To the Members of
AANCHAL ISPAT LIMITED
Report on the Financial Statements
We have audited the accompanying IND AS financial statement of AANCHAL ISPAT LIMITED("the Company") which comprise the Balance Sheet as at March 31 2019 and theStatement of Profit and Loss for the year ended on that date and a summary of significantaccounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2019; and of the profit for the year ended on that date;
Basis for opinion
We conducted our audit in accordance with the standards on auditing specified undersection 143 (10) of the Companies Act 2013. Our responsibilities under those Standardsare further described in the auditor's responsibilities for the audit of the IND ASfinancial statement section of our report. We are independent of the Company in accordancewith the code of ethics issued by the Institute of Chartered Accountants of India togetherwith the ethical requirements that are relevant to our audit of the IND AS financialstatement under the provisions of the Act and the rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the code ofethics.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide 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 IND AS financial statements of the current period. Thesematters were addressed in the context of our audit of the IND AS financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
See note 3.04 note 22 to the standalone financial statements
|How the matter was addressed in our audit ||The key audit matter |
|We identified revenue recognition as a key audit matter because the Company and its external stakeholders focus on revenue as a key performance indicator.. ||Our audit procedures in this area included the following : |
| ||1. W the assessed the appropriateness of the revenue recognition accounting policies by comparing with applicable accounting standards. |
| ||2. W the evaluated the design of key controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions. |
| ||3. W the performed substantive testing by selecting samples of revenue transactions |
| ||4. W the carried out analytical procedures on revenue recognised during the year to identify unusual variances. |
| ||5. W the tested on a sample basis specific revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period. |
Related party transactions
(See note 30 to the standalone financial statements)
|How the matter was addressed in our audit ||The key audit matter |
|We identified the accuracy and completeness of disclosure of related party transactions as set out in respective notes to the standalone Ind AS financial statements as a key audit matter due to: the significance of transactions with related parties during the year ended March 31 2019. ||Our procedures in relation to the disclosure of related party transactions included: |
|Related party transactions are subject to the compliance requirement under the Companies Act 2013 and SEBI (LODR) 2015. ||1. Obtaining an understanding of the Company's policies and procedures in respect of the capturing of related party transactions and how management ensures all transactions and balances with related parties have been disclosed in the standalone Ind AS financial statements. |
| ||2. Obtaining an understanding of the Company's policies and procedures in respect of evaluating arms-length pricing and approval process by the audit committee and the board of directors. |
| ||3. Agreeing the amounts disclosed to underlying documen- tation and reading relevant agreements evaluation of arms- length on a sample basis as part of our evaluation of the disclosure. |
| ||4. Assessing management evaluation of compliance with the provisions of Section 177 and Section 188 of the companies Act 2013 and SEBI (LODR) 2015. |
Tax litigations provisions and contingencies
(See note 31 to the standalone financial statements)
|The key audit matter ||How the matter was addressed in our audit |
|The Company is involved in several ongoing direct and indirect tax litigations ||We have applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: |
|A disclosure for contingent liabilities is made where there is a possible obligation or a present obligation that may probably not require an outflow of resources. When there is a possible or a present obligation where the likelihood of outflow of resources is remote no provision or disclosure is made. ||1. W the tested the effectiveness of key controls around the recording and assessment of tax provisions and contingent liabilities. |
| ||2. W the assesseed the value of the provisions and contingent liabilities in light of the nature of the exposures applicable regulations and related correspondences with the authorities. |
|We have identified tax litigations provisions and contingencies as a key audit matter because it requires the management to make judgements and estimates in relation to the exposure arising out of litigations. The key judgement lies in the estimation of provisions where they may differ from the future obligations. The Company operates under several tax laws and some of these have a significant impact on the financial statements of the Company. ||3. W the assessed the relevant historical and recent judgments passed by the court authorities. |
| ||4. Obtained Management's assessment of the open cases and compared to assess the reasonableness of the provision or contingency. |
| ||5. Considered the adequacy of the Company's disclosures made in relation to taxation related provisions and contingencies in the financial statements. |
Information other than the financial statements and auditors' report thereon
The Company's board of directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Board'sReport including Annexures to Board's Report Business Responsibility Report but does notinclude the IND AS financial statements and our auditor's report thereon.
Our opinion on the IND AS financial statement does not cover the other information andwe do not express any form of assurance conclusion thereon. In connection with our auditof the IND AS financial statement our responsibility is to read the other informationand in doing so consider whether the other information is materially inconsistent withthe standalone financial statements or our knowledge obtained during the course of ouraudit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the Financial Statement
The Company's Board of Directors is responsible for the matters in section 134(5) ofthe Companies Act 2013 ("the Act") with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provision of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating 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.
In preparing the IND AS financial statement management is responsible for assessingthe Company's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The board of directors are also responsible for overseeing the Company's financialreporting process.
Our objectives are to obtain reasonable assurance about whether the IND AS financialstatement as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with ASswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these IND ASs financial statement.
As part of an audit in accordance with ASs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the IND AS financialstatement whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe IND AS financial statement or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the IND AS financialstatement including the disclosures and whether the IND AS financial statement representthe underlying transactions and events in a manner that achieves fair presentation.
W the communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant defficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the IND AS financial statement of the current period and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on the 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 sub-section (11) of section 143 ofthe Companies Act 2013 We give in the Annexure A on the matters specified in paragraph 3& 4 of the order.
2) As required by section 143(3) of the Act we report that:
a) W the have sought and obtained all the information and explanations which to thebest of 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 appears from our examination of those books.
c) The Balance Sheet and 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 ofthe Companies (Accounts) Rules 2014.
e) On the basis of written representations received from the directors as on 31 March2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of Section164(2) of the Act. with respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:
i. The company has no pending litigations in the current financial year.
ii. The company did not have any material foreseeable losses on long-term contracts.
iii. There are no amount required to be transferred to the Investor Education andProtection Fund by the Company
The Annexure A referred to in paragraph 1 of the Our Report of even date to the membersof AANCHAL ISPAT LIMITED on the accounts of the company for the year ended 31st March2019.
On the basis of such checks as we considered appropriate and according to theinformation and explanation given to us during the course of our audit we report that:
1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of informationavailable.
(b) As explained to us fixed assets have been physically verified by the managementreasonable intervals; no material discrepancies were noticed on such verification.
(c) In our opinion and according to the information and explanations given to us nosubstantial part of fixed asset has been disposed off during the year and thereforedoes not affect the going concern assumption.
2) (a) As explained to us the stock is regularly verified by the management atreasonable intervals.
(b) In our opinion and according to the information and explanations given to us theprocedure for verification of stock followed by the management is reasonable andadequate in relation to the size of the Company and the nature of its business.
(c) In our opinion and on the basis of our examination of the records the Company isgenerally maintaining proper records of its stocks. No discrepancies have beennoticed on verification of stocks statement as compared to book records
3) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability partnerships or other parties covered in the Register maintainedunder section 189 of the Act. Accordingly the provisions of clause 3 (iii) (a) to(C) of the Order are not applicable to the Company and hence not commented upon.
4) According to the information and explanations given to us the company has notadvanced any loans to any of its directors or to any other person in whom thedirector is interested or given any guarantee or provided any security in connection withany loan taken by him or such other person. The company has not made anyinvestments during the year. Therefore provisions of Clause
3(iv) of the Companies (Auditor's Report) Order 2016 are not applicable. The companyhas not granted any loans or provided any guarantees or security to the parties coveredunder section 185 of Companies Act 2013.
5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or anyother relevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015with regard to the deposits accepted from the public are not applicable.
6) W the have broadly reviewed the cost records maintained by the Company relating toits products pursuant to the Companies (Cost
Accounting Records) Rules 2011 prescribed by the Central Government under Section148(1) of the Act and are of the opinion that prima facie the prescribed CostRecords have been made and maintained. We have however not made a detailed examinationof the cost record with a view to determine whether they are accurate or complete.
7) a) According to the information and explanations given to us the Company isgenerally regular in depositing undisputed statutory dues including provident fundemployees' state insurance sales tax income tax wealth tax service tax duty ofcustoms of excise value added tax cess and other statutory dues as applicable withthe appropriate authorities.
b) The particulars of dues of sales tax income tax wealth tax service tax duty ofcustoms duty of excise value added tax and cess as applicable as at 31st March 2019which have not been deposited on account of a dispute are as follows
|Name of the Statute ||Nature of Dues ||Amount Involved ||Period to which the amount relates ||Forum where Dispute is Pending |
|The Central Excise Act 1944 ||Excise Duty ||Rs. 7986754/- ||FY 2007 - 08 ||Customs & Central Excise Service Tax Tribunal |
|Income Tax Act 1961 ||Income Tax ||Rs. 19278200/- ||FY 2011 - 12 ||CIT (A) 1 Kolkata |
|Income Tax Act 1961 ||Income Tax ||Rs. 3233690/- ||FY 2012-13 ||CIT(A)-1 Kolkata |
|West Bengal Value Added Tax Act 2003 ||VAT ||Rs.25257225/- ||FY 2012 - 13 ||Senior Joint Commissioner Howrah Circle |
8) In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of dues to banks & financialinstitutions. The Company has not taken any loan either from the government and has notissued any debentures.
9) Based upon the audit procedures performed and the information and explanations givenby the management the company has not raised moneys by way of initial public offeror further public offer during the year under review. The company had utilized the moneyraised by way of term loan during the year for the purpose for which they were raised.
10) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the companyby its officers or employees has been noticed or reported during the year.
11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;
12) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 4 (xii) of the Order are not applicable to the Company.
13) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed inthe Financial Statements as required by the applicable accounting standards.
14) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.
15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactionswith directors or persons connected with him. Accordingly the provisions of clause 3(xv) of the Order are not applicable to the Company and hence not commented upon.
16) In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.
"Annexure B" to the Independent Auditor's Report of even date on theFinancial Statements of AANCHAL ISPAT 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 AANCHALISPAT LIMITED ("the Company") as of March 31 2019 in conjunction with our auditof the Ind AS 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 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 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 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 2019 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 Raj Chandra & Associates |
| ||Chartered Accountants |
| ||Sd//- |
| ||( R.K.Agarwala ) |
| ||Partner |
|Place : Kolkata ||(Firm Registration No. : 326312E) |
|Date : 28/05/2019 || |