To The Members of the KIOCL LIMITED
Report on the standalone Ind AS Financial Statements
We have audited the accompanying Standalone IND AS financial statements of KIOCLLimited (Referred to as the Company) which comprises the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including other comprehensive income)the Statement of Cash Flows and Statement of changes in Equity for the year then endedand notes to the Financial statements including a summary of significant accountingpolicies and other explanatory information
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information in themanner so required and give a true and fair view in conformity with the Indian AccountingStandard prescribed under Section 133 of the Companies Act 2013 and accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019the profit including other comprehensive income changes in equity and its cash flows forthe 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have ful lled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis 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 aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report
1. Impairment of property plant and equipment: -
The operation of Blast Furnace Unit has been suspended since 2009 due to thecommercial non-viability of manufacturing of pig iron. The company has done the impairmenttest as stated under 12(b) of Ind AS 36 from an approved valuer and accordingly the fairvalues of the machinery determined are more than the carrying cost.
Similarly the Kudremukh Unit from where iron ore was extracted by KIOCLLimited is abandoned long time back and all the assets located therein are eitherdisposed off or transferred to Pellet Plant. Owing to disputes relating to land andpending issues on surrender of mines the buildings in the township are reduced tonil' value but value of the land continues to be shown in the books of accounts. Thecompany is of the view that Lakya Dam therein is the main water source for the pelletplant the land value is shown under PPE.
2. Valuation of inventory: -
As the company is in existence for more than 42 years and continue manufacturing of'Pellet' has piled up significant inventory of non-moving spare parts presently re-classied under capital spares and valued at cost.
The management is of the view that these capital spares have a de nite use but flowingto the nature of industry their replacement value could not be ascertained and thereforeretained at cost.
The Accounting Standards and Accounting Policies require the Company to make estimatesand assumptions about future events that directly affect its reported financial conditionand operating performance. The following accounting estimates and assumptions consideredat the end of the reporting year may have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilities within the next financialyears.
Useful lives of property plant and equipment: The Company reviewsthe estimated useful lives of property plant and equipment at the end of each reportingyear. The financial effect of this reassessment assuming the assets are held until theend of their estimated useful lives is an increase/decrease the depreciation expense inthe current financial year and future years.
Estimation of defined benefit obligation: The cost of defined benefits planincluding other post-employment benefits and the present value of such obligations aredetermined using actuarial valuations. The Company has adopted the valuation and figuresas submitted by its corporate office. The actuarial assumptions on retirement benefits aresubject to various assumptions like mortality rate inflation on salary and attritionrate. Any changes will significantly influence the assumptions. We have relied uponvaluation of 'actuary' in accordance with SA 620 issued by ICAI.
Company is availing input credit on the eligible inputs under the GST act and the rulesmade there under. The company is also claiming refunds on the zero-rated supply namelyExport of Goods. The input credits are grouped under Loans and Advances in Current Asset.However the company not reconciled the input credit with the Electronic Credit Ledgeravailable under the GST portal. It was explained to us that the entries in the ElectronicCredit Ledger are pending reconciliation and the effect of the reconciliation in theopinion of the management is not material considering the turnover and the profit of thecompany.
4. Disputed Liability
The company has disclosed in their notes to Financial Accounts disputes with Railwaysacross the country which are pending before various courts and not resolved for manyyears.
Responsibility of Management for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance (changes in equity) and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate implementationand maintenance of accounting policies; making judgments and estimates that are reasonableand prudent; and design implementation and maintenance of adequate Internal FinancialControls that were operating effectively for ensuring the accuracy and completenessof the accounting records relevant to the preparation and presentation of the financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so those Board of
Directors are also responsible for overseeing the company's financial reportingprocess.
Auditor's Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
A further description of our responsibilities for the audit of the financial statementsis included in Appendix of this Auditors' Report forms part of our Auditors'report.
Other Matter -None
Report on Other Legal and Regulatory Requirements
1. As required under the directions and sub-directions issued by the Comptroller andAuditor General of India in terms of Subsection (5) of Section 143 of the Companies Act2013 we are enclosing our report in
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable our report thereon is enclosedas Annexure B
3. As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit. Accordingly wehave relied upon the expenditure statement as certi ed by the management.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books
c. The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account
d. In our opinion the aforesaid standalone Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
e. With respect to the adequacy of the Internal Financial Controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in
" Annexure C".
f. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note 23.2(B) to the 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 required to be transferred tothe Investor Education and Protection Fund by the Unit of the Company.
| ||For Anand & Ponnappan |
| ||Chartered Accountants |
| ||FRN 000111S |
| ||Sd/- |
| ||(R Ponnappan) |
|Place : New Delhi ||Partner |
|Date : 21/05/2019 ||MRN 021695 |
Auditor's Responsibility for the Audit of the Financial Statements
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
a. Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
b. 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 theCompanies Act 2013 we are also responsible for expressing our opinion on whether theImplementation Guide on Reporting Standards 87 company has adequate internal financialcontrols system in place and the operating effectiveness of such controls.
c. Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
d. Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions 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.
e. Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying 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 ndings including anysignificant de ciencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
To The Independent Auditors' Report Of Even Date On The Standalone Ind AS FinancialStatements Of KIOCL Limited
Report on Directions issued by the Comptroller and Auditor General of India (undersection 143(5) of the Companies Act 2013)
1. The unit of the company has a system in place to process all the accountingtransactions through IT system. Transactions relating to Inventory are recorded in aseparate "Software" called Price Stores Ledger (PSL) which is not integratedwith Financial Accounting System. Similarly production details are not linked to FinancialAccounting System. However there are no implications (whether financial or otherwise) ofprocessing of accounting transactions through IT system on the integrity of the accounts.
2. According to the information & explanations given to us there is norestructuring of an existing loan or cases of waiver/write off of debts/loans/interestetc. made by a lender. As such there is no financial implication involved.
3. According to the information & explanations given to us the company hasreceived funds of Rs.11.20 lakhs from Government of India Ministry of Steel which isdisbursed to Dayananda Sagar College of Engineering Bengaluru for carrying out researchand Development on Synthesis of Kudremukh Iron Ore Mine Tailings based GeopolymerAggregate using Ash as Precursor in Construction Industry.
| ||For Anand & Ponnappan |
| ||Chartered Accountants |
| ||FRN 000111S |
| ||Sd/- |
| ||(R Ponnappan) |
|Place : New Delhi ||Partner |
|Date : 21/05/2019 ||MRN 021695 |
Annexure - B to the Auditors' Report
The Annexure referred to in Independent Auditors' Report to the members of the Companyon the standalone Ind AS financial statements for the year ended March 31 2019.
We report that:
1. The Company has maintained proper records showing full particulars includingquantitative details and situation of xed assets.
The Company has a regular programme of physical verification of its xed assets by whichxed assets are verified in a phased manner over a period of three years. In accordancewith this programme certain xed assets were verified by the management during the yearand no material discrepancies were noticed on such verification. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of theCompany and the nature of its assets.
According to the information and explanations given to us and based on our examinationof the records of the Company the title deeds of immovable properties are held in thename of the Company.
2. Physical verification of inventory has been conducted at reasonable intervals by themanagement and no material discrepancies were noticed;
3. The Company has not granted loans to bodies corporate covered in the registermaintained under section 189 of the Companies Act 2013 ('the Act').
4. In our opinion and according to the information and explanations given to us theCompany has not entered in to any transaction attracting the provisions of section 185 and186 of the Act.
5. The Company has not accepted any deposits from the public.
6. Maintenance of cost records has been specified by the Central Government undersub-section (1) of section 148 of the Companies Act 2013 and such accounts and recordshave been so made and maintained.
7. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income-taxsales tax value added tax duty of customs service tax Goods and service taxcess andother material statutory dues have been regularly deposited during the year by the Companywith the appropriate authorities. As explained to us the Company did not have any dues onaccount of employees' state insurance and duty of excise.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms service tax Goods and service tax cess and other material statutory dues werein arrears as at 31 March 2019 for a period of more than six months from the date theybecame payable.
According to the information and explanations given to us there are no dues of duty ofcustoms which have not been deposited with the appropriate authorities on account of anydispute. However according to information and explanations given to us the followingdues of income tax sales tax duty of excise service tax and value added tax have notbeen deposited by the Company on account of disputes:
|Statute ||Nature of Dues ||Amount in ||Period to which ||Forum where |
| || ||Lakhs ||relates ||dispute pending |
|Excise ||Non-payment of SAD on DTA clearance of Pellets ||1454.11 ||2010-11 ||CESTAT |
|Excise ||Non-payment of SAD on DTA clearance of Pellets ||1248.99 ||2011-12 ||CESTAT |
|Excise ||Non-payment of SAD on DTA clearance of Pellets ||3145.21 ||2011-12 ||CESTAT |
|Service Tax ||Service Tax ||111.33 ||2012-13 to 2016-17 ||CESTAT |
8. The Company does not have any loans or borrowings from any financial institutionbanks government or debenture holders during the year. Accordingly paragraph 3(viii) ofthe Order is not applicable.
9. The Company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year. Accordingly paragraph3 (ix) of the Order is not applicable.
10. According to the information and explanations given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.
11. As per notification No. GSR 463(E) dated 5th June 2015 issued by the Ministry ofCorporate Affairs Government of India Section 197 of the Companies Act 2013 is notapplicable to the Government Companies. Accordingly paragraph 3(xi) of the Order is notapplicable to the Company.
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 ourexamination 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 such transactions have beendisclosed in the standalone Ind AS financial statements as required by the applicableaccounting standards.
14. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.
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 him. Accordingly paragraph 3(xv) ofthe 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 Anand & Ponnappan
Firm's registration number: 000111S
Place : New Delhi
Date : 21/05/2019
To The Independent Auditor's Report of Even Date on the Stand Alone Ind-AS FinancialStatements of KIOCL Limited
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the nancials controls over financial reporting KIOCL Limited as of andfor the year ended March 31 2019 in conjunction with our audit of the Standalone Ind ASfinancial statements of the Unit.
Management's Responsibility for Internal Financial Controls
The respective Board of Directors of the of the Holding company its subsidiarycompanies its associate companies and jointly controlled companies which are companiesincorporated in India are responsible for establishing and maintaining internal financialcontrols based on the internal control over financial reporting criteria established bythe Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting issued bythe Institute of Chartered Accountants of India (ICAI). These responsibilities include thedesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the respective company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") issued by the ICAI and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat I/we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial 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 and the audit evidence obtained bythe other auditors in terms of their reports referred to in the Other Matters paragraphbelow is sufficient and appropriate to provide a basis for our audit opinion on theCompany's Internal Financial Controls System over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of 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.
In our opinion the Unit has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2019 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For Anand & Ponnappan Chartered Accountants Firm's registration number:000111S
Partner MRN 021695
Place : New Delhi Date : 21/05/2019