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Scan Steels Ltd.

BSE: 511672 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE099G01011
BSE 00:00 | 24 Apr 37.65 -2.10
(-5.28%)
OPEN

42.70

HIGH

42.70

LOW

37.00

NSE 05:30 | 01 Jan Scan Steels Ltd
OPEN 42.70
PREVIOUS CLOSE 39.75
VOLUME 4584
52-Week high 60.75
52-Week low 18.95
P/E 13.94
Mkt Cap.(Rs cr) 197
Buy Price 37.10
Buy Qty 10.00
Sell Price 37.65
Sell Qty 100.00
OPEN 42.70
CLOSE 39.75
VOLUME 4584
52-Week high 60.75
52-Week low 18.95
P/E 13.94
Mkt Cap.(Rs cr) 197
Buy Price 37.10
Buy Qty 10.00
Sell Price 37.65
Sell Qty 100.00

Scan Steels Ltd. (CLARUSINFRARL) - Auditors Report

Company auditors report

To the members of Scan Steels Limited

Report on the Ind AS Financial Statements

We have audited the accompanying financial statements of Scan Steels Limited (the‘'Company") which comprise the Balance Sheet as at March 31201 8 thestatement of Profit and Loss (including other comprehensive income) and the statement ofcash flows and the statement of changes in equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information.

Management's Responsibility for the Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act2013 (‘'the Act") with respect to the preparationand presentation of these Ind AS financial statements that give a true and fair view ofthe financial position financial performance including other comprehensive income andcash flows and changes in equity of the company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standardsspecified under Section 133 of the Act read with rule 7 of the Companies (Accounts)Rules 2014.

This responsibility also includes maintenance of adequate accounting 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 judgments 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 Ind ASfinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

• ur responsibility is to express an opinion on these Ind AS financial statementsbased on our audit.

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

We conducted our audit in accordance with the standards on auditing specified undersection 143 (10) of the Act.Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the Ind AS financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of theInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the Ind AS financial statements that give a true and fair view in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Company's Directors as well as evaluating theoverall presentation of the Ind AS financial statements.

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

• pinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe 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 March 31 2018 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

Without qualifying our opinion we draw attention to

i. Note - 40 to the financial statements which describes the approval of therestructuring arrangement by the lead banker State Bank of India and about recognition ofinterest cost of other members.

ii. Note - 41 to the financial statements which describes on steps taken by the companyfor transition to Ind AS compliances.

• ur opinion is not qualified in respect of this matter.

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 Companies Act 2013 we give in the ‘Annexure A'; a statement on the mattersspecified in the paragraph 3 and 4 of the said order 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 Balance Sheet the Statement of Profit and Loss and the statement of cash flowsand the statement of changes in equity dealt with by this report are in agreement with thebooks of account.

d. In our opinion the aforesaid Ind AS financial statements comply with the accountingstandards specified under section 133 of the Act read with rule 7 of the Companies(Accounts) Rules 2014

e. On the basis of the written representations received from the Directors as on 31stMarch 2018 and taken on record by the Board of Directors none of the Directors aredisqualified as on 31st March 2018from 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 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 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 Ind AS financial statements. Refer Note- 28 to the Ind AS financialstatements;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. there has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the company.

For SRB & Associates
Chartered Accountants
F.Regd. NO-310009E
B. Mohanty
30th May 2018 Partner
Bhubaneswar M. No:056264

Annexure-A to the Independent Auditors' Report

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

The Annexure referred to in our Independent Auditor's Report to the members of ScanSteels Limited (the Company) on the Ind AS financial statements for the year ended March312018 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 assetsby which all fixed assets are verified in a phased manner over a period of two years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to such program a portion offixed asset has been physically verified by the management during the year and no materialdiscrepancies were noticed on such verification.

(c) The deed of immovable properties are held in the name of the Company in almost allcases excepting for

• Freehold land of 7.68 Acres situated in Village Raiberna and Laing Sundergarhwhich is in the name of M/s. Shristi Ispat Limited the company which was merged in tothis company during 2005.

• Land of 14.88 Acres occupied by the company situated in Village-KudithiniBellary Karnataka.

(ii.) a. The inventory has been physically verified by the management during the year.In our opinion the frequency of such verification is reasonable.

b. The discrepancies noticed on the aforesaid verification between the physical stocksand book records were not material.

(iii) According to the information and explanations given to us no loan has beengranted by the Company (secured/ unsecured loans) to companies/ firms/ limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct.Accordingly reporting on interest and its repayment are 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 in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

(v.) In our opinion and according to the information and explanations given to us theCompany has accepted deposits from the public and complied in accordance with Chapter-VI(section 73 to 76) of the Act.

(vi.) We have broadly reviewed the books of account maintained by the Company pursuantto the rules prescribed by the Central Government for maintenance of cost records undersub-section (1) of section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the records.

(vii.)(a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees' stateinsurance income-tax sales tax service tax duty of customs duty of excise valueadded tax goods and services tax cess and other material statutory dues have beengenerally regularly deposited during the year by the Company with the appropriateauthorities.

(b) According to the information and explanations given to us the following dues ofCustomsDuty Income Tax VAT Goods and Services Tax and Entry Tax have not been depositedby the Company on account of disputes:

STATEMENT OF DISPUTED DUES

Name of the Statute Period Nature of Dues Amount ( Rs. ‘Lakhs') Forum where dispute is pending
Orissa Sales Tax Act 2001-2002  

• ST

0.63 Sales Tax Tribunal Cuttack
Entry Tax Act 2001-2002 ENTRY

TAX

0.09 Sales Tax Tribunal Cuttack
Orissa Sales Tax Act 2002-2003  

• ST

11.00 Assistant Commissioner of Commercial Tax RKL
Orissa Sales Tax Act 2004-2005  

• ST

3.66  

• ST Tribunal Cuttack

Entry Tax Act 2004-2005 ENTRY

TAX

3.45  

• ST Tribunal Cuttack

Orissa Sales Tax Act 2005-2006  

• ST

100.62 High Court of Odisha Cuttack
Entry Tax Act 2005-2006 ENTRY

TAX

16.79 High Court of Odisha Cuttack
Central Sales Tax Act 2005-2006 CST 4.25 High Court of Odisha Cuttack
OVAT Act 2006-2007  

• VAT

101.28 High Court of Odisha Cuttack
Central Sales Tax Act 2006-2007 CST 153.29 High Court of Odisha Cuttack
Entry Tax Act 2006-2007 ENTRY

TAX

30.73 High Court of Odisha Cuttack
OVAT Act 2007-08 & 2008-09  

• VAT

1.10 Additional CST Northern Zone
Entry Tax Act 2007-08 & 2008-09 ENTRY

TAX

0.67 Additional CST Northern Zone
Central Sales Tax Act 2007-08 & 2008-09 CST 0.93 Additional CST Northern Zone
Central Sales Tax Act  

• 1.08.2008 to

28.02.2011

CST 3.18 Additional CST Northern Zone
 

• VAT Act

01.04.2009

to

31.03.2011

 

• VAT

1.98 Additional CST Northern Zone
Entry Tax Act 01.04.2009

to

31.03.2011

ENTRY

TAX

4.55 Additional CST Northern Zone
 

• VAT Act

01.08.2008

to

28.02.2011

 

• VAT

1499.34  

• ST Tribunal Cuttack/ Stay Revision Commissioner

Entry Tax Act 01.08.2008

to

28.02.2011

ENTRY

TAX

315.77  

• ST Tribunal Cuttack/ Stay Revision Commissioner

 

• VAT Act

04.04.2012

to

31.03.2014

 

• VAT

2.71 Commissioner Cuttack Revision
Entry Tax Act 01.04.2012

to

31.03.2014

ENTRY

TAX

21.05 Commissioner Cuttack Revision
Central Sales Tax Act 01.04.2012

to

31.03.2014

CST 5.38 Commissioner Cuttack Revision
Central Sales Tax Act 01.04.2014 to

30.09.2015

CST 1.54 DCCT Rourkela
Central Sales Tax Act 01.04.2016 to

31.03.2017

CST 1.14 DCCT Rourkela
Custom Act 1962 2012 & 2013 Custom

Duty

132.04 Customs Excises Service Tax Appellate Tribunal

Bangalore

Income Tax act 2009-10 & 2011-12 Income

Tax

88.94 The Commissioner of Income Tax(appeals)
2506.10

(vii) In our opinion and according to the information and explanations given to us theCompany has defaulted in repayment of dues to banks who have declared the same asnon-performing in respect of the following amounts:

Particular Nature of Loan Period of Default Principal Amount outstanding in Books of Account as at 31st March 2018 (Rs. In Lakhs) Remarks
Oriental Bank of Commerce Cash Credit 30th April2016 to 31st March 2018. 1265.00 Refer Note No-40 and 12 to Financial Statements.
Punjab National Bank. Cash Credit 30th April2016 to 31st March 2018. 2527.00
IDBI Bank Cash Credit 30th June 2016 to 31st March 2018. 1760 .00
Term Loan 368 .00
Bank of India Cash Credit 30th June 2017 to 31st March 2018. 1306.00

(ix.) In our opinion and according to the information and explanations given to us theterm loans taken by the Company have been applied for the purpose for which they wereraised. The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year.

(x.) According to the information and explanations given to us no fraud by the Companyor on by its officers or employees has been noticed or reported during the course of ouraudit.

(xi.) According to the information and explanations given to us managerialremuneration has been paid or provided in accordance with the requisite approvals mandatedby the provisions of section 1 97 read with Schedule V to the Companies Act.

(xii.) In our opinion and according to the information and explanations given to usthe Company 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 section 177 and 188 of

the Companies Act 2013 and the details of such transactions have been disclosed in theInd AS financial statements of the Company as required by the applicable accountingstandards.

(xiv) Based upon audit procedures performed and the information and explanations givenby the management The company has allotted on Preferential basis 800000 no of equityshares at a premium as decided by the Board of Directors out of the conversion of warrantsallotted earlier. (Refer Note - 42)

(xv.) The Company has not entered into any non-cash transactions with its directors orpersons connected with them. Accordingly the provisions of clause 3(xv) of the Order arenot applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1 934. Accordingly the provisions of clause 3(xvi) of the order arenot applicable to the Company.

For SRB & Associates

Chartered Accountants F.Regd. NO-310009E

B. Mohanty

Partner M. No:056264

30th May 2018

Bhubaneswar

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 Scan SteelsLimited ("the Company") as of March 31 2018 in conjunction with our audit ofthe 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 (‘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

• ur 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 "GuidanceNote") and the Standards on Auditing (the 'Standards') issued by ICAI and deemed tobe prescribed under section 143 (10) of the Companies Act 2013 to the extent applicableto an audit of internal financial controls both applicable to an audit of InternalFinancial Controls and both 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.

• ur audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of thelnd AS financial statements whether due to fraud orerror.

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

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Ind AS financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial controloverfinancial reporting includes those policies and procedures that (i) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASfinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (iii) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial 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.

• pinion

In our opinion the Company has in all material respects an adequate internalfinancial controls over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2018 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For SRB & Associates
Chartered Accountants
F.Regd. NO-310009E
B. Mohanty
30th May 2018 Partner
Bhubaneswar M. No:056264