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Sagardeep Alloys Ltd.

BSE: 510200 Sector: Metals & Mining
NSE: SAGARDEEP ISIN Code: INE976T01013
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Sagardeep Alloys Ltd. (SAGARDEEP) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

SAGARDEEP ALLOYS LIMITED

Opinion

We have audited the accompanying standalone financial statements of SAGARDEEP ALLOYSLIMITED ("the Company") which comprise the Balance Sheet as at 31st March2017 the Profit and Loss Statement the Cash Flow Statement for the Period ended and asummary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone 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 31st March 2017 and its profit and its cash flows for the year/period ended on thatdate.

Basis of Our Opinion

We conducted our audit in accordance with the standard on auditing (SAs) specifiedunder section 143(10) of the companies act 2013. Our responsibilities under thosestandards are further described in the auditor's responsibilities for the audit of thefinancial statements section of our report. We are independent of the company inaccordance with the code ethics issued by the institute of chartered accountants of Indiatogether with ethical requirements that are relevant to our audit of financial statementunder the provisions of the companies act 2013 and rules there under and we havefulfilled our ethical responsibilities in accordance with these requirements and the codeof ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide separate opinion on these matters.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE 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 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 standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the standalone financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thestandalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances but not for thepurpose of expressing an opinion on whether the Company has in place an adequate internalfinancial controls system over financial reporting and the operating effectiveness of suchcontrols. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of the accounting estimates made by the Company's directorsas well as evaluating the overall presentation of the standalone financial statements.

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

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

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 and the cash flow statementdealt with by this Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone financial statements comply with the

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

e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms ofSection 164 (2) of the Act.

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) With respect to the other matters included in the auditor's report and to best ofour information and according to the explanation given to us.

1. The company has disclosed the impact of pending litigation on its financial positionin its financial statement if any.

2. The company has made provision as required under the applicable law or AccountingStandards for material foreseeable losses if any on long term contracts includingderivative contracts.

3. There has been no delay in transferring amounts required to be transferred to theinvestor's education and protection fund by the company if any.

For Piyush J. Shah & Co.

Chartered Accountants

FRN: 121172W

Piyush J. Shah

Partner

M. No: 108670

Place: Ahmedabad

Date: 25th May 2017

Annexure - A to the Auditors' Report

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the Period 01-04-2016 to 31-03-2017 wereport that:

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

(b) The company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.

(c) The title deeds of immovable properties are held in the name of the company.

ii) The Inventories have been physically verified during the year by the management. Inour opinion and according to the information and explanations given to us the company hasmaintained proper records of inventory. As explained to us there were no materialdiscrepancies noticed on physical verification of inventory as compared to book recordsand the same has been properly dealt with in books of accounts.

iii) The Company had not granted loan to any body corporate covered in the registermaintained under section 189 of the Companies Act 2013 ('the Act').

(a) Not Applicable

(b) Not Applicable

(c) Not Applicable

iv) In our opinion and according to the information and explanations given to us inrespect of loans investments guarantees and security provisions of section 185 and 186of the Companies Act 2013 had been complied with.

v) The company had not accepted any deposits from public therefore the directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Companies Act 2013 and the rules framed there under is notapplicable.

vi) The Central Government had prescribed the maintenance of cost records under section148(1) of the Act for the goods supplied by the Company. In our opinion and according tothe information and explanations given to us the company had maintained proper costrecords.

vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities. As explained to us the Company did not have any dues onaccount of employees' state insurance and duty of excise.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax wealth tax service tax dutyof customs value added tax cess and other material statutory dues were in arrears as at31st March 2017 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us there are no materialdues of wealth tax duty of customs and cess which have not been deposited with theappropriate authorities on account of any dispute. However according to explanationsgiven to us the following dues of sales tax have not been deposited by the company onaccount of dispute:

Name of Statue Nature of Dues Amount (In Rs.) Period to which Relates Forum Where Dispute is pending
Gujarat VAT Act Sales Tax Interest and Penalty 2328175/- 2009-10 DCCT-A
Gujarat VAT Act Sales Tax Interest and Penalty 48200824/- DCCT-A
Gujarat VAT Act Sales Tax Interest and Penalty 18385414/- 2010-11 DCCT-A
Gujarat VAT Act Sales Tax Interest and Penalty 4096251/- 2011-12 DCCT-A
Income Tax Act Income Tax 2081000 2012-13 CIT-A

viii) The company had not defaulted in repayment of loans or borrowing to a financialinstitution bank Government or dues to debenture holders.

ix) According to the information and explanations given to us the company had raisedRs.6.00 /- crores by way of Initial Public offer and the same have been applied for thepurpose for which it was raised.

x) According to the information and explanations given to us no material fraud on orby the Company has been noticed or reported during the course of our audit.

xi) According to the information and explanations given to us managerial remunerationhad been paid or provided in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Companies Act.

xii) In our opinion the company is not nidhi company. Therefore the provisions asmentioned in the Nidhi Rules 2014 are not applicable to the company.

xiii) In our opinion and according to the information and explanations given to us alltransactions with the related parties are in compliance with sections 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the FinancialStatements etc. as required by the applicable accounting standards.

xiv) According to the information and explanations given to us the company had notmade preferential allotment of shares or fully or partly convertible debentures during theyear/period under review and so the requirement of section 42 of the Companies Act 2013is not applicable.

xv) According to the information and explanations given to us the company had notentered into any non-cash transactions with directors or persons connected with him.

xvi) In our opinion the company is not a Non Banking Finance Company therefore therequirement to register under section 45-IA of the Reserve Bank of India Act 1934 in notapplicable.

For Piyush J. Shah & Co.

Chartered Accountants

FRN: 121172W

Piyush J. Shah

Partner

M. No: 108670

Place: Ahmedabad

Date: 25th May 2017

Annexure - B to the 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 SagardeepAlloys Limited ("the Company") as of 31st March 2017 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

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 standalone financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Piyush J. Shah & Co.

Chartered Accountants

FRN: 121172W

Piyush J. Shah

Partner

M. No: 108670

Place: Ahmedabad

Date: 25th May 2017