To the Members of
M/s. Nova Iron and Steel Ltd.
Report on the Ind AS Financial Statements Qualified Opinion
We have audited the accompanying Ind AS Financial Statements of M/s Nova Iron andSteel Ltd. (the Company) which comprise the Balance Sheet as at 31stMarch 2019 and the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flow for the year then endedand 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 except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid financial statements give the informationrequired by the Companies Act 2013 in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31st 2019 and its profit changes in equity and itscash flows for the year ended on that date.
Basis for Qualified Opinion
(a) The company has not provide for interest expenses amounting to Rs 2282.32 Lakhs(Estimated) for the year ended March 31st 2019 related to short term borrowings of Rs33829.69 Lakhs. The statement of account from the lenders could not available to us tillthe date of signing to confirm the balances and/or interest chargeable thereon. ( Refernote no 47 of Financial Statements)
(b) Non capitalisation by the company of capital expenditure of Rs. 655.99 Lakhs onupgradation of Kiln which was completed before 31stMarch 2019. ( Refer note no 49 ofFinancial Statements)
We further report that the effects of item (a) could not be bifurcated on capital andrevenue account.
Had the observations made by us in paragraph (b) above been considered during the yearended March 31 2019 Capital work in progress would have been Rs. 30885.49 Lakhs (asagainst the reported figure of Rs.31541.48 lakhs) Property pant and equipments for theyear would have been Rs.6762.41 lakhs (as against the reported Figure of Rs. 6106.75Lakhs) Depreciation on property plant and equipments for the year would have been Rs91.13 Lakhs (as against the reported Figure of Rs. 90.80 Lakhs) and Profit after Othercomprehensive income for the year ended 31st March 2019 would have been Rs. 68.93 lakhs(as against the reported Profit after Other comprehensive income of Rs.69.26 lakhs).
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and we have fulfilledour other ethical responsibilities in accordance with these requirements and the ICAI'sCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our qualified opinion.
Emphasis of Matter
Land under Property Plant and Equipment includes land measuring 72.95 acre amounting toRs 194.34 Lakhs bought by the company in the name of third parties. Transfer of the samein the company's name is yet to be initiated (Refer note no 3 of Financial Statements)
Our opinion is not qualified in respect of the aforesaid matters.
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.
We have determined that there are no key audit matters to communicate in our report.
(a) The company has not deposited the ESI for a period January 2019 to March 2019 of Rs4.36 lakhs pF for a period December 2018 to March 2019 of Rs 25.10 lakhs and GST onReverse charge on Lease rent paid on lease hold land for the year ended March 2019 of Rs1.16 lakhs.
Our opinion is not qualified in respect of the aforesaid matters.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sannual report but does not include the financial statements and our auditors' reportthereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon. In connection with our audit of thefinancial statements our responsibility is to read the other information and in doingso consider whether the other information is materially inconsistent with the 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 Ind-AS Financial Statements
The Company's management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these financial statementsthat give a true and fair view of the state of affairs profit / loss (including othercomprehensive income) changes in equity and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (Ind AS) specified under Section 133 of the Act.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so. Board of Directors is alsoresponsible for overseeing the Company's financial reporting process.
Auditor's Responsibilities for the Audit of Ind-AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the statements as awhole are free from material misstatement whether due to fraud or error and to issue anauditor's report that includes our opinion. Reasonable assurance is a high level ofassurance but is not a guarantee that an audit conducted in accordance with SAs willalways detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if individually or in the aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese Ind-AS 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 Ind-AS 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 todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating effectiveness 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 Ind-AS 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 Ind-AS financialstatements including the disclosures and whether the Ind-AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
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.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Ind AS 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 disclosure about the matter or whenin extremely rare circumstances we determine that a matter should not be communicated inour report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
(i) As required by the Companies (Auditors Report) Order 2016 (the Order)issued by the Central Government of India in terms of the section 143(11) of the CompaniesAct 2013 we give in Annexure A a statement on the matters specifiedin the paragraphs 3 and 4 of the said Order to the extent applicable.
(ii) As required by Section 143 (3) of the Act based on our audit we report that:
a. we have sought and obtained except for the possible effect of the matter describedin the Basis for Qualified Opinion above all the information and explanations which tothe best of our knowledge and belief were necessary for the purpose of our audit;
b. Except for the possible effects of the matter described in the Basis for QualifiedOpinion p paragraph above in our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;
c. the Balance Sheet Statement of Profit and Loss Other Comprehensive Income theCash Flow and Statement of Changes in Equity dealt with by this report are in agreementwith the books of account;
d. in our opinion except for the effect of the matters described in the Basis forQualified Opinion paragraph above the aforesaid Ind AS Financial Statement comply withthe Indian Accounting Standards specified under section 133 of the act;
e. The matters described in the Basis for Qualified Opinion paragraph above in ouropinion may have an adverse effect on the financial statement.
f. on the basis of the written representation received from the directors as on 31stMarch 2019taken on record by the Board of Directors none of the directors is disqualifiedas on 31st March 2019 from being appointed as a director in terms of Section 164 (2) ofthe 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 B which expressed qualified opinion and ;
h. with respect to the other matters to be included in Auditor's Report in accordancewith Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinion and to thebest of our information and according to the explanations given to us;
i. The Company has disclosed the impacts of pending litigations on its financialposition in its Ind AS Financial Statements as on 31st March 2019. (Refer to note no 35)
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.
(iii) With respect to the matter to be included in the Auditors' Report under section197(16):
In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the current year is in accordancewith the provisions of Section 197 read with Schedule V of Companies Act 2013. Theremuneration paid to any director is not in excess of the limit laid down under Section197 of the Act. The Ministry of Corporate Affairs has not prescribed other details underSection 197(16) which are required to be commented upon by us.
| ||For Mehra Goel & Co. Chartered Accountants |
| ||FRN: 000517N |
| ||Sanjay Mehra |
|Place: New Delhi ||Partner |
|Date : 28/05/2019 ||M.N.085389 |