TO THE MEMBERS OF NATIONAL ALUMINIUM COMPANY LIMITED
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of NationalAluminium Company Limited ("the Company") which comprises the Balance Sheetas at 31st 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 significant accounting policies and other explanatory information.
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 the maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone IndAS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
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 thereunder.
We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing specified under section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone Ind AS financial statements are freefrom material misstatement. An audit involves performing procedures to obtain auditevidence about the amounts and the disclosures in the financial statements. 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. Inmaking those risk assessments the auditor considers internal financial control relevantto the company's preparation of financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by company's directors as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thestandalone Ind AS financial statements.
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 Ind AS of thefinancial position of the Company as at 31st March 2017 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.
The comparative financial information of the Company for the year ended 31st March 2016and the transition date opening balance sheet as at 1st April 2015 included in thesestandalone Ind AS financial statements are based on the previously issued statutoryfinancial statements for the year ended 31st March 2016 and 31st March 2015 respectivelyprepared in accordance with the Companies (Accounting Standards) Rules 2006 and auditorsexpressing unmodified opinion thereon in their audit reports dated 28th May 2016 and 30thMay 2015 respectively.
Those standalone financial statements have been 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 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 section 143(11) of the Act we givein Annexure "A" to this report a statement on the matters specified inparagraphs 3 and 4 of the Order.
2. In compliance to directions of the Comptroller and Auditor General of Indiau/s.143(5) of the Act we give in Annexure "B" to this report a statement on thematters specified therein.
3. 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 purpose 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 the Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account.
d. In our opinion the aforesaid standalone Ind AS financial statements comply with theIndian Accounting Standards prescribed under section 133 of the Act read with relevantrules made thereunder.
e. Section 164(2) of the Act regarding disqualification of directors is not applicableto the Company by virtue of Notification No. G.S.R. 463(E) dated 05.06.2015 issued by theMinistry of corporate Affairs Govt. of India.
f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure "C".
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 26 to thestandalone Ind AS financial 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 no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company; and
iv. the Company has 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 - Refer Note 28 to the standalone Ind ASfinancial statements. However as stated in the said note and as represented to us by theManagement amounts aggregating to Rs.81000/- and Rs.9000/- respectively have beenreceived and utilized in respect transactions which are not permitted.
ANNEXURE TO THE INDEPENDENT AUDITORS' REPORT ON STANDALONE IND AS FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 ST MARCH 2017 OF NATIONAL ALUMINIUM COMPANY LIMITED
(Referred to in paragraph 1 under the heading of
"Report on Other Legal and Regulatory Requirements" of our Report of evendate)
i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of its property plant and equipment includingintangible assets.
(b) All movable assets of the Company are physically verified by the management everyyear. The frequency of verification in our opinion is reasonable. No materialdiscrepancies were noticed on such verification conducted during the year; Non-movableassets have been physically verified by the management at an interval of three yearswhich in our opinion is reasonable having regard to the size and nature of assets of theCompany; No material discrepancies between book records and physical assets have beennoticed;
(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 are heldin the name of the Company. Out of 8022.63 acres of freehold land and 9162.65 acres ofleasehold land held by the Company title/lease deeds are not yet executed in respect of66.92 acres of freehold and 1744.63 acres of leasehold land respectively. However theCompany has been permitted by the concerned authorities to carry on its operation on thesaid land. Registration formalities in respect of office space for 6459 sft. in Kolkata isalso not completed.
ii) Inventories except stocks relating to expansion project stocks lying with thirdparties and stocks-in-transit have been physically verified during the year by firms ofChartered Accountants appointed by the management for this purpose. The frequency ofverification is reasonable. The discrepancies noticed on physical verification betweenphysical stocks and book records in case of shortages have been properly dealt with in thebooks of accounts while excesses have been ignored;
iii) The Company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013. Consequently clauses (iii) (a) (b) & (c) ofparagraph 3 of the Order are not applicable;
iv) Section 185 of the Act regarding loans to directors is not applicable to theCompany by virtue of Notification No. G.S.R. 463(E) dated 05.06.2015 issued by theMinistry of corporate Affairs Govt. of India. In our opinion and according to theinformation and explanations given to us the Company has complied with the provisions ofsection 186 of the Act with respect to the loans and investments made.
v) The Company has not accepted any deposits from the public.
vi) We have broadly reviewed the books and records maintained by the Company asspecified by the Central Government for the maintenance of cost records under section148(1) of the Companies Act 2013 in respect of manufacturing activities and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. We have however not made a detailed examination of the records with a viewto determine whether they are accurate and complete. vii) (a) According to the informationand explanations given to us and on the basis of our examination of the records of theCompany in our opinion the Company is generally regular in depositing undisputedstatutory dues including provident fund employees' state insurance income tax salestax service tax duty of customs duty of excise value added tax cess electricity dutyand other material statutory dues with the appropriate authorities and there are noundisputed statutory dues as at 31st March 2017 outstanding for a period of more than sixmonths from the date they became payable.
(b) According to the information and explanations given to us following statutory dueshave not been deposited by the Company on account of disputes:
|Name of the Statute ||Nature of Dues ||Amount disputed ||Amount deposited ||Forum where disputes are pending |
| || ||(Rsin crore) ||(Rsin Crore) || |
|Sales Tax ||Sales Tax ||254.13 ||52.47 ||Commissioner |
| || ||72.33 ||31.78 ||Tribunal |
| || ||101.36 ||4.67 ||High Court |
| || ||427.82 ||88.92 || |
|Entry Tax ||Entry Tax ||134.80 ||40.50 ||Commissioner |
| || ||73.89 ||37.01 ||Tribunal |
| || ||82.64 ||22.48 ||High Court |
| || ||291.33 ||99.99 || |
|Central Excise Act1944 ||Excise Duty ||2.57 ||0.06 ||Commissioner |
| || ||99.75 ||2.91 ||Tribunal |
| || ||0.10 ||0.03 ||High Court |
| || ||102.42 ||3.00 || |
|Service Tax ||Service tax ||2.28 ||0.00 ||Commissioner |
| || ||0.04 ||0.00 ||Tribunal |
| || ||2.32 ||0.00 || |
|Customs Act 1962 ||Custom Duty ||5.04 ||0.00 ||Commissioner |
| || ||46.96 ||0.13 ||Tribunal |
| || ||52.00 ||0.13 || |
|Income Tax Act 1961 ||Income Tax ||390.46 ||196.16 ||Commissioner |
| || ||375.56 ||446.74 ||Tribunal |
| || ||31.92 ||52.14 ||High Court |
| || ||797.94 ||695.04 || |
|Odisha Stamps Act ||Stamp duty ||204.53 ||0.00 ||High Court |
|Road Tax ||Road Tax ||0.21 ||0.00 ||Commissioner |
| || ||2.44 ||0.00 ||High Court |
| || ||2.65 ||0.00 || |
| ||Total: ||1881.01 ||887.08 || |
viii) Except bill discounting arrangement with banks the Company does not have anyloans or borrowings from any financial institution banks government or debentureholders. The Company has not defaulted in repayment of the loans obtained under the billdiscounting facility.
ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year.
x) According to the information and explanations given to us no fraud by the Companyor any material fraud on the Company by its officers or employees has been noticed orreported during the year. xi) Section 197 of the Act regarding managerial remuneration isnot applicable to the Company by virtue of Notification No. G.S.R. 463(E) dated 05.06.2015issued by the Ministry of corporate Affairs Govt. of India.
xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company.
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 Companies Act 2013 where applicable anddetails of such transactions have been disclosed in the financial statements as requiredby the applicable accounting standards.
xiv) According to the information and explanations given to us and based on ourexamination of the records the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.
xv) According to the information and explanations given to us and based on ourexamination of the records the Company has not entered into any non-cash transactionswith any director or persons connected with him.
xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT ON THE STANDALONE IND AS FINANCIALSTATEMENTS FOR THE YEAR ENDED 31 ST MARCH 2017 OF NATIONAL ALUMINIUM COMPANY LIMITED
(Referred to in paragraph 2 under the heading of
"Report on Other Legal and Regulatory Requirements" of our Report of evendate)
Report on the directions under section 143(5) of the Companies Act 2013 by theComptroller & Auditor General of India
According to the information and explanations given to us by the management and on thebasis of our examination of books and records of the Company we report that:
1. The Company has clear title/lease deeds for freehold and leasehold land respectivelywherever the title/lease deeds are executed. There are 66.92 acres of freehold and 1744.63acres of lease hold land out of 8022.63 acres of freehold and 9162.65 acres of lease holdland in respect of which the title/lease deeds are not yet executed. However the Companyhas been permitted by the concerned authorities to carry on its operation on the saidland.
2. There are 11 cases of write-off of advances debtors and claims amounting toRs.18.40 lacs as detailed below. The reason of write-off as explained to us is thatthese are old balances lying unadjusted / unrealized for a long time have becometime-barred and chances of recovery / adjustments are remote.
|Types of write off / waiver ||No of cases ||Amount in Rs. Lacs |
|Advances ||4 ||2.80 |
|Debtors ||3 ||0.10 |
|Claims ||4 ||15.50 |
|Total ||11 ||18.40 |
3. (a) Proper records are maintained for inventories lying with third parties.
(b) The Company has not received any asset as gift/grant(s) from Government or otherauthorities during the year.
ANNEXURE TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE STANDALONE IND ASFINANCIAL STATEMENTS FOR THE YEAR ENDED 31 ST MARCH 2017 OF NATIONAL ALUMINIUM COMPANYLIMITED
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 NATIONALALUMINIUM COMPANY LIMITED ("the Company") as of March 31 2017 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor 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.
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. Ouraudit 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 financial statements whether due to fraud or error. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit 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 the 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.
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.
COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THECOMPANIES ACT 2013 ON THE FINANCIAL STATEMENTS OF NATIONAL ALUMINIUM COMPANY LIMITEDBHUBANESWAR FOR THE YEAR ENDED 31 MARCH 2017.
The preparation of financial statements of National Aluminium Company Limited for theyear ended 31 March 2017 in accordance with the financial reporting framework prescribedunder the Companies Act 2013 (Act) is the responsibility of the management of thecompany. The statutory auditors appointed by the Comptroller and Auditor General of Indiaunder section 139(5) of the Act are responsible for expressing opinion on the financialstatements under section 143 of the Act based on independent audit in accordance withstandards on auditing prescribed under section 143(10) of the Act. This is stated to havebeen done by them vide their Audit Report dated 27 May 2017.
I on the behalf of the Comptroller and Auditor General of India have conducted asupplementary audit under section 143(6)(a) of the Act of the financial statements ofNational Aluminium Company Limited for the year ended 31 March 2017. This supplementaryaudit has been carried out independently without access to the working papers of thestatutory auditors and is limited primarily to inquiries of the statutory auditors andcompany personnel and a selective examination of some of the accounting records. On thebasis of my audit nothing significant has come to my knowledge which would give rise toany comment upon or supplement to statutory auditors' report.
| ||For and on the behalf of the |
| ||Comptroller & Auditor General of India |
| ||(Praveer Kumar) |
|Place : Kolkata ||Principal Director of Commercial Audit |
|Date : 22 June 2017 ||& Ex-officio Member Audit BoardI |
| ||Kolkata |