To the Members of Narayani Steels Limited
Report on the Audit of the Standalone Financial Statements Opinion
We have audited the accompanying standalone Ind AS financial statements of NarayaniSteels Limited ("the Company") which comprise the Balance Sheet as at 31March 2019 the Statement of Profit and Loss (including Other Comprehensive Income)Statement of changes in Equity and Statement of Cash Flows for the year ended and notesto the standalone financial statements including a summary of significant accountingpolicies and other explanatory information. In our opinion and to the best of ourinformation and according to the explanations given to us the aforesaid standalone Ind ASfinancial statements give the information required by the Companies Act 2013 as amended("the Act") in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2019 its profit total comprehensive income thechanges in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the standalone Ind AS financial statementsunder the provisions of the Act and the Rules thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key Audit Matters are those matters that in our professional judgement 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.
|The key audit matter ||How the matter was addressed in our audit |
|1. Related party transactions || |
|The Company has entered into several transactions with related parties during the year 2018-19. We identified related party transactions as a key audit matter because of risks with respect to completeness of disclosures made in the financial statements; non-compliance with statutory regulations governing related party relationships such as the Companies Act 2013 and SEBI Regulations and the judgement involved in assessing whether transactions with related parties are undertaken at arms' length. ||In view of the significance of the matter we applied the following audit procedures in this area among others to obtain sufficient appropriate audit evidence: 1. We carried out an assessment of the key controls to identify and disclose related party relationships and transactions in accordance with the relevant Indian accounting standar d. |
|(Refer Note 35 to the standalone financial statements) ||2. We carried out an assessment of compliance with the listing regulations and the regulations under the Companies Act 2013 including checking of approvals/ scrutiny as specified in Sections 177 and 188 of the Companies Act 2013 with respect to the related party transactions. In cases where the matter was subject to interpretation we exercised judgement to rely on opinions provided by legal practitioners. 3. We considered the adequacy and appropriateness of the disclosures in the financial statements relating to the related party transactions. 4. For transactions with related parties we inspected relevant ledgers and other information that may indicate the existence of related party relationships or transactions. We also tested completeness of related parties with reference to the various registers maintained by the Company statutorily. 5. We have tested on a sample basis Management's assessment of related party transactions for arm's length pricing. |
|2. Expected Credit Loss on Trade ||Our procedures in relation to the Expected Credit |
|Receivables ||Loss on Trade Receivables included: |
|As on 31.03.2019 trade receivables stand at Rs. 21556.00 lakhs after providing Expected Credit Loss amounting to Rs. 81.63 lakhs. Refer Note 3(i) 8 and 36(i) of Standalone Financial Statements. ||1. Testing with regard to trade receivable includes testing controls over billing and collections ageing analysis etc. 2. Test the completeness and accuracy of the data. 3. Critically assessed and tested the significant judgments used by management based on past experience. 4. Analyzing the key terms of contract with customers to ascertain provision required for expected credit loss. |
Information Other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Annual report but does not includethe financial statements and our auditor's report thereon. The information included in theannual report is expected to be made available to us after the date of the auditor'sreport. Our opinion on the Ind AS standalone 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 standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the standalone Ind AS financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated. 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 Standalone Ind AS 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 Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Companies (Indian Accounting Standards) Rules2015 as amended. This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone Ind AS financial statements that give a true and fair view and are freefrom material misstatement whether due to fraud or error. In preparing the standalone IndAS financial statements management is responsible for assessing the Company's ability tocontinue as a going concern disclosing as applicable matters related to going concernand using the going concern basis of accounting unless management either intends toliquidate the Company or to cease operations or has no realistic alternative but to doso. The Board of Directors is also responsible for overseeing the Company's financialreporting process.
Auditor's Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith Standards on Auditing (SAs) will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements. As part of an audit in accordance with SAs we exercise professional judgmentand maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalone 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 control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3) (i) ofthe 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 reasonableness ofaccounting estimates and related disclosures made by management.
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 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 to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone financial statements. We communicate withthose charged with governance regarding among other matters the planned scope and timingof the audit and significant audit findings including any significant deficiencies ininternal control that we identify during our audit. We also provide those charged withgovernance with a statement that we have complied with relevant ethical requirementsregarding independence and to communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence and where applicable relatedsafeguards. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
Report on Other Legal and Regulatory Requirements
1. 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 Act we give in the "Annexure 1" a statement on the matters specifiedin paragraphs 3 and 4 of the Order.
2. 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; (b) In ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books; (c) The Balance Sheet the Statement ofProfit and Loss(including Other Comprehensive Income) Statement of changes in equity andthe Cash Flows dealt 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 theIndian Accounting Standards specified under section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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 with reference to these standalone Ind AS financial statementsand the operating effectiveness of such controls refer to our separate Report in "Annexure2" to this report; (g) In our opinion the managerial remuneration for the yearended March 31 2019 has been paid / provided by the Company to its directors inaccordance with the provisions of section 197 of the Act; (h) With respect to the othermatters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 as amended in our opinion and to the best of ourinformation and according to the explanations given to us: i. The Company has disclosedthe impact of pending litigations on its financial position in its financialstatements Refer Note 32 to the financial statements. ii. The Company did nothave any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses; iii. There were no amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.
For A.C. Bhuteria & Co.
Chartered Accountants Firm Registration No.303105E
CA. Mohit Bhuteria
Membership No. 056832
Place of Signature: Visakhapatnam Dated: The 30th day of May 2019
ANNEXURE- 1 TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 1 of the Report on Other Legal and Regulatory Requirements ofIndependent Auditor's Report of even date to the members of Narayani Steels Limited on thestandalone Ind AS financial statements as of and for the year ended 31 March 2019 i.a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets. b) The Company has a regular programmeof physical verification of its fixed assets by which all fixed assets are verified in aphased manner over a period of three years. In our opinion this periodicity of physicalverification is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme certain fixed assets were physically verified duringthe year. No material discrepancies were observed on such verification. c) In our opinionand 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 propertiesincluded in property plant and equipment are held in the name of the Company.
In respect of immovable properties been taken on lease and disclosed as property plantand equipment in the standalone Ind AS financial statements the lease agreements are inthe name of the Company. ii. In our opinion and according to the information andexplanations given to us the physical verification of inventory has been conducted by themanagement at reasonable intervals and no material discrepancies were noticed. iii. On thebasis of examination of records and according to the information and explanations given tous the Company has during the year not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Act. Accordingly clause iii (a) (b) (c) of theOrder are not applicable to the Company and hence not commented upon. iv. In our opinionand according to the information and explanations given to us the Company has compliedwith the provisions of Sections 185 and 186 of the Act in respect of making investmentsand providing guarantees and securities as applicable. v. The Company has not acceptedany deposits from the public within the meaning of Sections 73 to 76 of the Act and therules framed thereunder and therefore the provisions of the clause 3 (v) of the Order arenot applicable to the Company. vi. We have broadly reviewed the books of accountmaintained by the Company in respect of products where pursuant to the Rules made by theCentral Government of India maintenance of cost records has been prescribed undersub-section (1) of Section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have not however madea detailed examination of the records with a view to determine whether they are accurateor complete. vii. a) The Company has generally been regular in depositing undisputedstatutory dues Provident Fund Employees State Insurance Income Tax Goods and ServiceTax Cess and other material statutory dues applicable to it with the appropriateauthorities.
According to the information and explanations given to us no undisputed amountspayable in respect of Provident Fund Employees State Insurance Income Tax Goods andService Tax
Cess and other material statutory dues were in arrears as at 31st March 2019for a period of more than six months from the date they became payable. b) According tothe information and explanations given to us and the records of the Company examined byus the dues outstanding of income-tax sales-tax service tax duty of custom duty ofexcise value added tax goods and service tax and cess on account of any dispute are asfollows:
|NAME OF STATUTE ||NATURE OF DUES ||AMOUNT (Rs. In lakhs) ||PERIOD TO WHICH THE AMOUNT RELATES ||FORUM WHERE DISPUTE IS PENDING |
|Income Tax Act 1961 ||Income Tax ||6.04 ||F.Y. 2005-06 ||CIT (Appeals)Kolkata |
|Income Tax Act 1961 ||Income Tax ||6.46 ||F.Y. 2009-10 ||ITAT Kolkata |
|Income Tax Act 1961 ||Income Tax ||205.52 ||F.Y. 2011-12 ||CIT (Appeals)Kolkata |
|Income Tax Act 1961 ||Income Tax ||5.97 ||F.Y. 2012-13 ||CIT (Appeals)Kolkata |
|Income Tax Act 1961 ||Income Tax ||14.98 ||F.Y. 2013-14 ||CIT (Appeals)Kolkata |
|Income Tax Act 1961 ||Income Tax ||10.73 ||F.Y. 2015-16 ||CIT (Appeals)Kolkata |
viii. In our opinion and according to the information and explanations given to us thecompany has not defaulted in repayment of loans or borrowings to any financialinstitution banks or government during the year. The Company has no outstandingdebentures. ix. The Company has not raised moneys by way of initial public offer orfurther public offer (including debt instruments) during the year. According to theinformation and explanations given to us the Company has applied the term loan for thepurpose for which they were obtained. x. Based upon the audit procedures performed for thepurpose of reporting the true and fair view of the financial statements and according tothe information and explanations given by the management we report that no fraud by thecompany or on the company by the officers and employees of the Company has been noticed orreported during the year. xi. According to the information and explanations given by themanagement the managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013. xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi Company. Accordingly clause 3(xii) of the Orderis not applicable. xiii. According to the information and explanations given to us and therecords of the Company examined by us all transactions with related parties are incompliance with Section 177 and 188 of the Companies Act 2013 and the details have beendisclosed in the financial statements as required by the applicable accounting standards.
xiv. According to the information and explanations given to us and the records of thecompany examined by us the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year. xv.According to the information and explanations given to us and the records of the companyexamined by us the Company has not entered into non-cash transactions with directors orpersons connected with him. Accordingly clause 3(xv) of the Order is not applicable. xvi.The company is not required to be registered under section 45-IA of Reserve Bank of IndiaAct 1934.
For A. C. Bhuteria & Co.
Chartered Accountants Firm Registration No.303105E
CA. Mohit Bhuteria
Membership No. 056832
Place of Signature: Visakhapatnam Date: The 30th day of May 2019
ANNEXURE- 2 TO THE INDEPENDENT AUDITOR'S 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 NarayaniSteels Limited ("the Company") as of 31st March 2019 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date. In our opinion the Company has in all materialrespects adequate internal financial controls with reference to financial statements andsuch internal financial controls were operating effectively as at 31 March 2019 based onthe internal financial controls with reference to financial statements 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 (the "Guidance Note").
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 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. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error. We believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion on the Company's internal financial controls system over financialreporting.
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.
For A. C. Bhuteria & Co.
Chartered Accountants Firm Registration No.303105E
CA. Mohit Bhuteria
Membership No. 056832
Place of Signature: Visakhapatnam Date: The 30th day of May 2019