Mar 31, 2018
INDEPENDENT AUDITOR''S REPORT
The Members of ELECTROSTEEL STEELS LIMITED
Report on the Ind AS Financial Statements
We have audited the accompanying Ind AS financial statements of Electro steel Steels Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2018, and the Statement of Profit and Loss (including Other Comprehensive Income), and Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory notes for the year ended on that date (hereinafter referred to as "Ind AS financial statements").
Management''s Responsibility for the Ind AS Financial Statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act 2013 (" the Act") with respect to the preparation of these Ind AS financial statements that gives a true and fair view of the state of affairs (financial position), Profit or Loss (financial performance including Other Comprehensive Income), Cash Flows and changes in Equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed 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 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 Ind AS financial statements that gives a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
Our responsibility is to express an opinion on these Ind AS financial statements based on our audit.
We have taken into account the provisions of the Act, the Accounting and Auditing Standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit of the Ind AS financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Ind AS financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditors'' judgment, including the assessment of the risks of material misstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the Ind AS financial statements that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the Ind AS financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financial statements give the information required by the 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, 2018, its Loss, total Comprehensive Income, its Cash Flows and the Changes in Equity for the year ended on that date.
Emphasis of Matters
Attention is invited to Note no. 5.6 of the Ind AS financial statement regarding exceptional item which includes Rs. 511,193.01 lakhs recognized as impairment against Property, Plant and Equipments, Intangible Assets and Capital Work in Progress based on valuation carried out by an Independent Valuer, upon which reliance has been placed by us.
Our opinion is not modified in respect of this matter.
Other Matters
The comparative Ind AS financial information of the Company for the corresponding year ended March 31,2017 were audited by the predecessor auditor, M/s. B Chhawchharia & Co, who expressed unmodified opinion vide their report dated May 15, 2017 and reliance has been placed by us on the same for the purpose of this report.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor''s Report) Order, 2016 ("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 A" a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
Further to our comments in the annexure referred to in the paragraph above, 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 proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
c) The Balance Sheet, the Statement of Profit and Loss, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
d) In our opinion, the aforesaid financial statements comply with the Indian Accounting Standards (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, 2018, none of the director is disqualified as on March 31,2018, from being appointed as a director in terms of section 164 (2) of the Act. This however was not taken on record by the Board of Directors, since as stated in Note no. 42, the Company was under Corporate Insolvency Resolution Process (CIRP) and powers of the Board were suspended during CIRP;
f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B". Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting; and
g) With respect to the other matters to be included in the Auditor''s 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. Impact of pending litigations (Other than those already recognized in the accounts) on the financial position of the Company have been disclosed in the Ind AS financial statement as required in terms of the Ind AS and provisions of the Companies Act, 2013.;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts as referred to in Note no. 43(d) to the Ind AS financial statements; and
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
ANNEXURE "A" TO THE AUDITOR''S REPORT OF EVEN DATE :
i) a. The Company has maintained proper records showing full particulars, including quantitative details and situations of fixed assets.
b. The Company has a program of verification to cover all the items of fixed assets in a phased manner which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. Pursuant to this program, certain fixed assets have been physically verified by the management During the year and detailed verification has since been undertaken which is in progress. According to the information and explanation given to us, no material discrepancies with respect to verification so far carried out were noticed.
c. According to the information and explanations given to us, the records examined by us and based on the conveyance deeds provided to us, we report that, the title deeds, comprising all the immovable properties of land and building which are freehold, are held in the name of the Company as on the Balance Sheet date except as detailed below: (Refer Note no. 5.4 to the Ind AS financial statements).
(Amount Rs, In Lakhs)
Type of Immovable Property |
No. of Cases |
Area |
Gross Block |
Net Block |
Freehold Land |
226 |
229.43 acres |
1,615.99 |
878.01 |
ii) As informed, the inventories of the Company except for materials in transit and those lying in depot have been physically verified by the management during the year. In our opinion and according to the information and explanations given to us, the frequency of such verification is reasonable. As the Company''s inventory of raw materials comprises mostly of bulk materials such as coal, coke, iron ore, etc. requiring technical expertise for quantification, the Company has hired an independent agency for the physical verification of the stock of these materials. The discrepancies noted on such verification as stated in Note no.30.1 even though material in certain cases, have been properly dealt with in the books of the accounts.
iii) The Company has not granted any loans secured or unsecured to companies, firms or parties covered in the register maintained under Section 189 of the Act. Accordingly, clause 3 (iii) of the Order is not applicable to the Company.
iv) In our opinion and according to the information and explanations given to us, the Company has not granted any loans, made investments or provided any guarantees/securities to parties covered under Section 185 and 186 of the Act. Accordingly, clause 3 (iv) of the Order is not applicable to the Company.
v) The Company has not accepted any deposits During the year and does not have any unclaimed deposits as at March 31,2018 from public covered under Sections 73 to 76 or any other relevant provisions of the Act and Rules framed there under and therefore the provisions of clause 3(v) of the Order is not applicable to the company
vi) We have broadly reviewed the books of account maintained by the company pursuant to the Rules made by the Central Government for the maintenance of cost records under Section 148 (1) of the Act in respect of the Company''s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been maintained. We have however not made a detailed examination of the said records with a view to determine whether they are accurate or complete.
vii) a. According to the information and explanations given to us, During the year, the Company has generally been regular in
depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education Protection fund, Employees'' State Insurance, Income Tax, Sales Tax, Wealth Tax, Goods and Service Tax, Service tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues as applicable to it.
b. There were no undisputed amounts payable in respect of Provident Fund, Investor Education Protection fund, Employees'' State Insurance, Income Tax, Sales Tax, Goods and Service Tax, Wealth Tax, Service tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrear as at March 31, 2018 for a period of more than six months from the date they become payable.
c. According to the information and explanations given to us, the details of disputed dues of Sales tax, Income tax, Customs duty, Wealth tax, Excise duty, Service Tax, and Cess, if any, as at March 31,2018, areas follows:
Name of the statute |
Nature of dues |
Amount (Rs. in Lakhs) |
Period to which the amount relates |
Forum where dispute is pending |
The Central Excise Act, 1944 |
Excise Duty |
34.00 |
2009-2010 |
CESTAT |
36.71 |
2016-2017 |
Commissioner (Appeals), Ranchi |
||
Central Sales Tax Act, 1956 |
Sales Tax |
57.58 |
2011-2012 |
Deputy Commissioner of Commercial Taxes, Jharkhand |
392.78 |
2012-2013 |
|||
348.00 |
2012-2013 2014-2015 |
Commissioner Commercial Taxes, Jharkhand |
||
452.98 |
2013-2014 |
|||
1,507.64 |
2014-2015 |
|||
322.58 |
2015-2016 |
Name of the statute |
Nature of dues |
Amount (Rs. in Lakhs) |
Period to which the amount relates |
Forum where dispute is pending |
Customs Act'' 1962 |
Custom Duty |
5,974.73 |
2008-2009 to 2011-2012 |
Additional Director General, Directorate of Revenue Intelligence, New Delhi |
Custom duty-EPCG |
1,57,739.94 |
2009-2010 to 2017-2018 |
Principal, Additional Director General, Directorate of Revenue Intelligence, Kolkata Zonal Unit |
|
Jharkhand VAT Act, 2015 |
Value Added Tax |
24.40 |
2009-2010 |
Commercial Tax Tribunal, Ranchi |
45.90 |
2010-2011 |
Commissioner Commercial |
||
329.68 |
2013-2014 |
Taxes, Jharkhand |
||
179.41 |
2015-2016 |
|||
91.98 |
2010-2011 |
Deputy Commissioner of |
||
16,380.35 |
2011-2012 |
Commercial Taxes, Jharkhand |
||
4,202.12 |
2012-2013 |
|||
276.96 |
2013-2014 |
|||
1,092.47 |
2015-2016 |
|||
Service Tax under Finance Act,1994 |
Service Tax |
2,214.87 |
2007-2008 2008-2009 |
CESTAT |
1,071.40 |
2007-2008 to 2011-2012 |
|||
331.87 |
2009-2010 |
|||
3.22 |
2015-2016 |
|||
13.34 |
2014-2015 |
Commissioner (Appeals) Kolkata |
||
2.27 |
2015-2016 |
The Asst Commissioner of Service Tax, Audit, Kolkata |
||
West Bengal (Entry Tax) |
Entry Tax |
2,888.58 |
2012-2013 to 2017-2018 |
West Bengal Taxation Tribunal |
Jharkhand (Entry Tax) |
Entry Tax |
26,491.47 |
2011-2012 to 2017-2018 |
High Court of Jharkhand |
Income Tax Act, 1961 |
TDS/TCS |
0.21 |
2008-2009 |
Commissioner of Income Tax |
0.79 |
2009-2010 |
(Ranchi) |
||
0.91 |
2010-2011 |
|||
0.33 |
2011-2012 |
|||
8.57 |
2012-2013 |
|||
22.63 |
2013-2014 |
|||
23.62 |
2014-2015 |
|||
50.31 |
2015-2016 |
|||
59.33 |
2016-2017 |
|||
15.73 |
2017-2018 |
As stated in Note no. 42(a), claims against the company with respect to above will be dealt with as provided in resolution plan as approved by NCLT and thereby, these will stand extinguished as provided in the said plan.
viii) In our opinion and on the basis of information and explanations given to us by the management, the Company has defaulted in repayment of dues to the following banks and financial institutions:
Amount (in Lakhs)
Name of the Bank / Financial Institution |
Principal |
Period of Default |
Interest |
Period of Default |
State Bank of India |
3,41,554.77 |
December 2015 to July 21, 2017 |
1,01,120.84 |
April 2015 to July 21, 2017 |
Punjab National Bank |
57,007.01 |
17,141.78 |
||
Canara Bank |
50,501.01 |
15,049.97 |
||
UCO Bank |
49,264.58 |
14,638.00 |
||
Indian Overseas Bank |
42,468.93 |
12,261.10 |
Name of the Bank / Financial Institution |
Principal |
Period of Default |
Interest |
Period of Default |
SREI Infrastructure Finance Ltd |
42,976.77 |
14,813.63 |
||
Oriental Bank of Commerce |
43,650.69 |
12,812.15 |
||
United Bank of India |
32,918.10 |
9,084.23 |
||
Union Bank of India |
28,444.07 |
8,277.13 |
||
HUDCO |
29,497.91 |
8,822.17 |
||
Allahabad Bank |
29,090.33 |
8,585.73 |
||
Bank of India |
19,954.67 |
5,936.92 |
||
Vijaya Bank |
20,307.95 |
5,953.57 |
||
Indian Bank |
16,699.22 |
4,837.78 |
||
Corporation Bank |
18,183.71 |
December 2015 to July 21, 2017 |
5,347.97 |
April 2015 to July 21, 2017 |
Syndicate Bank |
18,406.60 |
5,055.23 |
||
Bank of Baroda |
16,938.18 |
5,008.23 |
||
Life Insurance Corporation of India |
16,985.30 |
4,949.49 |
||
Bank of Maharashtra |
12,606.42 |
3,738.96 |
||
Central Bank of India |
13,464.72 |
3,878.45 |
||
Andhra Bank |
11,296.57 |
3,341.89 |
||
Punjab & Sind Bank |
12,000.76 |
3,394.34 |
||
Dena Bank |
11,615.04 |
3,551.80 |
||
Jammu & Kashmir Bank |
6,008.39 |
1,706.66 |
||
ICICI Bank |
4,898.91 |
1,282.70 |
||
IL&FS Financial Services Ltd |
1,895.72 |
427.49 |
However, as stated in Note no. 42 to the Ind AS financial statements all these dues have since been settled.
ix) In our opinion and according to the information and explanations given to us, the company did not raise any money by way of Initial Public Offer or Further Public Offer (including debt instruments) or term loans during the year. Accordingly, provisions of clause 3 (ix) of the Order is not applicable.
x) During the course of our examination of books of account carried out in accordance with Generally Accepted Auditing Practices in India, we have neither come across any incidence of fraud on or by the Company nor have we been informed of any such cases by the management.
xi) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not paid/provided for managerial remuneration During the year. Accordingly, provisions of clause 3 (xi) of the Orders not applicable.
xii) The Company is not a Nidhi company and hence reporting under paragraph 3(xii) of the Order is not applicable to the Company.
xiii) As indicated in Note no. 42 of the Ind AS financial statements, the Company was under Corporate Insolvency Resolution Process (CIRP) for the period from July 22, 2017 to March 31,2018 and accordingly powers of the Board of Directors were suspended during the said period. According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties have been disclosed in the financial statements considering the relationship and control existing prior to the initiation of CIRP. In absence of the Board as stated above, compliance with respect to Section 177 and 188 of the Act could not be ensured. These were however approved in the meetings of Resolution Professional with Key Managerial Professional.
xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures During the year.
xv) According to the information and explanations given to us and as represented to us by the management and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.
xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act 1934.
ANNEXURE "B" TO THE INDEPENDENT AUDITORS'' REPORT
(Referred to in paragraph (g) under ''Report on Other Legal and Regulatory Requirements'' of our report of even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Electro steel Steels Limited ("the Company") as of March 31,2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company''s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with Generally Accepted Accounting Principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the Ind AS financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, 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.
For Lodha & Co
Chartered Accountants
Firm''s ICAI Registration No.:301051E
R. P. Singh
Place : Kolkata Partner
Date : August 29, 2018 Membership No: 52438
Mar 31, 2017
Report on the Financial Statements
We have audited the accompanying financial statements of ELECTROSTEEL STEELS LIMITED (âthe Companyâ), which comprise the balance sheet as at 31 March 2017, the statement of profit and loss (including other comprehensive income), the statement of cash flows and the statement of changes in equity for the year then ended and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Auditorâs Responsibility
1. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.
3. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditorâs judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls relevant to the Companyâs preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidences we have obtained are sufficient and appropriate to provide a basis for our audit opinion on the financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including the Ind AS, of the financial position of the Company as at 31 March, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matters
Without qualifying our opinion, we draw attention to the following Notes to the financial statements:
Note no. 18(A)(4), regarding carrying value of securities against the secured loans due being short, consequently the loans being marginally not being fully secured.
Note No. 39, regarding the preparation of these financial statements on a âgoing concern basisâ. The Company incurred an accumulated net loss of Rs. 3,18,925 lakhs up to the year ended March 31, 2017 and, as of that date, the companyâs current liabilities exceeded its current assets by Rs. 5,55,233 lakhs. Further the companyâs net worth has been eroded as at the balance sheet date. Since the full compliance of the sanctioned CDR package could not be met with, the lenders have since invoked Strategic Debt Restructuring (SDR) pursuant to RBI circulars dated 08.06.2015 & 24.09.2015, the implementation whereof is under progress. Company has positive EBIDTA in F.Ys. 2015-16 & 2016-17. Further, the company as well as the lenders are looking out for potential investors, and the restructuring proposal is under active consideration of the lenders. In view thereof, and expecting favorable market conditions in future, these financial statements have been prepared on a âgoing concern basisâ and no adjustment has been made to the carrying value of the assets and liabilities.
Our opinion is not modified in respect of the matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government of India 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.
2. 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 purpose of our audit;
b. in our opinion, 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 financial statements dealt with by this report are in agreement with the books of account;
d. in our opinion, the aforesaid financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act read with relevant rule issued thereunder;
e. two matters described under the Emphasis of Matters paragraph, in our opinion may have adverse effect on the functioning of the company;
f. on the basis of the written representations received from the directors as on 31 March 2017 and taken on record by the Board of Directors, none of the directors are disqualified as on 31 March 2017 from being appointed as a director in terms of Section 164(2) of the Act;
g. with respect to the adequacy of the internal financial controls over financial reporting (IFCoFR) of the Company and the operating effectiveness of such controls refer to our separate report in Annexure âBâ.
h. with respect to the other matters to be included in the Auditorâs 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 does not have any pending litigations, other than those disclosed in the financial statements; which would materially impact its financial position;
ii. the Company, as detailed in Note 40 to the financial statements, has made provision, as required under the applicable laws or Ind AS, for material foreseeable losses, if any, on long-term contracts including derivative contracts;
iii. there were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
iv. the Company, as detailed in Note No. 43 to the financial statement, has made requisite disclosures in these standalone financial statement as to holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on the audit procedure performed and taking into consideration the information and explanation given to us, in our opinion, these are in accordance with the books of accounts maintained by the company.
Annexure A to the Auditorâs Report
The Annexure referred to in Independent Auditorâs Report of even date to the members of Electrosteel Steels Limited, on the financial statements for the year ended 31-March, 2017
Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) As planned, a part of the fixed assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. In our opinion, the planned frequency of verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of all immovable properties are held in the name of the Company except for 226 noâs of cases of Freehold Land comprising of 229.43 acres aggregating to amount of Rs. 1615.99 lakhs- registration pending for requisite approvals.
(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.
(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no material discrepancies between physical inventory and book records were noticed on physical verification.
(iii) The Company has not granted any loan, secured or unsecured to companies, firms, LLP or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a),3(iii)(b) and 3(iii)(c)of the Order are not applicable.
(iv) In our opinion and according to the information and explanations given to us, the Company does not have any loan, investment, guarantees and securities. Accordingly, the provisions of clause 3(iv) of the Order is not applicable.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Companyâs products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete. As informed, the cost audit for the year is under progress.
(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, employeesâ state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding on the year-end fora period of more than six months from the date they became payable.
(b) According to the information and explanations given to us, the following dues outstanding in respect of income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax and cess on account of any dispute, are as follows:
Name of the statute |
Nature of dues |
Amount (Rs.Lacs) |
Period to which the amount relates |
Forum where dispute is pending |
Central Excise Act, 1944 |
Excise Duty |
74.69 |
2009-10 |
CESTAT |
Central Excise Act, 1944 |
Excise Duty |
36.57 |
CESTAT |
|
Service Tax under Finance Act,1994 |
Service Tax |
2,214.87 |
2007-08 & 2008-09 |
CESTAT |
Service Tax under Finance Act,1994 |
Service Tax |
317.72 |
2009-10 |
CESTAT |
Service Tax under Finance Act,1994 |
Service Tax |
1,071.40 |
2007-08 to 2011-12 |
CESTAT |
Service Tax under Finance Act,1994 |
Service Tax |
13.34 |
2014-15 |
The Joint Commissioner of Service Tax, Kolkata |
Service Tax under Finance Act,1994 |
Service Tax |
5.50 |
2015-16 |
Commissioner (Appeals) |
Custom Act, 1962 |
Custom duty |
5,974.73 |
2008-09 to 2011-12 |
Additional Director General, Directorate of Revenue Intelligence, New Delhi |
Custom Act, 1962 |
Custom duty |
19,569.38 |
2009-10 & 2010-11 |
Principal, Additional Director General, Directorate of Revenue Intelligence, Kolkata Zonal Unit |
Custom Act,1962 |
Custom Duty |
10,267.82 |
2008-09 & 2009-10 |
Principal, Additional Director General, Directorate of Revenue Intelligence, Kolkata Zonal Unit |
Jharkhand VAT Act, 2015 |
Value Added Tax |
24.40 |
2009-10 |
Commercial Tax Tribunal Ranchi |
Jharkhand VAT Act, 2015 |
Value Added Tax |
137.88 |
2010-11 |
Commissioner Commercial taxes, Jharkhand |
Jharkhand VAT Act, 2015 |
Value Added Tax |
273.16 |
2010-11 to 2012-13 |
Deputy Commissioner of Commercial Taxes, Jharkhand |
Jharkhand VAT Act, 2015 |
Value Added Tax |
8,194.13 |
2011-12 |
Deputy Commissioner of Commercial Taxes, Jharkhand |
Jharkhand VAT Act, 2015 |
Value Added Tax |
3,936.83 |
2012-13 |
Deputy Commissioner of Commercial Taxes, Jharkhand |
Jharkhand VAT Act, 2015 |
Value Added Tax |
138.94 |
2013-14 |
Commissioner Commercial taxes, Jharkhand |
Jharkhand VAT Act, 2015 |
Value Added Tax |
194.07 |
2013-14 |
Deputy Commissioner of Commercial Taxes, Jharkhand |
Jharkhand VAT Act, 2015 |
Value Added Tax |
9.11 |
2008-09 to 2010-11 |
Deputy Commissioner of Commercial Taxes, Jharkhand |
Jharkhand VAT Act, 2015 |
Value Added Tax |
673.47 |
2015-16 |
Commissioner Commercial taxes, Jharkhand |
Central Sales Tax, 1956 |
Central Sales Tax |
392.78 |
2012-13 |
Commissioner Commercial taxes, Jharkhand |
Central Sales Tax, 1956 |
Central Sales Tax |
1,507.64 |
2014-15 |
Commissioner Commercial taxes, Jharkhand |
Central Sales Tax, 1956 |
Central Sales Tax |
322.58 |
2015-16 |
Commissioner Commercial taxes, Jharkhand |
(viii) The Company has defaulted in the payment of principal as well as interest dues to the following banks and Financial Institutions:
Amount (in Lakhs)
Name of the Bank |
Principal |
Period |
Interest |
Period |
Allahabad Bank |
4,427.20 |
December 2015 to March 2017 |
6,373.54 |
April 2015 to March 2017 |
Andhra Bank |
1,730.79 |
December 2015 to March 2017 |
2,481.13 |
April 2015 to March 2017 |
Bank of Baroda |
2,594.75 |
December 2015 to March 2017 |
3,709.51 |
April 2015 to March 2017 |
Bank of India |
3,056.03 |
December 2015 to March 2017 |
4,382.78 |
April 2015 to March 2017 |
Bank of Maharashtra |
1,946.89 |
December 2015 to March 2017 |
2,789.03 |
April 2015 to March 2017 |
Canara Bank |
622.92 |
December 2015 to March 2017 |
948.78 |
April 2015 to March 2017 |
Central Bank of India |
7,680.76 |
December 2015 to March 2017 |
11,132.02 |
April 2015 to March 2017 |
Corporation Bank |
2,059.68 |
December 2015 to March 2017 |
2,967.80 |
April 2015 to March 2017 |
Dena Bank |
2,783.95 |
December 2015 to March 2017 |
4,008.43 |
April 2015 to March 2017 |
ICICI Bank |
1,779.25 |
December 2015 to March 2017 |
2,544.61 |
April 2015 to March 2017 |
Indian Bank |
2,553.64 |
December 2015 to March 2017 |
3,668.31 |
April 2015 to March 2017 |
Indian Overseas Bank |
6,430.71 |
December 2015 to March 2017 |
9,305.58 |
April 2015 to March 2017 |
J&K Bank |
920.67 |
December 2015 to March 2017 |
1,319.66 |
April 2015 to March 2017 |
Oriental Bank of Commerce |
6,696.08 |
December 2015 to March 2017 |
9,569.29 |
April 2015 to March 2017 |
Punjab & Sind Bank |
1,838.19 |
December 2015 to March 2017 |
2,635.31 |
April 2015 to March 2017 |
Punjab National Bank |
8,864.24 |
December 2015 to March 2017 |
12,594.34 |
April 2015 to March 2017 |
State Bank of Hyderabad |
7,312.36 |
December 2015 to March 2017 |
10,542.74 |
April 2015 to March 2017 |
State Bank of India |
30,537.94 |
December 2015 to March 2017 |
43,796.27 |
April 2015 to March 2017 |
State Bank of Mysore |
3,562.97 |
December 2015 to March 2017 |
5,177.73 |
April 2015 to March 2017 |
State Bank of Patiala |
5,910.68 |
December 2015 to March 2017 |
8,575.04 |
April 2015 to March 2017 |
State Bank of Travancore |
4,774.30 |
December 2015 to March 2017 |
6,942.52 |
April 2015 to March 2017 |
Syndicate Bank |
2,358.56 |
December 2015 to March 2017 |
4,050.19 |
April 2015 to March 2017 |
UCO Bank |
7,456.94 |
December 2015 to March 2017 |
10,810.64 |
April 2015 to March 2017 |
Union Bank of India |
4,320.63 |
December 2015 to March 2017 |
6,247.55 |
April 2015 to March 2017 |
United Bank of India |
5,038.07 |
December 2015 to March 2017 |
7,226.01 |
April 2015 to March 2017 |
Vijaya Bank |
3,067.54 |
December 2015 to March 2017 |
4,462.55 |
April 2015 to March 2017 |
Name of the Financial Institution |
Principal Defaul |
Period |
Interest Default |
Period |
HUDCO |
4,305.75 |
December 2015 to March 2017 |
6490.24 |
April 2015 to March 2017 |
IL&FS |
274.44 |
December 2015 to March 2017 |
375.97 |
April 2015 to March 2017 |
LIC of India |
2,479.32 |
December 2015 to March 2017 |
3737.17 |
April 2015 to March 2017 |
SREI |
9,211.32 |
March 2016 to March 2017 |
9621.91 |
April 2015 to March 2017 |
(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instrument) during the year. According to the information and explanations given to us, further disbursement of Term loan received during the year were applied for the purpose they were raised.
(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us and based on our examination of the records of the Company, 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) In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with section 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable Indian accounting standards.
(xiv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.
(xv) According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with them.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
For B Chhawchharia & Co.
Chartered Accountants
Firmâs Registration No.: 305123E
S K Chhawchharia
Place : Kolkata Partner
Date : May 15, 2017 Membership No.:008482
Mar 31, 2015
1. We have audited the accompanying financial statements of
Electrosteel Steels Limited ("the Company"), which comprise the Balance
Sheet as at 31 March 2015, the Statement of Profit and Loss, the Cash
Flow Statement for the year then ended, and a summary of the
significant accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
2. The Company's Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 ("the Act") with
respect to the preparation of these standalone financial statements,
that give a true and fair view of the financial position, financial
performance and cash flows of the Company in accordance with the
accounting principles generally accepted in India, including the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies(Accounts) Rules, 2014 (as amended). This
responsibility also includes maintenance of adequate accounting records
in accordance with the provisions of the Act for safeguarding the
assets of the Company and for preventing and detecting frauds and other
irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and
prudent; and design, implementation and maintenance of adequate
internal financial controls, that were operating effectively for
ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
3. Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
4. We have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the
Rules made thereunder.
5. We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the standalone financial
statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial controls relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion on the
financial statements.
8. Opinion
In our opinion and to the best of our information and according to the
explanations given to us the aforesaid financial statements give the
information required by the 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 31 March 2015, and its loss and its cash flows for the year ended on
that date.
Emphasis of Matters
9. Without qualifying our opinion, we draw attention to Note 40 to the
financial statements, regarding the preparation of the same on a going
concern basis. The Company incurred a net loss of Rs. 62,404.23 lacs
during the year ended March 31,2015 and, as of that date, the Company's
current liabilities exceeded its current assets by Rs 163,669.48 lacs,
further the Company's net worth has also been substantially eroded as
at the balance sheet date. However, in view of operationalisation of
the other project facilities together with the increase in release of
the working capital limits and the committed infusion of funds, these
financial statement have been prepared on a going concern basis and no
adjustment has been made to the carrying value of the assets and
liabilities.
Report on Other Legal and Regulatory Requirements
10. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of Section
143(11) of the Act, we give in the Annexure a statement on the matters
specified in paragraphs 3 and 4 of the Order.
11. As required by Section143(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
purpose of our audit;
b. in our opinion, 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 financial statements dealt with by this report are in agreement
with the books of account;
d. in our opinion, the aforesaid financial statements comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);
e. the matter described in paragraph 9 under the Emphasis of Matters,
may not have an adverse effect on the functioning of the Company.
f. on the basis of the written representations received from the
directors as on 31 March 2015 and taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March 2015
from being appointed as a director in terms of Section164(2) of the
Act;
g. with respect to the other matters to be included in the Auditor's
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 does not have any pending litigations which would
impact its financial position;
ii. the Company, as detailed in Note 39 to the financial statements,
has made provision, as required under the applicable law or accounting
standards, for material foreseeable losses, if any, on long-term
contracts including derivative contracts.
iii. there were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company.
Annexure to the Independent Auditor's Report of even date to the
members of Electrosteel Steels Limited, on the financial statements for
the year ended 31st March, 2015
Based on the audit procedures performed for the purpose of reporting a
true and fair view on the financial statements of the Company and
taking into consideration the information and explanations given to us
and the books of account and other records examined by us in the normal
course of audit, we report that
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) As planned, a part of the fixed assets have been physically
verified by the management during the year and no material
discrepancies were noticed on such verification. In our opinion, the
frequency of verification of the fixed assets is reasonable having
regard to the size of the Company and the nature of its assets.
(ii) (a) The management has conducted physical verification of
inventory at reasonable intervals during the year.
(b) The procedures of physical verification of inventory followed by
the management are reasonable and adequate in relation to the size of
the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no
material discrepancies between physical inventory and book records were
noticed on physical verification.
(iii) The Company has not granted any loan, secured or unsecured to
companies, firms or other parties covered in the register maintained
under Section 189 of the Act. Accordingly, the provisions of clauses
3(iii)(a) and 3(iii)(b) of the Order are not applicable.
(iv) In our opinion, there is an adequate internal control system
commensurate with the size of the Company and the nature of its
business for the purchase of inventory and fixed assets and for the
sale of goods and services. During the course of our audit, no major
weakness has been noticed in the internal control system in respect of
these areas.
(v) The Company has not accepted any deposits within the meaning of
Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits)
Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of
the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the
Company pursuant to the Rules made by the Central Government for the
maintenance of cost records under sub-section (1) of Section 148 of the
Act in respect of Company's products/services and are of the opinion
that, prima facie, the prescribed accounts and records have been made
and maintained. However, we have not made a detailed examination of the
cost records with a view to determine whether they are accurate or
complete. As informed, the cost audit for the year is under progress.
(vii) (a) Undisputed statutory dues including provident fund,
employees' state insurance, income-tax, sales-tax, wealth tax,
service tax, duty of customs, duty of excise, value added tax, cess and
other material statutory dues, as applicable, have generally been
regularly deposited with the appropriate authorities. Further, no
undisputed amounts payable in respect thereof were outstanding at the
year-end for a period of more than six months from the date they became
payable.
(b) The dues outstanding in respect of income-tax, sales-tax, wealth
tax, service tax, duty of customs, duty of excise, value added tax and
cess on account of any dispute, are as follows:
Name of the statute Nature of Amount Period to
dues (Rs.Lacs) which the
amount
relates
Central Excise Act, Excise Duty 75.97 2009-10
1944
Service Tax under Service Tax 2,215.62 2007-08 &
Finance Act,1994 2008-09
Service Tax under Service Tax 1,510.34 2009-10
Finance Act,1994
Service Tax under Service Tax 317.72 2009-10
Finance Act,1994
Service Tax under Service Tax 1,071.40 2007-08 to
Finance Act,1994 2011-12
Custom Act, 1962 Custom duty 5,974.73 2008-09 to
2011-12
Jharkhand VAT Value Added Tax 101.61 2010-11
Act, 2015
Jharkhand VAT Value Added Tax 273.16 2012-13
Act, 2015
Jharkhand VAT Value Added Tax 138.94 2013-14
Act, 2015
Jharkhand VAT Value Added Tax 9.11 2008-09 to
Act, 2015 2010 11
Name of the statute Forum where dispute
is pending
Central Excise Act, CESTAT
1944
Service Tax under CESTAT
Finance Act,1994
Service Tax under Order Awaited.
Finance Act,1994
Service Tax under Order Awaited.
Finance Act,1994
Service Tax under CESTAT
Finance Act,1994
Custom Act, 1962 Additional Director
General, Directorate of
Revenue Intelligence,
New Delhi
Jharkhand VAT Commissioner
Act, 2015 Commercial taxes
Jharkhand VAT Deputy Commissioner
Act, 2015 of Commercial Taxes
Jharkhand VAT Commissioner Commercial
Act, 2015 taxes
Jharkhand VAT Commissioner
Act, 2015 Commercial taxes
(c) There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the Company in accordance
with the relevant provisions of the Companies Act, 1956 (1 of 1956) and
rules made thereunder
(viii) In our opinion, the Company's accumulated losses at the end of
the financial year are not less than fifty percent of its net worth.
The Company has incurred cash losses in the current and the immediately
preceding financial year.
(ix) The Company has defaulted in payment of interest dues to the
following banks and Financial Institutions:
Name of the bank Amount Due date Delay in days
(in crores)
Allahabad Bank 2.60 31-Mar-2015 Not yet paid
Andhra Bank 1.20 31-Mar-2015 Not yet paid
Bank of Baroda 1.50 31-Mar-2015 Not yet paid
Bank of India 1.79 31-Mar-2015 Not yet paid
Bank of Maharashtra 1.15 31-Mar-2015 Not yet paid
Canara Bank 4.67 31-Mar-2015 Not yet paid
Central Bank of India 1.24 31-Mar-2015 Not yet paid
Corporation Bank 1.67 31-Mar-2015 Not yet paid
Dena Bank 1.03 31-Mar-2015 Not yet paid
ICICI Bank Ltd 0.45 31-Mar-2015 Not yet paid
Indian Bank 1.51 31-Mar-2015 Not yet paid
Indian Overseas Bank 3.79 31-Mar-2015 Not yet paid
J&K Bank 0.54 31-Mar-2015 Not yet paid
Oriental Bank of Commerce 3.88 31-Mar-2015 Not yet paid
Punjab & Sind Bank 1.09 31-Mar-2015 Not yet paid
Punjab National Bank 5.22 31-Mar-2015 Not yet paid
State Bank of Hyderabad 4.31 31-Mar-2015 Not yet paid
State Bank of India 18.11 31-Mar-2015 Not yet paid
State Bank of Mysore 2.12 31-Mar-2015 Not yet paid
State Bank of Patiala 3.60 31-Mar-2015 Not yet paid
State Bank of Travancore 2.87 31-Mar-2015 Not yet paid
Syndicate Bank 1.70 31-Mar-2015 Not yet paid
UCO Bank 4.45 31-Mar-2015 Not yet paid
Union Bank of India 2.57 31-Mar-2015 Not yet paid
United Bank of India 2.98 31-Mar-2015 Not yet paid
Vijaya Bank 1.85 31-Mar-2015 Not yet paid
Total 77.89
Name of Financial Amount Due date Delay in days
Institution (in crores)
HUDCO 2.73 31-Mar-2015 Not yet paid
Life Insurance
Corporation of
India 1.57 31-Mar-2015 Not yet paid
IL&FS 0.16 31-Mar-2015 Not yet paid
Total 4.46
(x) The Company has not given any guarantees for loans taken by others
from banks or financial institutions. Accordingly, the provisions of
clause 3(x) of the Order are not applicable.
(xi) In our opinion, the term loans were applied for the purpose for
which the loans were obtained, though surplus funds which were not
required for immediate utilization were temporarily used for the
purpose other than for which the loan was sanctioned.
(xii) No fraud on or by the Company has been noticed or reported during
the period covered by our audit.
For B Chhawchharia & Co.
Chartered Accountants
Firm's Registration No.: 305123E
S K Chhawchharia
Place : Kolkata Partner
Date : May 11,2015 Membership No.:008482
Mar 31, 2014
We have audited the accompanying financial statements of ELECTROSTEEL
STEELS LIMITED (''the Company''), which comprises the Balance Sheet as at
March 31, 2014, the Statement of Profit & Loss and the Cash Flow
Statement for the year then ended (in which are incorporated the
accounts of the representative office at China), and a summary of
significant accounting policies and other explanatory information.
2. Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards notified under the Companies Act, 1956 (''the
Act'') read with the General Circular 15/2013 dated 13th September 2013
of the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013. This responsibility includes the design,
implementation and maintenance of internal control relevant to the
preparation and presentation of the financial statements that give a
true and fair view and are free from material misstatement, whether due
to fraud or error.
3. Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the
purposes of expressing an opinion on the effectiveness of the Company''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We have relied upon the management''s representation relating to the
disclosures in the financial statements regarding (a) segment reporting
(Note 27); (b) related party disclosures (Note 28); (c) dues to Micro,
Small & Medium Enterprises (Note 33) and (d) reconciliation and
confirmation of balance of trade receivables, trade payables, loans and
advances and other liabilities (Note 37).
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
4. Opinion
In our opinion, and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
(b) in the case of the Statement of Profit & Loss, of the loss for the
year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
5. Report on Other Legal and Regulatory Requirements
5.1 As required by the Companies (Auditors'' Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Act, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.
5.2 As required by section 227(3) of the Act, we report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(ii) In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
those books and proper returns adequate for the purposes of our audit
have been received from the representative office;
(iii) We have received the report on the accounts of the representative
office audited under section 228 by another auditor and have
appropriately dealt with these while forming our audit opinion;
(iv) The Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(v) In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement comply with the Accounting Standards notified under
the Act read with the General Circular 15/2013 dated 13th September
2013 of the Ministry of Corporate Affairs in respect of section 133 of
the Companies Act, 2013;
(vi) On the basis of written representations received from the
Directors as on March 31, 2014, and taken on record by the Board of
Directors, none of the Directors is disqualified as on March 31, 2014,
from being appointed as a Director in terms of clause (g) of
Sub-Section (1) of Section 274 of the Act;
ANNEXURE TO THE AUDITORS'' REPORT Referred to in paragraph 5 of our
report of even date
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) As explained to us, all the fixed assets have not been physically
verified by the management during the year but there is a regular
programme of verification which, in our opinion, is reasonable having
regard to the size of the Company and nature of its assets. No material
discrepancies were noticed on such verification.
(c) As per the information and explanations given to us, the Company
has not disposed off a substantial part of fixed assets during the
period so as to affect its going concern status.
(ii) (a) As informed to us, a part of the inventory has been physically
verified by the management during the year. In our opinion, the
frequency of such verification is reasonable.
(b) As per the information given to us, the procedures of physical
verification of inventories followed by the management, in our opinion,
are reasonable and adequate in relation to the size of the Company and
the nature of its business.
(c) The Company is maintaining proper records of inventory. As
explained to us, the discrepancies noticed on verification between the
physical stocks and the book records were not material and the same
have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, the
Company has neither granted nor taken any loan secured or unsecured
to/from companies, firms or parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly, paragraph
4(iii) of the Companies (Auditors'' Report) Order, 2003 is not
applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and with regard to
sale of goods. During the course of our audit, we have neither observed
nor have been informed of any major weaknesses in the said internal
control system.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered in the
register maintained under Section 301 of the Companies Act, 1956 have
been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lacs in
respect of any party during the period under audit, have been made at
prices which are reasonable having regard to the prevailing market
prices at the relevant time.
(vi) No deposits within the meaning of Section 58A, 58AA or any other
relevant provisions of the Companies Act, 1956 and the rules framed
there under have been accepted by the Company.
(vii) The Company has an internal audit system commensurate with the
size and nature of the Company.
(viii) As informed to us, the Company has made and maintained cost
records as prescribed by the Central Government under Section 209(1)(d)
of the Act. We have not made a detailed examination of such records.
However, we have broadly reviewed the records maintained and are of the
opinion, that prima facie, the prescribed accounts and records have
been maintained. The Cost Auditor has yet to complete the audit as
prescribed & submit his report.
(ix) (a) According to the records of the Company examined by us, in our
opinion, the Company is regular in depositing with the appropriate
authorities undisputed statutory dues including provident fund,
investor education protection fund, employees'' state insurance, income
tax, sales tax, wealth tax, service tax, customs duty, excise duty,
cess and other material statutory dues applicable to it.
According to the information and explanations given to us, no
undisputed amounts payable in respect of statutory dues as aforesaid
were outstanding, as at 31st March 2014 for a period of more than six
months from the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of sales tax, income tax, customs duty, wealth tax, service
tax, excise duty and cess which have not been deposited on account of
any dispute, except
Name of the statute Nature of Year Amount
dues (Rs. Lacs)
Central Excise Act, 1944 Excise Duty April 2008 to 68.24
April 2009
Central Excise Act, 1944 Excise Duty 2008-09 & 398.49
2009-10
Service Tax under Service Tax 2007-08 & 4,431.24
Finance Act, 1994 2008-09
Service Tax under Service Tax 2007-08 to 2,140.93
Finance Act, 1994 2011-12
Jharkhand VAT Value June 2010 53.99
Act, 2005 Added Tax
Income Tax Act, 1961 TDS 2012-13 4.35
Income Tax Act, 1961 TDS 2013-14 1.05
Income Tax Act, 1961 TDS 2009-10 8.57
Name of the statue Forum where dispute
is pending
Central Excise Act, 1944 CESTAT
Central Excise Act, 1944 CESTAT
Service Tax under
Finance Act, 1994 CESTAT
Service Tax under
Finance Act, 1994 Appeal yet to be filed
Jharkhand VAT
Act, 2005 Commissioner Ranchi
Income Tax Act, 1961 Asst. Commissioner
of Income Tax (TDS)
Income Tax Act, 1961 Asst. Commissioner of
Income Tax (TDS)
Income Tax Act, 1961 Asst. Commissioner of
Income Tax (TDS)
(x) In our opinion, the accumulated losses of the Company are not more
than fifty percent of its net worth. The Company has incurred cash loss
during the financial year covered by our audit and also in the
immediately preceding financial year.
(xi) As per our audit procedures and according to the information and
explanations given to us, the Company has not defaulted in repayment of
dues to financial institutions and banks during the year.
(xii) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund or a nidhi/mutual benefit
fund/society.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions during the period under audit.
(xvi) According to the information and explanations given to us, in our
opinion, the term loans raised were, prima facie, either utilized for
the purposes for which they were obtained and repayment of such loans
or pending utilization, been temporarily invested in Mutual Funds and
Term Deposits with Banks.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short term basis have been used for long-term
investments.
(xviii) The Company has not made any preferential allotment of shares
during the year to parties and companies covered in the Register
maintained under Section 301 of the Act.
(xix) The Company has not issued any debentures during the period under
audit. (xx) The Company has not raised any money by public issue
during the period under audit.
(xxi) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the year.
B Chhawchharia & Co.
Firm Registration No.: 305123E
Chartered Accountants
Vikram Dhanania
Place : Kolkata Partner
Date : May 5, 2014 Membership No. 060568
Mar 31, 2013
1. Report on the Financial Statements
We have audited the accompanying financial statements of ELECTROSTEEL
STEELS LIMITED (''the Company''), which comprises the Balance Sheet as at
March 31, 2013, the Statement of Profit & Loss and the Cash Flow
Statement for the year then ended (in which are incorporated the
accounts of the representative office at China), and a summary of
significant accounting policies and other explanatory information.
2. Management''s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial
statements that give a true and fair view of the financial position,
financial performance and cash flows of the Company in accordance with
the Accounting Standards referred to in sub-section (3C) oi section 211
of the Companies Act, 1956 (''the Act''). This responsibility includes
the design, implementation and maintenance of internal control relevant
to the preparation and presentation of the financial statements that
give a true and fair view and are free from material misstatement,
whether due to fraud or error.
3. Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor''s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
4. Opinion
In our opinion, and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2013;
(b) in the case of the Statement of Profit & Loss, of the loss for the
year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
5. Report on Other Legal and Regulatory Requirements
5.1 As required by the Companies (Auditors'' Report) Order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Act, we give in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the Order.
5.2 As required by section 227(3) of the Act, we reportthat:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
(ii) In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
those books and proper returns adequate for the purposes of our audit
have been received from the representative office;
(iii) The Balance Sheet, Statement of Profit & Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(iv) In our opinion, the Balance Sheet, Statement of Profit & Loss and
Cash Flow Statement comply with the Accounting Standards referred to in
Sub-Section (3C) of section 211 of the Act;
(v) On the basis of written representations received from the Directors
as on March 31, 2013, and taken on record by the Board of-Directors,
none of the Directors is disqualified as on March 31, 2013, from being
appointed as a Director in terms of clause (g) of Sub-Section (1) of
Section 274 of the Act;
(vi) Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under 441A of the Act nor has
it issued any rules under the said section, prescribing the manner in
which such cess is to be paid, no cess is due and payable by the
Company.
(vii) We have relied upon the management''s representation relating to
the disclosures in the financial statements regarding (a) segment
reporting (Note 27); (b) related party disclosures (Note 28); (c) dues
to Micro, Small & Medium Enterprises (Note 33) and (d) reconciliation
and confirmation of balance of trade payables and loans and advances
(Note 37).
ANNEXURETOTHE AUDITORS''REPORT
Referred to in paragraph 5 of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) As explained to us, all the fixed assets have not been physically
verified by the management during the year but there is a regular
programme of verification which, in our opinion, is reasonable having
regard to the size of the Company and nature of its assets. No material
discrepancies were noticed on such verification.
(c) As per the information and explanations given to us, the Company
has not disposed off a substantial part of fixed assets duringthe
period so as to affect its going concern status.
(ii) (a) As informed to us,''a part of the inventory has been physically
verified by the management during the year. In our opinion, the
frequency of such verification is reasonable.
(b) As per the information given to us, the procedures of physical
verification of inventories followed by the management, in our opinion,
are reasonable and adequate in relation to the size of the Company and
the nature of its business.
(c) The Company is maintaining proper records of inventory. As
explained to us, the discrepancies noticed on verification between the
physical stocks and the book records were not material and the same
have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, the
Company has neither granted nor taken any loan secured or unsecured
to/from companies, firms or parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly, paragraph
4(iii) of the Companies (Auditors'' Report) Order, 2003 is not
applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for''the purchase of inventory, fixed assets and with regard to
sale of goods. During the course of our audit, we have neither observed
nor have been informed of any major weaknesses in the said internal
control system.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered in the
register maintained under Section 301 of the Companies Act, 1956 have
been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lacs in
respect of any party during the period under audit, have been made at
prices which are reasonable having regard to the prevailing market
prices at the relevant time.
(vi) No deposits within the meaning of Section 58A, 58AA or any other
relevant provisions of the Companies Act, 1956 and the rules framed
there under have been accepted by the Company.
(vii) The Company has an internal audit system commensurate with the
size and nature of the Company.
(viii) As informed to us, the Company has made and maintained cost
records as prescribed by the Central Government under Section 209(1
)(d) of the Act. We have not made a detailed examination of such
records. However, we have broadly reviewed the records maintained and
are of the opinion, that prima facie, the prescribed accounts and
records have been maintained. The Cost Auditor has yet to complete the
audit as prescribed & submit his report.
(ix) (a) According to the records of the Company examined by us, in our
opinion, the Company is regular in depositing with the appropriate
authorities undisputed statutory dues including provident fund,
investor education protection fund, employees'' state insurance, income
tax, sales tax, wealth tax, service tax, customs duty, excise duty,
cess and other material statutory dues applicable to it.
According to the information and explanations given to us, no
undisputed amounts payable in respect of statutory dues as aforesaid
were outstanding, as at 31 st March 2013 for a period of more than six
months from the date they became payable.
(x) In our opinion, the accumulated losses of the Company are not more
than fifty percent of its net worth. The Company has incurred cash loss
during the financial year covered by our audit and also in the
immediately preceding financial year.
(xi) As per our audit procedures and according to the information and
explanations given to us, the Company has defaulted in repayment of
dues to financial institutions and banks during the year and the
defaults existing at the Balance Sheet date are as below:
Nature of Dues Period of default Amount (Rs in Lacs)
Senior Debt March 2013 Installment 13,353.42
Sub-Debt March 2013 Installment 1,919.67
External Commercial Borrowings March 2013 Installment 2,119.24
Interest on Term Loans (*) JanuarytoMarch2013 15,159.04
(*) Rs 5,008.09 lacs since repaid.
(xii) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund or a nidhi/mutual benefit
fund/society.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks orfinancial institutions during the period under audit.
(xvi) According to the information and explanations given to us, in our
opinion, the term loans raised were, prima facie, either utilized for
the purposes for which they were obtained and repayment of such loans
or pending utilization, been temporarily invested in Mutual Funds and
Term Deposits with Banks. However, repayment of installments of term
loan aggregating to Rs 15,273.09 lacs as per the terms and conditions
of the Securitization Loan availed by the Company, is yet to be made.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that short term funds amounting to Rs 9,561.72 lacs consisting of
short-term borrowings and increase in current liabilities have been
used for long-term investment - project implementation.
(xviii) The Company has made preferential allotment of shares for Rs
15,200.00 lacs during the year to a company covered in the Register
maintained under Section 301 of the Act. In our opinion and according
to the information and explanations given to us, the price at which
such shares have been issued are prima facie not prejudicial to the
interest of the Company.
(xix) TheCompanyhasnotissuedanydebenturesduringtheperiod underaudit.
(xx) The Company has not raised any money by public issue during the
period underaudit.
(xxi) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the year.
B Chhawchharia & Co.
Firm Registration No.: 305123E
Chartered Accountants
Vikram Dhanania
Place : Kolkata Partner
Date : May 6, 2013 Membership No. 060568
Mar 31, 2012
1. We have audited the attached Balance Sheet of ELECTROSTEEL STEELS
LIMITED as at 31st March, 2012 and also the Profit & Loss Account and
the Cash Flow Statement for the year ended on that date annexed thereto
in which are incorporated the accounts of the representative office at
China. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We bel ieve that our audit provides a reasonable basis
for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 (as
amended) issued by the Central Government of India in terms of
Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments above and also in the Annexure referred to
above, we report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purposes of
our audit;
(ii) In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
those books and proper returns adequate for the purposes of our audit
have been received from the representative office;
(iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in Sub-Section (3C) of section 211 of the
Companies Act, 1956.
(v) On the basis of written representations received from the
Directors, as on 31st March, 2012, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified from
being appointed as a Director in terms of Clause (g) of Sub-Section (1)
of Section 274 of the Companies Act, 1956;
(vi) We have relied upon the management's representation relating to
the disclosures in the financial statements regarding (a) segment
reporting (Note 26); (b) related party disclosures (Note 27); (c) dues
to Micro, Small & Medium Enterprises (Note 32) and (d) reconciliation
and confirmation of balance of trade payables and loans and advances
(Note 36).
(vii) In our opinion, and to the best of our information and according
to the explanations given to us, the said accounts, together with the
notes thereon, give the information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2012;
(b) in the case of the Profit & Loss Account, of the loss for the year
ended on that date;
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS' REPORT
Referred to in paragraph 3 of our report of even date
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) As explained to us, all the fixed assets have been physically
verified by the management in a phased periodical manner, which in our
opinion is reasonable, having regard to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
verification.
(c) As per the information and explanations given to us, the Company
has not disposed off a substantial part of fixed assets during the
period so as to affect its going concern status.
(ii) (a) As informed to us, a part of the inventory has been physically
verified by the management during the year.
In our opinion, the frequency of such verification is reasonable.
(b) As per the information given to us, the procedures of physical
verification of inventories followed by the management, in our opinion,
are reasonable and adequate in relation to the size of the Company and
the nature of its business.
(c) The Company is maintaining proper records of inventory. As
explained to us, the discrepancies noticed on verification between the
physical stocks and the book records were not material and the same
have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, the
Company has neither granted nor taken any loan secured or unsecured
to/from companies, firms or parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly, paragraph
4(iii) of the Companies (Auditors' Report) Order, 2003 is not
applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and with regard to
sale of goods. During the course of our audit, we have neither observed
nor have been informed of any major weaknesses in the said internal
control system.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered in the
register maintained under Section 301 of the Companies Act, 1956 have
been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lacs in
respect of any party during the period under audit, have been made at
prices which are reasonable having regard to the prevailing market
prices at the relevant time.
(vi) No deposits within the meaning of Section 58A, 58AA or any other
relevant provisions of the Companies Act, 1956 and the rules framed
there under have been accepted by the Company.
(vii) The Company has an internal audit system commensurate with the
size and nature of the Company.
(viii) As informed to us, the Company has made and maintained cost
records as prescribed by the Central Government under Section 209(1)(d)
of the Act. We have not made a detailed examination of such records.
However, we have broadly reviewed the records maintained and are of the
opinion, that prima facie, the prescribed accounts and records have
been maintained.
(ix) (a) According to the records of the Company examined by us, in our
opinion, the Company is regular in depositing undisputed statutory dues
including provident fund, investor education protection fund,
employees' state insurance, income tax, sales tax, wealth tax, service
tax, customs duty, excise duty, cess and other material statutory dues
applicable to it with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of statutory dues as aforesaid
were outstanding, as at 31 March 2012 for a period of more than six
months from the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of sales tax, income tax, customs duty, wealth tax, service
tax, excise duty and cess which have not been deposited on account of
any dispute, except
Name of the
statute Nature of Year Amount Forum where dispute
dues (Rs. Lacs) is pending
Central
Sales Tax Sales Tax (*) 2010-11 78.39 Jharkhand Sales Tax
Tribunal
Act, 1956
(*) A sum of Rs 35.20 lacs has been deposited by the Company.
(x) In our opinion, the accumulated losses of the Company are not more
than fifty percent of its net worth. The Company has incurred cash loss
during the financial year covered by our audit and also in the
immediately preceding financial year.
(xi) As per our audit procedures and according to the information and
explanations given to us, the Company has not defaulted in repayment of
dues to financial institutions or banks as at the Balance Sheet date.
(xii) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund or a nidhi/mutual benefit
fund/society.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions during the period under audit.
(xvi) According to the information and explanations given to us, in our
opinion, the term loans raised were, prima facie, either utilized for
the purposes for which they were obtained and repayment of such loans
or pending utilization, been temporarily invested in Mutual Funds and
Term Deposits with Banks.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii)The Company has not made any preferential allotment of shares
during the year to parties and companies covered in the Register
maintained under Section 301 of the Act.
(xix) The Company has not issued any debentures during the period under
audit.
(xx) The Company has not raised any money by public issue during the
period under audit.
(xxi) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the year.
B Chhawchharia & Co.
Firm Registration No.: 305123E
Chartered Accountants
Vikram Dhanania
Place : Kolkata Partner
Date : May 8, 2012 Membership No. 060568
Mar 31, 2011
1. We have audited the attached Balance Sheet of ELECTROSTEEL STEELS
LIMITED as at 31st March, 2011 and also the Profit & Loss Account and
the Cash Flow Statement for the year ended on that date annexed thereto
in which are incorporated the accounts of the representative office at
China. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (as
amended) issued by the Central Government of India in terms of
Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments above and also in the Annexure referred to
above, we report that:
(i) We have obtained all the information and explanations, which to the
best of our knowledge and belief, were necessary for the purposes of
our audit;
(ii) In our opinion, proper books of account as required by law have
been kept by the company so far as appears from our examination of
those books and proper returns adequate for the purposes of our audit
have been received from the representative office;
(iii) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
(iv) In our opinion, the Balance Sheet, Profit & Loss Account and Cash
Flow Statement dealt with by this report comply with the accounting
standards referred to in Sub-Section (3C) of section 211 of the
Companies Act, 1956.
(v) On the basis of written representations received from the
Directors, as on 31 st March, 2011, and taken on record by the Board of
Directors, we report that none of the Directors is disqualified from
being appointed as a Director in terms of Clause (g) of Sub-Section (1)
of Section 274 of the Companies Act, 1956;
(vi) In our opinion, and to the best of our information and according
to the explanations given to us, the said accounts, together with the
notes thereon, give the information required by the Companies Act, 1956
in the manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31,2011;
(b) in the case of the Profit & Loss Account, of the loss for the year
ended on that date;
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS" REPORT Referred to in paragraph 3 of our
report of even date
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) As explained to us, all the fixed assets have been physically
verified by the management in a phased periodical manner, which in our
opinion is reasonable, having regard to the size of the Company and
nature of its assets. No material discrepancies were noticed on such
verification.
(c) As per the information and explanations given to us, the Company
has not disposed off a substantial part of fixed assets during the
period so as to affect its going concern status.
(ii) (a) As informed to us, a part of the inventory has been physically
verified by the management during the year. In our opinion, the
frequency of such verification is reasonable.
(b) As per the information given to us, the procedures of physical
verification of inventories followed by the management, in our opinion,
are reasonable and adequate in relation to the size of the Company and
the nature of its business.
(c) The Company is maintaining proper records of inventory. As
explained to us, the discrepancies noticed on verification between the
physical stocks and the book records were not material and the same
have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, the
Company has neither granted nor taken any loan secured or unsecured
to/from companies, firms or parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly, paragraph
4(iii) of the Companies (Auditors Report) Order, 2003 is not
applicable.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and with regard to
sale of goods. During the course of our audit, we have neither observed
nor have been informed of any major weaknesses in the said internal
control system.
(v) (a) According to the information and explanations given to us, we
are of the opinion that the transactions that need to be entered in the
register maintained under Section 301 of the Companies Act, 1956 have
been so entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act, 1956 and exceeding the value of rupees five lacs in
respect of any party during the period under audit, have been made at
prices which are reasonable having regard to the prevailing market
prices at the relevant time.
(vi) No deposits within the meaning of Section 58A, 58AA or any other
relevant provisions of the Companies Act, 1956 and the rules framed
there under have been accepted by the Company.
(vii) The Company has an internal audit system commensurate with the
size and nature of the Company.
(viii) As informed to us, the Company has made and maintained cost
records as prescribed by the Central Government under Section 209(1
)(d) of the Act. We have not made a detailed examination of such
records. However, we have broadly reviewed the records maintained and
are of the opinion, that prima facie, the prescribed accounts and
records have been maintained.
(ix) (a) According to the records of the Company examined by us, in our
opinion, the Company is regular in depositing undisputed statutory dues
including provident fund, investor education protection fund,
employees state insurance, income tax, sales tax, wealth tax, service
tax, customs duty, excise duty, cess and other material statutory dues
applicable to it with the appropriate authorities.
According to the information and explanations given to us, no
undisputed amounts payable in respect of statutory dues as aforesaid
were outstanding, as at 31 March 2011 for a period of more than six
months from the date they became payable.
(b) According to the information and explanations given to us, there
are no dues of sales tax, income tax, customs duty, wealth tax, service
tax, excise duty and cess which have not been deposited on account of
any dispute, except
Name of the
statute Nature of Year Amount Forum where dispute
dues (Rs. Lacs) is pending
Central Sales
Tax Sales Tax (*) 2010-11 24.40 Jharkhand Sales Tax
Tribunal
Act, 1956
(*)The entire amount disputed has been deposited by the Company.
(x) The Company has been registered for a period less than five years
and hence the provisions of Clause 4(x) of the Companies (Auditors
Report) Order, 2003 are not applicable to the Company.
(xi) As per our audit procedures and according to the information and
explanations given to us, the Company has not defaulted in repayment of
dues to financial institutions or banks as at the Balance Sheet date.
(xii) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
(xiii) The Company is not a chit fund or a nidhi/mutual benefit
fund/society.
(xiv) In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions during the period under audit.
(xvi) According to the information and explanations given to us, in our
opinion, the term loans raised were, prima facie, either utilized for
the purposes for which they were obtained or pending utilization, been
temporarily invested in Mutual Funds and Term Deposits with Banks.
(xvii) According to the information and explanations given to us and on
an overall examination of the Balance Sheet of the Company, there are
no funds raised on short term basis during the period under audit.
(xviii) The Company has not made any preferential allotment of shares
during the year to parties and companies covered in the Register
maintained under Section 301 of the Act.
(xix) The Company has not issued any debentures during the period under
audit.
(xx) The Management has disclosed the end use of money raised by public
issues and we have verified the same.
(xxi) According to the information and explanations given to us, no
material fraud on or by the Company has been noticed or reported during
the year.
B Chhawchharia & Co.
Firm Registration No.: 305123E
Chartered Accountants
S K Chhawchharia
Place: Kolkata Partner
Date : April 22, 2011 Membership No. 008482