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Kalyani Steels Ltd.

BSE: 500235 Sector: Metals & Mining
NSE: KSL ISIN Code: INE907A01026
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OPEN 315.25
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VOLUME 11484
52-Week high 390.00
52-Week low 263.70
P/E 8.47
Mkt Cap.(Rs cr) 1,403
Buy Price 0.00
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Sell Price 0.00
Sell Qty 0.00
OPEN 315.25
CLOSE 322.90
VOLUME 11484
52-Week high 390.00
52-Week low 263.70
P/E 8.47
Mkt Cap.(Rs cr) 1,403
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Kalyani Steels Ltd. (KSL) - Auditors Report

Company auditors report

To the Members of Kalyani Steels Limited

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the Standalone Financial Statements of Kalyani Steels Limited("the Company") which comprise the Balance Sheet as at March 31 2022 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes to theStandalone Financial Statements including a summary of Significant Accounting Policiesand other explanatory information (hereinafter referred to as "the StandaloneFinancial Statements"). These Standalone Financial Statements include the Company'sproportionate share of a Joint Operation.

In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of report of the other auditor on separatefinancial statements of the Joint Operation the aforesaid Standalone Financial Statementsgive the information required by the Companies Act 2013 ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2022 its profit (including other comprehensive income ) its changes in equity andits cash flows for the year 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 together with theethical requirements that are relevant to our audit of the Standalone 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.

We believe that the audit evidence obtained by us and by the other auditor referred toin the "Other Matter" paragraph is sufficient and appropriate to provide abasis for our opinion.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide a separateopinion on these matters.

Key Audit Matters Principle Audit Procedures
Accounting of joint operation As part of our audit procedure -
As explained in Note 2.3 the Company's composite steel manufacturing facility at Ginigera is under a strategic alliance arrangement with a joint venture partner. The facility is managed by Hospet Steels Limited. The alliance confers Kalyani Steels Limited (KSL) and Mukand Limited (ML) with rights to assets obligations for liabilities sharing of expenses / profit / loss in the proportion of product sharing ratio (viz. 41.38% by KSL and 58.62% by ML). Thus KSL and ML have right to the assets and obligations for the liabilities of this arrangement. The strategic alliance is a joint arrangement in the nature of joint operation and accordingly the Company has recognized its share of revenue and expenses and assets and liabilities from joint operation in its separate financial statements. Due to the nature and complexities involved in accounting of strategic alliance arrangement as joint operation this is a key audit matter. - we have obtained the said strategic alliance agreement and read the terms and conditions mentioned therein.
- assessed the management's judgement of concluding the arrangement as joint operation as per the principles laid down under Ind AS 111.
- further we have tested the controls and procedures established by the management relating to accounting of joint venture.
The accounting for joint operation requires the Company to recognize only its share of expenses from the joint operation therefore we have checked the amount charged to ML (joint venture partner) are as per the terms and conditions of strategic alliance arrangement and have been offset against the respective expense line items. Similarly the expenses incurred by the ML (joint venture partner) and charged to the Company have been reclassified to the respective expense line items based on the nature of such expenses.
Valuation of inventory As a part of our audit procedures over valuation of inventory we have performed the following procedures :
As on March 31 2022 the Company is having inventory of ' 2176.11 Million and disclosed in Note 10. The inventory is valued at cost or net realizable value whichever is lower. Costs includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but does not include borrowing costs. Cost of work-in-progress and finished goods are determined on a weighted average basis (refer Note (k) of Significant Accounting Policies). - assessed the design & performed tests of the design and operating effectiveness of the key controls over inventory valuation.
The Company's composite steel manufacturing involves processes such as Mini Blast Furnace (MBF) Steel Melting Shop (SMS) and Rolling Mill Shop (RMS). The production is carried out continuously by way of the simultaneous standardized and sequential process. The output of a process is the input of another. The production from the last process is transferred to finished stock. Both direct and indirect costs are charged to the processes. The production results in joint and by-products. Losses both normal and abnormal loss occur at different stages of production which are also taken into consideration while calculating the unit cost. - obtained understanding of production process at each stage.
Considering the calculation of process cost at each stage accounting of joint product and by-product normal / abnormal losses and allocation of overheads the valuation of inventory is regarded as a key audit matter. - obtained and tested on sample basis the process cost of each production process.
- verified the calculations accounting of joint and by-product and allocation basis of overhead as per costing principles.
- tested the assumptions such as allocation percentages of fixed and variable overheads and yield rate at each production stages with source data.
- further we have tested on sample basis net realizable value of finished goods based on subsequent sale value.
- we have also checked the aging report for identification of non-moving / slow moving finished goods on a sample basis.

Other Information

The Company's Board of Directors is responsible for the other information. The otherinformation comprises the Management Discussion and Analysis Board of Directors' Reportalong with its Annexures and Corporate Governance Report included in the Annual Report butdoes not include the Standalone Financial Statements and our Auditor's Report thereon. Ouropinion on the Standalone Financial Statements does not cover the other information and wedo 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 thisregard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the financial position financial performance (includingother comprehensive income) changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities selection andapplication of appropriate accounting policies making judgments and estimates that arereasonable and prudent and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe Standalone Financial Statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the Standalone Financial Statements the 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.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

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 Company hasadequate internal financial controls with reference to Financial Statements in place andthe operating effectiveness of 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 management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our Auditor's Report to the related disclosures inthe Standalone 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 and its JointOperation to cease to continue 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.

• Obtain sufficient appropriate audit evidence regarding the financial informationof the Company and its Joint Operation to express an opinion on the Standalone FinancialStatements. For the other entity included in the Standalone Financial Statements whichhave been audited by the other auditors such other auditors remain responsible for thedirection supervision and performance of the audits carried out by them. We remain solelyresponsible for our audit opinion.

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 them allrelationships and other matters that may reasonably be thought to bear on our independenceand 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 Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our Auditor's Report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

Other Matters

We did not audit the financial statements of a Joint Operation included in theStandalone Financial Statements on proportionate basis as per Ind AS 111 "JointOperations" whose financial statements reflect total revenue of ' Nil totalcomprehensive income / loss of ' Nil for the year ended March 31 2022. The jointoperation has total assets of ' 222.90 Million as on March 31 2022 and net cash (outflow)of ' (0.08) Million for the year ended March 31 2022. These

financial statements have been audited by other auditor whose report has been furnishedto us by the Management and our opinion on the Standalone financial statements insofar asit relates to the amounts and disclosures included in respect of this Joint Operation andour report in terms of sub-section (3) of Section 143 of the Act insofar as it relates tothe aforesaid Joint Operation is based solely on the report of the other auditor.

Our opinion is not modified in respect to this matter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2020 ("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 to the extent applicable.

2. As required by Section 143(3) of the Act based on our audit and on theconsideration of report of the other auditor on separate financial statements of JointOperation as noted in the Other Matters paragraph 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 and its Joint Operation so far as it appears from our examination of those books.

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

d) In our opinion the aforesaid Standalone Financial Statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended.

e) On the basis of the written representations received from the Directors as on March31 2022 taken on record by the Board of Directors and the report of other auditor of theJoint Operation none of the Directors is disqualified as on March 31 2022 from beingappointed as a Director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference toStandalone Financial Statements of the Company and its Joint Operation and the operatingeffectiveness of such controls refer to our separate Report in Annexure B.

g) As required by Section 197(16) of the Act in our opinion and according toinformation and explanation provided to us the remuneration paid by the Company to itsDirectors is in accordance with the provisions of Section 197 of the Act and remunerationpaid to Directors is not in excess of the limit laid down under this Section. As per thereport of the auditor of the Joint Operation no remuneration is provided / paid to theDirectors of the Joint Operation.

h) 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 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 Financial Statements - Refer Note 37.

(ii) The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses.

(iii) There is no amount required to be transferred to the Investor Education andProtection Fund by the Company and its Joint Operation.

(iv) (a) The management has represented to us that to the best of its knowledge andbelief no funds (which are material either individually or in the aggregate) have beenadvanced or loaned or invested (either from borrowed funds or share premium or any othersources or kind of funds) by the Company to or in any other person or entity includingforeign entities ("Intermediaries") with the understanding whether recorded inwriting or otherwise that the Intermediary shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Company ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries.

(b) The management has represented to us that to the best of its knowledge andbelief no funds (which are material either individually or in the aggregate) have beenreceived by the Company from any person or entity including foreign entities("Funding Parties") with the understanding whether recorded in writing orotherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries.

(c) Based on the information and explanation given to us and audit procedures performedas considered reasonable and appropriate in the circumstances nothing has come to ournotice that has caused us to believe that the representations made by the management andas mentioned under sub-clause (iv)(a) and (iv)(b) above contains any materialmisstatement.

(v) The dividend declared and paid during the year by the Company is in compliance withSection 123 of the Act.

(vi) The requirement to the use of accounting software for maintaining Company's booksof account which has a feature of recording audit trail (edit log) facility is deferred tofinancial years commencing on or after April 1 2023 therefore reporting under Rule 11(g)of Companies (Audit & Auditors) Rules 2014 is not applicable for financial year endedon March 31 2022.

For P G BHAGWAT LLP
Chartered Accountants
Firm Registration No.101118W/W100682
Abhijeet Bhagwat
Pune Partner
May 12 2022 Membership No.136835
UDIN : 22136835AJBDFK6153

Annexure 'A' to the Independent Auditor's Report

Referred to in paragraph 1 under the heading "Report on Other legal andRegulatory Requirements" of our report on even date :

(i) (a) (A) The Company is maintaining proper records showing full particularsincluding quantitative details and situation of property plant and equipment.

(B) The Company is maintaining proper records showing full particulars of intangibleassets.

(b) The property plant and equipment are physically verified by the Managementaccording to a phased programme designed to cover all the items over a period of fouryears which in our opinion is reasonable having regard to the size of the Company andthe nature of its assets. Pursuant to the programme a portion of the fixed assets havebeen physically verified by the Management during the year and no material discrepancieshave been noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties asdisclosed in the Financial Statements (refer Note 3) are held in the name of the Company.

(d) According to the information and explanations provided to us the Company has notrevalued its property plant and equipment or intangible assets or both during the year.

(e) According to the information and explanations provided to us there are noproceedings that have been initiated or are pending against the Company for holding anybenami property under the Prohibition of Benami Property Transactions Act 1988 (asamended in 2016) and rules made thereunder.

(ii) (a) The inventory has been physically verified by the management during the year.In our opinion the frequency coverage and procedure of such verification is reasonableand appropriate. The discrepancies noticed on verification between the physical stocks andthe book records were not 10% or more in the aggregate for each class of inventory andhave been properly dealt with in the books of account.

(b) According to the information and explanations provided to us the Company has beensanctioned working capital limits in excess of five crore rupees in aggregate from banksor financial institutions on the basis of security of current assets.

The management of the Company has provided us with the quarterly returns or statementswhich they have represented to us have been filed by the Company with their banks orfinancial institutions based on the sanction terms. We have compared such quarterlyreturns or statements with the unaudited books of accounts for the quarters ended June 302021 September 30 2021 December 31 2021 and March 31 2022. Based on our auditprocedures and in our opinion the quarterly returns or statements filed by the Companywith such banks or financial institutions are in agreement/reconciled with the books ofaccount of the Company.

(iii) (a) According to the information and explanations provided to us the Company hasnot provided any guarantee or security or granted any loans or advances in the nature ofloans secured or unsecured to companies firms Limited Liability Partnerships or anyother parties during the year. Accordingly reporting on Clause 3 (iii) (a) and (f) of theOrder is not applicable. The Company has made investments in mutual funds.

(b) According to information and explanation provided to us and in our opinion theinvestments made during the year are prima facie; not prejudicial to the interest of theCompany.

(c) According to the information and explanation provided to us in respect of loansthe schedule of repayment of principal and payment of interest has been stipulated. Theloan has been repaid in full during the year.

(d) According to the information and explanation provided to us no amount is overdue.

(e) According to the information and explanation provided to us no loan or advance inthe nature of loan granted has fallen due during the year. Accordingly reporting onclause 3(vi)(e) of the Order is not applicable.

(iv) The Company has complied with the provisions of Sections 185 and 186 of the Act inrespect of loans granted investments made and guarantees and securities provided asapplicable.

(v) According to the information and explanations given to us the Company has notaccepted any deposits from the public within the meaning of Sections 73 to 76 of the Actand the Rules made thereunder or amounts which are deemed to be deposits. Accordinglyreporting on Clause 3 (v) of the Order is not applicable.

(vi) We have broadly reviewed the books of account relating to materials labour andother items of cost maintained by the Company pursuant to the rules made by the CentralGovernment for the maintenance of cost records under sub-section (l) of Section 148 of theAct and we are of the opinion that prima facie the prescribed accounts and records havebeen made and maintained. We have not however made a detailed examination of records witha view to determine whether they are accurate and complete.

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including Goods and Services TaxProvident Fund Employees' State Insurance Income-Tax Sales-Tax Service Tax Duty ofCustoms Duty of Excise Value Added Tax Cess and any other material statutory dues havebeen regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of statutory dues referred in sub clause (a) above were in arrears asat March 31 2022 for a period of more than six months from the date they became payable.

(b) According to the information and explanation provided to us there are no statutorydues referred to in Clause (vii) (a) which have not been deposited because of any disputeexcept the following :

Name of the statute Nature of dues Amount ( Rs. in Million) Period to which the amount relates Forum where the dispute is pending
Central Excise Act 1944 Excise Duty 9.43 August 2008 to February 2011 Customs Excise and Service Tax Appellate Tribunal (CESTAT)
Central Excise Act 1944 Excise Duty 20.39 2012-13 to 2014-15 Commissioner
Income Tax Act 1961 Income Tax 6.72 Assessment Years 2016-17 & 2017-18 Commissioner of Income Tax Appeals
Income Tax Act 1961 Income Tax 6.29 Assessment Year 2018-19 Assessing Officer
KVAT 2003 VAT 0.64 FY 2011-12 Karnataka Appellate Tribunal
KVAT 2003 VAT 1.01 FY 2012-13 Forum JC-Appeals

(viii) According to the information and explanations given to us and records examinedby us there are no transactions which were not recorded in the books of account and havebeen surrendered or disclosed as income during the year in the tax assessments under theIncome Tax Act 1961 (43 of 1961).

(ix) (a) According to the information and explanations given to us and based on ouraudit procedures the Company

has not defaulted in repayment of loans or other borrowings or in the payment ofinterest thereon to any lender.

(b) According to the information and explanations given to us our audit procedures andas represented to us by the management we report that the Company has not been declaredwilful defaulter by any bank or financial institution or government or any governmentauthority.

(c) According to the information and explanation provided to us and in our opinionterm loans availed by the Company were prima facie applied for the purpose for which theloans were obtained.

(d) On an overall examination of the Financial Statements of the Company funds raisedon short-term basis have prima facie not been used during the year for long-termpurposes by the Company.

(e) According to the information and explanations given to us and based on our auditprocedures the Company has not taken any funds from any entity or person on account of orto meet the obligations of its subsidiaries or associates. Accordingly reporting onClause 3 (ix) (e) is not applicable.

(f) According to the information and explanations given to us and based on our auditprocedures the Company has not raised loans during the year on the pledge of securitiesheld in its subsidiaries or associate companies. Accordingly reporting on Clause 3 (ix)(f) is not applicable.

(x) (a) The Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments). Accordingly reporting on Clause 3 (x) (a) ofthe Order is not applicable.

(b) The Company has not made any preferential allotment or private placement of sharesor convertible debentures (fully partially or optionally convertible) during the year.Accordingly reporting on Clause 3 (x) (b) of the Order are not applicable.

(xi) (a) Based upon the audit procedures performed by us and according to theinformation and explanation provided to us by the management no fraud by the Company andno fraud on the Company has been noticed or reported during the year.

(b) According to information and explanation provided to us and based on ourexamination of records no report under sub-section (12) of Section 143 of the CompaniesAct 2013 has been filed in Form ADT-4 as prescribed under rule 13 of Companies (Audit andAuditors) Rules 2014 with the Central Government during the year and up to the date ofthis report.

(c) According to information and explanation provided to us and based on our auditprocedures and enquiry with the vigil mechanism committee there were no whistle-blowercomplaints received by the Company during the year and up to the date of this report.

(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company and the Nidhi Rules 2014 are not applicable to it.Accordingly Clause 3 (xii) (a) (b) & (c) of the Order is not applicable to theCompany.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with related parties are incompliance with Sections 177 and 188 of the Act where applicable and the details oftransactions have been disclosed in the Financial Statements as required by Ind AS 24'Related Party Disclosures'. Refer Note 39 to the Financial Statements.

(xiv) (a) According to the information and explanations given to us and in our opinionthe Company has an internal audit system commensurate with the size and nature of itsbusiness.

(b) We have taken into consideration the reports made available to us by the managementof the Internal Auditors for the period under audit.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non-cashtransactions with the directors or persons connected with them during the year.Accordingly reporting on Clause 3 (xv) of the Order is not applicable.

(xvi) (a) In our opinion and according to the information and explanations given to usthe Company is not required to

be registered under Section 45-IA of the Reserve Bank of India 1934. Accordinglyreporting on Clause 3(xvi) (b) (c) and (d) of the Order is not applicable.

(b) According to the information and explanations given to us there are two CoreInvestment Companies within the Group.

(xvii) The Company has not incurred cash losses in the financial year and in theimmediately preceding financial year.

(xviii) There has been no resignation of the statutory auditors during the year.Accordingly reporting on Clause 3 (xviii) of the Order is not applicable.

(xix) According to the information and explanations given to us and on the basis of thefinancial ratios ageing and expected dates of realization of financial assets and paymentof financial liabilities other information accompanying the Financial Statements ourknowledge of the Board of Directors and management plans and based on our examination ofthe evidence supporting the assumptions nothing has come to our attention which causesus to believe that any material uncertainty exists as on the date of the Audit Report thatthe Company is not capable of meeting its liabilities existing at the date of balancesheet as and when they fall due within a period of one year from the balance sheet date.We however state that this is not an assurance as to the future viability of theCompany. We further state that our reporting is based on the facts up to the date of theAudit Report and we neither give any guarantee nor any assurance that all liabilitiesfalling due within a period of one year from the balance sheet date will get dischargedby the Company as and when they fall due.

(xx) (a) There are no unspent amounts towards Corporate Social Responsibility (CSR) onother than ongoing projects requiring a transfer to a Fund specified in Schedule VII tothe Companies Act 2013 in compliance with second proviso to sub-section (5) of Section135 of the said Act. Accordingly reporting under Clause 3(xx)(a) of the Order is notapplicable for the year.

(b) According to the information and explanations given to us there is no amountremaining unspent towards Corporate Social Responsibility (CSR) under sub-section (5) ofSection 135 of the Act pursuant to any ongoing project. Accordingly reporting on Clause3 (xx) (b) is not applicable.

Annexure 'B' to the Independent Auditor's Report

Referred to in paragraph 2 (f) under the heading "Report on Other legal andRegulatory Requirements" of our report on even date

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 with reference to the FinancialStatements of Kalyani Steels Limited ("the Company") as of March 31 2022 inconjunction with our audit of the Financial Statements of the Company for the year endedon that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal controls over financial reporting criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to the Financial Statements based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the "Guidance Note") and the Standards on Auditing to theextent applicable to an audit of internal financial controls both issued by the Instituteof Chartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to thefinancial statements was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to the Financial Statements and theiroperating effectiveness. Our audit of internal financial controls with reference to theFinancial Statements included obtaining an understanding of internal financial controlswith reference to the Financial Statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrols based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the FinancialStatements whether due to fraud or error.

We believe that the audit evidence obtained by us and by the other auditor referred toin the "Other Matter" paragraph is sufficient and appropriate to provide a basisfor our audit opinion on the Company's internal financial controls with reference to theFinancial Statements.

Meaning of Internal Financial controls over Financial Reporting

A Company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of Financial Statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial controls 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 with reference tothe Financial Statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to the Financial Statements to future periods are subject to the risk that theinternal financial controls with reference to the Financial Statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols with reference to the Financial Statements and such internal financial controlswith reference to the Financial Statements were operating effectively as at March 312022 based on the internal controls over financial reporting criteria established by theCompany considering the essential components of internal controls stated in the GuidanceNote on Audit of Internal Financial Controls over Financial Reporting issued by theInstitute of Chartered Accountants of India.

Other Matter

Our aforesaid reports under Section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls with reference to financial statementsinsofar as it relates to a Joint Operation is based on the corresponding report of theauditor of such Company. Our opinion is not modified in respect of this matter.

For P G BHAGWAT LLP
Chartered Accountants
Firm Registration No.101118W/W100682
Abhijeet Bhagwat
Pune Partner
May 12 2022 Membership No.136835
UDIN : 22136835AJBDFK6153

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