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Jindal Stainless Ltd.

BSE: 532508 Sector: Metals & Mining
NSE: JSL ISIN Code: INE220G01021
BSE LIVE 15:40 | 24 Nov 107.70 -0.35
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NSE 15:59 | 24 Nov 108.00 -0.20
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OPEN 108.20
PREVIOUS CLOSE 108.05
VOLUME 33944
52-Week high 126.00
52-Week low 31.10
P/E 19.62
Mkt Cap.(Rs cr) 4,955
Buy Price 107.70
Buy Qty 2499.00
Sell Price 0.00
Sell Qty 0.00
OPEN 108.20
CLOSE 108.05
VOLUME 33944
52-Week high 126.00
52-Week low 31.10
P/E 19.62
Mkt Cap.(Rs cr) 4,955
Buy Price 107.70
Buy Qty 2499.00
Sell Price 0.00
Sell Qty 0.00

Jindal Stainless Ltd. (JSL) - Auditors Report

Company auditors report

To

The Members of

JINDAL STAINLESS LIMITED

REPORT ON THE STANDALONE IND AS FINANCIAL STATEMENTS

We have audited the accompanying standalone Ind AS financial statements of JINDALSTAINLESS LIMITED ("the Company") which comprise the Balance Sheet as at31stMarch 2017 the Statement of Profit and Loss (including other comprehensive income)the Cash Flow Statement for the year then ended and the statement of changes in equity forthe year then ended and a summary of the significant accounting policies and otherexplanatory information(herein after referred to as "standalone Ind AS financialstatements").

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS 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 preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued thereunder. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments 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 presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based 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 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone Ind ASfinancial statements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the standalone Ind ASfinancial statements.

OPINION

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thestate of affairs (financial position) of the Company as at 31stMarch 2017 and itsprofit(financial performance including other comprehensive income)) its cash flows andthe changes in equity for the year ended on that date.

EMPHASIS OF MATTERS:

We draw attention to the following matters:

(a) Pending necessary approvals for managerial remuneration [including payment made toone of the director pending central Government's approval] and waiver application forexcess remuneration paid earlier to one of the director rejected by the Central Governmentas stated in Note no. 49(C)(i)of the financial statements;

(b) Pending confirmations/reconciliation of balances of certain secured loans loans& advances (including MAT credit) trade receivables trade payables & otherliabilities read with Note no. 32(A)(iii)(g) & 32(B) and 40(A) of the financialstatements;

(c) Investments and loan & advances to certain subsidiary/other companies and MatCredit entitlement considered as good and fully realizable/ recoverable and no provisionfor diminution in value is considered necessary in the opinion of the management as statedin note no. 40(B) of the financial statements;

(d) Note no 35 of the financial statements wherein the company has made investment ofRs.8.56 crore (As per Ind AS Rs.8.47 Crore as on 31st March 2017) (along with bankguarantee of Rs.10.01 Crore) and Rs.0.10 Crore in MJSJ Coal Limited and Jindal SynfuelsLimited respectively. The company continues to treat the investment as good andrecoverable in view of the pending decision challenging the Order and other circumstancesmentioned therein;

(e) Net worth post considering the fair value became positiveas stated in the Note no34 of the financial statements.

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 sub-section (11) of section 143 ofthe Act and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanations given to usduring the course of audit we give in the Annexure 'A' a statement on the mattersspecified in the 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 bestof our knowledge and belief were necessary for the purposes of our audit.

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

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

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with relevant ruleissued thereunder.

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31stMarch 2017 from being appointed as a director in terms of Section164 (2) of the Act.

(f) As required by section 143(3)(I) of the Companies Act 2013 and based on thechecking of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us our separate report withrespect to the adequacy of the internal financial controls over financial reporting of theCompany and the operating effectiveness of such controls is as per Annexure 'B'.

(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 standalone Ind AS financial statements - refer Note no. 28(A & E)36&38to the standalone Ind AS financial statements.

(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts includingderivatives contracts.

(iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

(iv) The company had provided requisite disclosures in its Standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8th November 2016 to 30th December 2016 and these are in accordance with the booksof accounts maintained by the company. Refer Note No. 57 to the standalone Ind ASfinancial statements.

For LODHA & CO. For S.S. KOTHARI MEHTA & CO.
Chartered Accountants Chartered Accountants
FRN: 301051E FRN:000756N
N.K. LODHA SUNIL WAHAL
Partner Partner
Membership No. 85155 Membership No. 87294
Place: New Delhi
Dated: 12th May 2017

Annexure "A" referred to in paragraph 1 under the heading "Report onother legal and regulatory requirements" of our report of even date on the StandaloneInd AS Financial Statements of JINDAL STAINLESS LIMITED for the year ended 31st March 2017

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

(b) The Company has a regular programme of Physical Verification of its Fixed assets bywhich fixed asset have been verified by the management according to the programme ofperiodical physical verification in a phased manner which in our opinion is reasonablehaving regard to the size of the Company and the nature of its fixed assets. Thediscrepancies noticed on such physical verification were not material. Asset wiserecording of Fair Value is in process to be reconciled with fixes assets register.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable propertiesincluded in fixed assets are held in the name of the Company except as stated in footnote(@) of Note No. 2 of the standalone Ind AS financial statements.

2. The inventories of the Company (except stock lying with the third parties and intransit) part of stores and spares have been physically verified by the management atreasonable intervals. In our opinion the procedures of physical verification of inventoryfollowed by the Management are reasonable in relation to the size of the Company andnature of its business. The discrepancies noticed on such physical verification ofinventory as compared to book records were not material.

3. The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Act2013.

4. According to the information explanations and representations provided by themanagement and based upon audit procedures performed we are of the opinion that inrespect of loans investments guarantees and security the Company has complied with theprovisions of the Section 185 and 186 of the Companies Act 2013.

5. In our opinion and according to the information and explanations given to us theCompany has complied with the directive issued by the Reserve Bank of India and theprovisions of Section 73 to76 of the Act or any other relevant provisions of the Act andthe rules framed there under (to the extent applicable) with regard to deposit acceptedfrom the public. We have been informed that no order has been passed by the Company LawBoard or National Company Law Tribunal or Reserve Bank of India or any Court or otherTribunal in this regard.

6. We have broadly reviewed the books of account maintained by the company pursuant tothe rules made by the Central Government for the maintenance of cost records under section148(1) of the Act in respect of the company's products to which the said rules are madeapplicable and are of the opinion that prima facie the prescribed records have been madeand maintained. We have however not made a detailed examination of the said records witha view to determine whether they are accurate or complete.

7. (a) According to the records of the Company the Company is regular in depositingundisputed statutory dues including provident fund employees' state insurance incometax sales-tax service tax duty of customs duty of excise value added tax cess andother material statutory dues with the appropriate authorities to the extent applicableand there are no undisputed statutory dues payable for a period of more than six monthsfrom the date they become payable as at 31st March 2017.

(b) According to the records and information & explanations given to us there areno dues in respect of service tax that have not been deposited with the appropriateauthorities to the extent applicable on account of any dispute and the dues in respect ofincome tax duty of customs duty of excise and value added tax that have not beendeposited with the appropriate authorities on account of any dispute and the forum wherethe dispute is pending are given below: -

Name of The Statuts Nature of Dues Amount (' in Crore) Period (Financial Year) Forum where dispute is pending
31.35 2005-11 CESTAT East Zonal Bench Kolkata.
Central Excise Act Excise Duty 0.30 April 06 - March 12 Commissioner Appeal Bhubaneswar
0.03 2011-12 & 2012-13 Commissioner Appeal jajpur division
Central Excise Act Custom Duty 7.97 2012-13 Commissioner of Central Excise Customs and Service Tax Bhubaneswar -1
24.79 2005-06 to 2007-08 High Court Odisha Cuttack
The Central Sales Tax 1956 Sales Tax 1.88 2013- 14 2014- 15 Additional Commissioner of Commercial Tax Cuttak
0.02 2011-12 Joint Commissioner of Commercial Tax Jajpur Range Jajpur Road
2005-06
2.47 2006-07
2010-11 Delhi
2002-03 High Court New Delhi
Income tax Act Income Tax 5.18 2003-04
2004-05
2005-06 ITAT New Delhi
28.28 2006-07 & 2007-08
69.59 2006-07 to 2016-17 Hon'ble Supreme Court
Entry Tax Act1999 Entry Tax 2006-11
130.93 2013-14 High Court Odisha Cuttack
2014-15
Odisha Value Added Value Added Tax 22.93 2013-14 & 2014-15 High Court Odisha Cuttack

Above does not include show cause notices and are after incorporating effect of theScheme (Refer Note27A).

8. In our opinion on the basis of audit procedures and according to the informationand explanations given to us the company has defaulted in repayment of dues (includinginterest installment& letter of credits payments) to banks and financial institutionsat various days during the year (read with note no. 33).The maximum amount of default on aparticular date was Rs.856.97 Crore (including default of Rs.7.82 Crore w.r.t. outstandingdebentures) and maximum delay (no. of days) noticed was 88 days (maximum delay of 84 daysw.r.t. outstanding debentures). As on March 31 2017 the overdue financial obligations tobanks/ financial institutions/debenture holders was Rs.266.68 Crore with maximum delay of60 days the lender wise details of which is as follows:

Allahabad Bank Rs.3.43 Crore; Axis Bank '4.67 Crore; Bank of Baroda Rs.127.61 Crore;Bank of Maharashtra Rs.0.28 Crore; Canara Bank Rs.0.38 Crore; Central Bank of IndiaRs.3.65 Crore; Corporation Bank Rs.0.84 Crore; Federal Bank Rs.0.99 Crore; GeneralInsurance Corporation of India Rs.0.28 Crore; HDFC Bank Rs.0.78 Crore; IDBI Bank Rs.5.10Crore; Indian Bank Rs.0.67 Crore; Jammu & Kashmir Bank Rs.1.49 Crore; Karnataka BankRs.0.81 Crore; Life Insurance Corporation of India Rs.5.49 Crore; New India AssuranceCompany Rs.0.28 Crore; Oriental Bank of Commerce Rs.3.19 Crore; Punjab National BankRs.1.23 Crore; Standard Chartered Bank Rs.22.63 Crore; State Bank of Bikaner & JaipurRs.1.14 Crore; State Bank of Hyderabad Rs.4.18 Crore; State Bank of India Rs.0.10 Crore;State Bank of Mysore Rs.3.38 Crore; State Bank of Patiala Rs.65.17 Crore; State Bank ofTravancore Rs.1.47 Crore; Syndicate Bank Rs.1.46 Crore; UCO Bank Rs.1.67 Crore; UnitedIndia Insurance Company Rs.0.28 Crore; Union Bank of India Rs.1.29 Crore; United Bank ofIndia Rs.2.75 Crore.

9. On the basis of information and explanations given to us term loan were applied forthe purpose for which the loans were obtained. No money have been raised during the yearby way of initial public offer or further public offer.

10. Based on the audit procedure performed and on the basis of information andexplanations provided by the management no fraud by the Company and no material fraud onthe Company by its officers or employees has been noticed or reported during the course ofthe audit.

11. According to the information and explanations given to us and based on ourexamination of the records of the Company managerial remuneration has been paid/provided[pending Central Government's approval] in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act readwith note no. 49(C)(I).

12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

13. According to the information and explanations and records made available by themanagement of the Company and audit procedure performed for transactions with the relatedparties during the year the Company has complied with the provisions of Section 177 and188 of the Act where applicable [Read with note no. 27Band 47].As explained and as perrecords details of related party transactions have been disclosed in the standalone IndAS financial statements as per the applicable Accounting Standards.

14. According to the information and explanations given to us the Company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebentures during the year read with note no. 12; except allotment of compulsorilyconvertible warrants as stated in note no.12A(vi) in respect of which requirement ofsection 42 of the Act have been complied with and the amount raised have been used for thepurpose for which the funds were raised.

15. On the basis of records made available to us and according to information andexplanations given to us the Company has not entered into noncash transactions with thedirectors or persons connected with him.

16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act1934.

For LODHA & CO. For S.S. KOTHARI MEHTA & CO.
Chartered Accountants Chartered Accountants
FRN: 301051E FRN: 000756N
N.K. LODHA SUNIL WAHAL
Partner Partner
Membership No. 85155 Membership No. 87294
Place: New Delhi
Dated: 12th May 2017

ANNEXURE 'B' TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE IND ASFINANCIAL STATEMENTS OF JINDAL STAINLESS LIMITED

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 controls over financial reporting of JINDALSTAINLESS LIMITED("the Company") as of March 31 2017 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat 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 (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 Companies Act 2013.

AUDITOR'S 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 the Institute ofChartered Accountants of India (ICAI) and deemed to be prescribed under section 143(10) ofthe Companies Act 2013 to the extent applicable to an audit of internal financialcontrols both applicable to an audit of Internal Financial Controls and both issued bythe Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 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 judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the 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 2017 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 LODHA & CO. For S.S. KOTHARI MEHTA & CO.
Chartered Accountants Chartered Accountants
FRN: 301051E FRN: 000756N
N.K. LODHA SUNIL WAHAL
Partner Partner
Membership No. 85155 Membership No. 87294
Place: New Delhi
Dated: 12th May 2017