Sunflag Iron and Steel Company Limited C I N - L 27100 MH 1984 PLC 034003 33 MountRoad Sadar Nagpur - 440001
Report on Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of SUNFLAG IRON ANDSTEEL COMPANY LIMITED ("the Company") which comprise of Balance Sheet as at31st March 2016 Statement of Profit and Loss and the Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation.
Managements Responsibility for the Standalone Financial Statements
The Companys 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.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgements 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 financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
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 theauditors judgement including the assessment of the risks of material misstatementof the financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial controls relevant to theCompanys preparation of the financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances but not forthe purpose of expressing an opinion on whether the Company has in place an adequateinternal financial controls system over financial reporting and the operatingeffectiveness of such controls. An audit also includes evaluating the appropriateness ofthe accounting policies used and the reasonableness of the accounting estimates made bythe Companys Directors as well as evaluating the overall presentation of thefinancial 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.
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 2016 and its profit and its cash-flows for the year ended on that date.
Report On Other Legal and Regulatory Requirements
As required by the Companies (Auditors Report) Order 2016 (theorder) issued by the Central Government of India in terms of sub-section (11) ofSection 143 of the Companies Act 2013 we give in the Annexure-A a statement onthe matters specified in paragraphs 3 and 4 of the order to the extent applicable.
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 theAccounting 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 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in terms of Section164 (2) of the Act;
f) with respect to the adequacy of the Internal Financial Controls over the financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in "Annexture - B" and;
g) with respect to the other matters to be included in the Auditors 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 Annexure - C of our Report and note27.3(i) to the financial statements.
ii) The Company does not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.
iii) The Company does not have any pending amount required to be transferred to theInvestor Education and Protection Fund.
| ||For Patel Shah & Joshi |
| ||Chartered Accountants |
| ||Firm Regn. No. 107768W |
|Nagpur ||CA Jayant I. Mehta |
| ||Partner |
|28th May 2016 ||Membership Number - 42630 |
ANNEXURE - A TO INDEPENDENT AUDITORS REPORT
Referred to in paragraph under "Report on the other legal and regulatoryrequirements" section of our report of even date on the accounts of the Company forthe year ended 31st March 2016 :
On the basis of sample checks and according to the information and explanations givento us during the course of our audit we report that;
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The fixed assets have been physically verified by the management at reasonableintervals which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. According to the information and explanations given to usno material discrepancies were noticed on such verification.
c) i) According to the information and explanations given to us and the recordsexamined by us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising the immovableproperties of land acquired and buildings which are freehold are held in the name of theCompany as at the balance sheet date.
ii) In respect of immovable properties of land that have been taken on lease anddisclosed as fixed asset in the financial statements the lease agreements are in the nameof the Company where the Company is the lessee in the agreement.
ii) We are informed that the physical verification of inventory has been conductedduring the year by the management at reasonable intervals. As explained to us no materialdiscrepancies were noticed on such verification.
iii) a) According to the information and explanations given to us the Company hasduring the year granted loan and advance to a
Body Corporate covered in the register maintained under Section 189 of the CompaniesAct 2013.
b) In the case of loan and advance granted to the Body Corporate listed in the registermaintained under Section 189 of the Act. the terms of arrangements do not stipulate anyrepayment schedule and the loans are repayable on demand. Accordingly the paragraph3(iii)(b) of the Order is not applicable to the Company in respect of repayment of theprincipal amount.
c) There are no overdue amounts of more than rupees one lakh in respect of the loan andadvance granted to the body corporate listed in the register maintained under Section 189of the Act.
iv) According to the information and explanations given to us the Company has compliedwith the provisions of Section 185 and 186 of the Companies Act 2013 in respect of loansinvestment guarantees and security.
v) We are informed that the Company has not accepted any deposit during the year underSection 73 to 76 of the Companies Act 2013 and rules made there under.
vi) According to the information and explanations given to us Central Goverment hasprescribed the maintenance of cost records under section (1) of the Section 148 of theCompanies Act 2013. We have broadly reviewed the cost records maintained by the Companyand are of the opinion that prima facie the Company has maintained the prescribed costrecords pursuant to the Companies (Cost Records and Audit) Rules 2014.
vii) a) The Company is regular in depositing undisputed statutory dues includingProvident Fund Employees State Insurance
Income Tax Sales Tax Service Tax Duty of Customs Duty of Excise Value Added TaxCess and other statutory dues to the appropriate authorities.
b) No disputed amounts payable other than those mentioned in the attached Annexure- C in respect of Income Tax Service Tax Sales Tax or Duty of Customs or Duty ofExcise or Value Added Tax were outstanding as at 31st March 2016.
viii) The Company has not defaulted in repayment of any loans or borrowings fromfinancial institutions banks Government or dues to debenture holders during the year.Accordingly clause (viii) of the Order is not applicable and hence not commented upon.
ix) The Company has not raised money by way of initial public offer or further publicoffer (incluiding debt instruments) and term loans during the year. Accordingly clause(ix) of the Order is not applicable and hence not commented upon.
x) According to the information and explanations given to us no material fraud by theCompany or any fraud on the Company by its officers or employees has been noticed orreported during the year.
xi) According to the information and explanations given to us the managerialremunaration has been paid or provided for in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Companies Act 2013.
xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly clause (xii) of the order is not applicableand hence not commented upon.
xiii) According to the information and explanantions given to us all transactions withrelated parties are in compliance with Section 177 and 188 of the Companies Act 2013where applicable and the details have been disclosed in the Financial Statements asrequired by the applicable accounting standards.
xiv) The Company has not made any preferential allotment or private placement of sharesor full or partly convertible debentures during the year under review.
xv) According to the information and explanations given to us and based on ourexamination of the record of the Company the Company has not entered into any non-cashtransactions with directors or persons connected with them. Accordingly clause
(xv) of the Order is not applicable and hence not commneted upon.
xvi) The Company is not required to be registered under Section 45-1A of the ReserveBank of India Act 1934. Accordingly the clause
(xvi) of the Order is not applicable to the Company and hence not commented upon.
ANNEXURE - B TO THE INDEPENDENT AUDITORS REPORT
"Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of SunflagIron and Steel Company Limited ("the Company) as of 31st March 2016 in conjunctionwith our audit of the financial statements of the Company for the period 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 Insitute 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.
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 issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols 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 on 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.
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 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 authorizations of management and directors of the Company; and
3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized 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.
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 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 Patel Shah & Joshi |
| ||Chartered Accountants |
| ||Firm Regn. No. 107768W |
| ||CA Jayant I. Mehta |
|Nagpur ||Partner |
|28th May 2016 ||Membership Number - 42630 |