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Ferro Alloys Corporation Ltd.

BSE: 500141 Sector: Metals & Mining
NSE: FERROALLOY ISIN Code: INE912A01026
BSE 00:00 | 06 Mar Ferro Alloys Corporation Ltd
NSE 05:30 | 01 Jan Ferro Alloys Corporation Ltd
OPEN 0.92
PREVIOUS CLOSE 0.92
VOLUME 20210
52-Week high 0.92
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 17
Buy Price 0.94
Buy Qty 1500.00
Sell Price 0.92
Sell Qty 113404.00
OPEN 0.92
CLOSE 0.92
VOLUME 20210
52-Week high 0.92
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 17
Buy Price 0.94
Buy Qty 1500.00
Sell Price 0.92
Sell Qty 113404.00

Ferro Alloys Corporation Ltd. (FERROALLOY) - Auditors Report

Company auditors report

To The Members of FERRO ALLOYS CORPORATION LIMITED

Corporate Insolvency Proceedings as per Insolvency and Bankruptcy Code 2016 (IBC)

The Honorable Company Law Tribunal Kolkata ("NCLT") admitted the CorporateInsolvency Resolution Process ("CIRP") application filed against Ferro AlloysCorporation Ltd. and appointed Mr. K. G. Somani as the Interim Resolution Professionalunder Insolvency and Bankruptcy Code 2016 ("Code") vide order dated 6th July2017. Further the Committee of Creditors ("COC") constituted during the CIRP hasconfirmed the appointment of Mr. K. G. Somani as the Resolution Professional("RP") on 4th August 2017 to manage the affairs of Ferro Alloys CorporationLimited as per the provisions of Insolvency and Bankruptcy Code 2016. Though the totaltime allowed of 270 days (including extended period) for CIRP which expired on 2nd April2018 NCLT vide its order dated 4th March 2019 has allowed further exclusion and themanagement of affairs of the company are continuing to be exercised by the ResolutionProfessional.

Report on the audit of the Standalone Financial Statements Opinion

We have audited the accompanying Standalone financial statements of FERRO ALLOYSCORPORATION LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2019 and the Statement of Profit and Loss (including other comprehensiveincome) Statement of changes in Equity and Statement of Cash Flows for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information. In our opinion and to the best ofour information and according to the explanations given to us the aforesaid Standalonefinancial statements give the information required by the Companies Act 2013("theAct") in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India including the Ind AS of the state ofaffairs of the Company as at March 31 2019 and total comprehensive income (comprisingloss and other comprehensive income) the profit changes in equity and its cash flows andfor the year then ended on that date.

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 Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India (ICAI) togetherwith the ethical requirements that are relevant to our audit of the Standalone financialstatements 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 appropriateto provide a basis for our opinion.

Other information

The Company's Management is responsible for the other information. The otherinformation comprises the information included in the annual report but does not includethe Standalone financial statements and our auditor's report thereon.

Our opinion on the Standalone financial statements does not cover the other informationand 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 in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the Standalonefinancial statements

The Company's Management is responsible for the matters stated in Section 134(5) of theAct with respect to the preparation of these Standalone financial statements that give atrue and fair view of the financial position financial performance changes in equity andcash flows of the Company in accordance with the accounting principles generally acceptedin India including the accounting Standards specified under Section 133 of the Act.

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 implementation and maintenance of accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing theCompany'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 Company's Management are also responsible for overseeing the company's financialreporting process. Pursuant to ongoing Corporate Insolvency Resolution Process (CIRP)powers of the board of Directors have been suspended and these Powers are now vested withResolution Professional.

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 of userstaken 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 Standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

•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 Companyhas adequate internal financial controls system in place and the operating effectivenessof 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 use of the going concern basis of accountingand based on the audit evidence obtained whether a material uncertainty exists relatedto events or conditions that may cast significant doubt on the Company's ability tocontinue as a going concern. If we conclude that a material uncertainty exists we arerequired to draw attention in our auditor's report to the related disclosures in theStandalone financial statements 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 Standalonefinancial statements including the disclosures and whether the Standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in 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 auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A a statement on the matters specified in paragraphs 3and 4 of the Order.

2. As required by section 143(3) of the Act we report to the extent applicable 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 appears from our examination of those books;

c. The Balance Sheet Statement of Profit and Loss including Other ComprehensiveIncome the Statement of changes in equity and the statement of Cash Flow Statement dealtwith by this Report are in agreement with the books of account;

d. In our opinion the aforesaid Standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act.

e. In the terms of Section 17(1)(b) of the Insolvency and Bankruptcy Code 2016 thepower of the board of directors has been suspended and exercised by the ResolutionProfessional however on the basis of the written representations received as on 31stMarch 2019 and taken on record by the Company's Management none of the directors isdisqualified as on 31st March 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 B"; 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 note its standalone financial statements.

ii) The Company did not have any long-term contracts including derivatives contractsfor which there were any material foreseeable losses; iii) There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company.

ABHAY UPADHYE

Partner

Membership No. 049354

For and on behalf of

K.K. MANKESHWAR & CO.

Chartered Accountants

Firm's Registration No. 106009W

Noida dated the

24th May 2019

ANNEXURE A TO THE INDEPENDENT AUDITOR'S REPORT

The Annexure referred to in paragraph 1 under "Report on Other Legal andRegulatory Requirement" section of our Independent Auditors' Report to the members ofthe Company on the Standalone financial statements for the year ended March 31 2019 wereport that:

1. In respect of Company's Fixed Asset a. The Company has maintained proper recordsshowing full particulars including quantitative details and situation of fixed Assets. b.The company has a regular programme of physical verification of fixed assets. In ouropinion the periodicity of physical verification is reasonable having regard to the sizeof the company and the nature of its asset.

2. Physical verification of the inventory has been conducted at reasonable intervals bythe management. No material discrepancies were noticed.

3. According to the information and explanation given to us the Company has notgranted unsecured loans to bodies corporate covered in the register maintained underSection 189 of Companies Act 2013

4. In our opinion and according to the information and explanation given to us thecompany has complied with the provision of section 185 and 186 of the Act in respect ofloans making investments and providing guarantees and securities as applicable.

5. According to the information and explanation given to us the Company has notaccepted any deposits during the year and does not have unclaimed deposit thereforeprovision of clause 3(v) are not applicable to the company.

6. The maintenance of cost records has been prescribed by the Central Government undersub-section (1) of section 148 of the Companies Act 2013 for the business activitiescarried out by the company and we are of opinion that prima facie such accounts andrecords have been made and maintained.

7. According to the information and explanation given to us in respect of statutorydues:

a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities.

b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2019 for a period of more than six months fromthe date they became payable.

c) Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value AddedTax which have not been deposited as at March 31 2019 on account of dispute are givenbelow:

Nature of dues Rs. in Forums where the dispute is pending Period
Lakhs (Net of Payment)
Custom 61.18 Hon'ble High Court 1995-96 1997-98
Duty 8.15 Orissa; Joint Secretary (Review) CBEC New Delhi. 1994-95
10.16 Dy. Commissioner of Customs Paradip 1990-91 & 2000-01
137.84 Asst. Commissioner Central Excise 1981-82 1982-83 1985-86 1988-89 1989-90 1990-
Customs & Service Tax Balasore. 91 1996-97 1997-98 1999-2000 2000-01 2001-02
64.96 Commissioner of Customs (Appeals) Kolkata 1983-84
Central Excise And Service Tax 2.2 Asst. Commissioner Central Excise Customs & Service Tax Balasore 1981
22.88 Central Excise and Service Tax Appellate Tribunal West Zone Bench Mumbai 2001-02 & 2002-03
1190.47 Customs Excise & Service Tax Appellate Tribunal Kolkata 2007-08 & 2008-09
79.14 Commissioner Central Excise Customs & Service Tax Bhubaneswar-II 2008-09 2009-10 & 2010-11
79.88 Commissioner (Appeal) Central Excise Customs & Service Tax Bhubaneswar 2005-06 2007-08 2008-09 & 2009-10
85.11 Jt. Commsr. Central Excise Customs & Service Tax Bhubaneswar-II 2011-12 2012-13 & 2013-14
6089.72 Commissioner Central Excise Customs & Service Tax Bhubaneswar-II 2009-10 2010-11 2011-12 & 2012-13 & 2013-14
3513.47 Commissioner GST & Central Excise Bhubaneswar 2013 to 2018
75.87 Asst. Commissioner Balasore 2013-14 & 2014-15
716.16 CommissionerGST& CE BBSR. 2016-17 & 2017-18
Sales Tax 49.44 JCCT Balasore; 1999-00 2005-06 2007-08 2012-13 2016-17.
10.7 Sales tax tribunal Cuttack; 2000-01 2003-04
9.49 Addl. Commissioner Cuttack; 2005-06 2006-07 2007-08
1.00 Addl. Commissioner Of Sales Tax Central Zone Cuttack. 1980-81 1981-82 2005-06 & 2006-07

*The Amount is net of Payments

8. The Company has not defaulted in repayment of loan or borrowing to financialinstitutions banks government or dues to debenture holders.

9. The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments) and term loan during the year. Accordingly clause (ix)of the paragraph 3 of the Order is not applicable.

10. 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.

11. In our opinion and according to the information and explanation 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 of the Act.

12. As the Company is not a Nidhi Company accordingly clause (xii) of paragraph 3 ofthe order is not applicable to the Company.

13. According to the information and explanation given to us all transaction withrelated parties are in compliance with section 177 and 188 of Companies Act 2013 whereverapplicable and the details have been disclosed in the Standalone Financial Statement etc.as required by the applicable accounting standards.

14. According to the information and explanation given to us the company has not madeany preferential allotment or private placement of shares or fully or partly convertibledebenture during the year and hence reporting under clause 3(xiv) of the order is notapplicable to the company. 15. In our opinion and according to the information andexplanations given to us during the year the company has not entered into any non-cashtransactions with its directors or persons connected its directors or persons connected toits directors and hence provisions of section 192 of the companies Act 2013 are notapplicable to the company. 16. The Company is not required to be registered under section45-IA of the Reserve Bank of India Act 1934.

ABHAY UPADHYE

Partner

Membership No. 049354

For and on behalf of

K.K. MANKESHWAR & CO.

Chartered Accountants

Firm's Registration No. 106009W

Noida dated the

24th May 2019

"ANNEXURE B" TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF FERRO ALLOYS CORPORATION 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 FerroAlloys Corporation ("the Company") Limited as of March 31 2019 in conjunctionwith our audit of the Standalone financial statements of the Company for the year ended onthat 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). 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.

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 judgement including the assessment of the risks ofmaterial misstatement of the Standalone 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 Standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the Standalonefinancial 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 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.

ABHAY UPADHYE

Partner

Membership No. 049354

For and on behalf of

K.K. MANKESHWAR & CO.

Chartered Accountants

Firm's Registration No. 106009W

Noida dated the

24th May 2019

.