Mar 31, 2021
INDEPENDENT AUDITORSâ REPORT
To
The Members of Steel Authority of India Limited
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Managementâs Replies |
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on 28th December, 2020 to the aforesaid Application of DVC. The above disputed demands stated at (3) and (4), contested on valid and bonafide grounds, have been treated as contingent liabilities as it is not probable that present obligations exist as on 31st March, 2021. Therefore, there is no adverse impact on Profit for the year. |
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5. |
mpact of all the above qualifications on the standalone financial statements for the year ended 31 March 2021 is as under: (''crore) |
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As at 31st March, 2021 |
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Particulars |
Reported balances |
Balances after impact of all the qualifications which are quantified |
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Other equity |
39,364.35 |
37,896.79 |
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Deferred tax liability |
1,253.16 |
759.58 |
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Other current assets |
6,353.97 |
5,766.25 |
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Other current liabilities |
7,555.04 |
8,928.46 |
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The audit report on the standalone financial statements for the year ended 31 March 2020 was also modified in respect of above matters. |
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6. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Auditors'' responsibilities for the audit of the standalone financial statements'' section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (âICAI'') together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained and that obtained by the branch auditors, in terms of their reports referred to in paragraph 20 of the Other Matters section below is sufficient and appropriate to provide a basis for our qualified opinion. |
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Emphasis of Matter |
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7. We draw your attention to the following matters : (i) note 49.2 to the accompanying standalone financial statements, which describes that the revenue from operations include sales to Government agencies aggregating to '' 6,902.50 crores for the year ended 31 March 2021 (cumulative upto 31 March 2021 of '' 14,952.22 crores) which is recognized on the basis of provisional prices as per the terms of sales with such Government agencies. (ii) note 49.12 of the accompanying standalone financial statements, which explains the management''s assessment on the valuation and classification of inventories of sub-grade fines and tailings, which were accumulated over several years but gained economic value in the previous year pursuant to an order of the Ministry of Mines, Government of India and accounted for basis the opinion of the Expert Advisory Committee of the Institute of Chartered Accountants of India. The note further explains the management''s assessment made during the year with respect to the volume of such inventories that are expected to be sold / processed after 12 months from the end of the current year and which have accordingly in the current year been classified as non-current inventories in the standalone financial statements. Our opinion is not modified in respect of these matters. |
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Key Audit Matters |
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8. Key audit matters are those matters that, in our professional judgment, and based on the consideration of the reports of the branch auditors as referred to paragraph 20 below, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 9. In addition to the matters described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report. |
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Key Audit Matter |
How our audit addressed the key audit matter |
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Provisions and contingent liabilities relating to ongoing litigations The Company is subject to a number of legal, regulatory and tax cases for which final outcome cannot be easily predicted and which could potentially result in significant liabilities. |
Our audit procedures included, but were not limited to the following: - Obtained understanding of the process of identification and measurement of provisions and contingent liabilities relating to ongoing litigations implemented by the Management, |
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Managementâs Replies |
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Management''s disclosures with regards to provisions and contingent liabilities relating to ongoing litigations are presented in notes 47.1 and 47.2 read with note 3.18 to the Company''s standalone financial statements. The assessment of whether a liability is recognised as a provision or disclosed as a contingent liability in the standalone financial statements is inherently subjective and requires significant management judgement in determination of the cash outflows from the business, interpretation of applicable laws and regulations, and careful examination of pending assessments at various levels of regulatory authorities. Since the amounts involved are significant and due to the range of possible outcomes leading to high estimation uncertainty that requires significant management and auditor judgement, this matter is considered to be a key audit matter for the current year audit. |
through various discussions held with Companyâs legal and finance personnel. - Tested the design and operating effectiveness of the controls put in place by the management in relation to assessment of the outcome of the pending litigations. - Inspected the summary of litigation matters and discussed key developments during the year with the Companyâs Legal and Finance personnel. - Inspected and evaluated, where applicable, external legal and/or regulatory advice sought by the Company. Obtained direct confirmation from the dealing lawyers for certain material ongoing litigations. - Discussed and challenged the managementâs assessment of the likelihood, magnitude and accounting of any liability that may arise in certain material cases. Accordingly, we reviewed the amount of provisions recognized and contingent liabilities disclosed in the standalone financial statements and exercised our professional judgment to assess appropriateness of such conclusions, involving experts as required. - Evaluated the adequacy of disclosures made in the Companyâs standalone financial statements in accordance with the applicable accounting standards. |
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Property, plant & equipment and intangible assets (including capital work in progress) As at 31 March 2021 the Company has Property, Plant and Equipment (âPPE''), Intangible Assets (âIAâ) and Capital Work-in-Progress (âCWIP'') with carrying values of ''64,115.26 crores, ''1,429.28 crores and ''8,878.48 crores, respectively, as disclosed in note 4, note 7 and note 5 of the accompany standalone financial statements. Refer note 3 for the accounting policies adopted by the Company for recognition and measurement of such non-current assets. Determination of the carrying values and their respective depreciation and amortisation amounts of PPE, IA and CWIP requires considerable management judgement. These include the decisions to capitalise or expense costs, the annual asset life review, the timeliness of the capitalisation of assets and the use of managementâs assumptions and estimates for the determination and measurement of assets retired from active use, in accordance with the requirements of Ind AS 16, Property, Plant and Equipment(âInd AS 16â), and Ind AS 38, Intangible Assets (âInd AS 38â). The carrying value of CWIP also includes balances pertaining to long term projects which requires careful examination of continuity and viability of such projects. Considering the significance of the amounts involved in the context of the balance sheet of the Company and the level of judgements and estimates required, we consider this to be a key audit matter in the current year audit. |
Our audit procedures included, but were not limited to the following: - Obtained an understanding of the managementâs process of recording the transactions pertaining to capital expenditure incurred by the Company and evaluated the accounting policies adopted by the Company in accordance with the requirements of Ind AS 16 and Ind AS 38. - Tested the design and operating effectiveness of the controls put in place by the management in relation to the above process. - Tested the amounts capitalised during the year, on a sample basis, by inspecting supporting documents and evaluating whether assets capitalised satisfied the recognition criteria and were recgonised accurately in the correct periods and with correct amounts. - Reviewed the judgements made by management in determination of carrying values of the specified non-current assets including the nature of underlying costs capitalized, determination of realisable value of the assets retired from active use, the appropriateness of useful lives applied in the calculation of depreciation as determined by technical assessment by management and external technical experts, where required, and evaluation of appropriateness of long standing CWIP balances pertaining to long-term projects. - Evaluated the appropriateness and adequacy of the related disclosures in the standalone financial statements in accordance with the applicable accounting standards |
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Managementâs Replies |
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By-products inventory Refer to note 3.8 of summary of significant accounting policies and other explanatory information for accounting policy for valuation of by-products amounting to ''5,020.08 crores as at 31 March 2021 and significant accounting judgements, estimates and assumptions related thereto and the note 3.24.4 of the standalone financial statements. Inventories of by-products mainly consist of subgrade fines, iron and steel scrap embedded in BF slag and LD slag and slime, and tailings containing iron ore fines, which are accumulated in stock piles. Further, as explained in notes 49.12 and 49.13, pursuant to the order of Ministry of Mines, Government of India dated 16 September 2019, certain by-products were allowed to be sold and hence, were valued for the first time in the previous year. The management of the Company also sought the opinion of Expert Advisory Committee of the ICAI (âEAC Opinions'') in the previous year and current year on recognition and measurement of byproduct inventories. Valuation of such items requires management to exercise significant judgement in respect of use of estimates for determination of the quantity, quality and valuation rate of these items. In the current year, basis the actual volumes of sale of such by-product inventory and expected future sales, the management has classified inventory expected to be sold after 12 months from the date of balance sheet, being the operating cycle of the Company, as non-current inventory. Owing to the significance of the carrying value of such by-products and the complexities discussed above, we have considered this area as a key audit matter in the current year audit. |
Our audit procedures included, but were not limited to the following: - Obtained an understanding of the processes and procedures, including controls relating to sub grade fines, iron and steel scrap embedded in BF slag and LD slag and slime containing iron ore fines (âby-products''). - Evaluated the accounting policy adopted by the Company for valuation of the by-product inventory in accordance with the requirements of Ind AS 2, Inventory in conjunction with the EAC Opinions obtained by the management. - In assessing management''s assessment of the value of by-products, we discussed in detail with the management to understand the procedures adopted in ascertaining the quantity and quality (including gradation) of the byproducts considered for valuation. - Management''s estimate of the NRV was verified with reference to the average selling price (ASP) published by the Indian Bureau of Mines. We also obtained technical analysis report from external experts sought by management for determining the quantity of by-products and the chemical analysis report used by the management for arriving at the quality (including gradation) of fines. - Obtained management''s working of estimated future sales used for classification of the byproduct inventory between current and noncurrent, and tested the underlying assumptions basis our understanding of the processing and further approvals required for sale of such inventory in addition to evaluating management''s estimates on availability of demand for such by-products. - Evaluated the appropriateness and adequacy of the related disclosures in the financial statements in accordance with the applicable accounting standards. |
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Information other than the financial statements and auditorsâ report thereon 10. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditors'' report thereon. The Annual Report is expected to be made available to us after the date of this auditors'' report. Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. When we read the other information included in the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of management and those charged with governance for the standalone financial statements 11. The accompanying standalone financial statements have been approved by the Company''s Board of Directors. The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance (including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS specified under section 133 of the Act. This responsibility also |
Comments |
Managementâs Replies |
includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. 12. In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. 13. The Board of Directors are also responsible for overseeing the Company''s financial reporting process. |
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Auditorsâ responsibilities for the audit of the standalone financial statements |
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14. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors'' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements. 15. As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: ⢠Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; ⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls; ⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management; ⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors'' report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors'' report. However, future events or conditions may cause the Company to cease to continue as a going concern; ⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation; ⢠Obtain sufficient appropriate audit evidence regarding the financial information of the Company to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit of financial information of the Company and such branches included in the standalone financial statements, of which we are the independent auditors. For the other branches included in the standalone financial statements, which have been audited by the branch auditors, such branch auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. 16. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 17. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. |
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Managementâs Replies |
18. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors'' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Other matters 19. The audit of standalone financial statements for the corresponding year ended 31 March 2020 included in the standalone financial statements was carried out and reported jointly by statutory auditors, being M/s V.K. Dhingra & Co., M/s A.K. Sabat & Co., M/s Tej Raj & Pal and M/s. S. Jaykishan who have expressed modified opinion vide their audit report dated 10 July 2020 whose report has been furnished to us and relied upon by us for the purpose of our audit of the standalone financial statements. Our opinion is not modified in respect of this matter. 20. We did not audit the annual financial statements of twelve branches / units / marketing regions included in the standalone financial statements, whose annual financial statements reflects total assets of ''57,626.92 crores as at 31 March 2021 and total revenues of ''24,880.53 crores, total net profit after tax of ''3,100.55 crores, total comprehensive income of ''3,248.23 crores and cash inflows (net) of ''16.38 crores for the year then ended, as considered in the standalone financial statements. These financial statements have been audited by the branch auditors, whose reports have been furnished to us by the management, and our opinion, in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the audit report of such branch auditors. Our opinion is not modified in respect of the above matter with respect to our reliance on the work done by and the reports of the branch auditors. Report on other legal and regulatory requirements 21. As required by the Companies (Auditor''s Report) Order, 2016 (âthe Order'') issued by the Central Government of India in terms of section 143(11) of the Act, we give in the Annexure 1'' a statement on the matters specified in paragraphs 3 and 4 of the Order. 22. Further to our comments in Annexure 1'', as required by section 143(3) of the Act, based on our audit, and on the consideration of the reports of the branch auditors as referred to in paragraph 20 above, we report, to the extent applicable, 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 of the accompanying standalone financial statements; b) except for the effects of the matters described in the Basis for Qualified Opinion section, 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 and proper returns adequate for the purposes of our audit have been received from the branches not visited by us; c) the reports on the accounts of the branches of the Company audited under section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report; d) the standalone financial statements dealt with by this report are in agreement with the books of account and with the returns received from the branches not visited by us; e) except for the effects of the matters described in the Basis for Qualified Opinion section, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act; f) the provisions of section 164(2) of the Act are not applicable to the Company since the Company is a Government company as defined under section 2(45) of the Act; g) the qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion section; h) with respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure 2''; and i) with respect to the other matters to be included in the Auditors'' Report in accordance with rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the branch auditors as referred to in paragraph 20 above: i. except for the effects of the matters described in paragraphs 3 and 4 of the Basis for Qualified Opinion section, the standalone financial statements disclose the impact of pending litigations on the standalone financial position of the Company as at 31 March 2021, as detailed in notes 47.1 and 47.2 to the standalone financial statements; |
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ii. the Company, as detailed in note 43 (C) to the standalone financial statements, has made |
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provision as at 31 March 2021, as required under the applicable law or Ind AS, for material foreseeable losses, if any, on long-term contracts including derivative contracts; and |
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iii. there has been no delay in transferring amounts, required to be transferred, to the Investor |
The matured deposits have already been claimed |
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Education and Protection Fund by the Company during the year ended 31 March 2021 except |
by the successors/relatives of the individuals but |
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''1.00 crore pertaining to unclaimed matured deposits which was required to be deposited in |
are pending for submission of document of proof |
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the Investor Education and Protection Fund during the year ended 31 March, 2018 and which |
of legal heir by the claimants. Appropriate |
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has not been deposited till 31 March 2021. |
procedure is being followed for refunding the matured deposits to the legal heirs. |
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23. |
As required by section 143(5) of the Act, we given in âAnnexure 3'', a statement on the matters specified in the directions issued by the Comptroller and Auditor General of India in respect of the Company. |
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24. |
Based on our audit, we report that the provisions of section 197 read with Schedule V to the Act are not applicable to the Company since the Company is a Government company as defined under section 2(45) of the Act. Accordingly, reporting under section 197(16) is not applicable |
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For Tej Raj & Pal |
For S. Jaykishan |
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Chartered Accountants |
Chartered Accountants |
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Firm Registration No. 304124E |
Firm Registration No. 309005E |
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Sd/- |
Sd/- |
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(CA. P Venugopala Rao) |
(CA. Ritesh Agarwal) |
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Partner |
Partner |
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M.No.010905 |
M.No. 062410 |
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UDIN:21010905AAAAAP9822 |
UDIN:21062410AAAAIV5213 |
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Place: Bhubaneshwar |
Place: Kolkata |
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For Walker Chandiok & Co LLP |
For K A S G & CO. |
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Chartered Accountants |
Chartered Accountants |
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Firm Registration No. 001076N/N500013 |
Firm Registration No. 002228C |
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Sd/- |
Sd/- |
For and on behalf of Board of Directors |
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(CA. Neeraj Sharma) |
(CA. Bharat Goel) |
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Partner |
Partner |
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M.No. 502103 |
M.No.060069 |
Sd/- |
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UDIN:21502103AAAABC3762 |
UDIN:21060069AAAABE5636 |
(Soma Mondal) |
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Place: New Delhi |
Place: Kolkata |
Chairman |
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Place: New Delhi |
Place: New Delhi |
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Dated: 10th June 2021 |
Date: 1st September, 2021 |
Mar 31, 2018
Independent Auditors'' Report
To the Members of Steel Authority of India Limited
Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements
We have audited the accompanying Standalone Ind AS Financial Statements of Steel Authority of India Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement, the Statement of Changes in Equity for the year then ended, and a summary of significant accounting policies and other explanatory information (herein after referred to as "Standalone Ind AS Financial Statements"), in which are incorporated the Returns of 8 branches for the year ended on that date audited by the branch auditors of the Company''s branches.
Management''s Responsibility for the Standalone 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 Standalone Ind AS 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) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 (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 Standalone Ind AS Financial Statements that give 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 Standalone Ind AS Financial Statements based on our audit.
In conducting 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 in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Standalone 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 Standalone Ind AS Financial Statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal financial control relevant to the Company''s preparation of the Standalone Ind AS 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 Company''s Directors, as well as evaluating the overall presentation of the Standalone 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 Standalone Ind AS Financial Statements.
Basis for Qualified Opinion The Company has not provided for:
I. As per 9th National Joint Committee on Steel (NJCS) Agreement dated 1st July, 2014 (which is valid The Company''s view is that the Pension Scheme was approved by the upto 31st December, 2016) signed by the Company, contribution by the Company towards proposed Board in its Meeting held on 9th February, 2017, with a provision that Pension Fund for non-executive employees was stipulated at 6% of Basic Pay and D.A.. Pending the contribution towards Pension shall be based on the affordability, revision of the said Agreement and against reservation of representatives of non-executive employees, sustainability and capacity of the company, measured as a percentage Management of the Company has unilaterally reduced the rate of contribution towards the said Pension of Profit Before Tax(PBT) to average Net-worth. This is in line with the Fund to 2% of Basic Pay and D.A. and accordingly the Management, in the 4th quarter of the current Office Memorandum dated 21.5.2014 issued by the Department of year, has written back the provision towards the said Pension Fund for non-executive employees for Public Enterprises. If the percentage of PBT to average Net-worth is the period from 01.04.2015 to 31.12.2016 to the extent of '' 288.14 crore (Refer Note No.49.4) 8% or above, the contribution towards Pension shall be limited to 6%
of Basic Pay plus DA for Non-executives. Further, if the percentage of PBT to average Net-worth is lower than 8%, the amount of contribution will be reduced proportionately. However, a minimum Pension contribution is kept at the rate of 2% of Basic Pay plus DA even in case of loss during a Financial Year. Accordingly, the Board of Directors of the Company has approved the write back of Pension contribution for the period from 1.4.2015 to 31.12.2016 in its meeting held on 30.05.2018.
II. Wage revision for non-executives is due since 01.01.2017. During the 4th quarter of the current year, The Company''s view is that SAIL is a Government Company and is Management of the Company has reversed adhoc provision already made in last year for the period required to follow Government Guidelines for revising pay scales of from 01.01.2017 to 31.03.2017 amounting to Rs,77.47 crore. Further the Management has also reversed its employees. The Department of Public Enterprises (DPE) issued provision created thereof for nine months ended 31st December 2017 amounting to Rs,230.77 crore Office Memorandum dated 24.11.2017 in this regard. The Guidelines and also not made any provision thereof for the 4th quarter of the year. Pending negotiation with non- inter-alia, state that Management of PSEs would keep in view the executive employees and as per the experience and past practice of earlier wage revisions for non- affordability and financial sustainability of such wage revision and executive employees, adhoc provisions from 01.01.2017 to 31.03.2017 of Rs,77.47 crore and from further where the five year periodicity of Wage revision is followed, 01.04.2017 to 31.12.2017 of Rs,230.77 crore should not have been reversed and provision of Rs,76.92 Management has to ensure that negotiated scales of pay for two crore for the quarter ended 31.03.2018 should have been made. The aggregate impact of this on Loss successive wage negotiations do not exceed the existing scales of before Tax for the current year amounts to Rs,385.16 crore. (Refer Note No. 49.3) pay of executives/officers and non-unionized supervisors of respective
CPSEs for whom ten years periodicity is being followed. The current pay scales of Non-executive employees in SAIL for some of the levels after wage revision effective from 01.01.2012 for 5 years are already higher than the pay scales of certain Executive employees. Accordingly, it has been approved by the Board of Directors of the Company to withdraw the provision of wage revision for Non-executive employees for the period from 01.01.2017 to 31.03.2017 and also for the nine months ended 31st December, 2017 and not to make any provision for the 4th Quarter of Financial Year 2017-18.
III. The Company has not provided for : In respect of item stated at (i), the Company''s view is that the Nine
(i) Demand for Entry tax in various states amounting to Rs,1726.16 crore as on 31st March, 2018 Judges Bench of H°n''ble Supreme tart vide its judgment dated (Refer Note No 47 2(a)); and 11 November, 2016, upheld the constitutional validity of levy of Entry
.; Tax by the States and has laid down principles/tests on levy of Entry
(ii) Amount paid to Damodar Valley Corporation (DVC) in earlier years against bills raised for supp!y Tax Acts in various States. The respective regular benches of the Apex of power and retained as advance to DVC by Bokaro Steel Plant amounting to ''587.72 crore as Court would hear the matters as per laid down principles. Pending on 31 st 2018 (Refer Note No.47.2(b)). decision by the regular benches of the Apex Court on levy of entry tax Had the impact of all the above qualifications been considered, Total Comprehensive Loss (net of tax) for in the States of Chhattisgarh, Odisha, Uttar Pradesh, Jharkhand and in the year ended 31st March, 2018 would have been Rs,2,238.73 crore against reported Total Comprehensive respect of the case pertaining to Calcutta High Court, the Entry Tax Loss (net of tax) of Rs,295.39 crore, overstatement of other equity as on 31st March 2018 by demands under dispute have been treated as contingent liabilities. Rs,1,9432m crore, Linteteterrort of current liability by Rs,2,m46 crare and Linteteterrort of asset by h respect of item stated at (ii), the Company''s view is that the cases crore. are sub-judice and pending for adjudication before the various judicial authorities for a long time.
The above stated disputed demands, stated at III(i) and III(ii) above, contested on valid and bonafide grounds, have been treated as contingent liabilities as it is not probable that present obligations exist as on 31st March, 2018. Therefore, there is no adverse impact on loss for the year.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of the branch auditors on Financial Statements of the branches referred to in the Other Matters paragraph below, except for the effect of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid Standalone 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 31st March, 2018 and its total comprehensive loss (net loss and other comprehensive income), its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to the following:
Gross sales include sales to Government agencies for ''4,802.50 crore for the year ended 31st March, 2018 (cumulative upto 31st March, 2018 ''12,271.05 crore) which is recognized on provisional contract prices (Refer Note No. 49.2);
Our opinion is not qualified in respect of this matter.
Other Matters
We did not audit the financial statements of 8 branches included in the Standalone Ind AS Financial Statements of the Company whose financial statements reflect total assets of ''45,784.59 crore as at 31st March, 2018 and total revenue of Rs,20,798.09 crore for the year ended on that date. The financial statements of these branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (AuditorRs,s Report) Order, 2016 ("the Order") issued by the Central Government in terms of Sub-section 11 of Section 143 of the Act, we give in the Annexure 1, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act, based on our audit and on the consideration of the reports of the branch auditors on the financial statement of the branches, referred to in other matters above, we report, to the extent applicable, 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) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, 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 reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report.
d) The Balance Sheet and the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.
e) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act, read with relevant rules issued there under.
f) The matters described in the Basis for Qualified Opinion paragraph above, in our opinion, may not have an adverse effect on the functioning of the Company.
g) As per notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 164(2) of the Companies Act, 2013 is not applicable to the Company.
h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in the "Annexure 2".
i) 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Ind AS Financial Statements; (Refer Note No.47 and 48.4)
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
The Matured Deposits have already been claimed by the successors/
relatives; of the individual ails but Eire; pending for submission of document
iv. Requirements as to disclosure of holding as wc|1 as dealings in Specified Bank Notes (SBN) followed for refunding the Matured Deposits to the legal heirs. and reporting thereon are not applicable for the year.
3. As required by Section 143(5) of the Act, we give in "Annexure-3", a statement on the matters specified in the Directions issued by the Comptroller and Auditor General of India in respect of the Company.
Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Steel Authority of India Limited on the Standalone Ind AS Financial Statements for the year ended 31st March 2018
i. In respect of its fixed assets:
a. The Company has maintained proper records showing in most cases, full particulars including quantitative details and situation Necessary action is being take of its fixed assets. However, the location and the extent of area in respect of few lands needs to be updated in the fixed assets update the iocation and extent of registers and have to be reconciled with the revenue records as to the extent of holding and location of land. The delay is in respective plants in the fixed as attributable to procedural matters involved in ascertaining and reconciling with revenue records maintained by the revenue registers. This is a continuous proc departments of state governments involved.
b. The fixed assets of the Company have been physically verified by the Management at reasonable intervals in a phased manner .
so as to generally cover all the assets once in three years. However, it is observed that certain land and buildings are under Necessary Kton is being taken toi encroachment/unauthorized occupation. As informed, no material discrepancies have been noticed on such verification. In our theoccupants from |arra and bui|d opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its under encroachment/ unauthor
assets. occupation.
c. According to the information and explanations given to us and on the basis of our examination of records of the Company, the title/lease deeds of immovable properties are held in the name of Company except in the following cases:
Particulars |
Freehold Land |
Leasehold Land |
Building |
Area not in name of the Company |
47209.74 acres |
17335.30 acres and 1 case |
2 Buildings and 571.24 sq. mts |
Gross Block thereof |
173.75 crore |
151.33 |
0.57 |
Net Block thereof |
173.75 crore |
130.18 |
0.32 |
ii. In respect of physical verification of Inventory:
a. The inventories have been physically verified by the Management with reasonable frequency during the year. In certain cases, the stocks have been verified on the basis of visual survey/estimates.
b. In our opinion and according to the information and explanations given to us, discrepancies noticed on physical verification of inventories which were not material, have been properly dealt with in the books of account.
iii. In our opinion and according to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, limited liability partnership or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Hence, the clauses (iii) (a), (iii) (b) and (iii) (c) of Paragraph 3 of the order are not applicable to the Company.
iv. The Company has not granted any loans or given any guarantee and security covered under Section 185 and 186 of the Companies Act, 2013. In respect of Investments made by the Company, the provisions of Section 185 and 186 of the Companies Act, 2013 have been complied with.
v. The Company has not accepted any deposit from public within the meaning of Sections 73 to 76 of the Companies Act, 2013 and rules framed there under, during the year. Accordingly, paragraph 3(v) of the Order is not applicable to the Company.
vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products.
We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
vii. According to the information and explanations given to us in respect of statutory dues:
a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Taxes (including Goods and Services Tax), Cess and other Statutory Dues with the appropriate authorities. According to the information and explanations given to us, there are no undisputed statutory dues outstanding for a period of more than six months from the date they became payable, as per books of accounts as at 31st March, 2018.
b. According to the information and explanations given to us, there are disputed statutory dues, which have not been deposited as on 31st March, 2018 as given herein below:
Statute |
Nature of Dues |
Amount ('' crore) |
Forum where disputes are pending |
Sales Tax, VAT & |
Sales tax, VAT and GST Demands |
10.45 |
Supreme Court |
GST |
495.40 |
High Courts |
|
680.79 |
Sales Tax Tribunals |
||
71.87 |
Sales Tax Departments |
||
Entry Tax |
Entry Tax Demands |
1,257.26 |
Supreme Court |
544.49 |
High Courts |
||
606.92 |
Tribunal |
||
40.46 |
Department |
Central Excise Act, 1944 |
Excise Duty |
266.80 2,375.02 1664.36 339.39 0.32 |
Supreme Court High Courts CESTAT Department BIFR |
Service tax |
Service Tax |
32.76 |
High Court |
127.00 |
CESTAT |
||
201.25 |
Department |
||
Customs Duty |
Customs Duty |
1.71 |
Department |
Income Tax Act, |
TDS on Perks |
5.96 |
Supreme Court |
1961 |
122.85 |
High Courts |
|
Other TDS matters |
0.21 |
ITAT |
|
27.05 |
Department |
||
Income Tax Disputes |
194.52 |
High Courts |
|
516.06 |
ITAT |
||
46.85 |
Department |
||
TOTAL |
9,629.75 |
viii. The Company has not defaulted in repayment of loans or borrowings to financial institutions, banks, Government or dues to debenture holders during the year. Accordingly, paragraph 3(viii) of the Order is not applicable to the Company.
ix. According to the information and explanations given to us, the Company has not raised any money by way of initial public offer or further public offer (including debt instruments). Term loans from banks and financial institutions have been applied for the purpose for which they were obtained.
x. To the best of our knowledge and belief and according to the information and explanations given to us and based on the audit procedures performed, we report that no case of material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
xi. As per notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 of the Companies Act, 2013 is not applicable to the Government Companies. Accordingly, paragraph 3(xi) of the Order is not applicable to the Company.
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 to the Company.
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 Sections 177 and 188 of the Companies Act, 2013 where applicable and details of such transactions have been disclosed in the Standalone Ind AS Financial Statements as required under Ind AS 24 - ''Related Party Disclosures'' specified under Section 133 of the Act read with relevant rules.
xiv. According to the information and explanations give to us and based on our examination of the records, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.
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 him. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) of the Order is not applicable to the Company.
Referred to in paragraph 2 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Steel Authority of India Limited on the Standalone Ind AS Financial Statements for the year ended 31st March 2018
Report on the Internal Financial Controls 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 STEEL AUTHORITY OF INDIA LIMITED ("the Company") as of 31st March 2018 in conjunction with our audit of the Standalone 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 reporting considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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.
Auditors'' 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") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. 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 Standalone Ind AS 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 Standalone 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 Standalone Ind AS 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 unauthorised acquisition, use, or disposition of the Company''s assets that could have a material effect on the Standalone 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, 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 31st March 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 Singhi & Co. For V.K. Dhingra & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.: 302049E Firm Registration No.: 000250N
Sd/- Sd/-
[ Pradeep Kumar Singhi ] [ Sanjay Jindal ]
Partner Partner
(M. No.050773) (M. No.087085)
For Chatterjee & Co. For A.K. Sabat & Co.
Chartered Accountants Chartered Accountants
Firm Registration No.:302114E Firm Registration No.:0321012E
Sd/- Sd/-
[ T.N. Ghosh ] [ A.K. Sabat ]
Partner Partner
(M. No.050644) (M. No.030310)
Place : New Delhi
Dated : 30th May, 2018
Mar 31, 2017
Independent Auditors'' Report
To the Members of Steel Authority of India Limited
Report on the Standalone Indian Accounting Standards (Ind AS) Financial Statements
We have audited the accompanying Standalone Ind AS Financial Statements of Steel Authority of India Limited ("the Company"), which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement, the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information (herein after referred to as "Standalone Ind AS Financial Statements"), in which are incorporated the Returns of 8 branches for the year ended on that date audited by the branch auditors of the Company''s branches.
Management''s Responsibility for the Standalone 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 and presentation of these Standalone Ind AS 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 Companies(Indian Accounting Standards) Rules, 2015 (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 Standalone Ind AS Financial Statements that give 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 Standalone Ind AS Financial Statements based on our audit.
In conducting 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 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 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 Standalone Ind AS Financial Statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the Standalone 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 Standalone Ind AS 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 Company''s Directors, as well as evaluating the overall presentation of the Standalone 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 Standalone Ind AS Financial Statements.
Basis for Qualified Opinion The Company has not provided for:
(i) Entry tax amounting to Rs,1796.03 crore (Current year Rs,111.04 crore and up to last year Rs,1684.99 crore) (Refer Note No.39.2(a)(i) & (ii)); and
(ii) amount paid to Damodar Valley Corporation (DVC) against bills raised for supply of power and retained as advance to DVC by Bokaro Steel Plant amounting to Rs,587.72 crore (current year Rs,96.45 crore and up to last year Rs,491.27 crore). (Refer Note No. 39.2 (b)).
The total impact of above para (i) & (ii) resulted in understatement of loss (net of tax) for the year ended 31st March, 2017 by Rs,1558.78 crore, overstatement of other equity as on 31st March, 2017 by Rs, 1558.78 crore, understatement of current liabilities by Rs, 2383.75 crore and understatement of assets by Rs,824.97 crore.
In respect of item stated at (i), the Company''s view is that the Nine Judges Bench of Hon''ble Supreme Court, vide its judgment dated 11th November, 2016, upheld the constitutional validity of levy of Entry Tax by the States and has laid down principles/tests on levy of Entry Tax Acts in various States. The respective regular benches of the Apex Court would hear the matters as per laid down principles. Pending decision by the regular benches of the Apex Court on levy of entry tax in the States of Chhattisgarh, Odisha, Uttar Pradesh and in respect of the case pertaining to Calcutta High Court, the Entry Tax demands under dispute have been treated as contingent liabilities.
In respect of item stated at (ii), the Company''s view is that the cases are sub-judice and pending for adjudication before the various judicial authorities for a long time.
The above stated disputed demands, stated at (i) and (ii) above, contested on valid and bonafide grounds, have been treated as contingent liabilities as it is not probable that present obligations exist as on 31st March, 2017. Therefore, there is no adverse impact on loss for the year.
Qualified Opinion
In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of the branch auditors on separate Financial Statements of the branches referred to in the Other Matters paragraph below, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, the aforesaid Standalone 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 31 st March, 2017, and its loss (including total comprehensive loss), its cash flows and the changes in equity for the year ended on that date.
Emphasis of Matter
We draw attention to the following:
I. Sales include sale to the Government Agencies during the year Rs, 3807.78 crore and cumulative up to 31st March, 2017 Rs, 18342.41 crore which is recognized on provisional contract prices. (Refer Note No. 41.1); and
II. Recognition of Deferred Tax Assets of Rs,3352.42 crore (including Rs,1623.16 crore for the year) on the accumulated business losses as on 31st March, 2017 and unused tax credit (MAT Credit Entitlement) of Rs,1051.00 crore as on 31st March, 2017. (Refer Note No.12).
Our opinion is not qualified in respect of this matter.
Other Matter
a) The comparative financial information of the Company for the year ended 31st March, 2016 and the transition date opening balance sheet as at 1st April, 2015 included in these Standalone Ind AS Financial Statements, are based on the previously issued statutory financial statements prepared in accordance with the Companies (Accounting Standards) Rules, 2006 (as amended) audited by the auditors for the respective years ended 31st March, 2016 and 31st March, 2015 whose reports dated 30th May,
2016 and 29th May, 2015 respectively expressed modified opinion on those standalone financial statements, as adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have been audited by us.
b) We did not audit the financial statements of 8 branches included in the Standalone Ind AS Financial Statements of the Company whose financial statements reflect total assets of Rs,45,416.36 crore as at 31st March, 2017 and total revenues of Rs,16,909.93 crore for the year ended on that date. The financial statements of these branches have been audited by the branch auditors whose reports have been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such branch auditors.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2016 ("the Order") 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, based on our audit and on the consideration of the reports of the branch auditors on the separate financial statements of the branches, referred to in the Other Matters paragraph above, we report to the extent applicable 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) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, 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 reports on the accounts of the branch offices of the Company audited under Section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report.
d) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the relevant books of account.
e) Except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, in our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued there under.
f) The matters described in the Basis for Qualified Opinion paragraph above, in our opinion, may not have an adverse effect on the functioning of the Company.
g) As per notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 164(2) of the Companies Act, 2013 is not applicable to the Company.
h) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in the "Annexure B".
i) 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Ind AS Financial Statements; (Refer Note No.43.5)
ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There has been a case of delay in transferring '' 64,85,490/- being the amount of unpaid dividend for financial year 2008-09, required to be transferred to the Investor Education and Protection Fund by the Company. However, the same has been transferred to the said fund before 31st March, 2017; and
The Final Unclaimed Dividend for 2008-09 was due for transfer to IEPF account on 16th November, 2016. The Ministry of Corporate Affairs notified the Investor Education and Protection Fund (IEPF) Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the Rules") along with detailed procedure effective from 7th September
2016. The Rules required that all shares in respect of which dividend has not been claimed or paid for seven consecutive years or more shall be transferred to IEPF Suspense Account. The Rules further provided that where 7 years are completed or being completed within 3 months of coming into force of the Rules, the company shall initiate the aforesaid procedure immediately and transfer the shares after completion of 3 months. As per procedure prescribed in the Rules, the Company sent individual notices as well as through publication in newspapers, to 11346 shareholders, having unclaimed dividend of Rs,64.85 lakh, providing them time up to 15.12.2016 to claim the dividend. Meanwhile, the implementation of Rules was deferred in December, 2016. However, the Company deposited the Unclaimed Dividend on 3rd February, 2017 after processing the cases of claimants for the Final Unclaimed Dividend.
iv. The Company has provided requisite disclosures in Note No. 41.8 to its Standalone Ind AS Financial Statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8th November, 2016 of the Ministry of Finance, during the period from 8th November 2016 to 30th December, 2016. Based on audit procedures and relying on the management representation, we report that the disclosures are in accordance with books of account maintained by the Company and as produced to us by the Management.
3. As required by Section 143(5) of the Act, we give in the "Annexure C", a statement on the matters specified in the Directions issued by the Comptroller and Auditor General of India for the Company.
Referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even date to the members of Steel Authority of India Limited on the Standalone Ind AS Financial Statements for the year ended 31st March 2017
i. In respect of its fixed assets:
a. The Company has maintained proper records showing in most cases, full particulars including quantitative details and situation of its fixed assets. However, the location and the extent of area in respect of few lands needs to be updated in the fixed assets registers and have to be reconciled with the revenue records as to the extent of holding and location of land. The delay is attributable to procedural matters involved in ascertaining and reconciling with revenue records maintained by the revenue departments of state governments involved.
Necessary action is being taken to update the location and extent of area in respective plants in the fixed assets registers. This is a continuous process.
Necessary action is being taken to evict the occupants from land and buildings under encroachment/ unauthorised occupation.
b. The fixed assets of the Company have been physically verified by the Management at reasonable intervals in a phased manner so as to generally cover all the assets once in three years. However, it is observed that certain land and buildings are under encroachment/unauthorised occupation. No material discrepancies have been noticed on such verification. In our opinion, this periodicity of physical verification 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 basis of our examination of records of the Company, the title deeds of immovable property are held in the name of Company except for items mentioned below:
Particulars |
Freehold Land |
Leasehold Land |
Building |
Not in name of Company |
48468.47 acres |
17334.86 acres |
571.24 sq. Mtr and 1 case |
Gross block of land not in name of Company (Rs, crore) |
122.24 |
148.59 |
0.57 |
Net block of land not in name of Company (Rs, crore) |
122.24 |
131.02 |
0.33 |
ii. In respect of physical verification of Inventory:
a. The inventories have been physically verified by the Management with reasonable frequency during the year. In certain cases, the stocks have been verified on the basis of visual survey/estimates.
b. In our opinion and according to the information and explanations given to us, discrepancies noticed on physical verification of inventories were not material and have been properly dealt with in the books of account.
iii. In our opinion and according to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the Register maintained under Section 189 of the Companies Act, 2013. Therefore, clauses (iii) (a) and (iii) (b) of Paragraph 3 of the Order are not applicable to the Company.
iv. The Company has not granted any loan or made any investments or given any guarantee and provided any security covered under Section 185 and 186 of the Companies Act, 2013. Accordingly, paragraph 3(iv) of the Order is not applicable to the Company.
v. The Company has not accepted any deposit from public within the meaning of Sections 73, 74, 75 and 76 of the Companies Act, 2013 and rules framed there under, during the year. Accordingly, paragraph 3(v) of the Order is not applicable to the Company.
vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products.
We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
vii. According to the information and explanations given to us in respect of statutory dues:
a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added Taxes, Cess and other applicable Statutory Dues to the appropriate authorities. According to the information and explanations given to us, there are no undisputed statutory dues outstanding for a period of more than six months from the date they became payable, as per books of accounts as at 31st March, 2017.
b. According to the information and explanations given to us, there are disputed statutory dues, which have not been deposited as on 31st March, 2017 as given herein below:
Statute |
Nature of Dues |
Amount (Rs, crore) |
Forum where disputes are pending |
Sales Tax & VAT |
Sales Tax and VAT Demands |
4.15 |
Supreme Court |
538.22 |
High Courts |
||
716.11 |
Sales Tax Tribunals |
||
105.84 |
Sales Tax Departments |
||
Entry Tax |
Entry Tax |
1097.43 |
Supreme Court |
739.03 |
High Courts |
||
483.71 |
Tribunal |
||
19.02 |
Department |
Central Excise Act, 1944 |
Excise Duty |
354.81 1993.19 987.58 559.78 |
Supreme Court High Courts CESTAT Department |
Service Tax |
Service Tax |
0.79 |
High Court |
189.56 |
CESTAT |
||
50.93 |
Department |
||
Customs Duty |
Customs Duty |
5.09 |
CESTAT |
Income Tax |
TDS on Perks |
33.10 |
High Courts |
Act, 1961 |
|||
Other TDS matters |
46.71 |
High Courts |
|
1 .67 |
ITAT |
||
0.95 |
Department |
||
Income Tax Disputes |
194.52 |
High Courts |
|
213.16 |
ITAT |
||
289.03 |
Department |
||
TOTAL |
8624.38 |
viii. The Company has not defaulted in repayment of loans or borrowings to financial institutions, banks, Government or dues to debenture holders during the year. Accordingly, paragraph 3(viii) of the Order is not applicable to the Company.
ix. The Company did not raise any money by way of initial public offer or further public offer (including debt instruments). Term loans from banks and financial institutions have been applied for the purpose for which they were obtained.
x. According to the information and explanations given to us and based on the audit procedures performed, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the year.
xi. As per notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry of Corporate Affairs, Government of India, Section 197 of the Companies Act, 2013 is not applicable to the Company. Accordingly, paragraph 3(xi) of the Order is not applicable to the Company.
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 to the Company.
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 Sections 177 and 188 of the Companies Act, 2013 where applicable and details of such transactions have been disclosed in the Standalone Ind AS Financial Statements as required under Ind AS 24 - ''Related Party Disclosures'' specified under Section 133 of the Act read with relevant rules.
xiv. According to the information and explanations give to us and based on our examination of the records, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year. Accordingly, paragraph 3(xiv) of the Order is not applicable to the Company.
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 him. Accordingly, paragraph 3(xv) of the Order is not applicable to the Company.
xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3(xvi) of the Order is not applicable to the Company.
Referred to in paragraph 2 under the heading "Report on other legal and regulatory requirements" of our report of even date to the members of Steel Authority of India Limited on the Standalone Ind AS Financial Statements for the year ended 31st March 2017
Report on the Internal Financial Controls 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 STEEL AUTHORITY OF INDIA LIMITED ("the Company") as of 31st March 2017 in conjunction with our audit of the Standalone 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 (''ICAI''). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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.
Auditors'' 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") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. 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 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 Standalone 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, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such financial reporting were operating effectively as at 31 March 2017, 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.
(Referred to in paragraph 3 under the heading "Report on other legal and regulatory requirements" of our report of even date to the members of Steel Authority of India Limited on the Standalone Ind AS Financial Statements for the year ended 31st March 2017)
Directions issued by the Comptroller and Auditor General of India under sub section 5 of Section 143 of the Companies Act, 2013, based on the verification of records of the Company and according to information and explanations given to us, we report as under:
A. Directions under Section 143(5) of Companies Act, 2013
1. Whether the Company has clear title/ lease deeds for freehold and leasehold land respectively? If not please state the area of freehold and leasehold land for which title/lease deeds are not available.
2. Whether there are any cases of waiver/ write off of debts/loans/ interest etc., if yes, the reasons there for and the amount involved.
The Company has clear title/lease deeds for freehold and leasehold land respectively except for 65803.32 acres of freehold/leasehold land.
Necessary action is being taken for registration of pending title deeds and eviction of unauthorized occupants of land.
Waiver/ write offs are done on case to case basis with the approval of competent authorities. Details of the waiver/write off of debts/loans/interest are given below along with major reasons thereof:
Name of Riant/'' Unit |
Nature of dues |
Amount involved (Rs,Crore) |
Major reasons of waiver or write off |
Rourkela Steel plant |
Hospital Dues in respect of non-entitled patients |
0.08 |
Poor patients |
CMO (Southern Region) |
Credit sales to Bridge & Roof (India) Limited |
0.32 |
Delay in supply |
CMO (T&S) |
Old Claims |
0.01 |
No chances of recovery |
The Company has maintained adequate records in respect of inventories lying with third parties. No assets were received as gifts from the Government or other authorities during the year.
3. Whether proper records are maintained for inventories lying with third parties & assets received as gift from Govt. or other authorities.
For Singhi & Co. For V.K. Dhingra & Co.
For and on behalf of
Board of Directors
Chartered Accountants Chartered Accountants Sd/-
Firm Registration
No.: 302049E Firm Registration No.: 000250N (RKSingh)
Sd/- Sd/- Chairman
[ Shrenik Mehta ] [ Lalit Ahuja ]
Partner Partner
(M. No. 063769) (M. No. 085842)
For A.K. Sabat & Co. For Chatterjee & Co.
Chartered Accountants Chartered Accountants
Firm Registration
No.: 0321012E Firm Registration No.: 302114E
Sd/- Sd/-
[ A.K. Sabat] [ R.N. Basu ]
Partner Partner
(M. No. 30310) (M. No. 50430)
Rlace : New Delhi Rlace : New Delhi
Dated : 30th May, 2017 Date: 30th June, 2017
Mar 31, 2016
We have audited the accompanying standalone financial statements of
STEEL AUTHORITY OF INDIA LIMITED (''the Company''), which comprise the
Balance Sheet as at 31 March 2016, the Statement of Profit and Loss and
the Cash Flow Statement and a summary of significant accounting
policies and other explanatory information for the year then ended.
Management''s Responsibility for the Standalone 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 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. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give 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 standalone
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
thereunder.
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.
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 control 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. 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.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified audit opinion on the
standalone financial statements.
Basis for Qualified Opinion
The Company has not provided for:
i. entry tax amounting to Rs.97.22 crore
(current year Rs.2.33 crore and last year
Rs. 3.34 crore) in the The mentioned cases are
sub-judice and pending
before the
state of Uttar Pradesh, Rs.1091.02 crore
(current year Rs. 6.70 crore and last year
Rs. 13.04 crore) Hon''ble Supreme Court
and other courts for a
long time. The
in the state of Chhattisgarh and Rs.341.15
crore (current year Rs. 7.20 crore and last
year Rs.119.14 disputed demands,
contested on valid and
bonafide grounds, have
crore) in the state of Odisha (refer note
no. 29.l(i)(g); been disclosed as
contingent liabilities
as it is not probable
that
ii. amount paid to DVC against bills
raised for supply of power and
retained as advance by Bokaro present obligations
exist on the Balance
Sheet date. Therefore,
Steel Plant amounting to Rs.491.27 crore
(current year- Rs. 97.68 crore and last
year- Rs.101.83 there is no adverse
impact on loss. There
is no change in the
crore) (refer note no. 29.l(i)(f)); status of these cases
till date.
The total impact of above para (i) and (ii) has resulted in
understatement of Loss after Tax for the year by Rs. 1,321.35 crore
(Over statement of profit of Previous Year ended 31 st March, 2015 by
Rs. 1906.75 crore), overstatement of Reserves & Surplus by Rs. 1321.35
crore (As at 31 st March, 2015 Rs. 1906.75 crore), understatement of
Current Liabilities by Rs. 2020.66 crore (As at 31st March, 2015- Rs.
1906.75 crore) and understatement of Total Assets by Rs. 699.31 crore
(Previous Year ended 31st March, 2015 Rs. Nil).
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion paragraph above, the
aforesaid standalone 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 31st March 2016 and its
loss and its cash flows for the year ended on that date.
Emphasis of Matter
We draw attention to the net sales include sales to Government agencies
which are recognised on provisional contract prices (refer note no.
32.1);
Our opinion is not qualified in respect of this matter.
Other Matter
We did not audit the financial statements/ information of 8 branches
included in the standalone financial statements of the Company whose
financial statements/financial information reflect total assets of Rs.
44971.85 crore as at 31st March, 2016 and total revenues of Rs.
15,849.68 crore for the year ended on that date, as considered in the
standalone financial statements. The financial statements/ information
of these branches have been audited by the branch auditors whose
reports have been furnished to us, and our opinion in so far as it
relates to the amounts and disclosures included in respect of these
branches, is based solely on the report of such branch auditors.
Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. 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 the paragraph 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
purposes of our audit.
b. Except for the effects of the matter described in the Basis for
Qualified Opinion paragraph above,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 reports on the accounts of the branch offices of the Company
audited under Section l43 (8) of the Act by branch auditors have been
sent to us and have been properly dealt with by us in preparing this
report
d. The balance sheet, the statement of profit and loss and the cash
flow statement dealt with by this Report are in agreement with the
books of account;
e. Except for the effects of the matter described in the Basis for
Qualified Opinion paragraph above,in our opinion, the aforesaid
standalone financial statements comply with the Accounting Standards
specified under Section l33 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014;
f. The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may not have an adverse effect on the
functioning of the Company.
g. As per notification No. GSR 463(E) dated 5th June 2015 issued by
the Ministry of Corporate Affairs, Government of India, Section 164(2)
of the Companies Act, 2013 is not applicable to the Company;
h. With respect to the adequacy of the internal financial controls
over financial reporting of the Company and the operating effectiveness
of such controls, refer to our separate Report in Annexure ''B'', and
i. 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 has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer note Note No.
29.1 to 29.4 to the financial statements;
ii. The company did not have any long term contracts including
derivative contracts for which there were any material foreseeable
losses; and
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund.
3. As required by section 143(5) of the Act, we give in Annexure ''C'', a
statement on the matters specified by the Comptroller and Auditor
General of India for the Company.
Annexure ''A'' referred to in paragraph 1 under the heading "Report on
other legal and regulatory requirements" of our report of even date
Re: Steel Authority of India Limited (''the Company'')
i. In respect of its fixed assets:
a. The Company has maintained proper records showing in most cases,
full particulars including quantitative details and Necessary action is
being taken to situation of its fixed assets. However, the location and
the extent of area in few in respect of land needs to be updated update
the location and extent of area in the fixed assets registers and have
to be reconciled with the revenue records as to the extent of holding
and location in respective plants in the fixed assets of land. The
delay is attributable to procedural matters involved in ascertaining
and reconciling with revenue records registers.This is a continuous
process. maintained by the revenue departments of state governments
involved.
b. The fixed assets of the Company have
been physically verified by the management
at reasonable intervals in a phased Necessary action is
being taken to
manner so as to generally cover all the
assets once in three years. However, it is
observed that certain land and evict the occupants from
land and
buildings are under encroachment/
unauthorised occupation. As informed to
us, no material discrepancies have been buildings under
encroachment/
noticed on such verification. unauthorised occupation.
c. According to the information and
explanations given to us and on
basis of our examination of records of the
Company, the title deed of immovable
property are held in name of company except
in following instances:
Particulars Freehold Land Leasehold Land Building
Not in name of
company 40565.76 acres 17297.73 acres 1312 sq. Mtr and
l case
Gross block of land
not 120.52 146.62 0.69
in name of Company
(Rs. in Crore)
Net block of land
not in 120.52 126.25 0.44
name of Company (Rs.
in Crore)
ii. In respect of physical verification of Inventory:
a. The inventories have been physically verified by the management
with reasonable frequency during the year. In certain cases, the stocks
have been verified on the basis of visual survey/estimates.
b. In our opinion and according to the information and explanations
given to us, discrepancies noticed on physical verification of
inventories were not material and have been properly dealt with in the
books of account.
iii. In our opinion and according to the information and explanations
given to us, the Company has not granted any loans, secured or
unsecured, to companies, firms or other parties listed in the Register
maintained under Section l89 of the Companies Act, 2013. Therefore,
clauses (iii) (a) and (iii) (b) of Paragraph 3 of the Order are not
applicable to the Company
iv. The Company has not granted any loans or made any investments or
given any guarantee and security covered under Sections l85 and l86 of
the Companies Act, 20l3.
v. According to the information and explanations given to us, the
Company has not accepted any deposits from public during the year.
Accordingly, paragraph 3(v) of the Order is not applicable to the
Company.
vi. The Company has made and maintained cost records pursuant to the
Companies (Cost Records and Audit) Rules, 2014 prescribed by the
Central Government under Section 148(1) of the Companies Act, 2013.
vii. According to the information and explanations given to us in
respect of statutory dues:
a. The Company has generally been regular in depositing undisputed
statutory dues, including Provident Fund, Employees'' State Insurance,
Income-tax, Sales Tax, Service Tax, Duty of Customs, Duty of Excise,
Value Added Taxes, Cess and other Statutory Dues to the appropriate
authorities. According to the information and explanations given to us,
there are no undisputed statutory dues outstanding for a period of more
than six months from the date they became payable, as per books of
accounts as at 31st March, 2016.
b. According to the information and explanations given to us, there
are disputed statutory dues, which have not been deposited as on 31st
March, 2016 as given herein below:
Statute Nature of Dues Amount Forum where disputes
(Rs.
crore) are pending
Sales Tax Sales tax and VAT 6.51 Supreme Court
& VAT Demands 604.06 High Courts
624.35 Sales Tax Tribunals
121.01 Sales Tax Departments
Entry Tax Entry tax 1091.02 Supreme Court
666.29 High Courts
12.14 Tribunal
20.44 Department
Central Excise Excise Duty 152.02 Supreme Court
Act, 1944 140.14 High Courts
990.00 CESTAT
751.55 Department
Service Tax Service Tax 137.96 CESTAT
82.29 Department
Customs Duty Customs Duty 5.09 CESTAT
Income Tax TDS on Perks 46.74 Supreme Court
Act, 1961 105.94 High Courts
Other TDS matters 105.79 High Courts
1.67 ITAT
0.89 Department of
Income Tax
Income Tax Disputes 194.52 High Courts
522.33 ITAT
350.85 Department of
Income Tax
TOTAL 6733.60
viii. The Company has not defaulted in repayment of loans or
borrowings to a financial institutions, banks, government or dues to
debenture holders during the year. Accordingly, paragraph 3(viii) of
the Order is not applicable to the Company.
ix. The Company did not raise any money by way of initial public offer
or further public offer (including debt instruments).
Term loans from banks and financial institutions have been applied for
the purpose for which they were obtained.
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. As per notification No. GSR 463(E) dated 5th June 2015 issued by
the Ministry of Corporate Affairs, Government of India, Section 197 of
the Companies Act, 2013 is not applicable to the Company. Accordingly,
paragraph 3(xi) of the Order is not applicable.
xii. 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 sections l77 and l88 of
the Companies Act, 2013 where applicable and details of such
transactions have been disclosed in the financial statements as
required by the applicable accounting standards.
xiv. According to the information and explanations give to us and based
on our examination of the records, 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 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.
For B.N. Misra & Co For Sharma Goel & Co., LLP For and on behalf of
Board of Directors
Chartered Accountants Chartered Accountants
Firm Registration
no.32l095E Firm Registration
no.000643N
Sd/- Sd/-
[ B.N.Misra ] [ Amar Mittal ]
Partner Partner
(M. No. 083927) (M. No. 017755 ) Sd/-
For Singhi & Co. For Chatterjee & Co. (P.K. Singh)
Chartered
Accountants Chartered Accountants Chairman
Firm Registration
no.302049E Firm Registration
no.0302114E
Sd/- Sd/-
[ Shrenik Mehta ] [ S.K Chatterjee]
Partner Partner
(M. No. 063769) (M. No. 003124)
Place : New Delhi Place : New Delhi
Dated : 30th May, 2016 Date : 11th August,
2016
Mar 31, 2015
Report on the Standalone Financial Statements
We have audited the accompanying Standalone financial statements of
Steel Authority of India Limited ("the Company"), which comprise the
Balance Sheet as at March 31, 2015, the Statement of Profit and Loss,
the Cash Flow Statement and a summary of significant accounting
policies and other explanatory information for the year then ended.
Management''s Responsibility for the Standalone 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 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. 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
Our responsibility is to express an opinion on these standalone
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 thereunder.
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 the ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the Standalone
financial statements are free from material misstatement.
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 the internal financial control
relevant to the Company preparation of the Standalone 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 control 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
Standalone 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 Standalone
Financial Statements.
Basis for Qualified Opinion
1. The Company has not provided for;
a) entry tax amounting to Rs.94.89 crore (current year Rs.3.34 crore)
in the state of Uttar Pradesh, Rs.1084.32 crore (current year Rs.13.04
crore) in the state of Chhatisgarh and Rs.333.95 crore (current year
Rs.119.14 crore) in the state of no.29.2(a));
b) amount paid to DVC against bills raised for supply of power and
retained as advance by Bokaro Steel Plant amounting to Rs.393.59 crore
( current year Rs.101.83 crore) (refer note no. 29.2(b));
2. At Salem Steel Plant, inventory includes estimated quantity of 9089
MT of skull extractable from slag valued at Rs.51.80 Crore. Valuation
of skull was not justified since there is no separate distinguishable
physical existence of 9089 MT of skull and therefore cannot be
considered as inventory as on 31-03-2015. Further, this constitutes a
departure from Para 9 of the Guidance note on Audit of inventories,
which states that all recorded inventories should exist at year end, as
there is no identifiable skull as such and hence should not have been
considered as inventory to that extent.
The total impact of above para (1) to (2) has resulted in,
overstatement of Profit before Tax for the year by 1289.15 crore,
overstatement of Reserves & Surplus by 11958.55 crore (Previous Year
11669.40 crore), understatement of Current Liabilities by 11906.75
crore (Previous Year 11669.40 crore) and overstatement of Current
Assets by 151.80 crore (Previous Year INil).
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion above, the aforesaid
Standalone 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, 2015;
(b) in the case of the Statement of Profit and Loss, of the profit 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.
Emphasis of Matter
We draw attention to;
i. net sales include sales to Government agencies which are recognised
on provisional contract prices (refer note no.32.1);
ii. based on technical opinion, the Co. has adopted effective useful
life of Plant & Machinery used in the manufacture of steel as a
continuous process plant working on three shift basis, which is
different from useful life as prescribed in Schedule II of the
Companies Act, 2013 (refer note no.32.9);
Our opinion is not qualified in respect of these matters.
Other Matter
We did not audit the financial statements of 9(Nine) Plants/Units
included in the standalone financial statements of the Company whose
financial statements / financial information reflect total assets of
174,872.72 crore as at 31st March, 2015 and total revenues of
Rs.23,883.15 crore for the year ended on that date, as considered in
the standalone financial statements. The financial
statements/information of these Plants/Units have been audited by the
branch auditors, appointed by Comptroller & Auditor General of India,
whose reports have been furnished to us, and our opinion in so far as
it relates to the amounts and disclosures included in respect of these
Plants/Units, is based solely on the report of such Plants/Units
auditors. Our opinion is not qualified in respect of this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2015 ("the
Order") issued by the Central Government 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.
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
purposes of our audit.
(b) Except for the effect of the matter described in the Basis for
Qualified opinion paragraph above, in our opinion, proper books of
accounts 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 Plants/ Units
not visited by us.
(c) The reports on the accounts of the Plants/Units of the Company
audited under Section 143 (8) of the Act by Plants/Units auditors have
been sent to us and have been properly dealt with by us in preparing
this report.
(d) The Balance Sheet and Statement of Profit and Loss and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account.
(e) Except for the effects of the matter described in the Basis for
Qualified Opinion paragraph above, in our opinion, the aforesaid
Standalone financial statements comply with the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014.
(f) The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may not have an adverse effect on the
functioning of the Company. (g) On the basis of the written
representations received from the Directors as on 31 March, 2015 taken
on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2015 from being appointed as a director
in terms of Section 164(2) of the Companies Act, 2013.
(h) 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 has disclosed the impact of pending litigations on its
financial position in its financial statements  Refer Note 29 to the
financial statements;
ii. the Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses;
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by Company.
3. As required by section 143(5) of the Act, we give in Annexure - B,
a statement on the matters specified by the Comptroller and Auditor
General of India for the Company.
(Referred to in paragraph 1 of our Report on Other Legal and Regulatory
Requirements relevant to paragraph 3 & 4 of "the Order")
(i) In respect of its fixed assets:
(a) The Company has maintained proper records showing in most cases,
full particulars including quantitative details and situation of its
fixed assets.
However the location and extent of area in few of the plants in respect
of land needs to be updated in the fixed assets registers and have to
be reconciled with the revenue records as to the extent of holding and
location of land. The delay is attributable to procedural matters
involved in ascertaining and reconciling with revenue records
maintained by the revenue departments of the state governments
involved.
b) The fixed assets of the Company have been physically verified by the
management at reasonable intervals in a phased manner so as to
generally cover all the assets once in three years. However, it is
observed that certain land and buildings are under
encroachment/unauthorised occupation. As informed to us, no material
discrepancies ave been noticed on such verification.
(ii) In respect of physical verification of Inventory:
a) The inventories have been physically verified by the management with
reasonable frequency during the year. In certain cases, the stocks have
been verified on the basis of visual survey/estimates.
b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventories
followed by the management are generally reasonable and adequate in
relation to the size of the Company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and discrepancies noticed on physical verification of
inventories were not material and have been properly dealt with in the
books of account.
(iii) In our opinion and according to the information and explanations
given to us, the Company has not granted any loans, secured or
unsecured, to companies, firms or other parties listed in the Register
maintained under Section 189 of the Companies Act, 2013. Therefore,
clauses (iii) (a) and (iii) (b) of Paragraph 3 of the Order are not
applicable to the Company.
iv) In our opinion and according to the information and explanations
given to us, there are internal control systems 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, we have not observed any major
weaknesses in the internal control system.
v) According to the information and explanations given to us, the
Company has not accepted any deposits from public during the year
within the meaning of sections 73 to 76 or any other relevant
provisions of the Companies Act, 2013 and the Companies Acceptance of
deposits) Rules, 2014.
vi) The Company has made and maintained cost records pursuant to the
Companies (Cost Records and Audit) Rules, 2014 prescribed by the
Central Government under Section 148(1) of the Companies Act, 2013.
vii) According to the information and explanations given to us in
respect of statutory dues:
a) The Company has generally been regular in depositing 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 Taxes, Cess and other Statutory Dues with the
appropriate authorities. According to the information and explanations
given to us, there are no undisputed statutory dues outstanding for
aperiod of more than six months from the date they became payable, as
per books of accounts as at 31st March, 2015
b) According to the information and explanations given to us, there are
disputed statutory dues, which have not been deposited as on 31st
March, 2015 as given herein below:
Statute Nature of Dues Amount Forum where
(Rs. crore) disputes are pending.
Sales Tax
& VAT Demand by 3.04 Supreme Court
Appellate 184.55 High Courts
Authorities 576.67 Sales Tax Tribunals
124.22 Sales Tax Departments
Central
Excise Excise Duty and 19.74 Supreme Court
Act, 1944 Service Tax 209.56 High Courts
(including 1265.24 CESTAT
service
tax) 249.77 Department of Excise
Income Tax TDS on Perks 46.74 High Courts
Act, 1961 TDS Refund
Claim 124.13 High Courts
Income Tax
Disputes 516.40 Department of
Income Tax
566.03 ITAT
Other
Statutes Other
Statutory Dues 3505.64 Supreme Court
(including Cess) 498.76 High Courts
21.02 Lower Courts
253.76 Concerned
Department
TOTAL 8165.27
c) According to the information and explanations given to us, amounts
which were to be transferred to Investor Education and Protection Fund
in accordance with the relevant provisions of the Companies Act, 1956
(1 of 1956) and rules made there under has been transferred to such
fund.
viii) There are no accumulated losses of the company as at the end of
the year. The Company has not incurred cash losses during the
financial year covered by our audit and the immediately preceding
financial year.
ix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
Financial Institutions or Banks or Debenture holders.
x) 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
xi) To the best of our knowledge and belief and according to the
information and explanations given to us, in our opinion, the term
loans availed by the Company were, prima facie, applied by the Company
during the year for the purpose for which the loans were obtained other
than temporary deployment pending application.
xii) To the best of our knowledge and belief and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year.
For O.P.
Totla & Co. For B.N.
Misra & Co. For Sharma
Goel & Co. LLP For and on behalf of
the Board of Directors
Chartered
Accountants Chartered
Accountants Chartered
Accountants
Firm
Registration
No. Firm
Registra
tion No. Firm
Registration
No.
000734C 321095E 000643N
Sd/- Sd/- Sd/- Sd/-
[ Rajendra
P. Totla ] [ B. N.
Misra ] [ Amar Mittal ] (Rakesh Singh)
Partner Partner Partner Chairman
(M. No.
400658) (M. No.
083927) (M. No. 017755)
Place : New
Delhi Place : New
Delhi
Dated : 29th
May,
2015 Dated : 3rd
July, 2015
Mar 31, 2014
We have audited the accompanying financial statements of Steel
Authority of India Limited ("the Company"), which comprise the Balance
Sheet as at 31st March 2014, the Statement of Profit and Loss and the
Cash Flow Statement for the year then ended and a summary of
significant accounting policies and other explanatory information, in
which are incorporated the Accounts of Plants, Units, Branches and
Other Offices audited by the Branch Auditors in accordance with the
letter of appointment of Comptroller & Auditor General of India.
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) of section 211
of 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.
Auditors'' 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
purpose of expressing an opinion on the effectiveness of the entity''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 believe that the audit
evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
Basis for Qualified Opinion
1. The Company has not provided for;
a) entry tax amounting to Rs.91.55 crore( current year Rs.9.91 crore) in
the state of Uttar Pradesh, Rs 1071.28 crore (current year Rs.182.82
crore) in the state of Chhatisgarh and Rs.214.81 crore (current year
Rs.44.49 crore) in the state of Odisha (refer note no.28.2(a));
b) claims of Rs.291.76 crore (current year Rs.74.36 crore) by DVC for
supply of Power (refer note no. 28.2(b));
2. In respect of Rourkela Steel Plant (RSP), depreciation and interest
has been short provided by Rs.104.92 crore and Rs.28.74 crore respectively
( refer note no. (30.2 )). resulting in overstatement of profit by
Rs.133.66 crore and fixed assets by similar amount.
The total impact of para (1) to (2) has resulted in overstatement of
profit for the year by Rs.455.24 crore, cumulative Profit by Rs.1803.06
crore, understatement of Liability by Rs.1669.40 crore, overstatement of
fixed assets by Rs.133.66 crore (including interest during construction
Rs.28.74 crore).
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion
The mentioned cases are sub-judice and pending before the Hon''ble
Supreme Court. The disputed demands, contested on valid and bonafide
grounds, have been disclosed as contingent liabilities as it is not
probable that present obligations exist on the Balance Sheet date.
Therefore, there is no adverse impact on profit. These cases were
sub-judice as on 31st March, 2012 also and there is no change in the
status of these cases during the Financial Years 2012-13 & 2013-14.
As part of its Modernization and Expansion Plan / other Capital Schemes
in Rourkela Steel Plant, the Assets have been capitalized after
installation, trial run, removal of all defects, issue of acceptance
certificate and having become ready for commercial production during
the year. The capitalisation has been done in accordance with
applicable Accounting Standards and Generally Accepted Accounting
Principles. The position has been adequately explained in Note No. 30.2
forming part of the financial statements. Therefore, there is no over
statement of profit. paragraph, 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 and Loss, of the profit 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.
Emphasis of Matter
We draw attention to:
i. Claims/demands against the Company where the Company has lost in
the first or subsequent appeals and has made further appeals before
higher courts / forums (refer note no. 28 (f));
ii. Sales to Government agencies recognised on provisional contract
prices (refer note no. 32.1);
iii. Capitalisation at IISCO Steel Plant (valuing Rs.5457.48 crore)
during the financial year (refer note no. 30.1);
iv. Capital work-in-progress includes Rs.115.38 crore in respect of
Steel processing Unit at Bettiah not yet capitalised [refer note
no.29.4(b)]; v. Balance confirmation, reconciliation and consequential
adjustments, if any (refer note no. 31.3);
vi. Reversal of pension component of employee benefit expenses of
Rs.201.21 crores and expenditure during construction Rs.9.63 crores [refer
note no. (32.8)]; vii. Prior period income includes Rs. 120.94 crores
towards write back of depreciation on certain fixed assets, erroneously
depreciated earlier at 100% instead of 95% required as per the
Company''s policy and Schedule XIV of the Companies Act, 1956 read with
section 205 and 350 of the Companies Act, 1956. [refer note no.
32.3(a)] ;
viii. Prior period income includes interest of Rs. 20.67 crore received
on short term deposits held in the name of District & Session Judge A/c
land, for payment to land oustees [refer note no.(32.3(b)] ;
ix. Net realisable value of assets retired from active use (refer note
no.29.3) ;
x. Explosion of Boiler no.3, lying in capital work in progress valuing
Rs.37 crore at IISCO Steel Plant. Loss due to damage, if any, is not yet
determined (refer note no.30.4); Our opinion is not qualified in
respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") 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.
2. As required by Section 227(3) of the Act, we report that:
a. 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;
b. In our opinion proper books of accounts 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 Plants/ Units/ Branches /Other Offices not
visited by us. The Branch Auditors'' reports have been forwarded to us
and have been appropriately dealt with;
c. Except for the matter described in the Basis for Qualified Opinion
paragraph, in our opinion, the Balance Sheet, Statement of Profit and
Loss, and Cash Flow Statement comply with the accounting standards
referred to in sub-section (3C) of Section 211 of the Companies Act,
1956 read with the General Circular 15/2013 dated 13 September 2013 of
the Ministry of Corporate Affairs in respect of Section 133 of the
Companies Act, 2013.; and
d. Except for the matter described in the Basis for Qualified Opinion
paragraph, in our opinion, the Balance Sheet, Statement of Profit and
Loss, and Cash Flow Statement comply with the accounting standards
referred to in sub-section (3C) of Section 211 of the Companies Act,
1956;
e. On the basis of written representations received from the directors
as on 31 March, 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 Companies Act, 1956.
Annexure to the Auditor''s Report (Referred to in paragraph 1 of our
Report on Other Legal and Regulatory Requirements)
1. a) The Company has maintained proper records showing in most cases,
full particulars including quantitative details and situation of its
fixed assets. However, the location and extent of area in few of the
plants in respect of land needs to be updated in the fixed assets
registers and have to be reconciled with the revenue records as to the
extent of holding and location of land
b) The fixed assets of the Company have been physically verified by the
management at reasonable intervals in a phased manner so as to
generally cover all the assets once in three years. However, it is
observed that certain land and buildings are in unauthorised
occupation. As informed to us, no material discrepancies have been
noticed on such verification wherever reconciliation has been carried
out.
c) In our opinion and according to the information and explanations
given to us, there is no substantial disposal of fixed assets during
the year.
2. a) The inventories have been physically verified by the management
with reasonable frequency during the year. In certain cases, the stocks
have been verified on the basis of visual survey/estimates.
b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventories
followed by the management are generally reasonable and adequate in
relation to the size of the Company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventory. The discrepancies between physical stocks and book records
arising out of physical verification, which were not material, have
been dealt with in the books of account.
3. According to information and explanations given to us, the Company
has not granted or taken any secured or unsecured loans, to or from
companies, firms, or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Consequently, clauses
(iii)(a) to (iii)(g) of paragraph 4 are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems 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.
5. a) According to the information and explanations given to us, we are
of the opinion that there are no contract or arrangement of the
Company, referred to in Section 301 of the Companies Act, 1956, which
requires to be entered in the register required to be maintained under
that section. b) According to the information and explanations given
to us, there are no transactions of purchase of goods and materials and
sale of goods, materials and services made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act 1956, and aggregating during the year to Rs.5,00,000 or
more with any party.
6. The Company has not accepted any public deposits during the year. In
respect of public deposits accepted in earlier years, there are no
unmatured outstanding deposits.
7. The Company has an internal audit system, which is generally
commensurate with the size and nature of its business.
8. We have broadly reviewed the records maintained by the Company
pursuant to the rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act 1956, and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained in respect of the
applicable products. We have not, however, made a detailed examination
of the records with a view to determine whether these are accurate and
complete.
9. According to the information and explanations given to us in respect
of statutory and other dues:
a) The Company has been generally regular in depositing undisputed
statutory dues including Provident Fund, Investors Education and
Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
Wealth Tax, Service Tax, Customs duty, Excise duty, Cess and other
statutory dues, with appropriate authorities.
b) According to the information and explanations given to us, there are
no undisputed statutory dues outstanding for a period of more than six
months from the date they became payable, as per books of accounts as
at 31st March, 2013.
a) According to the information and explanations given to us, there are
disputed statutory dues, which have not been deposited as on 31st
March, 2014 as given herein below:
Statute Nature of Dues Amount Forum where
(Rs.in crore) disputes are pending.
Sales Tax
& VAT Demand by 3.05 Supreme Court
Appellate
Authorities 158.47 High Courts
548.35 Sales Tax Tribunals
90.73 Sales Tax Departments
800.60
Central
Excise Excise Duty 19.59 Supreme Court
Act, 1944 185.13 High Courts
598.74 CESTAT
351.40 Department of Excise
1154.86
Income Tax TDS on Perks 132.67 High Courts
Act, 1961 TDS Refund Claim 8.11 High Courts
Income Tax Disputes 155.77 Department of Income
Tax
194.52 ITAT
491.07
Other
Statutes Other Statutory Dues 960.78 Supreme Court
(including Cess) 1930.86 High Courts
57.48 Lower Courts
302.16 Concerned Department
3251.28
TOTAL 5697.81
10. There are no accumulated losses of the Company as at the end of the
year. The Company has not incurred cash losses during the financial
year covered by our audit and the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution or bank or bond holder.
12. 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.
13. The Company is not a chit fund or a Nidhi/mutual benefit
fund/society. Therefore, the provisions of clause 4 (xiii) of the
Order, are not applicable to the Company.
14. The Company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of clause
4(xiv) of the Order, are not applicable to the Company.
15. According to the information and explanations given to us, the
terms and conditions of the guarantees given by the Company for loans
taken by others from banks or financial institutions are not
prima-facie prejudicial to the interest of the Company.
16. To the best of our knowledge and belief, and according to the
information and explanations given to us, in our opinion, the term
loans availed by the Company were, prima facie, applied by the Company
during the year for the purpose for which the loans were obtained other
than temporary deployment pending application.
17. 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 of the company.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under Section 301 of
the Companies Act, 1956.
19. According to the information and explanations given to us and
records examined by us, charges have been created in respect of secured
bonds issued.
20. The Company has not raised any money by public issue during the
year.
21. To the best of our knowledge and belief and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year except in
Visvesvaraya Iron & Steel Plant Bhadravati, an employee of the company
was involved in delivery material without following the specified
procedures of collection of advances for sale of products. An amount of
Rs.2.68 crore remains unrecoverable on this account.
The procedures have been strengthened to avoid the recurrence of such
case. A complaint has been filed with the Police and the matter is
under investigation. Also, efforts are being made to recover the
balance amount of Rs.2.68 crore.
For S.K.
Mittal & Co. For O.P. Totla & Co. For B.N. Misra & Co. For and on
behalf of the
Board of
Directors
Chartered
Accountants Chartered
Accountants Chartered Accountants
Firm Registr
-ation No. Firm Regist
-ration No. Firm Registration No.
001135N 000734C 321095E
Sd/- Sd/- Sd/- Sd/-
[S.K.Mittal] [ S.K Acharya] [S.C.Dash] (C. S. Verma)
Partner Partner Partner Chairman
(M.No. 8506) (M. No. 78371) (M. No. 050020)
Place : New Delhi Place: New Delhi
Dated : 28th May, 2014 Dated: 11th August, 2014
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of Steel
Authority of India (SAIL) Limited ("the Company"), which comprise the
Balance Sheet as at March 31,2013, and the Statement of Profit and Loss
and Cash Flow Statement for the year then ended, and a summary of
significant accounting policies and other explanatory information, in
which are incorporated the Accounts of Plants, Units, Branches and
Other Offices audited by the Branch Auditors in accordance with the
letter of appointment of Comptroller & Auditor General of India.
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) of 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.
Auditors'' 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.
Basis for Qualified Opinion
The Company has not provided for;
a) entry tax amounting to Rs.81.64 crore (current year Rs. 17.62 crore)
in the state of Uttar Pradesh, (refer note no.28.2(a));
b) entry tax of Rs.888.46 crore (current year Rs. 163.83 crore) in the
state of Chhatisgarh and Rs. 170.32 crore (current year Rs.39.20 crore
) in the state of Odisha (refer note no. 28.2(b));
c) income tax demand of Rs.87.62 crore (refer note no. 28.2(c));
d) claims of Rs.217.40 crore ( current year Rs.88.80 crore) by DVC for
supply of Power (refer note no. 28.2(d));
The impact of para (a) to (d) has resulted in overstatement of profit
for the current year by Rs.397.07 crore, cumulative Profit by
Rs.1445.44 crore and understatement of Liability by Rs.1445.44 crore.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis for Qualified Opinion paragraph, 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 profit 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.
Emphasis of Matter
We draw attention to:
i. Pending finalisation of fresh agreement with non-executives in
respect of wage revision due from 1st January, 2012, we are unable to
comment on the adequacy of provision of Rs.611.03 crore (including
Rs.549.95 crore provided during the year) (refer note no.32.6);
ii. In view of the assumptions provided by the Company relating to the
salary escalation rates, we are unable to comment on the adequacy of
provision for retirement employee benefits based on actuarial valuation
as per Accounting Standard -15 : ''Employee Benefits'' issued by the
Ministry of Corporate Affairs (refer note no. 33.1.2(f));
iii. Regarding treatment of mining as a separate segment, as per
Accounting Standard-17 "Segment Reporting", issued by the Ministry of
Corporate Affairs (refer note no. 33.2 (iii) );
iv. Charging off consultancy fee in respect of deferred capital
schemes, amounting to Rs.107.17 crore (refer note no. 30.4 (a) and
non-capitalisation of assets valued at Rs.981.83 crore (refer note no.
30.4 (b));
v. Claims / demands against the Company Rs.85.34 crore where the
Company has lost in the first or subsequent appeals and has made
further appeals before higher courts / forums (refer note no.28.2 (f));
vi. Water Tax in the State of Odisha amount indeterminable. (refer
note no.28.2 (e));
vii. Net realisable value (NRV) of assets retired from active use
(refer note no.30.3 );
viii. Sales to Government agencies recognised on provisional contract
prices (refer note no.32.1);
ix. Change in basis of accounting of Mining Rights, resulting in
higher profit of Rs.214.14 crore for the year (refer note no.32.8);
x. Balance confirmation, reconciliation and consequential adjustments,
if any (refer note no. 31.3);
Our opinion is not qualified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") 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.
2. As required by Section 227(3) of the Act, we report that:
a. 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;
b. in our opinion proper books of accounts 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 Plants/ Units/ Branches /Other Offices not
visited by us. The Branch Auditors'' reports have been forwarded to us
and have been appropriately dealt with;
c. the Balance Sheet, Statement of Profit & Loss, and Cash Flow
Statement dealt with by this Report are in agreement with the books of
account and with the audited returns received from Plants/
Units/Branches/ Other Offices not visited by us;
d. except for the matter described in the Basis for Qualified Opinion
paragraph, 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 Companies Act,
1956;
e. 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 Companies Act, 1956.
1. a) The Company has maintained proper records showing in most cases,
full particulars including quantitative details and situation of its
fixed assets.
b) The fixed assets of the Company have been physically verified by the
management at reasonable intervals in a phased manner so as to
generally cover all the assets once in three years. However, it is
observed that certain land and buildings are in unauthorised
occupation. As informed to us, no material discrepancies have been
noticed on such verification wherever reconciliation has been carried
out.
c) In our opinion and according to the information and explanations
given to us, there is no substantial disposal of fixed assets during
the year.
2. a) The inventories have been physically verified by the management
with reasonable frequency during the year. In certain cases, the stocks
have been verified on the basis of visual survey/ estimates.
b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventories
followed by the management are generally reasonable and adequate in
relation to the size of the Company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventory. The discrepancies between physical stocks and book records
arising out of physical verification, which were not material, have
been dealt with in the books of account.
3. According to information and explanations given to us, the Company
has not granted or taken any secured or unsecured loans, to or from
companies, firms, or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Consequently, clauses
(iii)(a) to (iii)(g) of paragraph 4 are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems 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, certain weaknesses in
internal control system are observed in accounting transactions,
interface of transactions amongst the sub systems and SAP-ERP. Further,
no system audit is carried out for interface of the data from
functional sub systems to SAP-ERP and other critical business
processes, to establish checks to complete and proper recording of the
transactions.
5. a) According to the information and explanations given to us, we
are of the opinion that there are no contract or arrangement of the
Company, referred to in Section 30l of the Companies Act, l956, which
requires to be entered in the register required to be maintained under
that section.
b) According to the information and explanations given to us, there are
no transactions of purchase of goods and materials and sale of goods,
materials and services made in pursuance of contracts or arrangements
entered in the register maintained under Section 301 of the Companies
Act l956, and aggregating during the year to Rs.5,00,000 or more with
any party.
6. The Company has not accepted any public deposits during the year.
In respect of public deposits accepted in earlier years, there are no
unmatured outstanding deposits.
7. The Company has an internal audit system, which is generally
commensurate with the size and nature of its business. However it needs
improvement in scope and coverage. In view of implementation of SAP-ERP
and other functional packages, it requires further strengthening.
8. We have broadly reviewed the records maintained by the Company
pursuant to the rules made by the Central Government for the
maintenance of cost records under Section 209(l)(d) of the Companies
Act l956, and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained in respect of the
applicable products.We have not, however, made a detailed examination
of the records with a view to determine whether these are accurate and
complete.
9. According to the information and explanations given to us in
respect of statutory and other dues:
a) The Company has been generally regular in depositing undisputed
statutory dues including Provident Fund, Investors Education and
Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
Wealth Tax, Service tax, Customs duty, Excise duty, Cess and other
statutory dues, with appropriate authorities.
b) According to the information and explanations given to us, there are
no undisputed statutory dues outstanding for a period of more than six
months from the date they became payable, as per books of accounts as
at 31st March, 2013.
c) According to the information and explanations given to us, there are
disputed statutory dues, which have not been deposited as on 31st
March, 2013, as given herein below:
Statute Nature of Dues Amount Forum where disputes
(Rs.
crore) are pending
Sales Tax Demand by Appellate 3.05 Supreme Court
& VAT
Authorities 158.47 High Courts
548.35 Sales tax tribunals
90.73 Sales tax departments
800.60
Central Excise Excise Duty 19.59 Supreme Court
Act, 1944
185.13 High Courts
598.74 CESTAT
351.40 Department of Excise
1154.86
Income Tax Act, TDS on Perks 132.67 High Courts
1961
TDS Refund Claim 8.11 High Courts
Income Tax Disputes 155.77 Department of Income
Tax
194.52 ITAT
491.07
Other Statutes Other Statutory dues 960.78 Supreme Court
(including Cess)
1930.86 High Courts
57.48 Lower Courts
302.16 Concerned department
3251.28
TOTAL 5697.81
10. There are no accumulated losses of the Company as at the end of
the year. The Company has not incurred cash losses during the financial
year covered by our audit and the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution or bank or bond holder.
12. 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.
13. The Company is not a chit fund or a Nidhi/mutual benefit
fund/society. Therefore, the provisions of clause 4 (xiii) of the
Order, are not applicable to the Company.
14. The Company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of clause
4(xiv) of the Order, are not applicable to the Company.
15. According to the information and explanations given to us, the
terms and conditions of the guarantees given by the Company for loans
taken by others from banks or financial institutions are not
prima-facie prejudicial to the interest of the Company.
16. To the best of our knowledge and belief, and according to the
information and explanations given to us, in our opinion, the term
loans availed by the Company were, prima facie, applied by the Company
during the year for the purpose for which the loans were obtained other
than temporary deployment pending application.
17. 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 of the Company.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under section 301 of
the Companies Act, 1956.
19. According to the information and explanations given to us and
records examined by us, charges have been created in respect of secured
bonds issued.
20. The Company has not raised any money by public issue during the
year.
21. To the best of our knowledge and belief and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year.
For S.K. Mittal & Co. For O.P. Totla & Co. For B.N. Misra & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Registration No. Firm Registration No. Firm Registration No.
00II35N 000734C 321095E
Sd/- Sd/- Sd/-
[S. K. Mittal] [S.R. Totla] [S.C. Dash]
Partner Partner Partner
(M. No. 8506) (M. No. 71774) (M. No. 050020)
Place : New Delhi
Date :30th May, 2013
Mar 31, 2012
We have audited the attached Balance Sheet of STEEL AUTHORITY OF INDIA
LIMITED, as on 31st March 2012, the Statement of Profit & Loss Account
and the Cash Flow Statement of the company for the year ended on that
date annexed thereto, in which are incorporated the accounts of Plants,
Units, Branches and other Offices audited by the Branch Auditors in
accordance with the letter of appointment of Comptroller & Auditor
General of India. 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 conducted our audit in accordance with the 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 the 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 by the Companies (Auditors' Report) (Amendment) Order, 2004
(hereinafter referred to as "the Order") issued by the Government of
India in terms of Section 227(4A) of the Companies Act, 1956, we
enclose in the Annexure a statement on the matters specified in
paragraphs 4 & 5 of the said Order.
4. Since the matter regarding provision of pension under
superannuation benefits for non executives remains undecided and the
amount also not ascertained, we are therefore unable to express our
opinion on the same and the effect on the accounts, if any (Refer Note
No.32.7).
5. Without qualifying our opinion, we draw attention to Note Numbers
32.1 & 32.11 of notes to financial statements.
6. Further to our comments 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 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 the
books, and proper returns adequate for the purpose of our audit have
been received from the plants/ units/ branches/other units not visited
by us. The branch auditors' reports have been forwarded to us and have
been appropriately dealt with.
iii). The Balance Sheet, the Statement of Profit & Loss Account and
the Cash Flow Statement dealt with by this report are in agreement with
the books of account and with the audited returns from the branches.
iv). In our opinion, the Balance Sheet, the Statement of Profit & Loss
Account and the 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). In terms of Government of India, Department of Company Affairs
Notification No. GSR 829(E) dated 21st October, 2003, Government
companies are exempt from the applicability of provisions of Section
274(1)(g) of the Companies Act, 1956.
In our opinion and to the best of our information and according to the
explanations given to us, the said accounts subject to our observation
given in point no.4 above and read with significant accounting policies
and notes on accounts appearing in Note 28-41, 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:
i) in case of Balance Sheet, of the state of affairs of the Company as
on 31st March 2012;
ii) in case of Statement of Profit & Loss Account, of the Profit of the
Company for the year ended on that date; and
iii) in case of the Cash Flow Statement, of the cash flows for the year
ended on that date.
1. a) The Company has maintained proper records showing in most cases,
full particulars including quantitative details and situation of its
fixed assets.
b) The fixed assets of the Company have been physically verified by the
management at reasonable intervals in a phased manner so as to
generally cover all the assets once in three years. As informed to us,
no material discrepancies have been noticed on such verification
wherever reconciliation has been carried out.
c) In our opinion and according to the information and explanations
given to us, there is no substantial disposal of fixed assets during
the year.
2. a) The inventories have been physically verified by the management
with reasonable frequency during the year. In certain cases, the stocks
have been verified on the basis of visual survey/estimates.
b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventories
followed by the management are generally reasonable and adequate in
relation to the size of the company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventory. The discrepancies between physical stocks and book records
arising out of physical verification, which were not material, have
been dealt with in the books of account.
3. According to information and explanations given to us, the Company
has not granted or taken any secured or unsecured loans, to or from
companies, firms, or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Consequently, clauses
(iii) (a) to (iii)(g) of paragraph 4 are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems 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, we have not observed any
major failures in the internal control system.
5. a) According to the information and explanations given to us, we
are of the opinion that there are no contract or arrangement of the
Company, referred to in section 301 of the Companies Act, 1956, which
requires to be entered in the register required to be maintained under
that section. b) According to the information and explanations given
to us, there are no transactions of purchase of goods and materials and
sale of goods, materials and services made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act 1956, exceeding the value of Rs.5,00,000 in respect
of any party.
6. The Company has not accepted any public deposits during the year.
In respect of public deposits accepted in earlier years, there are no
unmatured outstanding deposits.
7. In our opinion, the Company's internal audit system is generally
commensurate with the size and nature of its business.
8. We have broadly reviewed the records maintained by the Company
pursuant to the rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956, and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained in respect of the
applicable products. We have not, however, made a detailed examination
of the records with a view to determine whether these are accurate and
complete.
9. According to the information and explanations given to us in
respect of statutory and other dues:
a) The Company has been generally regular in depositing undisputed
statutory dues including Provident Fund, Investors Education and
Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
Wealth Tax, Service Tax, Custom duty, Excise duty, Cess and other
statutory dues, with appropriate authorities.
b) According to the information and explanations given to us, there are
no undisputed statutory dues outstanding for a period of more than six
months from the date they became payable, as per books of accounts as
at 31st March, 2012.
c) According to the information and explanations given to us, there are
disputed statutory dues, which have not been deposited as on 31st
March, 2012, as given herein below:
Statutes Nature of Dues Amount Forum where disputes
are
(Rs.in
crore) pending.
Sales Tax Demand by Appellate 149.00 High Courts
Authorities 509.40 Sales tax tribunals
138.64 Sales tax departments
797.04
Central Excise Excise duty 1055.09 Supreme Court
Act, 1944 69.44 High Courts
607.52 CESTAT
224.00 Department of Excise
0.32 Settlement Commission
1956.37
Income Tax Act, TDS on perks Income 175.37 High Courts
1961 Tax 200.13 Department of Income
Tax
375.50
Other Statutes Other statutory dues 646.63 Supreme Court
(including cess)
464.24 High Courts
48.98 Lower Courts
177.59 Concerned Department
1337.44
TOTAL 4466.35
10. There are no accumulated losses of the company as at the end of
the year. The Company has not incurred cash losses during the financial
year covered by our audit and the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution or bank or bond holder.
12. 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.
13. The Company is not a chit fund or a Nidhi / mutual benefit fund /
society. Therefore, the provisions of clause 4 (xiii) of the Order, are
not applicable to the Company.
14. The Company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of
clause 4(xiv) of the Order, are not applicable to the Company.
15. According to the information and explanations given to us, the
terms and conditions of the guarantees given by the Company for loans
taken by others from banks or financial institutions are not
prima-facie prejudicial to the interest of the Company.
16. To the best of our knowledge and belief, and according to the
information and explanations given to us, in our opinion, the term
loans availed by the Company were, prima facie, applied by the Company
during the year for the purpose for which the loans were obtained other
than temporary deployment pending application.
17. 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 of the company.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under Section 301 of
the Companies Act, 1956.
19. According to the information and explanations given to us and
records examined by us, charges have been created in respect of secured
bonds issued.
20. The Company has not raised any money by public issue during the
year.
21. To the best of our knowledge and belief and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year except for
frauds on the Company for an amount of Rs.0.77 crore by employees of the
Company, out of which Rs.0.52 crore have been recovered and for the
balance amount of Rs.0.25 crore, as informed, necessary action has been
taken for recovery.
For Tej Raj & Pal For S.K. Mittal & Co. For O.P. Totla & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Registration Firm Registration Firm Registration
No.304124E No.001 135N No.000734C
Sd/- Sd/- Sd/-
[Dinakar Mohanty] [S. K. Mittal] [S.R. Totla]
Partner Partner Partner
(M. No. 059390) (M. No. 8506) (M. No. 071774)
Place : New Delhi
Dated : 29th May, 2012
Mar 31, 2011
We have audited the attached Balance Sheet of STEEL AUTHORITY OF INDIA
LIMITED, as on 31st March 2011, the Profit & Loss Account and the Cash
Flow Statement of the company for the year ended on that date annexed
thereto, in which are incorporated the accounts of Plants, Units,
Branches and other Offices audited by the Branch Auditors in accordance
with the letter of appointment of Comptroller & Auditor General of
India. 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 conducted our audit in accordance with the 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 the 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 by the Companies (Auditors' Report) (Amendment) Order, 2004
(hereinafter referred to as "the Order") issued by the Government of
India in terms of Section 227(4A) of the Companies Act, 1956, we
enclose in the Annexure a statement on the matters specified in
paragraphs 4 & 5 of the said Order.
4. Since the matter regarding provision of pension under
superannuation benefits for non executives remains undecided and the
amount also not ascertained, we are therefore unable to express our
opinion on the same and the effect on the accounts, if any (Refer Note
No. 5.8).
5. Further to our comments 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 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 the
books, and proper returns adequate for the purpose of our audit have
been received from the plants/ units/ branches/other units not visited
by us. The branch auditors' reports have been forwarded to us and have
been appropriately dealt with.
iii). The Balance Sheet, the Profit & Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account and with the audited returns from the branches.
iv). In our opinion, the Balance Sheet, the Profit & Loss Account and
the 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.
The position has been adequately explained in Note No. 5.8 of the
Rs.Schedule 3: Accounting policies and notes to accounts' forming part of
the accounts.
v). In terms of Government of India, Department of Company Affairs
Notification No. GSR 829(E) dated 21st October, 2003, Government
companies are exempt from the applicability of provisions of Section
274(1)(g) of the Companies Act, 1956.
In our opinion and to the best of our information and according to the
explanations given to us, the said accounts subject to our observation
given in point no.4 above and read with significant accounting policies
and notes on accounts appearing in Schedule 3, 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:
i) in case of Balance Sheet, of the state of affairs of the Company as
on 31st March 2011;
ii) in case of Profit & Loss Account, of the Profit of the Company for
the year ended on that date; and
iii) in case of the Cash Flow Statement, of the cash flows for the year
ended on that date.
1. a) The Company has maintained proper records showing in most cases,
full particulars including quantitative details and situation of its
fixed assets.
b) The fixed assets of the Company have been physically verified by the
management at reasonable intervals in a phased manner so as to
generally cover all the assets once in three years. As informed to us,
no material discrepancies have been noticed on such verification
wherever reconciliation has been carried out. In few cases of fixed
assets, verified but not reconciled, the discrepancies are yet to be
ascertained.
c) In our opinion and according to the information and explanations
given to us, there is no substantial disposal of fixed assets during
the year.
Physical verification of fixed assets and its reconciliation with the
books is a continuous process.
2. a) The inventories have been physically verified by the management
with reasonable frequency during the year. In certain cases, the
stocks have been verified on the basis of visual survey/estimates.
b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventories
followed by the management are generally reasonable and adequate in
relation to the size of the Company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventory. The discrepancies between physical stocks and book records
arising out of physical verification, which were not material, have
been dealt with in the books of account.
3. According to information and explanations given to us, the Company
has not granted or taken any secured or unsecured loans, to or from
companies, firms, or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Consequently, clauses
(iii)(a) to (iii)(g) of paragraph 4 are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems 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, we have not observed any
major failures in the internal control system.
5. a) According to the information and explanations given to us, we
are of the opinion that there are no contract or arrangement of the
Company, referred to in Section 301 of the Companies Act, 1956, which
requires to be entered in the register required to be maintained under
that section. b) According to the information and explanations given
to us, there are no transactions of purchase of goods and materials and
sale of goods, materials and services made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act 1956, exceeding the value of Rs.5,00,000 in respect of
any party.
6. The Company has not accepted any public deposits during the year.
In respect of public deposits accepted in earlier years, there are no
unmatured outstanding deposits.
7. In our opinion, the Company's internal audit system is generally
commensurate with the size and nature of its business.
8. We have broadly reviewed the records maintained by the Company
pursuant to the rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act, 1956, and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained in respect of the
applicable products. We have not, however, made a detailed examination
of the records with a view to determine whether these are accurate and
complete.
9. According to the information and explanations given to us in
respect of statutory and other dues:
a) The Company has been generally regular in depositing undisputed
statutory dues including Provident Fund, Investors Education and
Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
Wealth Tax, Service tax, Custom duty, Excise duty, Cess and other
statutory dues, with appropriate authorities.
b) According to the information and explanations given to us, there are
no undisputed statutory dues outstanding for a period of more than six
months from the date they became payable, as per books of accounts as
at 31st March, 2011.
c) According to the information and explanations given to us, there are
disputed statutory dues, which have not been deposited as on 31st
March, 2011, as given herein below:
Statute Nature of Dues Amount Forum where
(Rs. in crore) disputes are pending
Sales Tax Demand by 113.81 High Courts
Appellate 531.56 Sales Tax Tribunals
Authorities 195.07 Sales Tax Depar
-tments
840.44
Central Excise Excise duty 1016.58 Supreme Court
Act, 1944 17.54 High Courts
675.61 CESTAT
274.04 Department of
Excise
0.32 Settlement
Commission
1984.09
Income Tax
Act, 1961 TDS on perks 161.74 High Courts
Income Tax 256.56 Department of
Income
418.30
Other Statutes Other statutory dues 1272.74 Supreme Court
(including cess) 434.68 High Courts
42.25 Lower Courts
42.04 Concerned
Department
1791.71
TOTAL 5034.54
10. There are no accumulated losses of the Company as at the end of
the year. The Company has not incurred cash losses during the financial
year covered by our audit and the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution or bank or bond holder.
12. 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.
13. The Company is not a chit fund or a Nidhi / mutual benefit fund /
society. Therefore, the provisions of clause 4 (xiii) of the Order, are
not applicable to the Company.
14. The Company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of clause
4(xiv) of the Order, are not applicable to the Company.
15. According to the information and explanations given to us, the
terms and conditions of the guarantees given by the Company for loans
taken by others from banks or financial institutions are not
prima-facie prejudicial to the interest of the Company.
16. To the best of our knowledge and belief, and according to the
information and explanations given to us, in our opinion, the term
loans availed by the Company were, prima facie, applied by the Company
during the year for the purpose for which the loans were obtained other
than temporary deployment pending application.
17. 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 of the Company.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under Section 301 of
the Companies Act, 1956.
19. According to the information and explanations given to us and
records examined by us, charges have been created in respect of secured
bonds issued.
20. The Company has not raised any money by public issue during the
year.
21. To the best of our knowledge and belief and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year except for
misappropriation of Rs. 1 crore by an employee of the Company. We have
been informed that the amount has been subsequently recovered in May,
2011 and employee has been placed under suspension.
The matter has been reported to Central Bureau of nvestigation and the
investigation is going on. First nformation Report also has been lodged
with Police Proceedings by the management in the case are also in
progress. As the Company has recovered the entire amount in May, 2011,
there is no effect on the financial results of the Company for the
year.
For T.R. Chadha & Co. For Tej Raj & Pal For S.K. Mittal & Co.
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Registration No.: Firm Registration No.: Firm Registration No.:
006711N 304124E 001135N
Sd/- Sd/- Sd/-
(Ajesh Tuli) (B. Gangaraju) (S.K. Mittal)
Partner Partner Partner
(M. No. 86424) (M. No. 7605) (M. No. 8506)
Place : New Delhi
Dated : 24th June, 2011
For and on behalf of the
Board of Directors
Sd/-
(C. S. Verma)
Chairman
Place: New Delhi
Dated: 29th July, 2011
Mar 31, 2010
We have audited the attached Balance Sheet of STEEL AUTHORITY OF INDIA
LIMITED, as on 31st March 2010, the Profit & Loss Account and the Cash
Flow Statement of the company for the year ended on that date annexed
thereto, in which are incorporated the accounts of Plants, Units,
Branches and other Offices audited by the Branch Auditors in accordance
with the letter of appointment of Comptroller & Auditor General of
India. 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.
We conducted our audit in accordance with the 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 the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
As required by the Companies (Auditors Report) Order, 2003 as amended
by the Companies (Auditors Report) (Amendment) Order, 2004
(hereinafter referred to as "the Order") issued by the Government of
India in terms of Section 227(4A) of the Companies Act, 1956, we
enclose in the Annexure a statement on the matters specified in
paragraphs 4 & 5 of the said Order.
Further to our comments in the Annexure referred to above, we report
that:
1. 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.
2. 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 the
books, and proper returns adequate for the purpose of our audit have
been received from the plants/ units/ branches/other units not visited
by us. The branch auditors reports have been forwarded to us and have
been appropriately dealt with.
3. The Balance Sheet, the Profit & Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account and the audited returns from the branches.
4. In our opinion, the Balance Sheet, the Profit & Loss Account and
the 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.
5. In terms of Government of India, Department of Company Affairs
Notification No. GSR 829(E) dated 21st October, 2003, Government
companies are exempt from the applicability of provisions of section
274(1)(g) of the Companies Act, 1956.
In our opinion and to the best of our information and according to the
explanations given to us, the said accounts read with significant
accounting policies and notes on accounts appearing in Schedule 3, 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:
i) in case of Balance Sheet, of the state of affairs of the Company as
on 31st March 2010;
ii) in case of Profit & Loss Account, of the Profit of the Company for
the year ended on that date; and
iii) in case of the Cash Flow Statement, of the cash flows for the year
ended on that date.
Annexure to the Auditors Report (Referred to our Report of even date)
1. a) The Company has maintained proper records showing in most cases,
full particulars including quantitative details and situation of its
fixed assets.
b) The fixed assets of the Company have been physically verified by the
management at Physical verification of fixed assets and its reasonable
intervals in a phased manner so as to generally cover all the assets
once reconciliation with the books is a continuous in three years. As
informed to us, no material discrepancies have been noticed on process.
such verification wherever reconciliation has been carried out. In few
cases of fixed assets, verified but not reconciled, the discrepancies
are yet to be ascertained.
c) In our opinion and according to the information and explanations
given to us, there is no substantial disposal of fixed assets during
the year.
2. a) The inventories have been physically verified by the management
with reasonable frequency during the year. In certain cases, the
stocks have been verified on the basis of visual survey/estimates.
b) In our opinion and according to the information and explanations
given to us, the procedures for physical verification of inventories
followed by the management are generally reasonable and adequate in
relation to the size of the company and the nature of its business.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventory. The discrepancies between physical stocks and book records
arising out of physical verification, which were not material, have
been dealt with in the books of account.
3. According to information and explanations given to us, the Company
has not granted or taken any secured or unsecured loans, to or from
companies, firms, or other parties covered in the register maintained
under Section 301 of the Companies Act, 1956. Consequently, clauses
(iii)(a) to (iii)(g) of paragraph 4 are not applicable.
4. In our opinion and according to the information and explanations
given to us, there are adequate internal control systems 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, we have not observed any
major failures in the internal control system.
5. a) According to the information and explanations given to us, we
are of the opinion that there are no contract or arrangement of the
Company, referred to in Section 301 of the Companies Act, 1956, which
requires to be entered in the register required to be maintained under
that section. b) According to the information and explanations given
to us, there are no transactions of purchase of goods and materials and
sale of goods, materials and services made in pursuance of contracts or
arrangements entered in the register maintained under Section 301 of
the Companies Act 1956, and aggregating during the year to Rs.5,00,000
or more with any party.
6. The Company has not accepted any public deposits during the year.
In respect of public deposits accepted in earlier years, there are no
unmatured outstanding deposits.
7. In our opinion, the Companys internal audit system is generally
commensurate with the size and nature of its business.
8. We have broadly reviewed the records maintained by the Company
pursuant to the rules made by the Central Government for the
maintenance of cost records under Section 209(1)(d) of the Companies
Act 1956, and are of the opinion that prima facie, the prescribed
accounts and records have been made and maintained in respect of the
applicable products. We have not, however, made a detailed examination
of the records with a view to determine whether these are accurate and
complete.
9. According to the information and explanations given to us in
respect of statutory and other dues:
a) The Company has been generally regular in depositing undisputed
statutory dues including Provident Fund, Investors Education and
Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
Wealth Tax, Service tax, Custom duty, Excise duty, Cess and other
statutory dues, with appropriate authorities.
b) According to the information and explanations given to us, there are
no undisputed statutory dues outstanding for a period of more than six
months from the date they became payable, as per books of accounts as
at 31st March, 2010.
c) According to the information and explanations given to us, there are
disputed statutory dues, which have not been deposited as on 31st
March, 2010, as given herein below:
Statute Nature of Dues Amount Forum where
(Rs. in crore) disputes are pending
Sales Tax Demand by 107.91 High Courts
Appellate 322.37 Sales Tax Tribunals
Authorities 435.62 Sales Tax Departments
865.90
Central Excise Excise duty 891.34 Supreme Court
Act, 1944 17.53 High Courts
742.78 CESTAT
161.65 Department of Excise
0.32 Settlement Commission
1813.62
Income Tax Act,
1961 TDS on perks 153.34 High Courts
Income Tax 134.99 Department of
Income Tax
288.33
Customs Act Custom Duty 0.66 Tribunal
Other Statutes Other statutory dues 795.36 Supreme Court
(including cess) 280.04 High Courts
37.47 Lower Courts
94.79 Concerned Department
1207.66
TOTAL 4176.17
10. There are no accumulated losses of the Company as at the end of
the year. The Company has not incurred cash losses during the financial
year covered by our audit and the immediately preceding financial year.
11. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to a
financial institution or bank or bond holder.
12. 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.
13. The Company is not a chit fund or a Nidhi/mutual benefit
fund/society. Therefore, the provisions of clause 4 (xiii) of the
Order, are not applicable to the Company.
14. The Company is not dealing in or trading in shares, securities,
debentures and other investments. Accordingly, the provisions of
clause 4(xiv) of the Order, are not applicable to the Company.
15. According to the information and explanations given to us, the
terms and conditions of the guarantees given by the Company for loans
taken by others from banks or financial institutions are not
prima-facie prejudicial to the interest of the Company.
16. To the best of our knowledge and belief, and according to the
information and explanations given to us, in our opinion, the term
loans availed by the Company were, prima facie, applied by the Company
during the year for the purpose for which the loans were obtained other
than temporary deployment pending application.
17. 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 of the company.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to parties
and companies covered in the register maintained under section 301 of
the Companies Act, 1956.
19. According to the information and explanations given to us and
records examined by us, securities have been created in respect of
secured bonds issued.
20. The Company has not raised any money by public issue during the
year.
21. To the best of our knowledge and belief and according to the
information and explanations given to us, we report that no fraud on or
by the Company has been noticed or reported during the year.
For Chaturvedi & Co. For T.R. Chadha & Co. For Tej Raj & Pal
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Registration No.: Firm Registration No.: Firm Registration No.:
302137E 006711N 304124E
Sd/- Sd/- Sd/-
(S.C.Chaturvedi) [Ajesh Tuli) (P. Venugopala Rao)
Partner Partner Partner
(M. No. 12705) (M. No. 86424) (M. No. 10905)
Place :New Delhi
Dated : 28th May, 2010
For and on behalf of the
Board of Directors
Sd/-
(C. S. Verma)
Chairman
Place: New Delhi
Dated: 21st August, 2010
Mar 31, 2010
We have audited the attached Balance Sheet of Maharashtra Elektrosmelt
Limited as at 31st March, 2010, the Profit and Loss Account and Cash
Flow Statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Companys
management. Our responsi- bility is to express an opinion on these
financial statements based on our audit.
We 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 mis-statement. 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.
As required by The Companies (Auditors Report) Order 2003 (as amended)
issued by the Central Government of India in terms of section 227 (4A)
of the Companies Act 1956, and on the basis of such checks of the books
and records of the Company as we considered appropriate and according
to the information and explanations given to us, we enclose in the
Annexure a statement on the matters specified in paragraphs 4 and 5 of
the said order.
Further to our comments 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 it appears from our examination of
those books;
(iii) The Balance Sheet, Profit and 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 and 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 to the extent applicable.
(v) The provisions of Section 274(1 )(g) of the Companies Act, 1956 are
not applicable to the Government Company in terms of Notification No.
GSR 829(E) dated 21st October, 2003 issued by the Department of Company
Affairs, Ministry of Finance, Government of India.
(vi) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read 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 31s1 March, 2010; and
(b) in the case of the Profit and Loss Account, of the profit for the
year ended on that date and
(c) in the case of Cash Flow Statement, of the cash flows for the year
ended on that date.
Annexure to the Auditors Report (Referred to in our report of even
date)
1) a) As per the information and explanations given to us, the Fixed
Assets register showing full particulars including quantitative details
and situation of Fixed Assets is compiled by the Company.
b) As per information and explanations given to us the Fixed Assets,
except those held by the employees under Furniture hire scheme have
been physically verified by the management at reasonable intervals. In
our opinion, the frequency of verification is reasonable having regard
to the size of the operations of the Company and on the basis of
explanations received no material discrepancies were noticed during the
verification.
c) In our opinion, fixed assets disposed off during the year were not
substantial and therefore do not affect the going concern assumption.
2) a) As per information and explanations given to us the inventory has
been physically verified by the management at reasonable intervals. The
inventories in transit as at 31.03.2010 have been verified by the
management with reference to subsequent receipt of materials.
b) In our opinion and according to the information and explanation
given to us, the procedures for physical verification of inventories
followed by the management are reasonable and adequate in relation tot
he size of the Company and nature of its business.
c) In our opinion, and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories. The discrepancies noticed on verfication between the
physical stocks and the book records have been adequately dealt with in
the books of account.
3 (a) According to the information and explanation given to us, the
company has not granted any loans, secured or unsecured to companies,
firms or other parties covered in the register maintained under section
301 of the Act. Accordingly clause 4(iii) (b) to (d) of the order is
not applicable to the Company.
(b) According to the information and explanations given to us, the
Company has not taken any loans, secured or unsecured, from Companies,
firms and other parties covered in the register maintained under
Section 301 of the Companies Act, 1956. Accordingly clause 4(iii) (f)
to (g) of the order is not applicable to the Company.
4. In our opinion and according to the information and explanations
given to us, the company has adequate internal control system
commensurate with the size of the company and the nature of its
business with regard to purchase of inventories and fixed assets and
for the sale of goods and services. Further, on the basis of our
examination and according to the information and explanations given to
us, we have neither come across nor have we been informed of any
instance of continuing failure to correct major weaknesses in internal
control.
5. According to the information and explanations given to us, there
are no contracts and arrangements referred to in Section 301 of the
Companies Act, 1956, particulars of which need to be entered into a
register maintained under Section 301 of the Act. Accordingly clause
4(v)(b) of the order is not applicable to the Company.
6. The Company has not accepted any deposits during the year from the
public within the meaning of the directives issued by the Reserve Bank
of India and the provisions of sections 58A and 58AA or any other
relevant provisions of the Act and the rules framed there under, other
than the amount retained under Employees Family Benefit Scheme for
which exemption under Section 58Aof the Companies Act, 1956 has been
obtained by the Company.
7. In our opinion, the Companys internal audit system, generally
commensurate with the size and nature of its business, is required to
be strengthened further with regard to enlarging the scope and
frequency of the coverage.
8. According to information and explanations given to us the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of section 209 of the Act.
9. a) According to the information and explanations given to us, the
Comapny is generally regular in depositing with appropriate regulatory
authorities undisputed statutory dues including. Provident Fund,
Investor Education and Protection Fund, Income-Tax, Sales-Tax, Service
Tax, Custom Duty, Excise Duty /Cess and Profession Tax.
b) According to the information and explanations given to us, no
undisputed dues payable in respect of Provident Fund, Income Tax, Sales
Tax, Excise Duty, Service Tax, Profession Tax and Cess were outstanding
as at 31st March, 2010 for a period of more than six months from the
date they became payable.
c) According to the information and explanations given to us, there are
no dues of Sales Tax/Income Tax/ Custom Duty/Wealth Tax / Service Tax /
Excise Duty / Cess that have not been deposited on account of any
dispute, other than those mentioned below:
Period Amount Forum where dispute is Pending
(Rs.)
A] EXCISE DUTY
Financial Year:
1995 - 96 9,81,200 Commissioner, Central Excise (Appeals)
- Nagpur
1996 - 97 2,91,410 Commissioner, Central Excise (Appeals)
- Nagpur
1997 - 98 74,89,466 Commissioner, Central Excise (Appeals)
- Nagpur
For the period :
Apr. 2001 to
Mar. 2002 6,20,452 Commissioner, Central Excise - Nagpur
July 2000 to
Sept. 2001 68,92,496 Commissioner, Central Excise - Nagpur
Apr. 2001 to
Feb. 2004 155,79,066 Asstt. Commissioner, Central Excise
- Chandrapur
P1MVNCIPAITA*
Financial Year
1983-84 to
2002-03 1,29,98,650 High Court, Nagpur
C) GRAM PAN CHAYAT/ZILA PARISH AD CESS
1973-1974 TO
1982-83 5,32,000 Government of Maharashtra
P) INCOME TAX
2005-2006 1,27,45,359 Commissioner Appeals
2006-2007 11,62,102 Commissioner Appeals
10. The company has neither accumulated losses as at March 31, 2010
nor it has incurred any cash loss during the financial year ended on
that date and the immediately preceding financial year.
11. According to information and explanation given to us, the Company
has not defaulted in repayment of dues to any financial institution or
bank or debenture holders during the year.
12. 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.
13. The Company is not a chit or a nidhi/mutual benefit fund/society,
therefore, the clause 4(x Hi) of the Companies (Auditors Report) Order,
2003 is not applicable to the Company.
14. The Company has not dealt or traded in shares, securities,
debentures and other investments. Hence the question of maintenance of
proper records of the transactions and contracts and making timely
entries in the same does not arise.
15. According to information and explanation given to us, the Company
has not given any guarantee for loans taken by others from banks or
financial institutions and hence the question of terms and conditions
being prejudicial to the interests of the Company does not arise.
16. According to information and explanations given to us and the
records examined by us, the Company has not availed Term Loans from
Banks during the year.
17. According to information and explanation given to us, in our
opinion funds raised on short-term basis have not been used for
long-term purposes.
18. According to information and explanations given to us, the Company
has not made any preferential allotment of shares to parties and
companies covered in the register maintained under section 301 of the
Companies Act, 1956.
19. The Company has not issued any debentures in the current year.
Hence the issue of creation of charge does not arise.
20. The Company has not raised money by public issue and hence the
question of disclosure by management on the end use of money raised by
public issue and its verification does not arise.
21. In our opinion and according to the information and explanation
given to us, no fraud on or by the Company has been noticed or reported
during the year.
For Ghalla & Bhansali
Firm Registration Number: 103142W
Chartered Accountants
Sd/-
Yogesh Ravji Amal
Partner
M. No. 111636
Place: New Delhi
Date :26th May, 2010