we are satisfied that the valuation of inventory is appropriate.

MANAGEMENTS RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

8. The Companys management and Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs, loss and other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting 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 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 and Board of Directors are 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.

Board of Directors is also responsible for overseeing the Companys financial reporting process.

AUDITORS RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

9. 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 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 with reference to financial statements 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 going concern.

• 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.

10. Materiality is the magnitude of misstatements in the standalone 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.

11. 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.

12. 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.

13. From the matters communicated with those charged with governance, we determine those matters 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

14. 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 the "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

15. 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, except for the matter referred to in paragraph 2 above, 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 standalone balance sheet, the standalone statement of profit and loss (including other comprehensive income), the standalone statement of changes in equity and the standalone statement of cash flows dealt with by this Report are in agreement with the books of account.

d) In our opinion, except for the matter referred to in paragraph 2 above, the aforesaid standalone financial statements comply with the Ind AS specified under section 133 of the Act.

e) On the basis of the written representations received from the directors as on March 31, 2020 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 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 with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

g) With respect to the matter to be included in the Auditors Report under section 197(16): In our opinion and according to the information and explanations given to us, the remuneration paid by the company to its directors during the current year is in accordance with the provisions of Section 197 of the Act. The remuneration paid to any director is not in excess of the limit laid down under Section 197 of the Act.

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) Rules, 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 as at March 31, 2020 on its financial position in its standalone financial statements - Refer Note 35A to the standalone 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 amounts which were, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2020.

ANNEXURE A TO INDEPENDENT AUDITORS REPORT

Referred to in paragraph 14 of the Independent Auditors Report of even date to the members of VISA Steel Limited on the standalone financial statements as of and for the year ended March 31, 2020.

We report that:

i. In respect of its fixed assets:

(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 over a period of three years 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 3A on fixed assets to the standalone financial statements, are held in the name of the Company.

ii. The physical verification of inventory have been conducted at reasonable intervals by the Management during the year. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

iii. According to the information and explanations given to us 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. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of the loans and investments made, and guarantees and security provided by it, as applicable.

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, except for dues in respect of goods and services tax, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund employees state insurance and income tax, though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including sales tax, excise, service tax, duty of customs, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities. The extent of arrears of statutory dues outstanding as at March 31, 2020 for a period of more than six months from the date they became payable are as follows:

Name of the statute Nature of dues Amount (Rs. in Millions) Period to which the amount relates Due Date Date of Payment
Goods & Service tax, 2017 Interest 0.00 Jul-17 28-Aug-17 Not yet Paid
Goods & Service tax, 2017 Interest 2.80 Aug-17 20-Sep-17 Not yet Paid
Goods & Service tax, 2017 Interest 5.21 Sep-17 20-Oct-17 Not yet Paid
Goods & Service tax, 2017 Interest 3.38 Oct-17 20-Nov-17 Not yet Paid
Goods & Service tax, 2017 Interest 0.28 Nov-17 20-Dec-17 Not yet Paid
Goods & Service tax, 2017 Interest 0.10 Dec-17 22-Jan-18 Not yet Paid
Goods & Service tax, 2017 Interest 1.31 Jan-18 20-Feb-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.15 Feb-18 20-Mar-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.13 Mar-18 20-Apr-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.03 Apr-18 22-May-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.24 May-18 20-Jun-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.24 Jun-18 20-Jul-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.22 Jul-18 24-Aug-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.34 Aug-18 20-Sep-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.21 Sep-18 25-Oct-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.12 Oct-18 20-Nov-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.16 Nov-18 20-Dec-18 Not yet Paid
Goods & Service tax, 2017 Interest 0.19 Dec-18 20-Jan-19 Not yet Paid

ANNEXURE A TO INDEPENDENT AUDITORS REPORT

Referred to in paragraph 14 of the Independent Auditors Report of even date to the members of VISA Steel Limited on the standalone financial statements as of and for the year ended March 31, 2020.

Name of the statute Nature of dues Amount ( Rs. in Millions) Period to which the amount relates Due Date Date of Payment
Goods & Service tax, 2017 Interest 0.21 Jan-19 22-Feb-19 Not yet Paid
Goods & Service tax, 2017 Interest 0.18 Feb-19 20-Mar-19 Not yet Paid
Goods & Service tax, 2017 Interest 0.31 Mar-19 23-Apr-19 Not yet Paid
Goods & Service tax, 2017 Interest 0.19 Apr-19 20-May-19 Not yet Paid
Goods & Service tax, 2017 Interest 0.31 May-19 20-Jun-19 Not yet Paid
Goods & Service tax, 2017 Interest 0.10 Jun-19 20-Jul-19 Not yet Paid
Goods & Service tax, 2017 Interest 0.08 Jul-19 22-Aug-19 Not yet Paid
Goods & Service tax, 2017 Interest 0.11 Aug-19 20-Sep-19 Not yet Paid
Goods & Service tax, 2017 Interest 0.02 Sep-19 20-Oct-19 Not yet Paid
Total 16.62

The above table excludes the undisputed cases pertaining to the Special Steel undertaking transferred into VISA Special Steel Limited pursuant to the Scheme as sanctioned by National Company Law Tribunal, Cuttack Bench dated July 8, 2019, which are still being pursued in the Companys name.

(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of goods and service tax and duty of customs which have not been deposited on account of any dispute. The particulars of dues of income tax, sales tax, duty of excise, service tax and value added tax as at March 31, 2020 which have not been deposited on account of a dispute, are as follows:

Name of the statute Nature of dues Amount Rs. ( In Million) Period to which the amount relates Forum where the dispute is pending
Central Excise Act, 1944 Duty of Excise 10.46 Financial Year 2008-09 to 2010-11 Custom, Excise & Service Tax Appellate Tribunal, Kolkata
Service Tax under Finance Act, 1994 Service Tax 39.02 Financial Year 2011-12 to 2014-15 Commissioner CGST& Central Excise and Customs
Service Tax under Finance Act, 1994 Service Tax 15.61 Financial Year 2010-11 to 2011-12 Commissioner of Central Excise (Appeals)
Central Sales Tax Act,1956 Central Sales Tax 0.02 Financial Year 1999-2000 Sales tax Tribunal, Orissa
Andhra Pradesh Value Added Tax Act 2005 CST & VAT 0.96 Financial Year 2013-14 to 2017-18 Additional Commissioner of Commercial Taxes, Vijayawada
Odisha Value Added Tax Act, 2005 Entry Tax 8.11 Financial Year 2004-05 & 2012-13 High Court of Odisha
Odisha Value Added Tax Act, 2005 Odisha VAT 0.02 Financial Year 2013-14 & 2014-15 Additional Commissioner of Commercial Taxes, Cuttack

The above table excludes the disputed cases pertaining to the Special Steel undertaking transferred into VISA Special Steel Limited pursuant to the Scheme as sanctioned by National Company Law Tribunal, Cuttack Bench dated July 8, 2019, which are still being pursued in the Companys name.

viii. According to the records of the Company examined by us and the information and explanations given to us, except for loans or borrowings from banks and financial institutions aggregating to Rs. 16,277.63 Million for the period as set out below, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government or dues to debenture holders as at the balance sheet date.

Amount (Rs. in Million)

Name of Lender Nature of dues Less than 12 months More than 12 months Total
Asset Care and Reconstruction Enterprise Limited Principal & Interest 656.07 2,679.15 3,335.22
Bank of India Principal & Interest 55.01 177.63 232.63
Canara Bank Principal & Interest 284.26 1,208.74 1,493.00
Edelweiss Asset Reconstruction Company Limited Principal & Interest 25.00 87.22 112.22
Exim Bank Principal & Interest 107.49 476.10 583.59
HUDCO Principal & Interest 180.60 721.03 901.63
Punjab & Sind Bank Principal & Interest 66.26 260.92 327.18
Punjab National Bank Principal & Interest 1,003.62 3,989.03 4,992.65
State Bank of India Principal & Interest 423.45 2,220.94 2,644.39
Union Bank of India Principal & Interest 333.99 1,321.13 1,655.12
Total 3,135.75 13,141.88 16,277.63

Note: The unprovided interest amount reported above has been calculated by the management at simple interest.

ix. In our opinion, and according to the information and explanations given to us, the Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) and term loan during the year.

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 standalone financial statements as required under Ind AS 24, Related Party Disclosures specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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 noncash 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.

ANNEXURE B TO INDEPENDENT AUDITORS REPORT

Referred to in paragraph 15 (f) of the Independent Auditors Report of even date to the members of VISA Steel Limited on the standalone financial statements for the year ended March 31, 2020.

REPORT ON THE INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE ACT

1. We have audited the internal financial controls with reference to financial statements of VISA Steel Limited ("the Company") as of March 31, 2020, 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

2. The Companys Management is responsible for establishing and maintaining internal financial controls based on the internal financial controls with reference to financial statements 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

3. Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial statements 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 prescribed under Section 143(10) of the Act to the extent applicable to an audit of internal financial controls both applicable to an audit of internal financial controls, with reference to financial statements. 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 with reference to financial statements were established and maintained and whether such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of such internal financial controls, 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 financial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion on the Companys internal financial controls with reference to financial statements.

MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

6. A companys internal financial controls with reference to financial statements 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 controls with reference to financial statements includes those policies and procedures that :

i. pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

ii. 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 authorizations of management and directors of the company; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

INHERENT LIMITATIONS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

7. Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements 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

8. According to the information and explanations given to us and based on our audit, the following material weakness has been identified in the operating effectiveness of the Companys internal financial controls with reference to financial statements as at March 31, 2020: The Companys internal financial controls relating to application of appropriate policies and procedures that provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles were not operating effectively which resulted in non-recognition of interest expense as indicated in Note 16D to the standalone financial statements.

9. A ‘material weakness is a deficiency, or a combination of deficiencies, in internal financial controls with reference to financial statements, 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

10. In our opinion, the Company has, in all material respects, an adequate internal financial controls with reference to financial statements and except for the effects of the material weakness described in the Basis for Qualified Opinion paragraph above, such internal financial controls with reference to financial statements were operating effectively as at March 31, 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.

EXPLANATORY PARAGRAPH

11. We also have audited, in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act, the standalone financial statements of Visa Steel Limited which comprise the Balance Sheet as at March 31, 2020, and the related Statement of Profit and Loss including other comprehensive income and Cash Flow Statement and the Statement of changes in equity for the year ended, and a summary of significant accounting policies and other explanatory information. Resultant impact of this material weakness has been appropriately considered in our audit of the March 31, 2020 standalone financial statements of VISA Steel Limited and this report affect our report dated July 30, 2020, which expressed a qualified opinion on those financial statements.