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Pradeep Metals Ltd.

BSE: 513532 Sector: Engineering
NSE: N.A. ISIN Code: INE770A01010
BSE 00:00 | 02 Dec 162.45 3.90
(2.46%)
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NSE 05:30 | 01 Jan Pradeep Metals Ltd
OPEN 170.00
PREVIOUS CLOSE 158.55
VOLUME 48939
52-Week high 175.00
52-Week low 75.25
P/E 16.96
Mkt Cap.(Rs cr) 281
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 170.00
CLOSE 158.55
VOLUME 48939
52-Week high 175.00
52-Week low 75.25
P/E 16.96
Mkt Cap.(Rs cr) 281
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Pradeep Metals Ltd. (PRADEEPMETALS) - Auditors Report

Company auditors report

To

The Members of Pradeep Metals Limited

Report on the Audit of Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Pradeep MetalsLimited (‘the Company') which comprise the Balance Sheet as at 31stMarch 2022 the Statement of Profit and Loss (including other comprehensive income) theStatement of Changes in Equity and the Statement of Cash Flows for the year then endedand a summary of significant accounting policies and other explanatory information(together referred to as standalone financial statements).

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (‘the Act') in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards (Ind AS) prescribed undersection 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015as amended and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2022 and its profit including othercomprehensive income the changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the standalone financialstatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Emphasis of Matter

Reference is invited to

1) Note 5 of the standalone financial statements. In view of accumulated losses in theWholly Owned Subsidiary (WOS) and Step Down Subsidiary (SDS) expected business impact ofCovid-19 and provision for impairment of goodwill and tangible assets by SDS the Companycarried out impairment assessment in respect of its investment in WOS and loans granted toWOS. Based on such assessment the Company has made a provision for impairment of Rs.135.00 Lakhs for the year ended 31st March 2022 (aggregate impairmentprovision upto 31st March 2022 is Rs. 675.00 Lakhs). In the view ofmanagement considering the long term and strategic nature of investment the balancecarrying value of investment would yield the required benefits and the loan given to theWOS is considered as fully recoverable.

2) Note 57 of the standalone financial statements regarding additional incentiveprovided of Rs. 27.23 Lakhs in respect of managing director of the Company for the yearended 31st March 2022 which is subject to the approval of the shareholders inensuing annual general meeting.

Our opinion is not modified in respect of above matters. The matter covered in para 1above was also reported under ‘Emphasis of Matter' paragraph in our audit report forthe year ended 31st March 2021 and our opinion was not modified in PreviousYear also.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current year.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.

Key Audit Matter & how our audit addressed the key audit matter

1. Investments in WOS and loans granted to WOS

Refer note 5 of standalone financial statements in respect of investment made and loangranted to its WOS and Emphasis of Matter paragraph above. The Company has carried outimpairment assessment for the recoverability of loans & investments into WOS as at 31stMarch 2022 and has made provision for impairment amounting to Rs. 135.00 Lakhs for theyear ended 31st March 2022 (aggregate impairment provision upto 31stMarch 2022 is Rs. 675.00 Lakhs) for the investment in WOS. Accordingly we determinedthis to be a key audit matter. As part of our audit procedures we have evaluated theassumptions and estimates used by the management while conducting the impairment test. Wehave discussed the future business outlook the steps taken by the management to improvethe performance of WOS and SDS the budgets presented to the Board of Directors and impacton account of Covid-19 on the business operations of the WOS and SDS. In respect of loanwe have verified the balance confirmation and compliance with repayment schedule.

Based on the above and on the basis of discussion with management the loan to WOS isconsidered fully recoverable and carrying value of the investment net of impairment is inorder.

2. Inventory valuation (WIP)

The nature of items produced by the Company are customized and are unique (i.e. nonstandardized items) this poses a challenge of inventory valuation especially in respectof in work in progress (WIP). As at 31st March 2022 WIP value is Rs. 1819.52Lakhs. The Company has multiple control points which include detailed recording ofmovement of WIP items in ERP System periodical physical verification and ascertainment ofstage of WIP by the management.

As part of our audit procedures we have performed test verification of closinginventory and also performed analytical test to validate the closing stock quantities andvalues of WIP. Our analytical test included

(a) verification of the overall input-output ratio and inquiring the reasons fordifference between standard and actual consumption & yield

(b) verifying the accuracy of the closing stock valuation work sheets

(c) basis of ascertainment of stage of completion and

(d) assessing the accuracy and completeness of the information used by management incomparing the cost of WIP inventory with net realizable value. The deviations were notsignificant and satisfactory explanation was provided to us.

Information Other than the Standalone Financial Statements and Auditor's Report Thereon

The Company's Board of Directors is responsible for the other information. The otherinformation comprises of the Board's Report including Annexures to Board's ReportManagement Discussion and Analysis Corporate Governance and Shareholder's Information butdoes not include the standalone financial statements and our auditor's report thereon.

Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance for the standalonefinancial statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Ind AS specified under section 133 of the Actread with the Companies (Indian Accounting Standard) Rules 2015 as amended from time totime. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the standalone financial statements

Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.

As a part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the standalone financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Report on other legal and regulatory requirements

1. 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 bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on 31stMarch 2022 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 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 controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionand to the best of our information and according to the explanations given to us theremuneration paid/provided by the Company to its directors for the year ended 31stMarch 2022 is in accordance with the provisions of section 197 read with Schedule V ofthe Act except for the following: Note 57 of the standalone financial statements regardingadditional incentive provided of Rs. 27.23 Lakhs in respect of managing director of theCompany for the year ended 31st March 2022 which is subject to the approval ofthe shareholders in ensuing annual general meeting. Further above matter is also reportedunder Emphasis of matter paragraph.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended fromtime to time in our opinion and to the best of our information and according to theexplanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements – Refer note 36(A) 36(B) and 36(C)to the standalone financial statements

ii. The Company did not have any long term contract including derivative contract forwhich there are any material foreseeable losses.

iii. According to the information and explanations given to us and on the basis of ourexamination of records of the Company there are no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.

iv. (a) The Management has represented that to the best of its knowledge and beliefno funds 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 person orentity including foreign entity ("Intermediaries") with the understandingwhether recorded in writing or otherwise that the Intermediary shall whether directlyor indirectly lend or invest in other persons or entities identified in any mannerwhatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provideany guarantee security or the like on behalf of the Ultimate Beneficiaries (Refer note 62to the standalone financial statements);

(b) The Management has represented that to the best of its knowledge and belief nofunds have been received by the Company from any person or entity including foreignentity ("Funding Parties") with the understanding whether recorded in writingor otherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries (Refer note 62 to the standalonefinancial statements);

(c) Based on the audit procedures that have been considered reasonable and appropriatein the circumstances nothing has come to our notice that has caused us to believe thatthe representations under sub-clause (i) and (ii) of Rule 11(e) as provided under (a) and(b) above contain any material misstatement.

v. (a) The final dividend proposed in the Previous Year declared and paid by theCompany during the year is in accordance with Section 123 of the Act as applicable.

(b) The Board of Directors of the Company have proposed final dividend for the yearwhich is subject to the approval of the members at the ensuing Annual General Meeting. Theamount of dividend proposed is in accordance with section 123 of the Act as applicable.

2. As required by the Companies (Auditor's Report) Order 2020 (the "Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration No.: 116560W/W100149
Milan Mody
Partner
Membership No.: 103286
UDIN: 22103286AIVYZU3790
Place: Mumbai
Date: 12th May 2022

Annexure A to Independent Auditors' Report for the year ended 31st March2022

[Referred to in ‘Other legal and regulatory requirements ‘of our report ofeven date]

1) a) (A) The Company has maintained proper records showing full particulars includingquantitative details and situation of Property Plant and Equipment (PPE) and relevantdetails of right to use assets. (B) The Company has maintained proper records showing fullparticulars including quantitative details and situation of intangible assets.

b) The Company has physically verified all the property plant and equipments and rightto use assets during the year. Further as per the phased program dies are physicallyverified once in 3 years and are verified in the current financial year. In our opinionfrequency of physical verification is reasonable having regard to the size of the Companyand the nature of its assets. According to information and explanations given to us nomaterial discrepancies were noticed on such verification.

c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company which have been verified from photocopies of theagreements since the original documents are deposited with banks against credit facilitiesgranted by them for which we have received confirmation from the bank. d) None of theitems of Property Plant and Equipment (including Right of Use assets) or intangibleassets have been revalued during the year.

e) No proceedings have been initiated during the year or are pending against theCompany as on 31st March 2022 for holding any benami property under the BenamiTransactions (Prohibition) Act 1988 and rules made thereunder.

2) a) The inventory (other than lying with third parties) has been physically verifiedby the management during the year. In respect of inventory lying with third partiesconfirmations were obtained by the Company during the year. In our opinion the frequencycoverage and procedure of such verification carried out by the management is reasonableand appropriate. As per the information and explanation given to us discrepancies noticedon physical verification were not material (i.e. less than 10% in the aggregate for eachclass of inventory) and have been properly dealt with in the books of accounts.

b) The Company has been sanctioned working capital limits of more than Rs. 5.00 Croresfrom bank on the basis of security of current assets. There are no borrowings fromfinancial institution. According to the information and explanations given to us and onthe basis of our examination of the records of the Company discrepancies in quarterlyreturns or statements of current assets filed by the Company to bank with books of accountwhich are not material are as mentioned below: (Rs. in Lakhs)

Quarter Name of bank Particulars of Securities Provided Amount as per books of account Amount as reported in the quarterly return/ statement Amount of difference Reason for material discrepancies
30th June 2021 Union Bank of India Inventory and trade receivables 7899.04 8044.41 (145.37) Amount of difference is upto 1.97% (on average basis) which is mainly due to material dispatched to customers but revenue is recognised in the subsequent quarters.
30th September 2021 Union Bank of India Inventory and trade receivables 8563.40 8725.93 (162.53)
31st December 2021 Union Bank of India Inventory and trade receivables 8988.04 9159.32 (171.28)
31st March 2022 Union Bank of India Inventory and trade receivables 9333.40 9554.48 (221.08)

3) a) The Company has granted unsecured loans and stood guarantee for loan taken by theWholly Owned Subsidiary (WOS) as given below: (Rs. in Lakhs)

Particulars Unsecured Loans Corporate Guarantee *
Aggregate amount during the current year 269.53 1211.40
Balance outstanding as on 31st March 2022* 2152.51 1574.40

* Loans and guaranteed given in USD are converted in INR as at 31st March2022.

Based on the information and explanation given to us apart from above the Company hasnot made any other investments provided any guarantee or security or granted any loans oradvances in the nature of loans.

b) In our opinion the investments made guarantees provided and the terms andconditions of the loans granted are not prima facie prejudicial to the Company'sinterest. The Company has not given any security for the loan taken by WOS from banks.

c) In respect of loan granted during the year repayment of principal amount was notdue as per revised repayment schedule and payment of interest is regular as stipulated.

d) There are no overdue amounts in respect of the loan granted to WOS. Hence reportingunder clause 3(iii)(d) and (e) is not applicable.

e) Based on the information and explanation given to us the Company has not grantedany loans or advances in the nature of loans either repayable on demand or withoutspecifying any terms or period of repayment. Hence reporting under clause 3(iii)(f) isnot applicable.

4) According to the information and explanation given to us in respect of corporateguarantee loan given and investment made in WOS the Company has complied with theprovisions of Section 185 and Section 186 of the Act as applicable. The Company has notgiven any security for loan taken by WOS.

5) In our opinion and according to the information and explanation given to us theCompany has not accepted any deposits. Therefore question of reporting compliance withdirective issued by the Reserve Bank of India and the provisions of sections 73 to 76 orany other relevant provisions of the Act and rules framed thereunder does not arise. Wehave been informed that no order relating to Company has been passed by the Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any Court or any otherTribunal.

6) As per information and explanation given to us maintenance of cost records inrespect of closed dies forging and processing is prescribed for the Company pursuant tothe Rules made by the Central Government under section 148(1) of the Act. We have broadlyreviewed the books of account maintained by the Company pursuant to the Rules made by theCentral Government for the maintenance of cost records under section 148 of the Act andare of the opinion that prima facie the prescribed accounts and records have been madeand maintained.

7) (a) According to the information and explanations given to us and on the basis ofour examination of records of the Company in respect of amounts deducted/accrued in thebooks of account the Company has been generally regular in depositing undisputedstatutory dues including provident fund employees' state insurance income tax salestax duty of customs duty of excise goods and services tax cess and any other statutorydues as applicable to the Company during the year with the appropriate authorities.There are no arrears of outstanding statutory dues as at 31st March 2022 for aperiod of more than six months from the date they became payable.

(b) According to the records of the Company and information and explanations given tous there are no dues of income tax sales tax service tax duty of customs duty ofexcise goods and services tax which have not been deposited with appropriate authoritieson account of any dispute except demands raised for income tax as given below:

The Nature of Statute Nature of dues Forum where dispute is pending Period to which the amount relates Amount (Rs. in Lakhs)
The Income Tax Act 1961 Income Tax Company has filed the rectification application with CPC F.Y. 2013-14 42.54
F.Y. 2017-18 101.84
F.Y. 2019-20 290.84

8) According to the information and explanations given to us and on the basis of ourexamination of records of the Company there were no transactions relating to previouslyunrecorded income that have been surrendered or disclosed as income during the year in thetax assessments under the Income Tax Act 1961.

9) Based on our audit procedures and as per the information and explanations given tous by the management we are of the opinion that (a) The Company has not defaulted inrepayment of loans and payment of interest thereon to any lender. (b) The Company has notbeen declared as willful defaulter by any bank or financial institution or other lender.

(c) Term loans raised during the year by the Company are applied for the purpose forwhich those are raised.

(d) The funds raised on short term basis have not been utilised for long term purposes.Hence further reporting under clause 3(ix)(d) is not applicable.

(e) During the year the Company has not availed any funds from any entity or person onaccount of or to meet the obligation of its subsidiaries. The Company does not have anyassociates and joint ventures. Hence further reporting under clause 3(ix)(e) is notapplicable.

(f) The Company has not raised loans during the year on the pledge of securities heldin subsidiaries. The Company does not have any associate companies or joint ventures.

10) (a) During the year the Company has not raised money by way of initial publicoffer or further public offer [including debt instruments]. Hence further reporting underclause 3(x)(a) is not applicable. (b) The Company has not made any preferential allotmentor private placement of shares or convertible debentures during the year. Hence furtherreporting under clause 3(x)(b) is not applicable 11) (a) During the course of ourexamination of the books of account and records of the Company carried out in accordancewith generally accepted auditing practices in India and according to the information andexplanations given to us we have neither noticed nor have been informed by themanagement any incidence of fraud by the Company or on the Company.

(b) No report under sub-section (12) of section 143 of the Companies Act has been filedin Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules 2014with the Central Government during the year and upto the date of this report.

(c) As informed to us no whistle blower complaints have been received by the Companyduring the year. 12) In our opinion and according to the information and explanation givento us the Company is not a Nidhi company. Therefore clause (xii) of paragraph 3 theOrder is not applicable.

13) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable Indian accounting standards. 14) (a) In our opinion the Company has aninternal audit system which commensurate with the size and nature of its business.

(b) We have considered the internal audit reports for the year under audit issued tothe Company during the year and till date of our report in determining the nature timingand extent of our audit procedures.

15) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transaction with directors or person connectedwith him. Therefore clause (xv) of paragraph 3 the Order is not applicable.

16) In our opinion and according to the information and explanations given to us

(g) The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934. Hence reporting under clause 3(xvi)(a) (b) and (c) of the Orderis not applicable.

(h) There is no core investment company within the Group (as defined in the CoreInvestment Companies (Reserve Bank) Directions 2016) and accordingly reporting underclause 3(xvi)(d) of the Order is not applicable.

17) The Company has not incurred any cash losses in the current financial year and inthe immediately preceding financial year.

18) There has been no resignation of the statutory auditors during the year.

19) On the basis of the financial ratios ageing and expected dates of realisation offinancial assets and payment of financial liabilities other information accompanying thefinancial statements our knowledge of the Board of Directors and management plansnothing has come to our attention which causes us to believe that material uncertaintyexists as on the date of the audit report and the company is capable of meeting itsliabilities existing at the date of balance sheet as and when they fall due within aperiod of one year from the balance sheet date. We however state that this is not anassurance as to the future viability of the Company. We further state that our reportingis based on the facts up to the date of the audit report and we neither give any guaranteenor any assurance that all liabilities falling due within a period of one year from thebalance sheet date will get discharged by the Company as and when they fall due.

20) During the year there are no unspent amounts towards Corporate SocialResponsibility (CSR). Accordingly reporting under clause 3(xx)(a) and (b) of the Order isnot applicable for the year.

21) The Company has only foreign subsidiaries hence reporting under clause 3(xxi) isnot applicable.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration No.: 116560W/W100149
Milan Mody
Partner
Membership No.: 103286
UDIN: 22103286AIVYZU3790
Place: Mumbai
Date: 12th May 2022

Annexure B to Independent Auditors' Report of even date on the standalone financialstatements of Pradeep Metals Limited

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013

Opinion

We have audited the internal financial controls over financial reporting of PradeepMetals Limited ("the Company") as of 31st March 2022 inconjunction with our audit of the standalone financial statement of the Company for theyear ended on that date. In respect of inventory (recording of WIP and allocation ofoverheads) internal financial controls needs to be further strengthened to commensuratewith the size of the Company and nature of its business. This matter was reported inearlier year also.

In our opinion read with our comment with respect to inventories above the Companyhas in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at 31st March 2022 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (‘the Guidance Note') issued by the Institute ofChartered Accountants of India (‘ICAI').

Responsibilities of Management and Those Charged with Governance for Internal FinancialControls over Financial Reporting

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ‘ICAI'. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statement whether due to fraud orerror. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.

Meaning of Internal Financial Controls over Financial Reporting

The Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statement for external purposes in accordance withgenerally accepted accounting principles. The Company's internal financial control overfinancial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statement in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

For N. A. Shah Associates LLP
Chartered Accountants
Firm Registration No.116560W/W100149
Milan Mody
Partner
Membership No. 103286
UDIN: 22103286AIVYZU3790
Place: Mumbai
Date: 12th May 2022

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