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India Steel Works Ltd.

BSE: 513361 Sector: Metals & Mining
NSE: ISIBARS ISIN Code: INE072A01029
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NSE 05:30 | 01 Jan India Steel Works Ltd
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VOLUME 518167
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Mkt Cap.(Rs cr) 84
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OPEN 2.10
CLOSE 2.21
VOLUME 518167
52-Week high 2.82
52-Week low 0.43
P/E
Mkt Cap.(Rs cr) 84
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

India Steel Works Ltd. (ISIBARS) - Auditors Report

Company auditors report

To the Members of INDIA STEEL WORKS LIMITED

Report on the Audit of the Standalone Ind AS Financial Statements Opinion

We have audited the standalone Ind AS Financial Statements of INDIA STEEL WORKSLIMITED which comprise the Balance Sheet as at March 312020 the Statement of Profit& Loss including Statement of Other Comprehensive Income Cash Flow Statement andStatement of Changes in Equity for the year then ended and notes to the standalone Ind ASfinancial statements including a summary of significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 ("Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 312020 and its LOSSother comprehensive expenses changes in equity and its cash flows for the year ended onthat date.

 

Basis for Opinion

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) specified under section 143(10) of the Companies Act2013. Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the 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 together with the ethical requirements that are relevantto our audit of the financial statements under the provisions of the Companies Act 2013and the Rules there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the Standalone Ind AS financial statements. Emphasis of the Matter

a) The developments surrounding the Corona (Covid-19) virus have a profound impact onpeople's health and on our society as a whole as well as on the operational and financialperformance of organizations. The situation changes on a daily basis giving rise toinherent uncertainty. The Company is confronted with this uncertainty as well which hasbeen disclosed in the Note No 50 to the Ind AS financial statements together with itsevaluation thereof. We draw attention to these disclosures. Our opinion is not modified inrespect of this matter.

b) In absence of information of Investee Company we are unable to determine the fairvalue of the investments as on reporting date. Hence the same are carried at cost and noprovision for diminution if any in value of such investments in made.

c) No effect is given in respect of settlement deed with the creditor resulting intopossible reduction in liability to the extent of '46.11 Crores after adjusting '9.23Crores on the basis of the payment made before the audit of the said Standalone FinancialResults.

d) In the absence of uncertainties of making profit in immediate future the company hasdecided not to create Asset/ Liability on account of Deferred Tax.

e) We did not Audited the financial statement of overseas branch included in thefinancial statement which constitute the total current assets of '288487457/- and netassets of '959382/- as at 31st March 2020 total revenue of Rs. Nil Net Loss of'1409857/- and net cash flow amounting to '305945/- for the period ended on that dateas considered in the financial statement.

 

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

a) Going Concern Our audit procedures included
As of 31 March 2020 the Company's total liabilities did not exceed its total assets; however company is continuously incurring losses. The directors of the Company have formed a judgement that the going concern basis is appropriate in preparing the financial statements. Going through the business planning process and assessing the design implementation and operating effectiveness of management's key internal controls over the assessment of going concern including the preparation of cash flow forecasts.
a) Going Concern Our audit procedures included
The directors of the Company made their assessment of going concern by preparing a cash flow forecast in which some key; assumptions were applied. These key assumptions included forecasts of sales volumes average selling prices raw material costs and the availability of banking and other financing facilities. Evaluating the key assumptions in the cash flow forecasts (including future revenue gross profit operating expenses and capital expenditure) with reference to historical production information current performance internal investment and production plans and market and other external available information
We identified going concern as a key audit matter because a significant degree of management judgement is involved in making this assessment and in forecasting the future cash flows of the Company which are inherently uncertain and because the management judgement and _ inherently uncertainties and because the management judgement and _ inherent uncertainties could have significant impact on the basis of preparation of the financial statements and could be subject to management bias. Considering the accuracy and reliability of cash flow forecasts made by management in prior years by comparing them with the current year's results; We also checked if any waivers were obtained from the financial institutions from which borrowings are made. Based on our procedures we noted that the key assumptions used in the forecasts were within a reasonable range of our expectations.
(b) Revenue Recognition Our audit procedures to assess the recognition of revenue included the following:
The Company's revenue is derived from the sale of steel products. The Company recognizes revenue when the control is transferred to the customer. The terms set out in the Company's sales contracts relating to goods acceptance by customers are varied. Accordingly the terms and conditions of sales contracts may affect the timing of recognition of sales to customers as each sales contract could have different terms relating to customer acceptance of the goods sold. Evaluating the design implementation and operating effectiveness of key internal controls over the existence accuracy and timing of revenue recognition; performed substantive test of details over revenue recognized throughout the period by selecting a sample of transactions to ensure that the samples selected meet the revenue recognition criteria and are appropriately recorded;
We identified the recognition of revenue as a key audit matter because revenue is one of the key performance indicators of the Company and is therefore subject to an inherent risk of misstatement to meet targets or expectations and because errors in the recognition of revenue could have a material impact on the Company. Tested sample transactions around the period end to end sure they were recorded in the correct period; and tested journal entries posted to revenue accounts focusing on unusual or irregular items if any.
Contingent Liabilities (Note No.32) Evaluation of uncertain tax positions Our audit procedures include the following substantive procedures:
The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on account of tax matters during the normal course of business including transfer pricing and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions consequently having an impact on related accounting and disclosures in the standalone financial statements. Refer Note 32 to the standalone financial statements. Obtained understanding of key uncertain tax positions and We - • Read and analyzed select key correspondences external legal opinions / consultations by management for key uncertain tax positions;
• Discussed with appropriate senior management and evaluated management' s underlying key assumptions in estimating the tax provisions and
• Assessed management' s estimate of the possible outcome of the disputed cases.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Board's report including annexure to Board's report but doesnot include the Standalone Ind AS Financial Statements and our auditor's report thereon.

Our opinion on the Standalone Ind AS financial statements does not cover-the otherinformation and we do note express any form of assurance conclusion thereon.

In connection with our audit of the Standalone Ind AS Financial Statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. If based on the work we have performed we conclude that there is a materialmisstatement of this other information; we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Standalone Ind AS Financial Statements

These Standalone Financial Results have been prepared on the basis of the annualStandalone Financial Statements. The Company's Board of Directors are responsible for thepreparation and presentation of these Standalone Financial Results that give a true andfair view of the net profit and other comprehensive income and other financial informationof the Company and the balance sheet and the statement of cash flows in accordance withthe recognition and measurement principles laid down in the Indian Accounting Standardsprescribed under Section 133 of the Act read with relevant rules issued thereunder andother accounting principles generally accepted in India and in compliance with Regulation33 and Regulation 52 of the Listing Regulations. The Board of Directors of the Company areresponsible for maintenance of adequate accounting records in accordance with theprovisions of the Act for safeguarding of the assets of the Company and for preventing anddetecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; andthe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Standalone FinancialStatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error which have been used for the purpose of preparation of theStandalone Financial Results by the Directors of the Company as aforesaid.

In preparing the Standalone Financial Results the Board of Directors of the Companyare responsible for assessing the ability of the Company to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Companyor to cease operations or has no realistic alternative but to do so.

The Board of Directors of the Company are responsible for overseeing the financialreporting process of the Company. Auditor's Responsibilities for the Audit of theStandalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Results as a whole are free from material misstatement whether due to fraud orerror and to issue an auditor's report that includes our opinion. Reasonable assurance isa 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 Results.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the Standalone FinancialResults whether due to fraud or error design and perform audit procedures responsive tothose 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.

2. Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to Standalone Financial Statements inplace and the operating effectiveness of such controls.

3. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the Board of Directors.

4. Conclude on the appropriateness of the Board of Directors' use of the going concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the Standalone

Financial Results or if such disclosures are Inadequate to modify our opinion. Ourconclusions 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.

5. Evaluate the overall presentation structure and content of the Standalone FinancialResults including the disclosures and whether the Standalone Financial Results representthe underlying transactions and events in a manner that achieves fair presentation.

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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

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 section 143 (11) of the CompaniesAct 2013 we give in the ‘Annexure -A' a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143 (3) of the Act based on our audit 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 & Loss including the Statement ofOther Comprehensive Income the Cash Flow Statement and Statement of Changes in Equitydealt with by this report are in agreement with the books of account.

d) In our opinion and to the best of our information and according to the explanationgiven to us the aforesaid standalone Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as on year ended March 312020

e) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020from 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 with reference to these standalone Ind AS financial statementsand the operating effectiveness of such controls refer to our separate Report in"Annexure B" to this report:

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements Refer Note 32 to the standalone IndAS financial statements;

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 to the Investor Education andProtection Fund by the Company.

3. In our opinion the managerial remuneration for the year ended 31 March 2020 hasbeen paid / provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to the Act; The Ministry of Corporate Affairs has notprescribed other details under section 197 (16) which are required to be commented by us.

For Laxmikant Kabra & Co
Chartered Accountants
FRN No.: 117183W
CA Laxmikant Kabra
Partner
Date: 31st July 2020 Membership No.: 101839
Place: Thane _ UDIN: 20101839AAAADO2463

ANNEXURE A" TO THE INDEPENDENT AUDITOR'S REPORT

Annexure referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our

report of even date on the standalone Ind AS financial statements for the year endedMarch 312020 we report that:

1. a) The company has maintained proper records showing full particulars includingquantitative details and situations

of its fixed assets.

b) According to the information and explanation given to us the company has a regularprogram of physical verification of its fixed assets by which fixed assets are verified inphased manner over a period of three years in accordance with this program certain fixedassets were verified during the year. In our opinion this periodicity of physicalverification is reasonable having regards to the size of the Company and the nature of itsbusiness and no material discrepancies have been noticed on such physical verification.

c) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable's and movableproperties are held in the name of the company except certain motor vehicles havingcarrying value of '10.98 lakhs as at 31/03/2020 is held in the name of directors ofcompany's behalf.

2. The inventories have been physically verified by the management during the yearexcept inventories lying with the third parties and goods in transit. In respect ofinventories lying with the third parties these have been substantially confirmed by themand with respect to goods in transit subsequent goods receipts have been verified bymanagement. In our opinion frequency of physical verification of inventory followed bythe management was reasonable in relation to the size of the company and the nature of itsbusiness. The discrepancies noticed on physical verification of the inventories have beenproperly dealt with in the books of account.

3. According to the information and explanation given to us the Company's has notgranted any loans secured or unsecured during the period to company's firms or otherparties covered in the register maintained under section 189 of the companies Act 2013.Therefore comments under clause (a) (b) and (c) are not given.

4. 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 loans investment and guarantee made.

5. The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable.

6. According to the information and explanation given to us cost records weremaintained by the company pursuant to the order of the Central Government under Section148(1) of the Act.

7. a) According to the records the Company is regular in depositing undisputedstatutory dues in respect of duty of

customs however undisputed statutory dues including income tax employees' stateinsurance provident fund duty of excise sales-tax service tax value added tax Goods& service tax cess and other statutory dues have not been regularly deposited withthe appropriate authorities and there have been delays in depositing the same.

b) According to the information and explanations given to us and on the basis of ourexamination of books of accounts there are no cases of dues of income tax goods &service tax sales tax duty of customs duty of excise value added tax and cess as at 31March 2020 which have not been deposited on account of disputes except for the following:-

Name of Status Nature of dues Amount (In Lakhs) Period to which the amount relates Forum where the dispute is pending
Sales Tax Act Sales Tax 160.11 FY-2014/2015 Sales Tax Officer
Central Excise Act Excise 53.53 FY-2012/2013 DGCI
Central Excise Act Excise 406.30 FY-2012/2013 FTWL
Central Excise Act Excise 37.99 FY-2005/2006 Commissioner Central Excise
Central Excise Act Excise 9.64 FY-2012/2013 Addl. Com of Central Excise

8. Based on our audit procedures and on the basis of information and explanations givenby the management we are

of the opinion that the Company has not defaulted in the repayment of dues to banks andfinancial institute. The company did not have any outstanding dues to debenture holdersduring the year.

9. During the year the company did not raise money by way of initial public offer orfurther public offer (including debt instrument) and term loans during the year.

10. Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no material fraud onthe Company by the officers and employees of the Company has been noticed or reportedduring the year.

11. According to information and explanation given to us and based on our examinationof the records the Company has paid/provided for managerial remuneration in accordancewith the requisite approvals mandated by the provisions of Section 197 read with ScheduleV to the Act for the year under consideration.

12. 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.

13. According to the information and explanations given to us and based on ourexaminations 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 Ind AS financial statements as required by theapplicable Indian accounting standards.

14. According to the information and explanations given to us and based on ourexaminations of the records of the company the company had not made any preferentialallotment of shares during the year under review.

15. 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 them. Accordingly paragraph 3(xv)of the order is not applicable.

16. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Laxmikant Kabra & Co
Chartered Accountants
FRN No.: 117183W
CA Laxmikant Kabra
Partner
Date: 31st July 2020 Membership No.: 101839
Place: Thane UDIN: 20101839AAAADO246

ANNEXURE B

Annexure referred to in paragraph 2 (f) under the heading "Report on Other Legaland Regulatory Requirements" of our report of even date on the standalone Ind ASfinancial statements.

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 INDIASTEEL WORKS LIMITED ("the Company") as of March 312020 in conjunction withour audit of the standalone Ind AS 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 controlstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the "Institute of Chartered Accountants ofIndia"(ICAI).These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies safeguarding of its assets prevention and detection of frauds anderrors accuracy and completeness of the accounting records and timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the internal financial controls overfinancial reporting of the Company 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. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting were established and maintained and whethersuch 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

Company's Internal financial control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

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 312020 however companyis required to strengthen its financial controls for obtaining balance confirmations fromtrade receivables and payables based on "the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India"(ICAI).

For Laxmikant Kabra & Co
Chartered Accountants
FRN No.: 117183W
CA Laxmikant Kabra
Partner
Date: 31st July 2020 Membership No.: 101839
Place: Thane UDIN: 20101839AAAADO246

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