To the members of
MSP Steel & Power Limited
Report on the Standalone Ind AS Financial Statements
1. We have audited the accompanying Standalone Ind AS financial statements("Financial Statement") of MSP STEEL & POWER LIMITED ("theCompany") which comprise the Balance Sheet as at March 31 2018 the Statement ofProfit and Loss (including Other Comprehensive Income) the Cash Flow Statement and theStatement of Changes in Equity for the year then ended and a summary of the significantaccounting policies and other explanatory information.
Management's Responsibility for the Standalone Ind AS Financial Statements
2. 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 including other comprehensive income cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) prescribed under section 133 ofthe Act read with the Companies (Indian Accounting Standard) Rules 2015 as amended andother accounting principles generally accepted in India.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
3. Our responsibility is to express an opinion on these financial statements based onour audit.
In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made there under and the orderissued under section 143 (11) of the Act.
We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under Section 143(10) of the Act and other applicable authoritativeannouncements issued by Institute of Chartered Accountants of India. Those Standards andpronouncements require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
4. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.
5. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
6. 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 the Actin the manner 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 2018 and its loss total comprehensive income its cash flows and the changes inequity for the year ended on that date.
7. The financial statement of the Company for the year ended March 31 2017 preparedin accordance with companies (Indian Accounting Standard) Rules 2015 was audited byanother firm of Chartered Accountants who vide their report dated May 27 2017 expressedan unmodified opinion on those financial statements.
Our opinion is not modified in respect of this matter.
Report on Other Legal and Regulatory Requirements
8. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order.
9. As required by Section 143(3) of the Act based on our audit we report to theextent applicable that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
c. The Balance Sheet the Statement of Profit and Loss including other comprehensiveincome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account
d. In our opinion the aforesaid financial statements comply with the Indian AccountingStandards prescribed under section 133 of the Act.
e. On the basis of the written representations received from the directors as on March31 2018 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312018 from being appointed as a director in terms of Section 164(2) of theAct.
f. 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 B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.
g. 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 financial statements as stated in note 36 to the financial statement;
II. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
III. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
IV. The disclosures in the financial statements regarding holdings as well as dealingsin specified bank notes during the period from November 08 2016 to December 30 2016 havenot been made since they do not pertain to the financial year ended March 312018.
For Singhi& Co.
Firm's Registration No. 302049E
Date: May 30 2018
ANNEXURE - A TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 8 with the heading 'Report on Other Legal and RegulatoryRequirements' section of our report of even date in respect to statutory audit of MSPSTEEL & POWER LIMITED for the year ended March 312018)
We report that:
i. In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. All fixed assets have not been physically verified by the management during the yearbut there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were 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 areheld in the name of the Company as shown in note no. 2 of the financial statements exceptfreehold land gross value of INR 6.51 lakh (Net carrying amount INR. 6.51 lakh) titles forwhich is pending registration.
ii. The inventory has been physically verified by the management during the year. Inour opinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification.
iii. According to the information and explanations given to us :
a. The Company has granted loans to two companies covered in the register maintainedunder section 189 of the Companies Act 2013. In our opinion and according to theinformation and explanations given to us the terms and conditions of the grant of suchloans are not prejudicial to the Company's interest.
b. The loans granted are re-payable on demand. We are informed that the Company has notdemanded repayment of any such loan during the year and thus there has been no defaulton the part of the parties to whom the money has been lent. However the payment ofinterest has not been regular.
iv. In our opinion and according to the information and explanations given to usthe Company has not advanced loans to directors / to a company in which the Director isinterested to which provisions of section 185 of the Companies Act 2013 apply and hencenot commented upon. In our opinion and according to the information and explanations givento us provision of section 186 of the Companies Act 2013 in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the Company.
v. The Company has not accepted any deposits within the meaning of Sections 73 to76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.
vi. We have broadly reviewed the books of accounts maintained by Company in respectof product where pursuant to the rule made by the Central Government of India themaintenance of cost records has been prescribed under section 1 48 (1 ) of the CompaniesAct 2013 and are of the opinion that prima facie the prescribed records have beenmaintained. We have not however made a detailed examination of the records with a viewto determine whether they are accurate or complete.
vii. According to the information and explanations given to us and on the basis ofour examination of the records of the Company:
a.The Company is regular in depositing undisputed statutory dues includingProvident fund Employee's state insurance Income tax Sales tax Service tax Duty ofCustoms Duty of Excise Value added tax cess Goods and Service tax and Other materialstatutory dues with the appropriate authorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident fund Employees' state insurance Income tax Sales taxService tax Duty of customs Duty of excise Value added tax Goods and Service taxcess and Other material statutory dues were in arrears as at March 31 2018 for a periodof more than six months from the date they became payable except as below:
|Nature of Statute ||Nature of Dues ||Amount (Rs. In lacs) ||Period to which the amount relates |
|Income Tax Act 1961 ||Income Tax ||19.02 ||2002-03 2005-06 2006-07 2008-09 and 2009-10 |
b. According to the information and explanation given to us the dues of Sales taxService tax Income tax Value added tax and duty of excise and cess which have not beendeposited on account of any dispute and the forum where the dispute is pending as at March312018 are as under :-
|Nature of Statute ||Nature of Dues ||Amount (Rs. In lacs) ||Period to which the amount relates ||Forum where the Dispute is Pending |
|Central Excise Act 1944 ||Excise Duty ||1119.57 ||2006-07 to 2015-16. ||Chief Commissioner- Raipur |
| ||Excise Duty ||23.12 ||2009-10 ||Additional Deputy Commissioner -Bilaspur |
|The Finance Act 1994 ||Service Tax ||182.62 ||2014-15 ||ITAT |
|Income ||Income Tax ||383.78 ||2004-05 200708 2010-11 2011-12 ||Assessing Officer (rectification) |
|1961 ||Income Tax ||295.29 ||2010-11201314 2014-15 ||Commissioner of Income Tax (Appeals) |
| ||Central Sales Tax ||29.18 ||2009-10 ||CESTAT New Delhi |
|Central Sales Tax ||Central Sales Tax ||92.01 ||2010-13 ||Additional Commissioner of Sales tax |
viii. The Company has defaulted in repayment of dues to Banks during the FinancialYear 2017-18. However the Joint lenders' forum (JLF) of the Company adopted the schemefor restructuring of loan as approved by the Overseeing Committee (OC) of Reserve Bank ofIndia on October 24 2017 with reference date as July 31 2017. (Refer Note 45 of theFinancial Statements.)
ix. In our opinion and according to the information and explanations given by themanagement the Company has utilized the monies raised by way of term loans for thepurposes for which they were raised. Based on the information and explanations given bythe management the Company has not raised any money by way of initial public offerfurther public offer and debt instruments.
x. Based upon the audit procedures performed for the purpose of reporting the trueand fair view of the financial statements and according to the information andexplanations given by the management we report that no material fraud by the Company orno material fraud on the Company by the officers and employees of the Company has beennoticed or reported during the year.
xi. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to usthe Company is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.
xiii. 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 suchtransactions have been disclosed in the financial statements as required by the applicableIndian accounting standards.
xiv. According to the information and explanations given by the management theCompany has complied with provisions of section 42 of the Companies Act 2013 in respectof the preferential allotment or private placement of shares during the year.
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 non-cashtransactions with directors or persons connected with him. Accordingly paragraph 3(xv) ofthe Order is not applicable.
xvi. According to the information and explanations given to us the Company is notrequired to be registered under section 45-IA of the Reserve Bank of India Act 1934.
| ||For Singhi & Co. |
| ||Chartered Accountants |
| ||Firm's Registration No. 302049E |
| ||(Shrenik Mehta) |
| ||Partner |
| ||Membership No. 063769 |
|Place: Kolkata || |
|Date: May 30 2018 || |
ANNEXURE - B TO THE INDEPENDENT AUDITOR'S REPORT
The Annexure referred to in paragraph 9(f) under the heading "Report on OtherLegal and Regulatory Requirements" of our Independent Auditors' Report of even datein respect to the internal financial control under clause (i) of sub-section 3 of section143 of the Act of MSP STEEL & POWER LIMITED for the year ended March 312018 wereport that:
1. We have audited the internal financial controls over financial reporting of MSPSTEEL & POWER LIMITED ("the Company") as of March 31 2018 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
2. The Company's management is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued 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.
3. 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 both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
4. Our audit involves performing procedures to obtain audit evidence about theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
5. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING
6. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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
7. Because of the inherent limitations of internal financial controls overfinancial reporting 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 overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
8. In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 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 ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
| ||For Singhi & Co. |
| ||Chartered Accountants |
| ||Firm's Registration No. 302049E |
| ||(Shrenik Mehta) |
| ||Partner |
|Place: Kolkata ||Membership No.063769 |
|Date: May 30 2018 || |