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S.A.L Steel Ltd.

BSE: 532604 Sector: Metals & Mining
NSE: SALSTEEL ISIN Code: INE658G01014
BSE LIVE 15:57 | 18 Oct 7.75 -0.40
(-4.91%)
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8.96

HIGH

8.96

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7.50

NSE 15:45 | 18 Oct 7.70 -0.40
(-4.94%)
OPEN

8.90

HIGH

8.90

LOW

7.50

OPEN 8.96
PREVIOUS CLOSE 8.15
VOLUME 632004
52-Week high 8.96
52-Week low 3.05
P/E
Mkt Cap.(Rs cr) 66
Buy Price 7.75
Buy Qty 900.00
Sell Price 0.00
Sell Qty 0.00
OPEN 8.96
CLOSE 8.15
VOLUME 632004
52-Week high 8.96
52-Week low 3.05
P/E
Mkt Cap.(Rs cr) 66
Buy Price 7.75
Buy Qty 900.00
Sell Price 0.00
Sell Qty 0.00

S.A.L Steel Ltd. (SALSTEEL) - Auditors Report

Company auditors report

To

The Members of

S.A.L. STEEL LIMITED AHMEDABAD

Report on the Financial Statements

We have audited the accompanying financial statements of S.A.L STEEL Limited ('theCompany) which comprise the Balance sheet as at March 31 2016 the Statement of profitand loss the Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information.

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 ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

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 there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free 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 accountingestimates made by the Company's Directors as well as evaluating the overall presentationof 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 for Qualified Opinion

1. Management is of the view that they do not anticipate execution of its ongoingcapital projects. However the Company has not made adequate provision towards recovery ofcapital advances for the said project for the amount of Rs.94122080/- which arecurrently shown under Long term loans and advances. The consequential impact ofadjustment if any on the actual realization of said advances on the financial statementsis currently not ascertainable. Therefore we are unable to comment on its consequentialfinancial impact if any on the financial statements.

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 paragraph above the aforesaid financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2016 and its loss for the year ended March 31 2016 and its cash flowsfor the year ended on that date.

Emphasis of Matters

We draw attention to the following matters in the Notes to the Financial Statements:

1. Note 26 to the financial statements which describes that the Non disclosure ofReportable Segments as required under Accounting Standard - 17 Rs.Segment Reporting'there is no impact on the Statement of Profit and Loss due to non disclosure.

2. During the year the Company has accumulated losses and its net worth has been fullyeroded. The Financial Statements indicates that the Company has incurred a net loss duringthe current and previous year(s) and the Company's current liabilities exceeded itscurrent assets as at the current and previous year balance sheet date. These conditionsindicate the existence of a material uncertainty that may cast significant doubt about theCompany's ability to continue as a going concern. However the financial statements of theCompany have been prepared on a going concern basis for the reasons stated in the saidNote 28 to the financial statements.

3. Assignment of dues for various facilities provided to the company by banks to InventAssets Securitization and Reconstruction Private Limited as per Note 29 to the financialstatements.

4. During the year ended 31st March 2016 the company has carried out atechno-economic assessment for the valuations of its Capital Projects to identify theimpairment loss and provision thereof if any. Based on the said techno-economicassessment of the Capital Projects the Company has provided for Rs. 317024474/- as perNote 30 to the financial statements The same is in accordance with the notified AccountingStandard 28 on Impairment of asset which states that impairment loss is recognized whenthe carrying amount of an asset exceeds its recoverable amount.

5. Note 27 to the Financials regarding the company's reference being filed undersection 15(1) of SICA (SP) Act 1985. The Honorable BIFR vide its letter reference no3(S-10)/BC/2015 dated 24th August 2015 has registered the reference filed bythe company vide case no 109/2015.

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 subsection (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in the paragraph3 and 4 of the Order to the extent applicable.

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 effects of the matter described in the Basis for Qualified Opinionparagraph above in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c) The Balance sheet the Statement of Profit and loss and the Cash flow statementdealt with by this Report are in agreement with the books of account;

d) Except for the effects of the matter described in the Basis for 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 theCompanies (Accounts) Rules 2014;

e) The going concern matter as described in sub-paragraph (2) under the Emphasis ofMatters paragraph above in our opinion may have an adverse effect on the functioning ofthe Company.

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 B"; and

g) 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; 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 opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 18A to the financial statements;

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

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

For Talati & Talati
Chartered Accountants
(Firm Reg. No: 110758W)
Umesh Talati
Place: Ahmedabad Partner
Date : May 30 2016 Mem No. : 034834

Annexure A to Independent Auditors' Report

The Annexure referred to in Independents Auditor's Report to the members of the Companyon the Standalone financial statement for the year ended 31st March 2016 wereport that:

i) In respect of its Fixed Assets:

a) The company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets on the basis of availableinformation.

b) As explained to us a major portion of the fixed assets has been physically verifiedby the management during the year in accordance with a phased program of verificationadopted by the Company. In our opinion the frequency of verification is reasonable havingregard to the size of the company and nature of its assets. As informed to us no materialdiscrepancies were noticed on such physical verification.

c) According to the information and explanation given to us and on the basis of ourexamination of records of the company the title deeds of the immovable properties heldare in the name of the company.

ii) In respect of its inventories:

As explained to us inventories (excluding Goods in Transit and Goods lying at Port)were physically verified by the management at reasonable intervals during the year. In ouropinion the frequency of the verification is reasonable. The discrepancies noticed onverification between the physical stocks and the book records were not material.

iii) In respect of Loans Secured or Unsecured granted by the company to companiesfirms Limited liability partnership or other parties covered in the register maintainedunder section 189 of the Companies Act 2013:

According to the information and explanations given to us and on the basis of therecords produced before us the company has not granted any Loan Secured or Unsecured tothe companies Limited liability partnership or firms or other parties covered in theregister maintained under section 189 of the Companies Act 2013 and hence sub-clause (a)& (b) & (c) of paragraph 3 of the Companies Auditor's Report Order 2016 are notapplicable to the Company.

iv) The Company has complied with the provision of Section 185 & 186 of CompaniesAct 2013 with respect of loans investments and guaranty made.

v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit and hence the provisions of Section 73 to 76 or anyother relevant provisions of the Companies Act and the Companies (Acceptance of Deposits)Rules 2014 with regard to the deposits accepted are not applicable to the Company.Therefore the provisions of Clause (v) of paragraph 3 of the Companies Auditor's ReportOrder 2016 are not applicable to the Company. According to the information andexplanations given to us no order has been passed by Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vi) 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 as specifiedunder Section 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have however not madea detailed examination of the cost records with a view to determine whether they areaccurate or complete.

vii) In respect of the Statutory dues:

a) According to the records of the company undisputed Statutory dues includingprovident fund employees state insurance income- tax sales-tax wealth-tax servicetax duty of customs duty of excise value added tax cess and any other statutory dueshave not been generally regularly deposited during the year with the appropriateauthorities. On the basis of records produced before us for our verification and accordingto the information & explanation given to us no undisputed amounts payable in respectof the aforesaid dues were outstanding as at 31st March 2016 for a period ofmore than six months from the date of becoming payable.

b) On the basis of records produced before us for our verification and according to theinformation and explanations given to us the details of disputed dues of Rs.257386625/- have not been deposited as on 31st March 2016 on account ofmatters pending before the appropriate authorities. The details of which are as under:

Sr. No. Name of the Statute Nature of the Dues Period to which the amount relates Forum where the dispute is pending Amount under dispute not yet deposited (in Rs.)
1 Central Excise Act 1944 Central Excise Duty 2006-07 Appellate Tribunal Ahmedabad 555781
2 Central Excise Act 1944 Central Excise Duty 2008-09 Appellate Tribunal Ahmedabad 1041057
3 Custom Act 1962 Custom Duty 2011-12 Appellate Tribunal Ahmedabad 24179202
4 Central Excise Act 1944 Central Excise Duty 2012-13 Appellate Tribunal Ahmedabad 44984993
5 Gujarat Value Added Tax Act 2003 Value Added Tax 2006-07 Jt. Value Added Tax Commissioner (Appeal) 36563595
6 Central Excise Act 1944 Central Excise Duty 2008-09 to 2010-11 Supreme Court 59014068
7 Central Service Tax Act 1994 Service Tax Duty 2009-10 Service Tax Commissioner 2536074
8 Central Excise Act 1944 Central Excise Duty 2005-06 to Sep 2014 Central Excise Commissioner 62628410
9. Central Excise Act 1944 Central Excise Duty 2012-13 Central Excise Commissioner 8011535
10. Gujarat Value Added Tax Act 2003 Value Added Tax 2011-12 Jt. Value Added Tax Commissioner (Appeal) 17871910

viii) On the basis of the information and explanation given to us and on the basis ofrecords produced before us the company has defaulted in repayment of dues as follows:

NAME OF THE BANK NATURE OF FACILITY Amount (in Rs.) of Default as at 31-03-2016 Period Of Default (No of Days)
Union Bank Of India Term Loan 417100000 1 to 1170
Working Capital 319391914 1 to 745
Interest 304167170 1 to 745
State Bank of India Term Loan 358700000 1 to 1170
Working Capital 373580824 1 to 944
Interest 394186852 1 to 944
State Bank of Saurashtra Term Loan 70000000 1 to 1170
State Bank of Hyderabad Term Loan 44200000 1 to 1170
Interest 23872699 1 to 836

* The Dues of State bank of Hyderabad Union Bank of India State bank of India havebeen assigned to Invent Assets Securitization and Reconstruction Pvt Ltd respectivelyw.e.f 1st July 2015 3rd July 15 and 30th Oct 2015 .However no agreements have been executed between the company and Invent AssetsSecuritization and Reconstruction Pvt Ltd as on March 31 2016. And hence defaults havebeen considered towards banks as mentioned above till the date of Dues of respective banksbeing assigned to Invent Assets Securitization and Reconstruction Pvt Ltd..

ix) According to the records of the company the company has neither raised any moniesby way of Initial Public Offer or Further Public Offer nor has the company obtained anyterm loan. Hence the comments under the clause are not called for.

x) Based on the audit procedures performed and representation obtained from managementwe report that no case of material fraud by the Company or on the Company by its officersand employee has been noticed or reported for the year under audit.

xi) The Company has provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V of the CompaniesAct 2013.

xii) In our opinion and to the best of our information and according to theexplanations provided by the management we are of the opinion that the company is not anidhi company. Hence in our opinion the requirements of clause (xii) of Paragraph 3 ofthe Order do not apply to the Company.

xiii) The Company has complied with Section 177 and 188 of Companies Act 2013 inrespect of transactions with the related parties and relevant details have been disclosedin the financial statements as required by the applicable accounting standards.

xiv) The Company has not made any preferential allotment or private placement of sharesor full or convertible debentures during the year under review. Hence the provisions ofClause (xiv) of paragraph 3 of the Order are not applicable to the Company.

xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him. Therefore the provisions of Clause (xv) of paragraph 3 of theOrder are not applicable to the Company.

xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Talati & Talati
Chartered Accountants
(Firm Reg. No: 110758W)
Umesh Talati
Place: Ahmedabad Partner
Date : May 30 2016 Mem No. : 034834

ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIAL STATEMENTSOF S.A.L. STEEL LIMITED

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

We have audited the internal financial controls over financial reporting of S.A.L STEELLimited ('the Company) as of March 31 2016 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as 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 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. Webelieve that the audit evidence I/we have obtained is sufficient and appropriate toprovide a basis for my /our audit opinion on the Company's internal financial controlssystem over 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 March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Talati & Talati
Chartered Accountants
(Firm Reg. No: 110758W)
Umesh Talati
Place: Ahmedabad Partner
Date : May 30 2016 Mem No. : 034834