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Monnet Ispat & Energy Ltd.

BSE: 513446 Sector: Metals & Mining
NSE: MONNETISPA ISIN Code: INE743C01013
BSE 15:07 | 26 Apr 15.35 -0.80
(-4.95%)
OPEN

15.35

HIGH

15.80

LOW

15.35

NSE 15:09 | 26 Apr 15.30 -0.80
(-4.97%)
OPEN

15.30

HIGH

15.85

LOW

15.30

OPEN 15.35
PREVIOUS CLOSE 16.15
VOLUME 82842
52-Week high 44.50
52-Week low 14.90
P/E
Mkt Cap.(Rs cr) 308
Buy Price 0.00
Buy Qty 0.00
Sell Price 15.35
Sell Qty 149547.00
OPEN 15.35
CLOSE 16.15
VOLUME 82842
52-Week high 44.50
52-Week low 14.90
P/E
Mkt Cap.(Rs cr) 308
Buy Price 0.00
Buy Qty 0.00
Sell Price 15.35
Sell Qty 149547.00

Monnet Ispat & Energy Ltd. (MONNETISPA) - Auditors Report

Company auditors report

To The Members Of

MONNET ISPAT AND ENERGY LIMITED

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying Standalone Ind AS financial statements of MONNETISPAT AND ENERGY LIMITED ("the Company") which comprise the Balance Sheetas at 31 March 2017 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

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 the stateof affairs (financial position) profit or loss (financial performance including othercomprehensive income) cash flows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) prescribed under Section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; 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 Standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Standalone Ind AS financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under. We conductedour audit of the Standalone Ind AS financial statements in accordance with the Standardson Auditing specified under Section 143(10) of the Act. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the Standalone Ind AS financial statements are free from materialmisstatement.

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 controlsrelevant 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 Ind AS financialstatements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Standalone Ind AS financial 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 31 March 2017 and its loss(financial performance including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

Other Matters

The comparative financial information of the Company for the year ended 31 March 2016and the transition date opening balance sheet as at 1 April 2015 included in theseStandalone Ind AS financial statements are based on the previously issued statutoryfinancial statements prepared in accordance with the Companies (Accounting Standards)Rules 2006 audited by us whose audit report for the year ended 31 March 2016 & 31March 2015 dated 28 April 2016 & 29 April 2015 respectively expressed an unmodifiedopinion on those Standalone financial statements as adjusted for the differences in theaccounting principles adopted by the Company on transition to the Ind AS which have beenaudited by us.

Our opinion is not modified in respect of above matter.

Emphasis of Matter

I) We draw attention to the following matters in the Notes to the financial statements:

(a) Note no. 47 regarding cancellation of coal blocks of the Company impact whereof onthe financial statements is uncertain.

(b) Note no. 48 in the financial statements which indicates that the Company hasaccumulated losses resulting in erosion of net worth and has incurred net cash losses inthe current and immediately preceding financial year. The current liabilities of theCompany exceeded its current assets as at the balance sheet date. These conditions maycast doubt about the Company's ability to continue as a going concern. However thefinancial statements of the Company have been prepared on a going concern basis for thereasons stated in the said Note.

Our opinion is not modified in respect of above 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 in terms of Section 143(11) of the Act and on the basisof such checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us we give in "AnnexureI" a statement on the matters specified in paragraphs 3 and 4 of the said 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 the OtherComprehensive Income) the Cash Flow Statement and the Statement of Changes in Equitydealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid Standalone Ind AS financial statements comply withthe Indian Accounting Standards prescribed under Section 133 of the Act read with the

Companies (Indian Accounting Standards) Rules 2015 as amended.

(e) The going concern matter described in subparagraph (b) under the Emphasis ofMatters paragraph above in our opinion may have an adverse effect on the functioning ofthe Company.

(f) On the basis of the written representations received from the directors as on 31stMarch2017taken on record by the Board of Directors none of the directors is disqualified as on31stMarch 2017 from being appointed as a director in terms of Section 164 (2)of the Act.

(g) We are enclosing herewith a report in Annexure II for our opinion on adequacy ofinternal financial controls system in place in the company and the operating effectivenessof such controls.

(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 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 36 to the financialstatements.

ii. In our opinion and as per the information and explanations provided to us theCompany has made appropriate provision regarding longterm contracts including derivativecontracts requiring provision under applicable laws or accounting standards for materialforeseeable losses during the year.

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

iv. The Company has provided requisite disclosures in Note no.11 of its financialstatements as to holdings as well as dealings in Specified Bank Notes (SBN) during theperiod from 8 November 2016 to 30 December 2016. Based on the audit procedures and relyingon the management representation we report that the disclosures are in accordance withthe books of accounts and records maintained by the Company.

For O. P. BAGLA & CO.
CHARTERED ACCOUNTANTS
PLACE : NEW DELHI Firm Regn No. 000018N
DATED : 30/05/2017 (ATULBAGLA)
PARTNER
M No. 91885

ANNEXURE- I TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'section of our report of even date)

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) As explained to us fixed assets have been physically verified by the management ina phased periodical manner which in our opinion is reasonable having regard to the sizeof the Company and nature of its assets. As in informed to us no material discrepancieswere noticed on such physical verification.

c) Title deeds In respect of all immovable properties are held in the name of thecompany.

ii) Physical verification has been conducted by the management at reasonable intervalsin respect of finished goods stores spare parts and raw materials except ores &coal. We were informed that physical verification of the same was difficult due to itsvolume and loose nature. The physical verification of ores and coal was made on the basisof volume and density. As informed to us no material discrepancies have been noticed onphysical verification.

iii) As informed to us the company has granted unsecured loans to companies covered inthe register maintained under section189 of the Companies Act 2013. In respect of suchloans we have been informed that:

a) the terms and conditions of the grant of such loans are not prejudicial to thecompany's interest.

b) the schedule of repayment of principal and payment of interest is not stipulated.Therefore no comments are offered on whether the repayments or receipts are regular.

c) no amount is overdue as at the end of the year.

iv) Acco rd i ng to the information and explanations given to us the company hascomplied with the provisions of Section 185 and 186 wherever applicable in respect ofloans investments guarantees and security given by the company except that no interestwas charged on some loans due to financial constraints faced by the borrower companies.

v) According to the information and explanations given to us the company has notaccepted any deposits in terms of the directives issued by the Reserve Bank of India andthe provisions of sections 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under.

vi) The central government has prescribed the maintenance of cost records undersub-section (l) of section 148 of the Companies Act 2013 read with Rules framedthereunder in respect of the manufacturing activities of the Company. We have broadlyreviewed the accounts and records of the Company in this connection and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however carried out a detailed examination of the same.

vii) a) As per information and explanations given to us the company is regular indepositing undisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax service tax duty of customs duty of excise value added tax cessand any other statutory dues with the appropriate authorities. However in some casesthere have been delays in deposit of statutory dues. As informed to us there are nooutstanding statutory dues in arrears as at the last day of the financial year concernedfor a period of more than six months from the date they became payable.

b) We have been informed that following disputed demands in respect of Income TaxExcise Duty us the company is regular in depositing undisputed statutory dues includingprovident fund employees' state insurance income-tax sales-tax service tax duty ofcustoms duty of excise value added tax cess and any other statutory dues with theappropriate authorities. However in some cases there have been delays in deposit ofstatutory dues. As informed to us there are no outstanding statutory dues in arrears as atthe last day of the financial year concerned for a period of more than six months from thedate they became payable.

b) We have been informed that following disputed demands in respect of Income TaxExcise Duty Sales Tax and Entry Tax have not been deposited on account of pending appealsas per details given below:-

S.No Nature of Demand Unpaid Amount* (Rs. In Crores) Forum where appeal is pending
1. Sales Tax/VAT 1.38 Deputy Commissioner of Sales Tax (Appeals)
2. Entry Tax 15.29 Deputy Commissioner of Sales Tax (Appeals)
3. Entry Tax 0.49 Bilaspur High Court
4. Central Excise/ Service Tax 7.67 Commissioner Appeals (Central Excise)
5. Central Excise/ Service Tax 26.98 CESTAT
6. Income Tax 6.08 ITAT
7. Income Tax 313.25 Commissioner Income Tax (Appeals)
8. Income Tax 40.78 ITAT order passed and matter restored to AO

* Basic amount excluding interest if any.

viii) Based on our audit procedures and on the basis of information and explanationsgiven to us by the management there is a default in repayment of loans to the banksfinancial institutions / repayment of dues to debenture holders as at the year end as perdetail below :-

Particulars Amount Period of default
Repayment of Principal to banks / financial institutions 1197.33 Crores Zero to Twenty one months
Repayment of dues to Debenture Holders 167.00 Crores Zero to Twenty one months
Interest Accrued and due on borrowings 782.02 Crores Zero to Twenty one months

ix) As explained to us no term loans have been obtained during the year. The companyhas not raised any money during the year by way initial or further public offer.

x) Based upon the audit procedures performed and information and explanations given bythe management we report that no fraud by the Company or on the company by its officersor employees has been noticed or reported during the course of our audit for the yearended 31.03.2017.

xi) According to information and explanations given to us no managerial remunerationhas been paid or provided by the company during the year.

xii) The provisions of clause (xii) of the Order are not applicable as the company isnot a Nidhi Company as specified in the clause.

xiii) According to information and explanations given to us we are of the opinion thatall related party transactions are in compliance with the Section 177 and 188 of CompaniesAct 2013. Necessary disclosures has been made in the financial statements as required bythe applicable accounting Standards.

xiv) According to information and explanations given to us the company has not made anypreferential allotment or private placement of shares or debentures during the year.

xv) According to information and explanations given to us the Company has not enteredinto any non-cash transaction with the director or any person connected with him duringthe year.

xvi) In our opinion in view of its business activities the company is not required tobe registered under section 45IA of Reserve Bank of India Act 1934.

For O. P. BAGLA & CO.
CHARTERED ACCOUNTANTS
PLACE : NEW DELHI Firm Regn No. 000018N
DATED : 30/05/2017 (ATUL BAGLA)
PARTNER
M No. 91885

ANNEXURE- II TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)

We have audited the internal financial controls over financial reporting of MONNETISPAT AND ENERGY LIMITED ("the Company") as of 31st March 2017 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 required underthe 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 auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial

reporting and their operating effectiveness.

Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence I/we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.

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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 31st March 2017based on the internal control over financial reporting criteria established by the companyconsidering the essential components of internal control stated in the Guidance Note on"Audit of Internal Financial Controls Over Financial Reporting" issued by theInstitute of Chartered Accountants of India.

For O. P. BAGLA & CO.
CHARTERED ACCOUNTANTS
PLACE : NEW DELHI Firm Regn No. 000018N
DATED : 30/05/2017 (ATUL BAGLA)
PARTNER
M No. 91885