THE MEMBERS OF
BALASORE ALLOYS LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Balasore AlloysLimited ("the Company") which comprise the Balance Sheet as at March 312017and the Statement of Profit and Loss and Cash Flow Statement for the year then ended anda summary of significant accounting policies and other explanatory information.
Management's Responsibility forthe Standalone Financial Statements
The Company's Board of Directors is responsible forthe matters stated in Section 134(5)of the Companies Act 2013 ("the Act") with respect to the preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provision of the Act for safeguarding the assets of the Company and for preventing anddetecting frauds and other irregularities; selection and application of the appropriateaccounting policies; making judgements and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and fair presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone financial statements. The procedures selected depend on theauditor's judgement including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the standalone financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
In our opinion and to the best ofour information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 312017 and its profit and its cash flows for the year ended on that date.
Emphasis of Matter
a) We draw attention to Note 30 to the standalone financial statements regarding demandby North Eastern Electricity Supply Company of Orissa Limited (NESCO) towards revocationof the waiver of dues granted under a settlement in earlier years to Company. NESCO hasraised total claim for Rs. 17616.94 Lacs as at 31st March 2017 (Rs. 16800.34 Lacs as at31st March 2016) (including delayed payment surcharge) towards revocation of the waiverof dues granted under a settlement in an earlier year net of Rs 3400 lacs already paidand provided in respective year of payment as a matter of prudence by the Company.Pursuant to the Supreme Court Order the dispute has been sent to Grievance RedressalForum (GRF). Pending outcome of the decision of GRF and based on discussion with Company'slegal counsel no provision has been made towards above demand.
b) We draw attention to Note 40 to the standalone financial statements relating topayments and expenditure incurred towards implementation of long gestation project forunderground mining. The company is in the process of making financial tie-ups for earlyimplementation of project.
Our Opinion is not qualified in respect of the aforesaid 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 sub-section (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 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 bestof our knowledge and belief were necessary for the purposes of our audit;
b) In our opinion proper books of account as required by law have been kept by theCompany so far as appears from our examination of those books;
c) The Balance Sheet Statement of Profit and Loss and Cash Flow Statement dealt withby this report are in agreement with the books of account;
d) In our opinion the aforesaid standalone financial statements comply with theaccounting standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
e) On the basis of written representations received from the directors as on March 31 2017 taken on record by the Board of Directors none of the directors is disqualified ason March 31 2017 from being appointed as a director in terms of section 164(2) of theAct;
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting;
g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rules 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 givento us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements as referred to in Note 26 and 29 to 30 tothe standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the standalone financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom November 8 2016 to December 30 2016. Based on audit procedures and relying on themanagement representation we report that the disclosures are in accordance with books ofaccount maintained by the Company and as produced to us by the Management as referred toin Note 42 to the standalone financial statements.
For Chaturvedi & Shah
Firm Registration No. 101720W
Membership No. 103141
Place : Kolkata
Date : May 19 2017
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF BALASORE ALLOYS LIMITED (Referred to in Paragraph 1 under the heading of"Report on other legal and regulatory requirements" of our report of even date)
1. In respect of its fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us no material discrepancies were noticed on suchverification.
c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deeds provided to us we reportthat the title deeds comprising all the immovable properties of lands which arefreehold are held in the name of the Company as at the balance sheet date except certainportion of land which company is in process of getting in its name. In respect ofimmovable properties of land that have been taken on lease and disclosed as fixed asset inthe financial statements the lease agreements for the said lands and building thereof arein the name of the Company except certain building which is pending for title clearance.
ii) In our opinion the inventories were physically verified during the year by theManagement at reasonable intervals and as explained to us no material discrepancies werenoticed on physical verification.
iii) In respect of the loans secured or unsecured granted by the company to companiescovered in the register maintained under Section 189 of the Act:
a. The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.
b. The repayment of principal and payment of interest are as per stipulated terms.
c. In respect of the said loan there are no overdue amounts at the end of the year.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
v. According to the information and explanations given to us the Company has notaccepted any deposit within the meaning of provisions of sections 73 to 76 or any otherrelevant provisions of the Act and the rules framed thereunder. Therefore the provisionsof clause (v) of paragraph 3 of the Order are not applicable to the Company.
vi. The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Act. We have broadly reviewed the cost records maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 prescribed by theCentral Government under Section 148(1) (d) ofthe Act and are of the opinion that primafacie the prescribed - cost records have been maintained. We have however not made adetailed examination ofthe cost records with a view to determine whether they are accurateor complete.
vii. In respectofstatutorydues:
a) According to the records of the Company undisputed statutory dues includingProvident Fund Employees' State Insurance Income-Tax Sales Tax Wealth Tax ServiceTax Customs Duty Excise Duty Value Added Tax Cess and any other statutory dues havebeen regularly deposited with the appropriate authorities except Income-Tax and servicetax. According to the information and explanations given to us undisputed amounts inrespect of the Statutory dues referred above outstanding as at 31st March 2017 for aperiod of more than six months from the date they became payable are as under:
|Nature of Dues ||Amount (Rs. in Lacs) ||Period to which amount Relates |
|Income Tax ||586.58 ||AY 2014-15 |
|Income Tax ||2479.47 ||AY 2015-16 |
|Income Tax ||569.71 ||AY 2016-17 |
|Income Tax (Advance Tax) ||2899.86 ||AY 2017-18 |
|Total ||6535.62 || |
b) The disputed statutory dues aggregating Rs. 2207.96 Lacs that have not beendeposited on account of disputed matters pending before appropriate authorities are asunder:
|Name of the statute ||Nature ofthe Dues ||Amount (Rs. in Lacs) ||Period to which the amount relates ||Forum where dispute is pending |
|Income Tax Act 1961 ||Income Tax (including interest) ||123.69 ||2012-15 ||Commissioner of Income Tax (Appeal) |
|Central Sales Tax Act 1956 and Orissa Sales Tax Act ||Sales Tax/VAT (including interest and Penalty) ||70.92 ||1997-98 ||Sales Tax Appellate Tribunal |
| || ||2.45 ||1994-96 ||Additional Commissioner |
| || ||437.97 ||2007-2013 ||Orissa High Court Cuttack |
|Entry Tax Act 1999 ||Entry Tax ||798.82 ||2008-14 ||Additional Commissioner |
| || ||92.96 ||2007-13 ||Orissa High Court Cuttack |
|Central Excise Act 1944 ||Excise Duty (including interest) ||7.89 ||2011-12 ||Commissioner Appeals |
|Chapter V of Finance Act 1994 ||Service Tax ||6.80 ||2005-07 ||Orissa High Court Cuttack |
| || ||666.46 ||1996-1998 & 2004-2012 ||Central Excise & Service Tax Appellate Tribunal |
|Total || ||2207.96 || || |
viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans to banks and dues to debentureholders. The Company has not borrowed any funds from financial institutions or government.
ix. In our opinion and according to the information and explanations given to us termloans have been applied by the Company during the year for the purposes for which theywere raised. The Company has not raised moneys byway of initial public offer or furtherpublic offer during the year.
x. Based on the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and as per information and explanations given to usno fraud by the Company and no fraud on the Company by its officers or employees has beennoticed or reported during the year.
xi. In our opinion and according to the information and explanations given to us theCompany has paid managerial remuneration in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Act.
xii. The Company is not a Nidhi Company and hence reporting under clause (xii) ofparagraph 3 of the Order is not applicable to the company.
xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 188 and 177 of the Act where applicable for alltransactions with the related parties and the details of related party transactions havebeen disclosed in the financial statements etc. as required by the applicable accountingstandards.
xiv. The Company has issued equity shares against the warrants allotted during the yearon preferential basis. Company has complied with the requirement of section 42 of the Actand amount raised has been used for purpose for which it was raised.
xv. In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transaction with the directors or personsconnected with him and covered under section 192 of the Act. Hence clause (xv) of theparagraph 3 of the Order is not applicable to the Company.
xvi. To the best of our knowledge and as explained the Company is not required to beregistered under section 45-IAof the Reserve Bankof IndiaAct 1934.
For Chaturvedi & Shah
Firm Registration No. 101720W
Membership No. 103141
Place : Kolkata
Date : May 19 2017
"Annexure B" to Independent Auditors' Report referred to in paragraph 2(f)under the heading "Report on other legal and regulatory requirements" of ourreport of even date.
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the Internal Financial Control over financial reporting of BalasoreAlloys Limited ("the company") as of March 31 2017 in conjunction with ouraudit of the standalone financial statements of the Company for the year then ended.
Management Responsibility forthe Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone financial statements whetherdue to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemoverfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control overfinancial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial controloverfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls overfinancialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In ouropinion the Company has in all material respects an adequate internalfinancial controls system overfinancial reporting and such internal financial controlsoverfinancial reporting were operating effectively as at March 312017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.
For Chaturvedi & Shah
Firm Registration No. 101720W
Membership No. 103141
Place : Kolkata
Date : May 19 2017