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Narayani Steels Ltd.

BSE: 540080 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE715T01023
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NSE 05:30 | 01 Jan Narayani Steels Ltd
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P/E 0.81
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OPEN 80.40
CLOSE 80.40
VOLUME 821
52-Week high 80.40
52-Week low 6.95
P/E 0.81
Mkt Cap.(Rs cr) 4
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Narayani Steels Ltd. (NARAYANISTEELS) - Auditors Report

Company auditors report

To the Members of

Narayani Steels Limited

Report on the Audit of the Standalone Financial Statements

Qualified Opinion

We have audited the accompanying standalone Ind AS financial statementsof Narayani Steels Limited ("the Company") which comprise the BalanceSheet as at 31 March 2022 the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and Statement of Cash Flows for the year thenended and notes to the standalone financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to theexplanations given to usexcept for the effects of the matters described in the 'Basisfor Qualified Opinion' section of our report the aforesaid standalone Ind ASfinancial statements give the information required by the Companies Act 2013 as amended("the Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2022 its profit total comprehensive income thechanges in equity and its cash flows for the year ended on that date.

Basis for Qualified Opinion:

a. The Company has based on the internal evaluation valuedinventories at Rs. 150.86 Lakhs wherein there is no movement since past one year. In theabsence of valuation report we are unable to ascertain the realisability of theinventories and to that extent total profit is overstated.

b. Internal Audit Report is not available since the management has notappointed Internal Auditor as required under section 138 of Companies Act 2013.

c. Balances under sundry debtors and loans and advances given by thecompany are subject to confirmations and adjustments if any. In absence of suchconfirmations and reconciliations consequential impact of the same on financialstatements of the company could not be ascertained.

d. Provision for gratuity and leave encashment is not being made onactuarial basis which is non-compliance with the requirements of IND AS - 19 'EmployeeBenefits'. In absence of an actuarial valuation being made we are unable to quantify theeffect if any on the profit/loss of the Company for the year ended 31st March 2022.

e. Physical verification / valuation report for Property Plant &Equipment including assets held for sale of Rs.84.16 Lakhs is not available and in absenceof verification / valuation report we are unable to ascertain the fair / realizablevalues of such items and its impact on the financials of the company for the year underreport.

We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone Ind AS financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with the requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.

Key Audit Matters

Key Audit Matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone financial statementsof the current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters:

(i) Accounting treatment for the effects of the Resolution Plan:

Refer Note 31 - Note 33 to the standalone financialstatements for thedetails regarding the resolution plan implemented in the Company pursuant to a corporateinsolvency resolution process concluded during the year ended 31st March 2022 underInsolvency and Bankruptcy Code 2016.

Owing to the size of the over-due credit facilities multiplicity ofcontractual arrangements and large number of operational and financial creditorsdetermination of the carrying amount of related liabilities on the date of approval ofResolution Plan was a complex exercise.

In respect of de-recognition of operational and financial creditorsdifference amounting to 19969.96 Lakhs between the carrying amount of financialliabilities extinguished and consideration paid is recognised in statement of profit andloss in accordance with "Ind AS - 109" "Financial Instruments"prescribed under section 133 of the Companies Act 2013 and disclosed as an"Exceptional item".

Accounting for the effects of the resolution plan is considered by usto be a matter of most significance due to its importance to intended users' understandingof the Financial Statements.

Our procedures included the following:

We have performed the following procedures to determine whether theeffect of Resolution Plan has been appropriately recognised in the Financial Statements:

• Reviewed management's process for review and implementation ofthe Resolution Plan.

• Reviewed the provisions of the Resolution Plan to understand therequirements of the said Plan and evaluated the possible impact of the same on thefinancial statements.

• Verified the balances of liabilities as on the date of approvalof Resolution Plan from supporting documents and computations on a test check basis.

• Verified the payment of funds on test check basis as per theResolution Plan.

• Tested the implementation of provisions of the Resolution Planin computation of balances of liabilities owed to financial and operational creditors.

• Evaluated whether the accounting principles applied by themanagement fairly present the effects of the Resolution Plan in financial statements inaccordance with the principles of Ind AS.

• Tested the related disclosures made in notes to the financialstatements in respect of the implementation of the resolution plan.

(ii) Litigations Matters & Contingent liabilities:

Refer Note 3(e) to the standalone financial statements. Prior to theapproval of the Resolution Plan the Company was a party to certain litigations. Pursuantto the approval of the Resolution Plan it was determined that no amounts are payable inrespect of those litigations as they stand extinguished.

The estimates related to exact outcome of litigations and its possibleimpact on the financials in respect thereof have high degree of inherent uncertainty dueto insufficient judicial precedents in India in respect of disposal of litigationsinvolving companies admitted to Corporate Insolvency Resolution Process.

Our procedures included the following:

We have performed the following procedures to test the recoverabilityof payments made by the Company in relation to litigations instituted against it prior tothe approval of the Resolution Plan:

• Verified the underlying documents related to litigations andother correspondences with the statutory authorities.

• Reviewed the provisions of the Resolution Plan to understand therequirements of the said Plan and evaluated the possible impact.

• Evaluated whether the accounting principles applied by themanagement fairly present the amounts recoverable from relevant authorities in financialstatements in accordance with the principles of Ind AS.

• Discussed with the management on the development in theseslitigations during the year ended 31st March 2022.

• Obtained representation letter from the management on theassessment of those matters as per SA 580 (revised) - written representations.

(iii) Non conduct of Internal Audit and Non availability of InternalFinancial Controls:

We were not provided with copy of Internal Audit Report and RiskControl Matrix including Standard Operating Procedures of the company which we consider tobe significant key matter keeping in view the nature and size of the operations of theCompany.

Our procedures included the following:

During the year the Company was under CIRP up to 11th January 2022.The issues relating to Internal Audit Report and Internal Financial Controls have beendiscussed with the management who has assured necessary compliances in the current fiscalyear.

Information Other than the Standalone Financial Statements andAuditors' Report thereon

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the Annual reportbut does not include the financial statements and our auditor's report thereon. Theinformation included in the annual report is expected to be made available to us after thedate of the auditor's report.

Our opinion on the Ind AS standalone financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether such other information is materially inconsistent with the standalone Ind ASfinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information; we are required to report that fact. Wehave nothing to report in this regardexcept for matters described in the 'Basis forQualified Opinion' para above.

Responsibilities of Management and Those Charged with Governance forthe Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Companies Act 2013 ("the Act") with respect to thepreparation of these standalone Ind AS financial statements that give a true and fair viewof the financial position financial performance including other comprehensive incomechanges in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Companies (Indian AccountingStandards) Rules 2015 as amended. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Ind ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with Standards on Auditing (SAs) will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if individually or in the aggregate they could reasonably beexpected to influence the economic decisions of users taken on the basis of thesestandalone Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3) (i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.

We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Act we give in the "Annexure 1" a statementon the matters specified in paragraphs 3 and 4 of the Order.

2. (A) As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those booksexceptfor matters described in the 'Basis for Qualified Opinion' para above.

(c) The Balance Sheet the Statement of Profit and Loss (includingOther Comprehensive Income) Statement of changes in equity and the Cash Flows dealt withby this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Indian Accounting Standards specified under section 133 of theAct read with rule 7 of the Companies (Accounts) Rules 2014 except for mattersdescribed in the 'Basis for Qualified Opinion' para above.

(e) On the basis of the written representations received from thedirectors as on March 31 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2022 from being appointed as a director in termsof Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone Ind ASfinancial statements and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;

(g) The Company has not paid anymanagerial remuneration for the yearended March 31 2022and hence no comments are required under this clause;

(B) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:

a. Pursuant to the approval of the Resolution Plan by the Order dated11th January 2022 of the Hon'ble National Company Law Board (Kolkata Bench) all thepreexisting contingent liabilities have beenextinguished together with the associatedpending litigations and hence as per management there is nothing to be disclosedin itsfinancial statements.

b. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;

c. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

d. (i) The management has represented that to the best of itsknowledge and belief other than as disclosed in notes to these Financial Statements nofunds have been advanced or loaned or invested (either from borrowed funds or sharepremium or any other sources or kind of funds) by the Company to or in any other personsor entities including foreign entities ("Intermediaries") with theunderstanding whether recorded in writing or otherwise that the Intermediary shall:

a) directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalfof the Company or

b) provide any guarantee security or the like to or on behalf of theUltimate Beneficiaries.

(ii) The management has represented that tothe best of its knowledgeand belief otherthan as disclosed in notes to these financial statements no fundshavebeen received by the Company from any persons or entities includingforeign entities("Funding Parties") with theunderstanding whether recorded in writingorotherwise that the Company shall:

a) directly or indirectly lend or invest in other persons or entitiesidentified in any manner whatsoever ("Ultimate Beneficiaries") by or on behalfof the Funding Parties or

b) provide any guarantee security or the like from or on behalf of theUltimate Beneficiaries.

(iii) Based on such audit procedures as considered reasonable andappropriate in the circumstances nothing has come to our notice that has caused us tobelieve that the representations under sub-clause (d) (i) and (d) (ii) contain anymaterial mis-statement.

ANNEXURE- 1 TO INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 1 of the Report on Other Legal and RegulatoryRequirements of Independent Auditor's Report of even date to the members of NarayaniSteels Limited on the standalone Ind AS financial statements as of and for the year ended31 March 2022

i. a)

(A) According to the information and explanations given to us theCompany is in the process of updating records showing full particulars includingquantitative details and situation of Property Plant and Equipment.

(B) The Company does not have any intangible assets and hence nocomments are required.

b) Property Plant and Equipment have not been physically verifiedduring the year by the Management as the records are under updation and hence we areunable to comment upon the discrepancies if any.

c) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the titledeeds of all immovable properties (other than properties where the company is the lesseeand the lease agreements are executed in favour of the lessee) are held in the name of theCompany.

d) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not revalued any class of its Property Plant and Equipment during the year. TheCompany does not have any Intangible Assets and Right of Use assets as at 31st March 2022.

e) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary no proceedingshave been initiated or are pending against the Company for holding any benami propertyunder the Benami Transactions (Prohibition) Act 1988 (45 of 1988) and rules madethereunder. Accordingly para 3(i)(e) of the order is not applicable.

ii. a) We have not received any evidence as to the conduct of physicalverification of inventory by the management during the year and hence we are unable tocomment on discrepancies if any between the book stock and physical stock.

b) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not been sanctioned working capital limits in excess of five crore rupees inaggregate from banks and financial institutions on the basis of security of currentassets.

iii. The Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Companies Act 2013. Therefore the provision ofparagraph 3 (iii) of the Order are not applicable to the Company.

iv. In our opinion and according to the information and explanationsgiven to us during the year the Company has not granted any loan made any investment orprovided any guarantees to any person specified under section 185 and section 186of theCompanies Act 2013. Therefore the provisions of paragraph 3(iv) of the Order are notapplicable to the Company.

v. In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not accepted during the year deposits or amounts which are deemed to be deposits andtherefore the directives issued by the Reserve Bank of India and the provisions ofSections 73 to 76 or any other relevant provisions of the Companies Act 2013 and the rulesframed there under are not applicable to the Company. No order has been passed by CompanyLaw Board or National Company Law Tribunal or Reserve Bank of India or any court or anyother tribunal.

vi. As informed to us the maintenance of Cost Records has beenspecified by the Central Governmentunder sub-section (1) of Section 148 of the Act inrespect of the activities carried on by the company.In our opinion and according to theinformation and explanations given to us the cost records for the year are being updated.

vii. a) In our opinion and according to the information andexplanations given to us and based on examination of records as we considered necessarybarring certain delay in deposit of TDS the Company is generally regular in depositingundisputed statutory dues including Goods and Services Tax provident fund employees'state insurance income tax duty of customs cess and other statutory dues applicable toit with the appropriate authority.

According to the information and explanations given to us noundisputed amounts payable in respect of Provident Fund Employees State Insurance IncomeTax Goods and Service Tax Cess and other material statutory dues were in arrears as at31st March 2022 for a period of more than six months from the date they became payable.

viii. In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary there are notransactions that are not recorded in the books of account that have been surrendered ordisclosed as income during the year in the tax assessments under the Income Tax Act 1961(43 of 1961). Accordingly para 3(viii) of the Order is not applicable.

ix. The National Company Law Tribunal ('NCLT') has approved the termsof the Resolution Plan submitted by Resolution Applicant pursuant to which loans orborrowings owed by the Company have been partially paid and the balance amount has beenextinguished.The Company has not defaulted during the year in repayment of loans orborrowings to any financial institution or a bank or government.

(a) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not been declared a wilful defaulter by any bank or financial institution or otherlender.

(b) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not taken any term loans during the year.

(c) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary and on overallexaminations of the Balance Sheet of the company funds raised on short term basis havenot been utilised for long term purposes by the Company.

(d) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not taken any funds from any entity or person on account of or to meet the obligationsof its subsidiaries.

(e) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not raised loans during the year on the pledge of securities held in its subsidiaries.

x. (a) In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not raised any money by way of initial public offer or further public offer (includingdebt instruments) during the year. Accordingly para 3(x)(a) of the order is notapplicable.

(b) In our opinion and according to the information and explanationsgiven to us and based on examination of records we considered necessary the Company hasnot made any preferential allotment or private placement of shares or convertibledebentures (fully partially or optionally convertible) during the year. Accordingly para3(x)(b) of the order is not applicable.The Company has however received shareapplication money (pending allotment) from successful resolution applicant and itsdirectors / associates pursuant to Order of the NCLT dated 11th January 2022.

xi. (a) In our opinion and according to the information andexplanations given to us and based on examination of records as we considered necessaryno fraud by the company or on the Company has been noticed or reported during the year.Accordingly para 3(xi)(a) of the order is not applicable.

(b) In our opinion and according to the information and explanationsgiven to us and based on examination of records we considered necessary no report underSection 143(12) of the Companies Act 2013 has been filed by the auditors in Form ADT-4 asprescribed under rule 13 of Companies (Audit and Auditors) Rules 2014 with the CentralGovernment. Accordingly para 3(xi)(b) of the order is not applicable.

(c) In our opinion and according to the information and explanationsgiven to us and based on examination of records we considered necessary no whistle-blowercomplaint has been received by the Company during the year. Accordingly para 3(xi)(c) ofthe order is not applicable.

xii. In our opinion and according to the information and explanationsgiven to us and based on examination of records we considered necessary the Company isnot a Nidhi Company. Accordingly paragraphs 3(xii) of the Order is not applicable.

xiii. In our opinion and according to the information and explanationsgiven to us and based on examination of records we considered necessary all transactionswith the related parties are in compliance with sections 177 and 188 of the Companies Act2013 and details of related party transactions have been disclosed in the financialstatements as required by the applicable accounting standards.

xiv. (a) In our opinion and according to the information andexplanations given to us and based on examination of records we considered necessary theCompany does not have an internal audit system commensurate with the size and nature ofits business.

(b) Internal Audit was not conducted by the company during thefinancial year 2021-22 and thus the reports of the Internal Auditors for the period werenot considered by us during the course of the audit.

xv. In our opinion and according to the information and explanationsgiven to us and based on examination of records we considered necessary the Company hasnot entered into any noncash transaction with directors or persons connected with him asspecified under Section 192 of the Companies Act 2013.Accordingly paragraph 3(xv) of theOrder is not applicable.

xvi. a. In our opinion and according to the information and explanationgiven to us and examination of books and records the Company is not required to beregistered under section 45-IA of the Reserve Bank of India Act 1934 as a Non-BankingFinance Company. Accordingly para 3(xvi)(a) of the Order is not applicable.

b. In our opinion and according to the information and explanationgiven to us and examination of books and records the Company has not conducted anyNon-Banking Financial activities or any Housing Finance activities. Accordingly para3(xvi)(b) of the Order are not applicable.

c. In our opinion and according to the information and explanationgiven to us and examination of books and records the company is not a Core InvestmentCompany (CIC) as defined in the regulations made by the Reserve Bank of India.Accordingly paragraph 3(xvi)(c) of the Order is not applicable.

d. In our opinion and according to the information and explanationgiven to us and examination of books and records there is no Core Investment Company(CIC) in the group.

xvii. In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companyhas not incurred any cash losses in the current financial year however cash lossesamounting to Rs. 3609.06 Lakhs were incurred in the immediately preceding financial year.

xviii. Pursuant to the implementation of the Resolution Plan asapproved by the NCLT vide its Order dated 11th January 2022 the existing Board ofDirectors was replaced by the Board constituted by the successful resolution applicant andthe erstwhile Statutory Auditors was replaced with the appointment of a fresh statutoryauditor.

xix. In our opinion and according to the information and explanationgiven to us and examination of books and records as we considered necessary on the basisof the financial ratios ageing and expected dates of realization of financial assets andpayment of financial liabilities other information accompanying the financial statementsand our knowledge of the Board of Directors and management plans we are of the opinionthat no material uncertainty exists as on the date of the audit report that Company iscapable of meeting its liabilities existing at the date of balance sheet as and when theyfall due within a period of one year from the balance sheet date. We however state thatthis is not an assurance as to the future viability of the Company. We further state thatour reporting is based on the facts up to the date of the audit report and we neither giveany guarantee nor any assurance that all liabilities falling due within a period of oneyear from the balance sheet date will get discharged by the Company as and when they falldue.

xx. In our opinion and according to the information and explanationsgiven to us and based on examination of records as we considered necessary the Companywas not required to transfer any amount to a fund specified in Schedule VII to theCompanies Act 2013 or to a special account in compliance with Section 135(6) of the Act.Accordingly paragraph 3(xx) of the Order is not applicable.

ANNEXURE- 2 TO THE INDEPENDENT AUDITOR'S REPORT

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

We have audited the internal financial controls over financialreporting of Narayani Steels Limited ("the Company") as of 31st March2022 in conjunction with our audit of the standalone Ind AS financial statements of theCompany for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India ('ICAI').These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls over FinancialReporting (the "Guidance Note") and the Standards on Auditing issued by ICAIand deemed to be prescribed under section 143(10) of the Companies Act 2013 to theextent applicable to an audit of internal financial controls both applicable to an auditof Internal Financial Controls and both issued by the Institute of Chartered Accountantsof India. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control with reference to the financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial control with reference to the financial statements includes those policies andprocedures that

(1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and

(3) provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assets thatcould have a material effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

According to the information and explanations given to us and based onour audit the following material weaknesses have been identified in the operatingeffectiveness of the Company's internal financial controls over financial reporting as atMarch 31 2022:

i. The Company has based on the internal evaluation valuedinventories at Rs. 150.86 Lakhs wherein there is no movement since past one year. In theabsence of valuation report we are unable to ascertain the realisability of theinventories and to that extent total profit is overstated.

ii. Internal Audit Report is not available since management has notappointed Internal Auditor as required under section 138 of Companies Act 2013.

iii. Balances under sundry debtors and loans and advances given by thecompany are subject to confirmations and adjustments if any. In the absence of suchconfirmations and reconciliations consequential impact of the same on financialstatements of the company could not be ascertained.

iv. Provision for gratuity and leave encashment is not being made onactuarial basis which is non-compliance with the requirements of IND AS - 19 'EmployeeBenefits'. In the absence of an actuarial valuation being made we are unable to quantifythe effect if any on the profit/loss of the Company for the year ended 31st March 2022.

v. Physical verification/valuation report for Property Plant &Equipment including assets held for sale of Rs.84.16 Lakhs is not available and in absenceof verification/valuation report we are unable to ascertain the fair / realizable valuesof such items and its impact on the financials of the company for the year under report.

In our opinion because of the possible effects of the materialweakness as described above on the achievement of the objectives of internal controlcriteria the Company has not maintained adequate internal financial control overfinancial reporting and such internal financial controls over financial reporting were notoperating effectively with respect to obtaining balance confirmations as on March 312022 and

We have considered the material weakness identified and reported abovein determining the nature timing and extent of audit tests applied in our audit offinancial statements of the Company for the year ended March 312022 and these materialweaknesses don't affect our opinion on the financial statements of the company.

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