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Jindal Stainless Ltd.

BSE: 532508 Sector: Metals & Mining
NSE: JSL ISIN Code: INE220G01021
BSE 00:00 | 20 May 153.10 8.75
(6.06%)
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149.00

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155.00

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148.15

NSE 00:00 | 20 May 153.40 8.95
(6.20%)
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148.30

HIGH

155.00

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OPEN 149.00
PREVIOUS CLOSE 144.35
VOLUME 111944
52-Week high 224.60
52-Week low 90.55
P/E 4.81
Mkt Cap.(Rs cr) 8,045
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 149.00
CLOSE 144.35
VOLUME 111944
52-Week high 224.60
52-Week low 90.55
P/E 4.81
Mkt Cap.(Rs cr) 8,045
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Jindal Stainless Ltd. (JSL) - Auditors Report

Company auditors report

To the Members of Jindal Stainless Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements ofJindal Stainless Limited ('the Company') which comprise the Balance Sheet as at 31 March2021 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and the Statement of Changes in Equity for the year then ended and asummary of the significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ('Act') in the manner so required and givea true and fair view in conformity with the accounting principles generally accepted inIndia including Indian Accounting Standards ('Ind AS') specified under section 133 of theAct of the state of affairs of the Company as at 31 March 2021 and its profit (includingother comprehensive income) its cash flows and the changes in equity for the year endedon that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the 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 financial statementsunder the provisions of the Act and the rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Key Audit Matters

4. Key audit matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

5. We have determined the matters described below to be the key auditmatters to be communicated in our report.

Key audit matter How our audit addressed the key audit matter
Valuation of investment in associate and subsidiary company
We draw reference to note 4 to the standalone financial statements. Our audit procedures were focused on obtaining sufficient appropriate audit evidence that the carrying value of investments in the associate Jindal United Steel Limited and subsidiary PT. Jindal Stainless Indonesia are not materially misstated. These procedures included but were not limited to the following:
The Company has investment in equity instruments of its associate Jindal United Steel Limited and subsidiary company PT. Jindal Stainless Indonesia amounting to Rs. 175.05 crores and Rs. 54.68 crores respectively. Such investments in the aforesaid associate and subsidiary company are accounted for at cost in accordance with Ind AS 27 Separate Financial Statements. The Company assesses the recoverability of these investments when impairment indicators exist by comparing the fair value (less costs of disposal) and carrying amount of the investment as on the reporting date in accordance with Ind AS 36 Impairment of Assets. We obtained an understanding of management's processes and controls for determining the fair valuation of investments. The understanding was obtained by performance of walkthroughs which included inspection of documents produced by the Company and discussion with those involved in the process of valuation.
The aforesaid investments are not traded in any recognized stock exchange(s). The fair values of the investments are determined by a management-appointed independent valuation specialist based on discounted cash flow ('DCF') method. The process of computation of fair valuation for such investments using DCF method is complex. Management's assessment of the fair valuation of investment requires estimation and judgement around assumptions used. The key assumptions underpinning management's assessment of the fair valuation include but are not limited to projections of future cash flows growth rates discount rates estimated future operating and capital expenditure. In addition to the evaluation of design and testing the operating effectiveness of controls implemented for identification of impairment indicators and measurement of impairment provisions we also performed the following procedures:
The application of significant judgment in this matter required substantial involvement of internal and external valuation experts on the audit engagement. • Assessed the qualification and objectivity of the management-appointed independent valuation specialist to determine the fair value of investments;
Accordingly assessment of impairment loss to be recognised if any on the carrying value of investment made in the associate and subsidiary company has been considered to be a key audit matter for current year's audit. • Assessed the appropriateness of valuation methodology used for the fair valuation computation with the help of an auditor's expert and tested the mathematical accuracy of management's model;
• Reconciled the cash flow projections to the business plans approved by the Company's management;
• Challenged the management's assessment of underlying assumptions used for the cash flow projections including the implied growth rates considering evidence available including the impact of COVID-19 pandemic where appropriate to support these assumptions and our understanding of the business;
• Tested the discount rate and long-term growth rates used in the forecast including comparison to economic and industry forecasts where appropriate;
• Evaluated the sensitivity analysis performed by management in respect of the key assumptions such as discount and growth rates to ensure there was sufficient headroom with respect to the estimation uncertainty impact of such assumptions on the fair value calculation;
• Engaged internal and external valuation experts to obtain additional comfort on the valuation technique used by management's valuation expert;
• Obtained written representations from management and those charged with governance on whether the significant assumptions used in valuation of the investments in the associate company and subsidiary company are considered reasonable;
• Evaluated the adequacy and appropriateness of disclosures in relation to the investments in associate company and subsidiary company in the standalone financial statements including the related impairment indicators.
Recoverability of Minimum Alternate Tax (MAT) Credit
As at 31 March 2021 the Company has recognised Minimum Alternate Tax (MAT) credit amounting to Rs. 77.65 crores within deferred tax assets. On that date the Company also has unabsorbed depreciation amounting to Rs. 1662.15 crores. Our procedures in relation to assessment of MAT credit recognised as at reporting date included but were not limited to the following:
The recognition of a deferred tax asset in the form of MAT credit is based on the management's estimate of taxable and accounting profits in future which are underpinned by the Company's price assumptions and business plans and tax adjustments required to be made in the taxable profit computations as per the provisions of Income-tax Act 1961 (IT Act). Estimating recoverability of MAT credit also requires significant judgments including the timing of reversals of unabsorbed depreciation. • Obtained and updated our understanding of the management's process of computation of future accounting and taxable profits of the Company and expected utilization of available MAT credit within specified time period as per provisions of the IT Act;
Considering the materiality of the amounts involved and inherent subjectivity requiring significant judgment involved in the determination of utilization of MAT credit through estimation of future taxable profits this area was considered to be of most significance to the audit and determined to be a key audit matter for current year's audit. • Evaluated the design of and tested the operating effectiveness of controls around the preparation of underlying business plans future taxable profit computation and assessment of recognition of MAT credit at year end;
• Reconciled the business results projections to the future business plans approved by the Company's board of directors;
• Challenged the management's assessment of underlying assumptions used for the business results projections including expected capacity expansion and utilisation implied growth rates and expected prices considering evidence available to support these assumptions and our understanding of the business;
• Tested the growth rates used in the forecast by comparing them to past trends and to economic and industry forecasts including the impact of COVID-19 pandemic where appropriate;
• Performed independent sensitivity analysis in respect of the key assumptions such as growth rates to ensure there was sufficient headroom with respect to the estimation uncertainty impact of such assumptions on the timing of reversal of unabsorbed depreciation and utilisation of MAT credit;
• Tested the computations of future taxable profits including testing of the adjustments made in such computations with respect to tax-allowed and tax- disallowed items other tax rebates and deductions available to the Company and tested the computation of MAT liability in such future years in accordance with the provisions of the IT Act.
• Evaluated the historical accuracy of the estimates made in the prior periods with respect to business projections and aforesaid tax computations;
• Tested the mathematical accuracy of management's projections and tax computations;
• Based on aforesaid computations assessed the appropriateness of management's estimate of likelihood of utilization of MAT credit within the time period specified and in accordance with the provisions of the IT Act;
• Engaged the internal tax experts to assess the accuracy of MAT credit recognized in the financial statements;
• Evaluated the appropriateness and adequacy of the disclosures related to MAT credit in the standalone financial statements in accordance with the applicable accounting standards.

6. The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the AnnualReport but does not include the standalone financial statements and our auditor's reportthereon. The Annual Report is expected to be made available to us after the date of thisauditor's report.

Our opinion on the standalone financial statements does not cover theother information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

When we read the Annual Report if we conclude that there is a materialmisstatement therein we are required to communicate the matter to those charged withgovernance.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

7. The accompanying standalone financial statements have been approvedby the Company's Board of Directors. The Company's Board of Directors is responsible forthe matters stated in section 134(5) of the Act with respect to the preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Ind AS specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

8. In preparing the financial statements management 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 unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

9. Those Board of Directors is also responsible for overseeing theCompany's financial reporting process.

10. Our objectives are to obtain reasonable assurance about whether thefinancial 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 Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these financial statements.

11. As part of an audit in accordance with Standards on Auditing weexercise professional judgment and maintain professional skepticism throughout the audit.We also:

• Identify and assess the risks of material misstatement of thefinancial 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 theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls;

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management;

• Conclude on the appropriateness of management's use of the goingconcern basis 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 financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern;

• Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

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

13. We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

14. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

15. As required by section 197(16) of the Act based on our audit wereport that the Company has paid remuneration to its directors during the year inaccordance with the provisions of and limits laid down under section 197 read withSchedule V to the Act.

16. As required by the Companies (Auditor's Report) Order 2016 ('theOrder') issued by the Central Government of India in terms of section 143(11) of the Actwe give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 ofthe Order.

17. Further to our comments in Annexure I as required by section143(3) of the Act based on our audit we report to the extent applicable that:

a) we have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purpose of our auditof the accompanying standalone financial statements;

b) in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;

c) the standalone financial statements dealt with by this report are inagreement with the books of account;

d) in our opinion the aforesaid standalone financial statements complywith Ind AS specified under section 133 of the Act;

e) on the basis of the written representations received from thedirectors and taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of section164(2) of the Act;

f) we have also audited the internal financial controls with referenceto financial statements of the Company as on 31 March 2021 in conjunction with our auditof the standalone financial statements of the Company for the year ended on that date andour report dated 14 May 2021 as per Annexure II expressed unmodified opinion; and

g) with respect to the other matters to be included in the Auditor'sReport in accordance with rule 11 of the Companies (Audit and Auditors) Rules 2014 (asamended) in our opinion and to the best of our information and according to theexplanations given to us:

i. the Company as detailed in note 36 to the standalone financialstatements has disclosed the impact of pending litigations on its financial position asat 31 March 2021;

ii. the Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses as at 31 March2021;

iii. there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during the yearended 31 March 2021; and

iv. the disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.

Annexure I to the Independent Auditor's Report of even date to themembers of Jindal Stainless Limited on the standalone financial statements for the yearended 31 March 2021

Annexure I

Based on the audit procedures performed for the purpose of reporting atrue and fair view on the financial statements of the Company and taking intoconsideration the information and explanations given to us and the books of account andother records examined by us in the normal course of audit and to the best of ourknowledge and belief we report that:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative

details and situation of property plant and equipment.

(b) The Company has a regular program of physical verification of itsproperty plant and equipment under which property plant and equipment are verified in aphased manner over a period of three years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. In accordance with thisprogram certain property plant and equipment were verified during the year and nomaterial discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are includedunder the head 'Property plant and equipment') are held in the name of the Company.

(ii) In our opinion the management has conducted physical verificationof inventory at reasonable intervals during the year except for goods-in-transit andstocks lying with third parties. For stocks lying with third parties at the year-endwritten confirmations have been obtained by the management. No material discrepancies werenoticed on the aforesaid verification.

(iii) The Company has not granted any loan secured or unsecured tocompanies firms Limited Liability Partnerships (LLPs) or other parties covered in theregister maintained under section 189 of the Act. Accordingly the provisions of clauses3(iii)(a) 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion the Company has complied with the provisions ofsection 186 in respect of investments guarantees and loans. Further in our opinion theCompany has not entered into any transaction covered under section 185 of the Act inrespect of loans guarantees and security and any transaction covered under section 186 ofthe Act in respect of security.

(v) In our opinion the Company has complied with the directives issuedby the Reserve Bank of India the provisions of sections 73 to 76 and other relevantprovisions of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended)as applicable with regard to the deposits accepted. According to the information andexplanations given to us no order has been passed by the Company Law Board or NationalCompany Law Tribunal or Reserve Bank of India or any Court or any other Tribunal in thisregard.

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the Rules made by the Central Government for the maintenance of costrecords under sub-section (1) of section 148 of the Act in respect of Company's productsand services a nd are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe cost records with a view to determine whether they are accurate or complete.

(vii) (a) The Company is regular in depositing undisputed statutorydues including provident fund

employees' state insurance income-tax sales tax service tax goodsand service tax duty of customs duty of excise value added tax cess and other materialstatutory dues as applicable to the appropriate authorities. Further no undisputedamounts payable in respect thereof were outstanding at the year-end for a period of morethan six months from the date they become payable.

(b) The dues outstanding in respect of income-tax sales tax servicetax goods and service tax duty of customs duty of excise and value added tax on accountof any dispute are as follows:

Statement of Disputed Dues

Name of Statute Nature of dues Amount (R crores) Amount paid under protest (R crores) Period to which the amount relates Forum where dispute is pending
The Central Sales Tax Act 1956 Central sales tax 2.35 0.47 Financial year 2013- 2014 and 2014- 2015 Additional Commissioner of Commercial Tax
The Central Sales Tax Act 1956 Central sales tax 0.43 0.09 October 2015 to March 2016 Additional Commissioner of Commercial Tax
The Central Sales Tax Act 1956 Central sales tax 1.64 0.16 April 2016 to June 2017 Additional Commissioner of Commercial Tax
The Odisha Value Added Tax Act 2004 Value added tax 22.92 Financial year 2013- 2014 and 2014- 2015 Hon'ble High Court of Odisha
The Orissa Entry Tax Act 1999 Entry tax 97.43 19.96 October 2006 to September 2010 Hon'ble High Court of Odisha
The Orissa Entry Tax Act 1999 Entry tax 57.18 20.96 Financial year 2013- 14 and 2014- 15 Hon'ble High Court of Odisha
The Orissa Entry Tax Act 1999 Entry tax 78.24 53.26 October 2010 to March 2013 and April 2015 to March 2017 Hon'ble High Court of Odisha
The Orissa Entry Tax Act 1999 Entry tax 0.10 0.10 April 2006 to September 2006 Additional Commissioner of Commercial Tax
The Customs Tariff Act 1975 Customs duty 7.97 0.60 Financial year 2012-2013 Customs Excise and Service Tax Appellate Tribunal
The Customs Act 1962 Customs duty 1.70 0.13 Financial year 2014-2015 Customs Excise and Service Tax Appellate Tribunal
The Customs Act 1962 Customs duty 0.90 0.84 Financial year 2014- 2015 and 2015- 2016 Commissioner of Customs
The Central Excise Act 1944 Central excise duty 1.30 1.30 Financial year 2006- 2007 2007- 2008 and 2008- 2009 Customs Excise and Service Tax Appellate Tribunal
The Central Excise Act 1944 Central excise duty 0.50 0.05 September 2006 to August 2011 Customs Excise and Service Tax Appellate Tribunal
The Central Excise Act 1944 Central excise duty 0.26 0.02 June 2007 to December 2007 Commissioner (Appeal) of CGST Central Excise and Customs
The Central Excise Act 1944 Central excise duty 0.30 0.03 May 2008 to March 2009 Customs Excise and Service Tax Appellate Tribunal
The Central Excise Act 1944 Central excise duty 0.22 0.02 Financial year 2012- 2013 to 2013- 2014 Commissioner (Appeal) of Central GST Central Excise and Customs
The Central Excise Act 1944 Central excise duty 20.33 December 2012 to February 2014 Customs Excise and Service Tax Appellate Tribunal
The Central Excise Act 1944 Central excise duty 0.22 April 2014 to June 2017 Assistant Commissioner of Central GST and Central Excise
The Central Excise Act 1944 Central excise duty 3.25 0.24 January 2013 to January 2014 Customs Excise and Service Tax Appellate Tribunal
The Central Excise Act 1944 Central excise duty 0.08 April 2011 to October 2016 Commissioner(Appe al) of Central Excise & Service Tax
The Central Excise Act 1944 Central excise duty 0.10 Financial year 2012- 2013 and 2013- 2014 Commissioner(Appe al) of Central Excise & Service Tax
The Central Excise Act 1944 Central excise duty 0.05 May 2008 to March 2013 Commissioner(Appe al) of Central Excise & Service Tax
The Central Excise Act 1944 Central excise duty 0.02 0.02 Financial year 2013-2014 Customs Excise and Service Tax Appellate Tribunal
The Central Goods and Services Tax Act 2017 Goods and service tax 7.48 - Financial year 2017-2018 Joint Commissioner of Commercial Tax
Income-tax Act 1961 Income-tax 0.97 - Assessment year 2003-2004 Hon'ble High Court of Delhi
Income-tax Act 1961 Income-tax 3.01 - Assessment year 2004-2005 Hon'ble High Court of Delhi
Income-tax Act 1961 Income-tax 7.26 - Assessment year 2005-2006 Hon'ble High Court of Delhi
Income-tax Act 1961 Income-tax 8.69 - Assessment year 2006-2007 Hon'ble High Court of Delhi
Income-tax Act 1961 Income-tax 3.59 - Assessment year 2007-2008 Hon'ble High Court of Delhi
Income-tax Act 1961 Income-tax 0.83 - Assessment year 2007-2008 Assessing officer
Income-tax Act 1961 Income-tax 2.08 Assessment year 2007-2008 Disposed off by Income tax Appellate Tribunal during the year. Further appeal yet not done.
Income-tax Act 1961 Income-tax 4.47 - Assessment year 2008-2009 Hon'ble High Court of Delhi
Income-tax Act 1961 Income-tax 0.09 - Assessment year 2009-2010 Assessing officer
Income-tax Act 1961 Income-tax 3.23 Assessment year 2009-2010 Disposed off by Income tax Appellate Tribunal during the year. Further appeal yet not done.
Income-tax Act 1961 Income-tax 0.06 - Assessment year 2010-2011 Assessing officer
Income-tax Act 1961 Income-tax 0.46 Assessment year 2010-2011 Disposed off by Income tax Appellate Tribunal during the year. Further appeal yet not done.
Income-tax Act 1961 Income-tax 0.21 Assessment year 2010-2011 Commissioner of Income-tax (Appeals)
Income-tax Act 1961 Income-tax 19.47 - Assessment year 2011-2012 Income-tax Appellate Tribunal
Income-tax Act 1961 Income-tax 18.20 - Assessment year 2012-2013 Income-tax Appellate Tribunal
Income-tax Act 1961 Income-tax 14.34 - Assessment year 2013-2014 Income-tax Appellate Tribunal
Income-tax Act 1961 Income-tax 12.99 - Assessment year 2014-2015 Income-tax Appellate Tribunal

(viii) The Company has not defaulted in repayment of loans orborrowings to any bank or financial institution or any dues to debenture-holders duringthe year. The Company has no loans or borrowings payable to government during the year.

(ix) In our opinion the Company has applied moneys raised by way ofterm loans for the purposes for which these were raised. The Company did not raise moneysby way of initial public offer/ further public offer (including debt instruments) duringthe year.

(x) No fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid by the Company in accordancewith the requisite approvals mandated by the provisions of section 197 of the Act readwith Schedule V to the Act.

(xii) In our opinion the Company is not a Nidhi Company. Accordinglyprovisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are incompliance with sections 177 and 188 of Act where applicable and the requisite detailshave been disclosed in the financial statements etc. as required by the applicable IndAS.

(xiv) During the year the Company has made preferential allotment ofshare warrants. In respect of the same in our opinion the Company has complied with therequirement of section 42 of the Act and the Rules framed thereunder. Further in ouropinion the amounts so raised have been used for the purposes for which the funds wereraised. During the year the Company did not make preferential allotment/ privateplacement of fully/partly convertible debentures.

(xv) In our opinion the Company has not entered into any non-cashtransactions with the directors or persons connected with them covered under section 192of the Act.

(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

Annexure II to the Independent Auditor's Report of even date to themembers of Jindal Stainless Limited on the standalone financial statements for the yearended 31 March 2021

Annexure II

Independent Auditor's Report on the internal financial controls withreference to the standalone financial statements under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013 ('the Act')

1. In conjunction with our audit of the standalone financial statementsof Jindal Stainless Limited ('the Company') as at and for the year ended 31 March 2021 wehave audited the internal financial controls with reference to financial statements of theCompany as at that date.

Responsibilities of Management and Those Charged with Governance forInternal Financial Controls

2. The Company's Board of Directors is responsible for establishing andmaintaining internal financial controls based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting ('the Guidance Note') issued by the Instituteof Chartered Accountants of India ('ICAI'). These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of the Company's businessincluding adherence to the 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 Act.

Auditor's Responsibility for the Audit of the Internal FinancialControls with Reference to Financial Statements

3. Our responsibility is to express an opinion on the Company'sinternal financial controls with reference to financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the ICAIprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls with reference to financial statements and the Guidance Noteissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls with reference to financial statements wereestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the internal financial controls with reference to financialstatements and their operating effectiveness. Our audit of internal financial controlswith reference to financial statements includes obtaining an understanding of suchinternal financial controls assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgement includingthe assessment of the risks of material misstatement of the financial statements whetherdue to fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls with reference to financial statements.

Meaning of Internal Financial Controls with Reference to FinancialStatements

6. A company's internal financial controls with reference to financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles. A company's internalfinancial controls with reference to financial statements include those policies andprocedures that (1) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls with Reference toFinancial Statements

7. Because of the inherent limitations of internal financial controlswith reference to financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to financial statements to future periods are subject to the riskthat the internal financial controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects adequateinternal financial controls with reference to financial statements and such controls wereoperating effectively as at 31 March 2021 based on the internal financial controls withreference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by the ICAI.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Rajni Mundra
Partner
Membership No.: 058644
UDIN: 21058644AAAACH9635
Place: New Delhi
Date: 14 May 2021

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