TO THE MEMBERS OF ASHIRWAD STEELS & INDUSTRIES LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Ashirwad Steels & IndustriesLimited ("the Company") which comprise the Balance Sheet as at March 31 2020the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information (here inafter referred to as "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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 312020 the lossand totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those SAs are further described in the Auditor's Responsibilitiesfor the Audit of the Standalone Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India (ICAI) together with the ethical requirements that arerelevant to our audit of the standalone financial statements under the provisions of theAct and the Rules made there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence wehave obtained is sufficient and appropriate to provide abasis for our opinion.
Emphasis of Matter
We draw your attention to Note 3 to the standalone financial statements which explainsthe uncertainties and management's assessment of the financial impact due to the lock-down/ restrictions related to the Covid-19 pandemic imposed by the Governments for which adefinitive assessment of the impact is dependent upon future economic conditions. Ouropinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Description of Key Audit Matter Revenue recognition
|Sr. No. ||Key Audit Matter ||How the matter was addressed in our audit |
|1. ||Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with Customers" (new revenue accounting standard) Revenue is recognized when the control of the underlying products has been transferred to the customer. ||Our audit procedures included: |
| || ||We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. |
| ||Revenue is measured net of discounts rebates and incentives earned b y customers on the Company's sales if any. ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||We identified Revenue recognition as a key audit matter because of the management judgment involved in determining the application of key judgments relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period. ||Evaluated the design of internal controls relating to Implementation of the new revenue accounting standard. |
| || ||Assessing the appropriateness of the revenue recognition accounting policies including those relating to discounts rebates and incentives by comparing applicable accounting standards. |
| || ||Testing the design implementation and operating effectiveness of the Company's general IT controls over the Company's systems and manual controls which govern recording of revenue and discounts rebates and incentives in the general ledger accounting system. |
| || ||Performing substantive testing (including year- end cut off testing) by selecting samples of revenue transactions recorded during the year (and before and after the financial year end) by verifying the under lying documents which included sales invoices/contracts and other documents. |
| || ||Comparing the historical discounts rebates and incentives to current payment trends. We also considered the historical accuracy of the Company's estimates in previous years. |
| || ||Considered the adequacy of the Company's disclosures in respect of revenue. |
|2. ||The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on a range of tax matters during the normal course of business including indirect tax matters and other litigation(s). These involve significant judgment by the company to determine the possible outcome of the uncertain tax positions consequently having an impact on related accounting and disclosures in the financial statements. ||Our audit procedures included the following substantive procedure; |
| || ||1. Obtain an understanding of key tax matters |
| || ||2. The audit team along with our internal tax experts read and analysed select key correspondences external legal opinions/ consultation obtained by Company for key tax matters |
| || ||3. Evaluated the key assumptions made by the company in estimating the current and deferred tax balances |
| || ||4. Assessed the company's estimate of the possible outcome of the disputed cases and pending litigations by considering legal precedence and other judicial rulings and; |
| || ||5. Assessed and tested the presentation and disclosures relating to taxes and litigations. |
Adoption of Ind As 116 Leases
|Sr. No. ||Key Audit Matter ||How the matter was addressed in our audit |
|3. ||As described in Note 1 to the financial statements the Company has adopted Ind AS 116 Leases in the current year. ||Our audit procedures on adoption of Ind AS 116 Leases include; |
| ||Ind AS 116 introduces a new accounting model wherein lessees are required to recognise a right-of- use asset and a lease liability arising from a lease on the balance sheet. ||1. Assessed and tested new processes and controls in respect of the lease accounting standard 116 Leases |
| || ||2. Assessed the company's evaluation on the identification of leases based on the contractual agreements and our knowledge of the business; |
| ||The lease liabilities are initially measured by discounting future lease payments during the lease terms as per the contract / arrangement. Adoption of the standard invo lves significant judgements and estimates including determination of the discount rates and the lease terms. ||3. Assessed that the company does not have any lease contracts / arrangements that qualifies to be a lease as per requirements of Ind AS 116 Leases hence there is no impact in the financial statements of the company as a result comparatives for the year ended 31st March 2019 have not been retrospectively adjusted. However lessor accounting remains the similar to the current standard -i.e. lessors continue to classify leases as finance or operating leases it replaces existing lease guidance Ind AS 17 |
|4. ||Classification and measurement of financial assets - Business model assessment Ind As 109 Financial Instruments contain three principal measurement categories for financial assets i.e. Amortised cost. Fair value through Other Comprehensive Income (FVOCI) and Fair value through Profit and Loss (FVIPL) ||Our audit procedures included: Desian / controls |
| || ||Assessing the design implementation and operating effectiveness of key internal controls over management's intent of purchasing a financial assets and classification of such financial assets on the basis of management's intent (business model). For financial assets classified at Amortized cost we tested controls over the classification of such assets and subsequent measurement of assets at Amortized cost |
| ||The term business model' refers to the way in which the Company manages its financial assets in order to generate cash flows. That is the Company's business model determines whether cash flows will result from contractual cash flows selling the financial assets or both. ||For financial assets classified at FVOCI we tested controls over the classification of such assets and subsequent measurement of assets at fair value. |
| || ||Substantive tests. |
| ||We identified business model assessment as a key audit matter because of the management judgment involved in determining the intent of purchasing and holding a financial asset which could lead to different classification and measurement outcomes of the financial assets and its significance to the financial statements of the Company. ||Test of details over classification and measurement of financial assets in accordance with management's intent. (Business model). |
| || ||We selected a sample of financial assets to test whether their classification as at the balance sheet date is in accordance with management's intent. |
| || ||We selected a sample (based on quantitative thresholds) of financial assets sold during the year to check whether there have been any sales of financial assets classified at amortized cost FVOCI or FVTPL. |
| || ||We have also checked that there have been no reclassifications of assets in the current period. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditor's reportthereon. Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
Based on the work we have performed; we conclude that there is no material misstatementof this other information; we are required to report that fact. We have nothing to reportin this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Management and Board of Directors are responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit and othercomprehensive income changes in equity and cash flows of the Company in accordance withthe Indian Accounting Standards (Ind AS) specified under Section 133 of the Act and otheraccounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safe guarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements Management and Board of Directors areresponsible for assessing the Company's ability tocontinue as a going concern disclosingas applicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions ofuserstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financialstatements 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 Act we are also responsible for expressing our opinion on whether the Company hasadequate internal financial control system in place and the operating effectiveness ofsuch 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually origin aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies 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 with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
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 in terms of Section143(11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraph 3 and 4 of theorder 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) 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 standalone Balance Sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flow dealt with by this Report are in agreement with therelevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the IndASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. as may be amended.
e) On the basis of the written representations received from the directors as on March312020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312020 from being appointed as a director in terms of Section 164 (2) of theAct.
f) With respect to the adequacy of the internal financial controls with reference tofinancials statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
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 best of our information and according to the explanations given to us:
i) The Company has disclosed the impact of pending litigations as at March 31 2020onits financial position in its standalone financial statements (Refer note 33 to thestandalone financial statements).
ii) 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.
iii) There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
3) With respect to the matter to be included in the Auditor's Report under Section197(16) of the Act:
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act. The Ministry ofCorporate Affairs has not prescribed other details under Section 197(16) of the Act whichare Required to be commented upon by us.
For and on behalf of
M.R.SINGHWI & CO
Firm Registration Number: 312121E
CA Mahesh Raj Singhwi
Membership Number: 050650
Annexure - A to the Independent Auditors' Report
With reference to the Annexure A referred to in the Independent Auditor's Report to themembers of the Company on the standalone financial statements for the year ended March312020 we report the following:
i. In respect of the Company's Property plant and equipment:
(a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
(b) The Company has physically verified all the major property plant and equipment asper a phased program of verification. In our opinion the periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. The discrepancies reported on such verification were not material and have beenproperly dealt in the books of accounts.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the records/deeds provided to us we report that thetitle deeds of all the immovable properties other than self- constructed immovableproperties (Building and Factory sheds etc.) are held in the name of the Company.
ii. As per the information furnished to us the management has conducted physicalverification of inventory at reasonable intervals during the year wherever possible andrequired and the discrepancies noticed have been properly dealt with in the books.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to Companies Firms Limited Liability Partnershipor other parties covered in the register maintained under section 189 of the CompaniesAct 2013. Accordingly paragraphs 3(iii) (a) (b) and (c) of the Order are notapplicable to the Company.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections186 of the Act in respect of grant ofloans making investments and providing guarantees and securities as applicable. No loanhas been given to any director of the Company.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from public within the meaning of sections 73 to 76or any other relevant provisions of the Companies Act 2013 and the rules framed thereunder and hence no reporting on this account is required.
vi. Since the net worth of the Company is less than Rupees one hundred and fifty croresand the turnover in respect of Sponge iron is less than Rupees thirty-five crores therequirement of maintenance of cost records is not necessary as per relevant provisions ofthe Companies Act 2013.
vii. The Company is generally regular in depositing undisputed statutory dues includingstaff provident fund Employees' State Insurance Income Tax Excise Duty Cess Goods andServices Tax and other material statutory dues as applicable to it.
viii. In our opinion there is no amount required to be transferred to InvestorEducation and Protection Fund in accordance with the relevant provisions of the CompaniesAct 2013 and rules framed there under.
ix. The Company has not taken any loans or borrowings from financial institutionsbanks and government or has not issued any debentures. Hence reporting under clause 3(viii) of the Order is not applicable to the Company.
x. In our opinion and according to the information and explanations given to us theCompany has not raised moneys by way of initial public offer or further public offer(including debt instruments) or term loans and hence reporting under clause 3 (ix) of theOrder is not applicable to the Company.
xi. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
xii. In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
xiii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) ofthe Order is not applicable to the Company.
xiv. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
xv. According to the information and explanations give us and based on our examinationof the records of the Company the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the year.
xvi. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsDirectors or persons connected with them.
xvii. In our Opinion and according to the information and explanations given to us theCompany is not required to be registered under Section 45-IA of the Reserve Bank of IndiaAct 1934. Accordingly paragraph 3 (xvi) of the Order is not applicable to the Company.
For and on behalf of
M.R.SINGHWI & CO
Firm Registration Number: 312121E
CA Mahesh Raj Singhwi
Membership Number: 050650
Annexure - B to the Independent Auditors' Report
With reference to the Annexure B referred to paragraph 1A (f) underReporton Other Legal and Regulatory Requirements of the Independent Audit Report to the membersof the Company on the standalone financial statements for the year ended March 31 2020we report the following:
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (the "Act")
We have audited the internal financial controls with reference to standalone financialstatements of ASHIRWAD STEELS & INDUSTRIES LIMITED ("the Company") asof March 312020 in conjunction with our audit of the standalone financial statements ofthe Company for the year ended on that date.
In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to standalone financial statements and such internalfinancial controls were operating effectively as at March 31 2020 based on the internalcontrol with reference to standalone financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India (the 'Guidance Note').
Management's Responsibility for Internal Financial Controls
The Company's Management and the Board of Directors of the Company are responsible forestablishing and maintaining internal financial controls based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential component of stated in the Guidance Note issued by the Instituteof Chartered Accountants of India. These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of its business includingadherence to company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under theCompanies Act2013.
Our responsibility is to express an opinion on the internal financial controls withreference to standalone financial statements based on our audit. We conducted our audit inaccordance with the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India and the Standards on Auditing prescribed under Section 143 (10) of the CompaniesAct 2013 to the extent applicable to an audit of internal financial controls withreference to financial statements. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to standalonefinancial statements were established and maintained and whether such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financial statements and their operatingeffectiveness. Our audit of internal financial controls with reference to standalonefinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effective internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud 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 withreference to standalone financial statement.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control with reference to standalone financial statementis a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal financialcontrol with reference to standalone financial statement includes those policies andprocedures that:-
(i) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(ii) 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
(iii) 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 with Reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
For and on behalf of
M.R.SINGHWI & CO
Firm Registration Number: 312121E
CA Mahesh Raj Singhwi
Membership Number: 050650 UDIN: