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Scan Steels Ltd.

BSE: 511672 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE099G01011
BSE LIVE 13:53 | 28 Apr 22.00 -0.44
(-1.96%)
OPEN

22.00

HIGH

22.88

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22.00

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 22.00
PREVIOUS CLOSE 22.44
VOLUME 1101
52-Week high 30.00
52-Week low 8.16
P/E
Mkt Cap.(Rs cr) 115.17
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.00
Sell Qty 475.00
OPEN 22.00
CLOSE 22.44
VOLUME 1101
52-Week high 30.00
52-Week low 8.16
P/E
Mkt Cap.(Rs cr) 115.17
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.00
Sell Qty 475.00

Scan Steels Ltd. (CLARUSINFRARL) - Auditors Report

Company auditors report

To the Members of Scan Steels Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of SCAN STEELSLIMITED ('the Company') which comprise the balance sheet as at 31 March 2016 thestatement of profit and loss and the cash flow statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand 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 statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under.

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 financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reportingand the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of thefinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opiniononthe standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the 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 31st March 2016 and its loss and its cash flows for the year ended on that date.

Emphasis of Matter

Without qualifying our opinion we draw attention to

i. Note No-2(vi) to the financial statements that describes that the company hasdefaulted on debt payments to consortium lenders due to unprecedented adversedevelopments witnessed by industry as a whole during financial year.

ii. Note No-2(xi) to the financial statements that describes that the company hascalculated reduction in value of inventory amounting to ' 784286306 due to sharpdecline in finished goods price.

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 ofthe Companies Act 2013 we give in the Annexure-A a statement on the matters specified inparagraph 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 it appears from ourexamination of those books.

(c) The balance sheet the statement of profit and loss and the cash flow statementdealt with by 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 31 March2016 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2016 from being appointed as a director in terms of Section 164 (2) of theAct; and

(f) With respect to the adequacy of the internal financial control over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in "Annexure- B"and

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand 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 financialposition in its financial statements.

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

iii. There are no amounts which are required to be transferred to the InvestorEducation and Protection Fund by the Company.

For SRB & Associates
Chartered Accountants
Firm Regn. No: 310009E
B.Mohanty
Place : Rajgangpur Partner
Date : 24th May 2016 M.N-056264

"Annexure A" to the Independent Auditors’ Report

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended 31 March 2016 we reportthat:

1. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us fixed assets have been physically verified by the Management inphased periodic manner which in our opinion is reasonable having regard to the size ofthe Company and the nature of its assets. No material discrepancies have been noticed onsuch verification.

(c) The deed of immovable properties are held in the name of the Company in almost allcases excepting for (I.) Freehold land of 7.68 Acres situated in Village Raiberna andLaing Sundergarh which is in the name of M/s. Shristi Ispat Limited the company whichwas merged in to this company during 2005.

(ii.) Land of 14.88 Acres occupied by the company situated in Village-KudithiniBellary Karnataka.

2. In respect of its Inventories:

(a) As explained to us Stocks have been physically verified by the management atregular intervals during the year. The frequency of verification is reasonable.

(b) In our opinion and according to the information and explanation given to us theprocedures of physical verification of inventory followed by the management are reasonableand adequate in relation to the size of the Company and the nature of its business.

(c) The company has maintained proper records of inventories. As explained to us therewas no material discrepancies noticed on physical verification of inventories as comparedto book records.

3. The Company has not granted any loan during the year secured or unsecured tocompanies firms or other parties covered in the register maintained under section 189 ofthe Companies Act 2013.

4. In our opinion and as per explanations given to us the company has complied withthe provisions of section 185 and186 of the Companies' Act 2013 in respect of loansinvestment guarantees and security.

5. The Company has accepted deposits from public and in our opinion and according tothe information and explanation given to us the directives issued by Reserve Bank ofIndia with respect to relevant provisions of section 73 to 76 or any other relevantprovisions of Act and Companies Rules 2015 with regard to deposits from public arecomplied with. We are informed that no order has been passed by the Company Law Board ofNational Company Law Tribunal or Reserve Bank of India or any court or any othertribunalin this context.

6. According to information and explanations given to us the company is maintainingcost records as prescribed by central government under section 148(1) of the Act inrespect of the activities carried on by the company.

7. a)According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities.

(b) According to the information and explanations given to us there are no materialdues of wealth tax duty of customs and cess which have not been deposited with theappropriate authorities on account of any dispute excepting for following which have notbeen deposited bythe Company on account of disputes:

STATEMENT OF DISPUTED DUES

SI No. Name of the Statute Period Nature of Dues Amount ( Rs ) Forum where dispute is pending
1 Orissa Sales Tax Act 2001-2002 OST 137958 Sales Tax TribunalCuttack
2 Entry Tax Act 2001-2002 ENTRY TAX 24482 Sales Tax TribunalCuttack
3 Orissa Sales Tax Act 2002-2003 OST 2296983 Assistant Commissioner of Commercial TaxRKL
4 Orissa Sales Tax Act 2004-2005 OST 1715871 Assistant Commissioner of Commercial TaxRKL
5 Entry Tax Act 2004-2005 ENTRY TAX 995460 OST Tribunal Cuttack
6 Orissa Sales Tax Act 2005-2006 OST 10726881 High Court of OdishaCuttack
7 Entry Tax Act 2005-2006 ENTRY TAX 1850937 High Court of OdishaCuttack
8 Central Sales Tax Act 2005-2006 CST 530992 High Court of OdishaCuttack
9 OVAT Act 2006-2007 OVAT 10738853 High Court of OdishaCuttack
10 Central Sales Tax Act 2006-2007 CST 16183731 High Court of OdishaCuttack
11 Entry Tax Act 2006-2007 ENTRY TAX 3351331 High Court of OdishaCuttack
12 OVAT Act 2007-08 & 2008-09 OVAT 225331 Additional CST Northern Zone
13 Entry Tax Act 2007-08 & 2008-09 ENTRY TAX 136613 Additional CST Northern Zone
14 Central Sales Tax Act 2007-08 & 2008-09 CST 182853 Additional CST Northern Zone
15 Central Sales Tax Act 01.04.2009 to 30.06.2010 CST 6403136 Additional CST Northern Zone
16 Central Sales Tax Act 01.08.2008 to 28.02.2011 CST 517563 Additional CST Northern Zone
17 OVAT Act 01.04.2009 to 31.03.2011 OVAT 298363 Additional CST Northern Zone
18 Entry Tax Act 01.04.2009 to 31.03.2011 ENTRY TAX 904748 Additional CST Northern Zone
19 OVAT Act 01.08.2008 to 28.02.2011 OVAT 169661165 Commissioner of Commercial TaxCuttack
20 Entry Tax Act 01.08.2008 to 28.02.2011 ENTRY TAX 40053670 Commissioner of Commercial TaxCuttack
21 Custom Act 1962 2012 & 2013 Custom Duty 13848914 CustomsExcise& Service Tax Appellate Tribunal Bangalore
22 Income Tax act 2009-10 & 2011-12 Income Tax 8893575 The Commissioner of Income Tax(appeals)
Total 289679410

8 In our opinion and according to the information and explanation given to us thecompany has defaulted in repayment of dues to banks who have declared the same asnon-performing in respect of following amounts:

Particular Nature of Loan Period of Default Amount outstanding in Books of Account as at 31st March 2016 (Rs) Remarks
State Bank of India Cash Credit 28th November2015 to 31st March 2016. 882908085 Refer Note No-2(vi) to Financial Statements
Term Loan 55730655
Central Bank of Cash Credit 57267850
India Term Loan 69959128

9 Based upon the audit procedures performed and the information and explanations givenby management the company has not raised moneys by way of initial public offer or furtherpublic offer including debt instrument.

10 Based upon audit procedures performed and the information and explanations given bymanagement we report that no fraud by the company has been noticed.

11 Based upon audit procedures performed and the information and explanations given bymanagement the managerial remuneration has been paid or provided in accordance with therequisite approvals mandate by the provisions of section197 read with schedule V to thecompanies Act.

12 In our opinion the company is not a nidhi company.

13 In our opinion all transactions with related parties are in compliance with section177 and 188 of companies Act2013 and the details have been disclosed in the financialstatements as required by the applicable accounting standards.

14 Based upon audit procedures performed and the information and explanations given bythe management the company has allotted on Preferential basis 11005330 no of equityshares and 12849605 no. of preference shares at a premium as decided by the Board ofDirectors. Further the company has also allotted on Preferential basis 8000000 Nos ofshare warrants convertible into equivalent number of equity shares of face value of Rs 10each of the company at an exercise price of' 50(Rupees Fifty Only) (including a premiumof'40) per equity shares within 18 months from the date of issue of warrants in its BoardMeeting held on 14th October2015 the allottees had exercised such power to convert4453330 number of warrants into equity shares at board meeting held on different datesduring the year ( Refer noteno.2(v)&5).

15 Based upon audit procedures performed and the information and explanations given bythe management the company has not entered into any non cash transaction with directorsor persons connected with them.

16 In our opinion the company is not required to be registered under section 45 1A ofthe Reserve Bank of India Act1934.

For SRB & Associates
Chartered Accountants
Firm Regn. No: 310009E
B.Mohanty
Place : Rajgangpur Partner
Date : 24th May 2016 M.N-056264

Annexure "B" to the Independent Auditor's report of even date on theStandalone Financial Statements as at and for the year ended 31st March 2016 of ScanSteels Limited

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

We have audited the internal financial controls over financial reporting of Scan SteelsLimited ("the Company") as of March 31 2016 in conjunction with our audit ofthe standalone 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 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as requiredunderthe Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note 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 Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence 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 overfinancial reportingassessingtheriskthata material weakness exists and testing and evaluating the design andoperating 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 whether due 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 systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial 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 preparation of standalone financialstatements in accordance with generally expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorised acquisitionuse or disposition of the company's assets that could have a material effect on thestandalone financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

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

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For SRB & Associates
Chartered Accountants
Firm Regn. No: 310009E
B.Mohanty
Place : Rajgangpur Partner
Date : 24th May 2016 M.N-056264