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KIOCL Ltd.

BSE: 540680 Sector: Metals & Mining
NSE: KIOCL ISIN Code: INE880L01014
BSE LIVE 13:13 | 19 Sep 216.65 10.30
(4.99%)
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216.65

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216.65

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NSE 15:25 | 19 Sep 217.75 10.35
(4.99%)
OPEN

217.75

HIGH

217.75

LOW

217.75

OPEN 216.65
PREVIOUS CLOSE 206.35
VOLUME 321
52-Week high 216.65
52-Week low 84.10
P/E 277.76
Mkt Cap.(Rs cr) 13,747
Buy Price 216.65
Buy Qty 14248.00
Sell Price 0.00
Sell Qty 0.00
OPEN 216.65
CLOSE 206.35
VOLUME 321
52-Week high 216.65
52-Week low 84.10
P/E 277.76
Mkt Cap.(Rs cr) 13,747
Buy Price 216.65
Buy Qty 14248.00
Sell Price 0.00
Sell Qty 0.00

KIOCL Ltd. (KIOCL) - Auditors Report

Company auditors report

To the Members of KIOCL Limited Report on the Financial Statements

We have audited the accompanying financial statements of KIOCL Limited ('the Company')which comprise the balance sheet as at March 31 2016 the statement of profit and lossand the cash flow statement and a summary of significant accounting policies and otherexplanatory information for the year then ended.

Management's Responsibility for the 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 andpresentation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit. 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 financial statements are free from material 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. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the

accounting estimates made by the Company's Directors as well as evaluating the overallpresentation of the financial statements.

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

Basis of Qualified Opinion

The Company has not provided for:

1. Attention is invited to item no.3 of Note 14 ("Other notes forming part ofFinancial Statements") regarding claims by railways for difference in freight chargeson account of distance based charges and normal freight on iron ore transportation. We areunable to ascertain the impact of the railway freight on stock valuation and adequacy ofprovisions in the books of accounts.

2. Attention is invited to item no.1 of Note 14 ("Other notes forming part ofFinancial Statements") Tangible Assets worth of Rs. 91.52 crores is located in BlastFurnace Unit land and Captive Power Plant land for which lease has expired. The managementhas applied for renewal well in advance and making regular follow ups for the renewal ofthe lease/ registration of land to fall in line with Accounting Standard -10 Accounting ofFixed Assets and Accounting Standard - 6 Depreciation Accounting issued by Institute ofChartered Accountants of India ("ICAI") and also Accounting Standard - 9 RevenueRecognition wherein The Company has recognised an income of Sub-leasing of land at BFU.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion above the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

a) in the case of the Balance Sheet of the state of affairs of the company as at March31 2016;

b) in the case of the Statement of Profit and Loss of the Loss for the year ended onthat date; and

c) in the case of the Cash Flow Statement of the cash flows for the year ended on thatdate.

Emphasis of Matter

We draw attention to;

1. Letter from Ministry of Steel dated 4th March 2016 received by the company informingthat Department of Public Enterprise (DPE) has categorised the company as "WeakCompany".

2. Based on Technical Committee recommendations the company has adopted componentaccounting. We hereby rely on the following criteria:

a. As declared by the company that all the assets have been considered for the purposeof component accounting classification (breaking up of principal asset into sub-assets)and are exhaustive.

b. The cost and the useful life of the sub-assets as determined by the Technicalcommittee on component accounting.

c. As declared by the company that component accounting is not considered for T ClassAssets. (Refer item 14 of Note 14 "Other notes forming part of FinancialStatements").

3. Confirmation of balances of advances deposits trade payables and trade receivableshas been received in certain cases only. (Refer item 20 of Note 14 "Other notesforming part of Financial statements").

4. Item 16(c) of Note 14" Other notes forming part of Financial Statements"where stock of Pig Iron is retrieved from Blast Furnace unit.

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 2016 (''the Order")issued by the Central Government of India in terms of sub section 11 of section 143 of theAct we give in the "Annexure-A" a statement on the matters specified in theparagraph 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) Except for the effect of the matter described in the Basis of Qualified Opinionparagraph above in our opinion proper books of account as required by law have been keptby the Company so far as it appears from our examination of those books.

c) The Balance Sheet and Statement of Profit and Loss and Cash Flow Statement dealtwith by this Report are in agreement with the books of account.

d) Except for the effect of the matter described in the Basis of Qualified Opinionparagraph above in our opinion the aforesaid financial statements comply with theAccounting

Standards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

e) The matter described in the Basis of Qualified Opinion paragraph above in ouropinion may not have an adverse effect on the functioning of the company.

f) On the basis of the written representations received from the directors as on March31

2016 taken on record by the Board of Directors none of the directors is disqualifiedas

on March 31 2016 from being appointed as a director in terms of Section 164 (2) of theAct;

g) 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"; and

h) 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 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 financialposition in its financial statements - Refer Note 14 "Other notes forming part ofFinancial Statements";

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

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

3. As required by Section 143 (5) of the Act we have given in "Annexure-C" astatement on the matters specified by the Comptroller and auditor General of India for theCompany.

For M/s. SUNDARAM SRINIVASAN Chartered Accountants Firm Registration No. 004207 S

Sd/-

P. Meenakshi Sundaram

Place: New Delhi Partner

Date : 25th May 2016 Membership No. 217914

ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in Paragraph 1 of our Report on Other Legal and Regulatory Requirementsrelevant to paragraph 3 & 4 of "the order")

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended 31 March 2016 we report that:

i. In Respect of its fixed assets:

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

b. On the basis of the information and explanation given to us fixed assets are beingphysically verified by the management at reasonable intervals. In our opinion thefrequency of verification of fixed assets by the management is reasonable having regard tothe size of the company and the nature of its assets. As informed to us no materialdiscrepancies were noticed on such verification.

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 properties areheld in the name of the Company except the following for which assets are lying in theLease land for which renewal of lease is pending:

Location Track Details Value of Assets (Rs. Crores) Lease fund Expiry Date
Blast Furnace Unit (BFU) BFU Land 80.96 17th February 2014 as per lease agreement
Captive Power Plant (CPP) Track 5-21270 Sq. Feet 10.56 21st July 2012

as per lease agreement

ii. Physical verification of inventory has been conducted at reasonable intervals bythe management and discrepancies noticed on such verification were not material and thesame has been dealt in the books of accounts. However Stock of Finished Goods - Pelletsamounting to Rs.2.99 Crores is available in a lease land for which lease has expired as on17.02.2014 (Track8- 27008Sq feet)

iii. According to the information and explanations given to us the Company has notgranted any loans to companies firms limited liability partnership firms or otherparties covered under section 189 of the Companies Act 2013 ('the Act').

iv. In our opinion and according to the information and explanations given to us theCompany has not given any loans guarantee securities and has not made any investmentshence provisions of section 185 & 186 of the Act is not applicable.

v. The Company has not accepted any deposits from the public during the year and hencethe directives issued by the Reserve Bank of India and the provisions of Sec 73 to 76 orany other relevant provisions of the Act and the rules framed there under are notapplicable.

vi. We have broadly reviewed the records maintained by the Company pursuant to therules made by the Central Government for the maintenance of cost records under sub section(1) of section 148 of the Companies Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have not however madea detailed examination of the records with a view to determine whether these are accurateand complete. Cost Audit Report is yet to be obtained for the year.

vii. According to the information and explanations given to us in respect of statutorydues:

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 employees stateinsurance income-tax sales tax duty of customs duty of excise value added taxservice tax cess and other material statutory dues have been regularly deposited duringthe year by the Company with the appropriate authorities. As explained to us there is noarrears of outstanding statutory dues as on the last date of the financial year concernedfor a period of more than six months from the date they become payable.

b. According to the information and explanations given to us there are no materialdues of provident fund employees state insurance income-tax sales tax duty of customsduty of excise value added tax and service tax cess which have not been deposited withthe appropriate authorities on account of any dispute except the following:

Statue Nature of dues Total amount (in lakhs) Paid and or

provided (in lakhs)

Balance amount outstanding as on

31.03.2016

Financial

year

which

amount

relates

Forum to which it

relates

Central

Excise

Non- payment of SAD on DTA Sales 5848.31 5848.31 2010-12 CESTAT

B'lore

Service

Tax

Claim of Service Tax Dispatch Money 89.59 89.59 2012-15 Commissioner of Central Excise (Appeals)
Statue Nature of dues Total amount (in lakhs) Paid and or

provided (in lakhs)

Balance amount outstanding as on

31.03.2016

Financial

year

which

amount

relates

Forum to which it

relates

Sales Tax For Sale of Kudremukh Assets 945.80 945.80 2013-14 Joint

Commissioner of Commercial Taxes (Appeals)

Income Tax Regular

Assts.

321.48 321.48 NIL 2009-10 Commissioner of Income Tax (Appeals)
1089.34 929.37 159.97 2011-12 ITAT Bangalore
391.77 93.76 298.01 2012-13 Commissioner of Income Tax (Appeals)
456.22 444.77 11.45 2013-14 Commissioner of Income Tax (Appeals)

viii. The Company does not have any loans or borrowings from any financial institutionbanks government or debenture holders during the year. Accordingly paragraph 3(viii) ofthe Order is not applicable.

ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and tem loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.

x. According to the information and explanations given to us by the management nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the course of our audit.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

xii. 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.

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

xiv. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.

xvi. The Company is not required to be registered under section 4S-IA of the ReserveBank of India Act 1934.

For M/s. SUNDARAM SRINIVASAN Chartered Accountants Firm Registration No. 004207 S

Sd/-

P. Meenakshi Sundaram

Place: New Delhi Partner

Date : 25th May 2016 Membership No. 217914

ANNEXURE - B TO THE INDEPENDENT AUDITORS' REPORT

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 KIOCLLimited (''the Company") as of 31 March 2016 in conjunction with our audit of thefinancial 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 ('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.

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 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 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 authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 31 March 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 M/s. SUNDARAM SRINIVASAN Chartered Accountants Firm Registration No. 004207 S

Sd/-

P. Meenakshi Sundaram

Place: New Delhi Partner

Date : 25th May 2016 Membership No. 217914

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THECOMPANIES ACT 2013 ON THE ACCOUNTS OF KIOCL LIMITED BANGALORE FOR THE YEAR ENDED 31MARCH 2016

The preparation of financial statements of KIOCL Limited Bangalore for the year endedon 31 March 2016 in accordance with the financial reporting framework prescribed under theCompanies Act 2013 (Act) is the responsibility of the management of the company. TheStatutory Auditor appointed by the Comptroller and Auditor General of India under Section139(5) of Act is responsible for expressing opinion on these financial statements underSection 143 of the Act based on the independent audit in accordance with the Standards onAuditing prescribed under Section 143(10) of the Act. This is stated to have been done bythem vide their Audit Report dated 25 May 2016.

I on the behalf of the Comptroller and Auditor General of India have conducted a(supplementary audit under Section 143(6)(a) of the Act of the financial statements ofKIOCL Limited Bangalore for the year ended on 31 March 2016. This supplementary audit hasbeen carried out independently without access to the working papers of the StatutoryAuditors and is limited primarily to inquiries of the Statutory Auditor and companypersonnel and a selective examination of some of the accounting records. On the basis ofmy audit nothing significant has come to my knowledge which would give rise to anycomment upon or supplement to Statutory Auditor's report.

For and on the behalf of the Comptroller and Auditor General of India

Sd/-

(Arabinda Das)

Principal Director of Commercial Audit &

Place: Hyderabad Ex-Officio Member Audit Board

Date: 08 June 2016 Hyderabad