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National Steel & Agro Industries Ltd.

BSE: 513179 Sector: Metals & Mining
NSE: NATNLSTEEL ISIN Code: INE088B01015
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OPEN 1.73
PREVIOUS CLOSE 1.70
VOLUME 50
52-Week high 6.69
52-Week low 1.61
P/E
Mkt Cap.(Rs cr) 8
Buy Price 1.59
Buy Qty 10.00
Sell Price 1.75
Sell Qty 10.00
OPEN 1.73
CLOSE 1.70
VOLUME 50
52-Week high 6.69
52-Week low 1.61
P/E
Mkt Cap.(Rs cr) 8
Buy Price 1.59
Buy Qty 10.00
Sell Price 1.75
Sell Qty 10.00

National Steel & Agro Industries Ltd. (NATNLSTEEL) - Auditors Report

Company auditors report

TO THE MEMBERS OF NATIONAL STEEL AND AGRO INDUSTRIES LIMITED

REPORT ON THE IND AS FINANCIAL STATEMENTS

OPINION

We have audited the accompanying Ind AS financial statements of National Steel And AgroIndustries Limited (‘the Company') which comprise the balance sheet as at 31stMarch 2019 the statement of profit and loss (including other comprehensive income) thestatement of cash flows and the statement of changes in equity for the year then ended anda summary of the significant accounting policies and other explanatory information (hereinafter referred to as "Ind AS financial statements").

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2019 and its lossincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Emphasis Of Matter

(a) Material Uncertainty regarding Going Concern

We refer to Note 29 of the Ind AS financial statements even if the net-worth of thecompany as on 31st March 2019 has been fully eroded its current liability hasalso been exceeded its current assets and the company has incurred huge losses thefinancial statements are prepared on going concern basis for the reasons mentioned in thesaid note.

Our report is not modified for the above as we are unable to comment on the ultimateoutcome of the above.

(b) As mentioned in Note 30 to the Ind AS financial statements Bank Guarantees (BGs)worth Rs. 6.48 crores have been invoked by the beneficiaries during the year ended 31stMarch 2019. The company is however confident of meeting its liabilities. We are unable tocomment on the said matter.

(c) As mentioned in Note 31 to the Ind AS financial statements the company hasaccumulated secured debts (inclusive of interest & net of payment) amounting to Rs.1166.04 crores which has been classified as Non-Performing Assets (NPA) by the banks as on31st March 2019. Some of the banks – Secured lenders has issued demandnotice under Section 13(2) of the Securitisation and Reconstruction of Financial Assetsand Enforcement of Security Interest Act 2002 ("SARFAESI Act") for recovery oftheir dues on various dates and also some of the Banks have issued notices to the Companyand its Directors classifying them as "Wilful defaulters". The Company hasreplied these notices and contemplating to restructure the loan with the lenders. AlsoBanks have mandated Forensic Audit for the period April' 2015 to December'2018. We areunable to comment on the said matter.

(d) As mentioned in Note 33 to the Ind AS financial statements the GST department hadcarried out a search at Mumbai office and Talojagodown of the Company all the documentsrelevant to the alleged transactions have also been seized by the GST department alsoconsidering the aforesaid allegation Managing Director of the Company had also beenarrested and now released on bail. Therefore in the absence of any update from GSTdepartment we are unable to comment upon the outcome of the same.

(e) As mentioned in Note 34 to the Ind AS financial statements the Company has writtenoff the trade receivable/advances amounting to Rs. 4.56 crores pertaining to old anddoubtful debts. Further the Company has made provisions of Rs. 108.69 crores in respect oftrade receivable /advances.

(f) We draw your attention to Note 35 of the Ind AS financial statements owing to theresignation of Independent Directors; the composition of the Board/sub committees is notin compliance with the provisions of the Companies Act 2013 and SEBI (LODR) Regulations2015 on 31st March 2019. However as on date the composition of the Board/subcommittees is in compliance with the provisions of the Companies Act 2013 and SEBI (LODR)Regulations 2015.

(g) As mentioned in Note 36 to the Ind AS financial statementsThe financial resultsfor the quarter / year ended on 31st March 2018 30th June 2018 and 31st December 2018were submitted after due date as per regulation 33 of SEBI–LODR regulations 2015.

(h) As mentioned in Note 38 (a) to the Ind AS financial statements some of the partieshave filed application/ petition before the NCLT/NCLAT under Insolvency & BankruptcyCode against which the company has adopted legal course. However no case is admitted bythe Bench.

MANAGEMENT'S RESPONSIBILITY FOR THE 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 Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) prescribed underSection 133 of the Act read with relevant rules issued there under.This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the Ind AS financial statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error.

In preparing the Ind AS financial statements management is responsible for assessingthe Company'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 theCompany 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 RESPONSIBILITY

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 withstandards on auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of theseInd AS financial statements.

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 section 143(11) of the Act we givein the " Annexure A" a statement on the matters specified in the paragraph 3and 4 of the order to the extent applicable.

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 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 statement of cash flows and the statement of changes in equity dealt with bythis Report are in agreement with the books of account;

d. In our opinion the aforesaid Ind AS financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

e. On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director interms of Section 164(2) of the Act;

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"; and

g. With respect to the other matters to be included in Auditor's Report in accordancewith the requirements of section 197 (16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

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:

i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements – Refer Note 37 to the Ind AS financialstatements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any foreseeable losses; and

iii. There were no amounts which were required to be transferred to the InvestorsEducation and Protection Fund by the Company.

For Gupta Saharia & Co.
Chartered Accountants
ICAI FRN-103446W
Place : Indore CA Suresh Saharia
Dated : 30th May 2019 (Partner)
Membership No. 040180

ANNEXURE A TO THE AUDITORS' REPORT

(Referred to in paragraph (1) of our report of even date)

(i) (a) As explained to us in respect of fixed assets the Company has maintainedproper records showing full particulars including quantitative details and situation offixed assets.

(b) As explained to us the fixed assets have been physically verified by themanagement in accordance with the program of verification adopted by the Company. In ouropinion the frequency of verification is reasonable having regard to the size of theCompany and the nature of its assets. To the best of our knowledge no materialdiscrepancies have been noticed on such verification.

(c) In respect of immovable property title deeds of all the immovable properties arein the name of the company.

(ii) As explained to us the inventory of the Company has been physically verifiedduring the year by the management. In respect of materials lying with third parties thesehave been confirmed by them. In our opinion the frequency of the verification isreasonable. In our opinion the discrepancies noticed on verification between the physicalstocks and book records were not material having regard to the size of the operations ofthe Company.

(iii) As explained to us the Company has not granted any loans secured or unsecuredto Companies firms Limited Liability Partnerships or other parties covered in theRegister maintained under Section 189 of the Companies Act 2013.

(iv) In our opinionthe Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.

(v) The Company has not accepted any deposits from the public within the meaning ofSection 73 and 76 of the Companies Act 2013 and the rules framed there under to theextent notified.

(vi) On the basis of records produced we are of the opinion that prima facie costrecords and accounts prescribed by the Central Government under sub section (1) of section148 of the Companies Act 2013 in respect of products of the company covered under therules under said section have been made and maintained. However we are neither required tocarry out nor have carried out any detailed examination of such accounts and records.

(vii) (a) According to the records of the Company examined by us and the informationand explanations given to us in our opinion the Company is generally regular indepositing the undisputed statutory dues including provident fund employees' stateinsurance income tax sales tax wealth tax service tax duty of customs duty ofexcise value added tax goods and service tax and other material statutory dues asapplicable with the appropriate authorities.

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of Sales Tax Entry Tax Service TaxCustoms Duty Excise DutyVAT Goods & Service Tax and Cess as at March 31 2019 whichhave not been deposited on account of disputes are as follows:

Statement of Disputed Dues

Name of Statute Nature of Dues Amount Disputed Period Forum where dispute is pending
(र)
Excise Duty 1250482 2013-14 Commissioner (Appeals) Indore.
500000 2014-15 Commissioner (Appeals) Indore.
Penalty 500000 2014-15 Commissioner (Appeals) Indore.
CENVAT Credit 14791017 2014-15 Commissioner (Appeals) Indore
The Central Excise Act Differential Duty 69464130 2014-15 Central Excise and Service Tax Appellate Tribunal New Delhi
Custom Duty 19299130 2015-16 Central Excise and Service Tax Appellate Tribunal Mumbai
Custom Duty 4748458 2012-13 Central Excise and Service Tax Appellate Tribunal Mumbai
Excise Duty 62172263 2015-16 Central Excise and Service Tax Appellate Tribunal New Delhi
Entry Tax 5047197 2004-05 M.P. Commercial Tax Appellate Board Bhopal
Sales Tax A ct State Case 519604 2004-05 M.P. Commercial Tax Appellate Board Bhopal
State Case 1868541 2005-06 M.P. Commercial Tax Appellate Board Bhopal
Entry Tax 549730 2008-09 Commercial Tax Tribunal Ghaziabad
Sales Tax (Commercial Tax) Central Sales Tax 51158 2010-11 Sales Tax (Ghaziabad)
Vat Tax 151500 2014-15 Sales Tax (Ghaziabad)

(viii) According to the records of the Company examined by us and the information andexplanation given to us The company has defaulted in repayment of loans or borrowings asat balance sheet date as follows:

(A) Default in Working Capital Facility

Name of the Bank Period of Default Amount of Default
(र in Crores)
Bank of India Since 02.07.2018 125.08
IDBI Bank Ltd. Since 03.04.2018 217.45
Andhra Bank Since 07.05.2018 222.00
United Bank of India Since 21.05.2018 40.01
Central Bank of India Since 11.06.2018 96.59
Oriental Bank of Commerce Since 25.06.2018 92.34
Punjab National Bank Since 13.07.2018 86.24
State Bank of India Since 27.04.2018 204.61
Bank of Maharashtra Since 10.10.2018 75.72

(B) Default in Working Capital Facility

Name of the Bank Period of Default Amount of Default
(र in Crores)
IDBI Bank Ltd. Since 01.07.2018 6.02

(ix) According to the records of the company examined by us and the information andexplanation given to us the company has not raised money by way of initial public offeror further public offer (including debt instruments) and term loan.

(x) During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the company or any fraud on the company by its officers oremployees noticed or reported during the year.

(xi) According to the records of the company examined by us managerial remunerationhas been paid or provided in accordance with the requisite approvals mandated by theprovisions of section 197 read with schedule V of the Companies Act 2013.

(xii) The Company is not a Nidhi company.

(xiii) According to the records of the company examined by us and the information andexplanation given to us all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in thefinancial statement as required by applicable accounting standards.

(xiv) According to the records of the company examined by us the company has not madeany preferential allotment or private allotment of shares or fully or partly convertiblesdebenture during the year.

(xv) According to the records of the company examined by us and the information andexplanation given to us the company has not entered into any non-cash transactions withdirectors or persons connected with him.

(xvi) According to the records of the company examined by us the company is notrequired to be registered under section 45 IA of the Reserve Bank of India Act.1934.

For Gupta Saharia & Co.
Chartered Accountants
FRN-103446W
Place : Indore CA Suresh Saharia
Dated : 30th May 2019 (Partner)
Membership No. 040180

ANNEXURE B 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 NationalSteel And Agro Industries Limited ("the Company") as of 31st March2019 in conjunction with our audit of the Ind AS financial statements of the Company forthe year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's Board of Diretors 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 the Company's policies the safeguardingof its 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.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting with reference to these Ind AS financial statementsbased on our audit. We conducted our audit in accordance with the Guidance Note on Auditof Internal Financial Controls Over Financial Reporting (the "Guidance Note")and the Standards on Auditing as specified under section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls and both issuedby the Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting with reference to these Ind AS financial statements was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls over financial reporting with reference to these Ind ASfinancial statements and their operating effectiveness. Our audit of internal financialcontrols over financial reporting included obtaining an understanding of internalfinancial controls over financial reporting with reference to these Ind AS financialstatements 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 judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls over financialreporting with reference to these Ind AS financial statements.

Meaning of Internal financial Controls over financial Reporting with reference to theseStandalone IND AS Financial Statements

A Company's internal financial control over financial reporting with reference to theseInd AS financial statements is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A Company's internal financial control over financial reporting with referenceto these standalone Ind AS financial statements includes those policies and proceduresthat;

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect 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 authorisations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting withreference to these IND AS Financial Statements

Because of the inherent limitations of internal financial controls over financialreporting with reference to these Ind AS financial statements including the possibilityof collusion or improper management override of controls material misstatements due toerror or fraud may occur and not be detected. Also projections of any evaluation of theinternal financial controls over financial reporting with reference to these Ind ASfinancial statements to future periods are subject to the risk that the internal financialcontrol over financial reporting with reference to these Ind AS financial statements maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequate internal financialcontrols over financial reporting with reference to these Ind AS financial statements andsuch internal financial controls over financial reporting with reference to these Ind ASfinancial statements were operating effectively as at 31st March 2019 basedon the internal control over financial reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal

Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Gupta Saharia & Co.
Chartered Accountants
FRN-103446W
Place : Indore CA Suresh Saharia
Dated : 30th May 2019 (Partner)
Membership No. 040180