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Chase Bright Steel Ltd.

BSE: 504671 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE839Q01019
BSE 05:30 | 01 Jan Chase Bright Steel Ltd
NSE 05:30 | 01 Jan Chase Bright Steel Ltd

Chase Bright Steel Ltd. (CHASEBRIGHTST) - Auditors Report

Company auditors report

To the Members of

CHASE BRIGHT STEEL LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of CHASE BRIGHT STEEL LIMITED("the Company") which comprise the Balance Sheet as at March 31 2019and the Statement of Profit and Loss (including other comprehensive income) Statement ofChanges in Equity and Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the financial statements").

Opinion

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 theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 and profit (including othercomprehensive income) changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Key Audit Matters

Key audit matters (‘KAM') are those matters that in our professional judgmentwere of most significance in our audit of the financial statements of the current period.These matters were addressed in the context of our audit of the financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.

The Key Audit Matters How our audit addressed the Key Audit Matters
During the year the Company has sold its Factory Land and Building situated at Rabale Navi Mumbai. The Company has to shift its manufacturing activities from its present location to some other place on or before March 31 2020. The Company has sold the present factory Land and Building and cleared the outstanding various loans. The Company has entered into MOU with the buyer to allow it to use the said land and building till March 31 2020 on rental basis for its manufacturing activities. We have verified the MOU and other relevant documents in the said matter.
As per the discussion with the Management the Company is on lookout for suitable land / building to shift the manufacturing activities from the present location.
In our opinion in case the Company is not able to identify and shift its manufacturing facilities by March 31 2020 the operations of the Company will be severely hampered which may even lead to closure of the manufacturing activities of the Company.
During the year the Company has provided Bad debts of र 2.44 Crores. We started our audit procedures with the understanding of the internal control procedure related to sales and receivable collections Our procedures over internal controls focused on recognition of receivable not likely to be recovered. We also examined the steps taken by the Company for recovery in each of the Receivable Account. We also tested the accuracy of the amount written off during the year. We assessed the disclosures made in the Ind AS financial statements.

Other Information

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 auditors' reportthereon. Our opinion on the financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.

Responsibility of Management and those Charged with Governance for the FinancialStatements

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 financial statementsthat give a true and fair view of the state of affairs profit / loss (including othercomprehensive income) changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act.

This responsibility also includes the maintenance of adequate accounting records inaccordance with the provision of the Act for safeguarding of the assets of the Company andfor preventing and detecting the frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of 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.

In preparing the financial statements the Board of Directors is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.

The Members of the Board of Directors are also responsible for overseeing the company'sfinancial reporting process.

Auditor's Responsibility

Our objectives are to obtain reasonable assurance about whether the financialstatements 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 SAswill 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 financial statements.

Annexed herewith "Annexure A" to this report the Auditorsresponsibility under Standards of Auditing Assurance and Limitations of Audit.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the "Annexure B" a statement on the mattersspecified in the paragraph 3 and 4 of the order.

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 Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the books of account;

(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with relevant Rules issuedthereunder;

(e) on the basis of the written representations received from the directors as on 31March 2019 taken on record by the Board of Directors none of the directors isdisqualified as on March 31 2019 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 financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure C" and;

(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 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;

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 were no amounts required to be transferred to the Investor Education andProtection Fund by the Company.

3. With respect to the matter to be included in the Auditors' Report under section197(16):

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 section 197 of the Act.

For MAHENDRA KUMBHAT & ASSOCIATES
Chartered Accountants
Firm's registration No.: 105770W
AMAR BAGRECHA
Mumbai Partner
May 29 2019 Membership number: 056605

Annexure - A to the Independent Auditors' Report

(Referred to in our report of even date)

[Report on the Assurance and limitations of Audit under Standards of Auditing specifiedunder Subsection 10 of Section 143 of the Act].

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 controls 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.

• We communicate with those charged with governance regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

• We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

• From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditor's report unless law or regulation precludes public disclosure about the matteror 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

• We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Financial Statements.

For MAHENDRA KUMBHAT & ASSOCIATES
Chartered Accountants
Firm's registration No.: 105770W
AMAR BAGRECHA
Mumbai Partner
May 29 2019 Membership number: 056605

Annexure - B to the Auditors' Report

The Annexure referred to in Independent Auditors' Report to the members of the Companyon the financial statements for the year ended March 31 2019 we report 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) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) The Inventory except goods – in – transit and stocks lying with thirdparties have been physically verified by the management during the year or at the yearend. In our opinion the frequency of such verification is reasonable and adequate inrelation to the size of the company and nature of its business. For stocks lying withthird parties at the year end confirmations of such stocks being held have been obtained.The discrepancies noticed on verification between the physical stocks and the book recordswere not material and have been dealt with in the books of account.

(iii) The Company has not granted loan to companies covered in the register maintainedunder section 189 of the Companies Act 2013 (‘the Act') hence sub clause (a) (b)and (c) of this clause is not applicable.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act with respectto the investments made.

(v) In our opinion and according to the information and explanation given to us as theCompany has not accepted any deposits from the public Paragraph 3(v) of the Order tocomment on whether the Company has complied with the directives issued by the Reserve Bankof India and the provisions of Sections 73 to 76 or any other relevant provisions of theCompanies Act 2013 and the Rules framed thereunder are not applicable.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 as specified by the Central Governmentunder section 148(1) of the Act in respect of its products and are of the opinion thatprima facie the prescribed accounts and records have been made and maintained. Howeverwe have not made a detailed examination of the records with a view to determine whetherthey are accurate or complete.

(vii) (a) According to the information and explanation given to us and the records ofthe Company examined by us in our opinion the Company is generally regular in depositingthe undisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax wealth-tax service-tax custom duty excise and other materialstatutory dues as applicable to it with the appropriate authorities. Further Accordingto the information and explanations given to us no undisputed amounts payable in respectof income-tax wealth-tax service-tax sales- tax customs duty and other materialstatutory dues were in arrears as at March 31 2019 for a period of more than six monthsfrom the date they became payable except ESIC dues of र 498 and NMMC Cess of र8.00 lakhs.

(b) Further According to the information and explanations given to us no undisputedamounts payable in respect of income-tax service-tax sales- tax customs duty exciseduty GST and other material statutory dues were in arrears as at March 31 2019 for aperiod of more than six months from the date they became payable.

(viii) According to the information and explanations given to us and records of theCompany examined by us the Company has not defaulted in repayment of dues to financialinstitutions or banks or government as on the date of Financial Statements. Further theCompany has not issued any debentures and hence Paragraph 4 (viii) of the Order to thatextent is not applicable.

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised money by way of term loans during the year. Further the Companydid not raise any money by way of initial public offer or further public offer (includingdebt instruments) during the year. Accordingly paragraph 3 (ix) of the Order is notapplicable.

(x) According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.

(xi) According to the information and explanations give to us and based on ourexamination of the records of the Company managerial remuneration has been paid orprovided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Financial Statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with him.

(xvi) According to information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.Accordingly Paragraph 3(xvi) of the Order is not applicable to the Company.

For MAHENDRA KUMBHAT & ASSOCIATES
Chartered Accountants
Firm's registration No.: 105770W
AMAR BAGRECHA
Mumbai Partner
May 29 2019 Membership number: 056605

Annexure - C 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 ChaseBright Steel Limited ("the Company") as of March 31 2019 inconjunction with our audit of the financial statements of the Company for the year endedon 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 (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required 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 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

(a) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(b) 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 authorisations of management and directors of the company; and

(c) Provide reasonable assurance regarding prevention or timely detection ofunauthorised 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.

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 31 March 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 MAHENDRA KUMBHAT & ASSOCIATES
Chartered Accountants
Firm's registration No.: 105770W
AMAR BAGRECHA
Mumbai Partner
May 29 2019 Membership number: 056605