To the Members of M/s. Lloyds Steels Industries Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying financial statements of Lloyds Steels IndustriesLimited ("the Company") which comprise the Balance Sheet as at March 31 2020the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on 31st March 2020and a summary of the significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Financial Statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed Under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of theState of Affairs of the Company as at March 312020 the Profit and Total ComprehensiveIncome Changes in Equity and its 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 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 independence requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our audit opinion on thefinancial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
1. IND AS 116:The Company has adopted IND AS 116 "Leases" from 1st July2019 since it came into effect from 1st April 2019. The impact of Ind AS 116 on theCompany's Financial Statements at 31st March 2020 is as follows:
Balance Sheet: The adoption of Ind AS 116 will result in an increase in total assets ofRs. 331.92 Lakhs split between right-of-use assets of Rs. 322.45 Lakhs and deferred taxassets of Rs. 9.47 Lakhs. Financial Liabilities are expected to increase by Rs.331.92Lakhs
Statement of Profit and Loss: The adoption of Ind AS 116 will result in increaseddepreciation of Rs.49.61 Lakhs from the right-of-use assets and increased finance costs ofRs.22.23 Lakhs per year due to the interest recognized on lease liabilities. These willoffset the reduction in operating lease expenses of Rs. 62.37 Lakhs for the yearresulting in an overall net reduction of profit before taxes of Rs.9.47 Lakhs.
Auditors Response: We assessed the entities process to identify the impact of adoptionof the new IND AS 116 "Leases" on the Financial Statements. Our audit approachconsisted examining accuracy of the calculations and its appropriate presentation &disclosure necessary as per the applicable standard.
2. Evaluation of Contingent Liabilities: Claims against the Company not acknowledged asdebts is disclosed in the Financial Statements. The existence of the payments againstthese claims requires management judgment to ensure disclosure of most appropriate valuesof contingent liabilities.
Refer Note 19 to the Financial Statements
Auditors Response: Our audit procedures include among others assessing theappropriateness of the management's judgment in estimating the value of claims against theCompany not acknowledged as debts as given in the Note 19.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexure to Board's ReportCorporate Governance Report but does not include the Financial Statements and ourAuditor's Report thereon. Our opinion on the Financial Statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Financial Statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the Financial Statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's Responsibility for the 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 Financial Statements that give a true and fair view of the Financial PositionFinancial Performance (Changes in Equity)and Cash Flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards specified under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Financial Statement that give a true and fair view andare free from material misstatement whether due to fraud or error.
In preparing the Financial Statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are also responsible for overseeing the Company's FinancialReporting Process.
Auditor's Responsibilities 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.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness 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 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.
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.
Materiality is the magnitude of misstatements in the Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the Financial Statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements
1. As required by section 143(3) of the Companies Act 2013 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 purpose of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c. The Company has no branch office and hence the Company is not required to conductaudit under Section 143 (8) of the Act;
d. The Balance Sheet the Statement of Profit and Loss the Cash flow statement dealtwith by this Report are in agreement with the Books of Account;
e. In our opinion the aforesaid Ind AS financial statements comply with the IndianAccounting Standards (Ind AS) prescribed under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2014 (As amended);
f. On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2020 from being appointed as a Director in terms of Section164 (2) of the Act;
g. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure A". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's Internal Financial Controls overfinancial Reporting; and
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 in our opinionand to the best of our information and according to the explanations given to us (Asamended):
i. The Company has disclosed the impact of pending claims on its financial position inNote 19 of the Financial Statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. During the year no amounts were required to be transferred to the InvestorEducation and Protection Fund by the Company. So the question of delay in transferringsuch sums does not arise.
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 B' a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
For TODARWAL & TODARWAL LLP
ICAI Firm Reg. no.: W100231
Kunal S. Todarwal
Dated: 19th June 2020
ANNEXURE - A TO THE INDEPENDENT AUDITORS' REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of M/s LloydsSteels Industries Limited ("the Company") as of 31 March 2020 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). 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 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") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting 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 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 procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of 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 reflecting in the transactions and dispositions of the assets of the company; (2)provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorized acquisitionuse or disposition of the company's assets that could have a material effect on thefinancial 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 Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance
Note on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.
For TODARWAL & TODARWAL LLP
Chartered Accountants ICAI Firm Reg. no.: W100231
Kunal S. Todarwal Partner
Dated: 19th June 2020
ANNEXURE - B TO THE INDEPENDENT AUDITOR'S REPORT
REPORT ON THE FINANCIAL STATEMENTS OF LLOYDS STEELS INDUSTRIES LIMITED AS ON 31st MARCH2020.
1 (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of Fixed Assets.
(b) As per the information and explanation given to us fixed assets are physicallyverified by the management according to a phased programme designed to cover all thelocations which in our opinion is reasonable having regard to the size of the company andthe nature of its assets. Pursuant to the programme the management during the yearphysically verified the Fixed Assets at certain locations and no material discrepancieswere noticed on such verification.
(c) According to the information and explanation given to us the title deed ofimmovable properties are held in the name of the company except in the case of one landparcel the reason for which is given in "Note No. 4 - Property Plant andEquipment" of the financials.
2. As per the information provided to us Inventory has been physically verified by themanagement during the year and no material discrepancies were noticed that would have animpact over the Financial Statements.
3. (a) According to information and explanation given to us the Company has notgranted unsecured loans to Companies Firms Limited Liability Partnerships or otherparties covered in the register maintained under Section 189 of the Companies Act 2013.
In view of the above provisions of clause 3(iii) (b) and (c) are not applicable to theCompany.
4. In our opinion and according to information and explanation given to us the Companyhas in respect of Loans Investments Guarantees and Security Provisions complied withSection 185 and 186 of the Companies Act 2013.
5. According to the information and explanation given to us the Company has notaccepted any Deposits whether the directives issued by the Reserve Bank of India and theprovisions of Sections 73 to 76 or any other relevant provisions of the Companies Act2013. Hence the provisions of clause 3(v) are not applicable to the company.
6. Pursuant to the rules made by the Central Government the maintenance of CostRecords has been prescribed u/s. 148(1) of the Companies Act 2013. We are of the viewthat prima facie the prescribed accounts and records have been maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
7. (a) According to the Books and Records as produced and examined by us in accordancewith generally accepted Auditing Practices in India and also Management Representationsundisputed Statutory Dues in respect of Provident Fund Employees' State Insurance IncomeTax Custom Duty Cess Goods & Service Tax and other statutory dues if anyapplicable to it has been regularly deposited with the appropriate authorities.
(b) According to the information and explanation given to us and the record producedbefore us there is no disputed amount payable in case of Income Tax Sales Tax WealthTax Service Tax Custom Duty Excise Duty Value Added Tax Goods & Service Tax orCess.
8. According to the information and explanation given to us and based on the recordsproduced before us the Company has not defaulted in repayments of dues to FinancialInstitutions and Banks.
9. According to the information and explanation given to us and the record producedbefore us the Company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments). The Company has not taken any term loan duringthe year.
10. During the course of our examination of the Books of Account carried in accordancewith the generally accepted Auditing Standards in India we have neither come across anyinstance of fraud on or by the Company either noticed or reported during the year norhave we been informed of such case by the Management.
11. According to the information and explanation given to us and the Books of Accountsverified by us the Managerial Remuneration has been paid or provided in accordance withthe requisite approvals mandated by the provisions of Section 197 read with Schedule V tothe Companies Act 2013.
12. The Company is not a Nidhi Company as specified in the Nidhi Rules 2014 hence theprovision of clause 3(xii) are not applicable to the Company.
13. According to the information and explanation given to us there are no transactionswith the Related Parties.
14. According to information and explanation given to us the Company during the yearhas not made any Preferential Allotment or Private Placement of Shares or Fully or PartlyConvertible Debentures hence the provision of clause 3(xiv) are not applicable to theCompany.
15. According to the information and explanation given to us and the books of accountsverified by us the company has not entered into any non-cash transactions with directorsor persons connected with him.
16. The Company is not required to be Registered Under Section 45-IA of the ReserveBank of India Act 1934.
For TODARWAL & TODARWAL LLP
ICAI Firm Reg. no.: W100231
Kunal S. Todarwal
Dated: 19th June 2020