The Members of
PANCHMAHAL STEEL LIMITED
Report on the Audit of the Financial Statements Opinion
We have audited the accompanying financial statements of PANCHMAHAL STEEL LIMITED("the Company") which comprises the Balance Sheet as at 31st March 2021 theStatement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information. (herein after referred to as "the financialstatements").
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 amendedand other accounting principles generally accepted in India of the state of affairs ofthe Company as at 31st March 2021 the profit and total comprehensive income changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the financial statements in accordance with the Standards onAuditing (SAs) specified under section 143(10) of the Companies Act 2013. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Company in accordance with the Code of Ethics issued by the Instituteof Chartered Accountants of India together with the independence requirements that arerelevant to our audit of the financial statements under the provisions of the CompaniesAct 2013 and the Rules there under and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion on the financial 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.
|Sr. No. Key Audit Matter ||How the matter was addressed in our audit: |
|1. Evaluation of uncertain tax positions and litigations ||In assessing the potential exposure of the on-going litigation we have performed the following procedures: |
|The company has on-going legal matters relating to direct tax Indirect tax and other matters which requires significant management judgement to determine the likely outcome. || Obtaining from the management details of all completed / pending tax assessments and other litigations upto 31st March 2021; |
|Refer Note 32 (i)(a) and (b) to the Financial Statements. || Understanding the status of pending tax demands and potential liability for the other pending litigations; |
| || Involved our internal tax teams and discussing with the company's legal advisors to confirm the management's underlying assumptions and judgement for determining the potential liability and provisions and the possible outcome of the litigation. |
Information other than the Financial Statement and Auditor's Report thereon
The Company's Board of Directors is responsible preparation the other information. Theother information comprises the information included in the Management discussion andanalysis board's report including Annexure to Board's Report Corporate Governance andShareholder's information but does not include the financial statements and our auditor'sreport thereon. The Board's Report including Annexure to Board's Report CorporateGovernance and Shareholder's Information are expected to be made available to us after thedate of this auditor's report. Any Material misstatement thereon pertaining to it will bereported thereon.
Our opinion on the financial statements does not cover the other information and wewill not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information identified above and in doing so consider whether the otherinformation is materially inconsistent with the financial statements or our knowledgeobtained in the audit or otherwise appears to be materially misstated. If based on thework we have performed we conclude that there is a material misstatement of this otherinformation; we are required to report that fact. We have nothing to report in thisregard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
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 total comprehensive income changes in equity and cash flows of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India including the Accounting Standards specified under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation 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 financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
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.
Those Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of 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 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 on whetherthe company 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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards; From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
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 Companies Act 2013 we give in the "Annexure A" a statement on the mattersspecified in paragraphs 3 and 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 statement of changes in equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms of Section164(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".
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act; and (h) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us: i. The Company has disclosed the impact of pendinglitigations on its financial position in its financial statements - Refer Note 32 (i) (a)and (b) to the financial statements. ii. The Company did not have any long-term contractsincluding derivatives contracts for which there were any material foreseeable losses; iii.There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company during the year ended 31st March2021. iv. i) The Management has represented that to the best of it's knowledge andbelief no funds have been advanced or loaned or invested (either from borrowed funds orshare premium or any other sources or kind of funds) by the Company to or in any otherperson(s) or entity(ies) including foreign entities ("Intermediaries") withthe understanding whether recorded in writing or otherwise that the Intermediary shallwhether directly or indirectly lend or invest in other persons or entities identified inany manner whatsoever by or on behalf of the company ("Ultimate Beneficiaries")or provide any guarantee security or the like on behalf of the Ultimate Beneficiaries;ii) The Management has represented that to the best of it's knowledge and belief nofunds have been received by the company from any person(s) or entity(ies) includingforeign entities ("Funding Parties") with the understanding whether recordedin writing or otherwise that the Company shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Funding Party ("Ultimate Beneficiaries") or provide any guarantee securityor the like on behalf of the Ultimate Beneficiaries; and iii) Based on such auditprocedures that we have considered reasonable and appropriate in the circumstancesnothing has come to our notice that has caused us to believe that the representationsunder sub-clause (i) and (ii) contain any material mis-statement. v. There is no dividenddeclared or paid during the year by the Company.
| ||For CNK & Associates LLP |
| ||Chartered Accountants |
| ||Firm Registration No. 101961W/W-100036 |
|Place : Vadodara ||(Alok Shah) |
|Date : 31st May 2021 ||Partner |
| ||Membership No. 042005 |
| ||UDIN: 21042005AAAAHI8785 |
Annexure-A to the Independent Auditors' Report
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the financial statements for the year ended 31st March 2021.
On the basis of such checks as considered appropriate and in terms of the informationand explanations given to us we state as under: (i) (a) The Company has maintained properrecords showing full particulars including quantitative details and situation of theproperty plant and equipments; (b) As informed to us the company has a phased programmeof physical verification of its Property plant and equipments so as to cover all assetsonce in three years. In accordance with this programme certain fixed assets were verifiedduring the year and no material discrepancies were noticed on such verification. In ouropinion this periodicity of physical verification is reasonable having regard to the sizeof the company and the nature of its assets; (c) According to the Information andexplanations given to us and on the basis of our examination of the records of theCompany the title deeds of the immovable properties are held in the name of the Company;(ii) (a) As per the information and explanations given to us the inventories held by thecompany have been physically verified by the management. In our opinion having regard tothe nature and location of stocks the frequency of the physical verification isreasonable; (b) In our opinion and according to the information and explanations given tous the Company is maintaining proper records of inventories and the discrepancies noticedon physical verification of the same were not material in relation to the operations ofthe Company and the same have been properly dealt with in the books of accounts; (iii)According to the information and explanations given to us the Company has not granted anyloans secured or unsecured to Companies Firms Limited Liability Partnership or anyother parties covered in the register maintained under section 189 of the Companies Act2013. Hence clause 3(a) 3(b) and 3(c) are not applicable for the year; (iv) In ouropinion and according to the information and explanations given to us provisions ofSections 185 and 186 of the Companies Act 2013 in respect of loans investmentsguarantees and securities have been complied with; (v) In our opinion and as explained tous the Company has complied with the directives issued by the Reserve Bank of India andthe provisions of sections 73 to 76 or any other relevant provisions of the Companies Act2013 and the rules framed there under; (vi) We have broadly reviewed the cost recordsmaintained by the Company as prescribed by the Central Government under sub section (1) ofSection 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed cost records have been made and maintained by the company. We have howevernot made a detailed examination of the cost records with a view to determine whether theyare accurate or complete; (vii) (a) According to the information and explanations given tous and the records examined by us the Company is regular in depositing with appropriateauthorities undisputed statutory dues including provident fund employee's stateinsurance income-tax sales-tax Goods and Service tax (GST) service tax custom dutyexcise-duty value added tax cess and other statutory dues and there are no undisputedstatutory dues outstanding as at 31st March 2021 for a period of more than six monthsfrom the date they became payable; (b) According to the information and explanations givento us and the records examined by us there are no dues of income tax sales tax Goodsand Service tax(GST) wealth-tax service tax duty of customs duty of excise valueadded tax or cess that has not been deposited on account of disputes except the following:
|Name of the Statute ||Nature of dues ||Amount (Rs. in Lakhs) ||Period to which the amount relates ||Forum where dispute is pending |
|Custom Act 1962 ||Custom Duty (including penalty) ||40.74 ||2014 to 2015 ||CESTAT Mumbai |
|Central Excise Act 1944 ||Excise Duty (including penalty) ||1566.63 ||2005 to 2015 ||CESTAT Ahmedabad |
|Income Tax Act 1961 ||Income Tax (including penalty) ||579.10 ||2010 to 2011 ||Commissioner (Appeals) Vadodara |
|Gujarat Value Added ||Value Added Tax ||229.94 ||2010 to 2011 ||GVAT Tribunal |
|Tax 2003 ||(including interest) || || ||Ahmedabad |
Note:- Amounts paid under protest and not charged to profit and loss statement have notbeen included above. [Refer Note no. 32 (i) (a) and (b) of Notes forming part of thefinancial statements]
(viii) Based on our audit procedure and according to the information and explanationgiven by the management we are of the opinion that the company has not defaulted inrepayment of dues to financial institutions or banks Government or dues to debentureholders; (ix) According to the information and explanations given to us no moneys wereraised by way of initial public offer or further public offer (including debt instruments)and no term loans were obtained during the year; (x) During the course of our examinationof the books of account and records of the company carried out in accordance with thegenerally accepted auditing practices in India and according to the information andexplanations given to us we have neither come across any incidence of fraud on or by thecompany noticed or reported during the year nor we have been informed of any such case bythe management; (xi) According to the information and explanation given to us and based onour examination of the records of the company the company has paid / provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with schedule V to the Act; (xii) In our opinion andaccording to the information and explanation given to us the provisions related to NidhiCompany are not applicable; (xiii) According to the information and explanations given tous all the transactions with the related parties are in compliance with section 177 and188 of the Companies Act 2013 where applicable and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards; (xiv) Accordingto the information and explanations given to us the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review; (xv) In our opinion and according to the information andexplanations given to us the Company has not entered into any non-cash transactions withdirectors or persons connected with him and the provisions of section 192 of the CompaniesAct 2013 have been complied with; (xvi) According to the information and explanationgiven to us the company is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.
For CNK & Associates LLP
Chartered Accountants Firm Registration No. 101961W/W-100036
Place : Vadodara (Alok Shah) Date : 31st May 2021 Partner Membership No. 042005 UDIN:21042005AAAAHI8785
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 PANCHMAHALSTEEL LMITED ("the Company") as of 31st March 2021 in conjunction with our auditof 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'). These responsibilitiesinclude the design implementation and maintenance of internal financial controls withreference to financial statements of the company that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information 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 internalfinancial controls with reference to financial statements of the company were establishedand maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the internalfinancial controls with reference to financial statements of the company 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.
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 that in reasonable detail accurately and fairly reflect the transactions anddispositions 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 internal financialcontrols with reference to financial statements of the company and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2021 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 ofChartered Accountants of India.
| ||For CNK & Associates LLP |
| ||Chartered Accountants |
| ||Firm Registration No. 101961W/W-100036 |
|Place : Vadodara ||(Alok Shah) |
|Date : 31st May 2021 ||Partner |
| ||Membership No. 042005 |
| ||UDIN: 21042005AAAAHI8785 |