To The Members of Prakash Steelage Limited
We have audited the accompanying lnd AS financial statements of Prakash SteelageLimited (the Company") which comprise the Balance Sheet as at 31stMarch2020 the Statement of Profit and Loss (including Other Comprehensive Income) the CashFlow Statement and the Statement of Changes in Equity for the year then ended and asummary of 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 possible effects of the matter described in the Basis forQualified Opinion and emphasis of matters section below the aforesaid Ind AS financialstatements give the information required by the Companies Act 2013 ("the Act")in the manner so required and give a true and fair view in conformity with the IndianAccounting Standards prescribed under section 133 of the Act read with the Companies(Indian Accounting Standards) Rules 2015 as amended and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31 March 2020and its loss total comprehensive loss its cash flows and the changes in equity for theyear ended on that date.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibility for the Audit of the Ind AS Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules made there underand we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAl's Code ofEthics. We believe that the audit evidence obtained by us is sufficient and appropriate toprovide a basis for our qualified opinion on the Ind AS financial statements.
Basis for Qualified Opinion
1) The account of the company with its consortium banks has turned Non-Performing Asseton various dates. In view of uncertainty the company has not provided interest includingpenal interest and other dues for the year ended March 312020 on borrowings to theextent the same have remained unpaid. The impact of the same on the loss for year and itsconsequent effect on the Liabilities and Reserve & Surplus is not ascertainable. Thismatter was also qualified in our report on the Ind AS financial statements for the yearended March 312019.
(a) The Company has accumulated losses resulting in erosion of Net Worth and hasincurred net cash losses in the previous Financial Years. These conditions cast seriousdoubt about the company's ability to continue as a going concern. However the Ind ASfinancial Statement of the Company has been prepared on a going concern basis. This matterwas also qualified in our report on the Ind AS financial statements for the year endedMarch 312019.
Material Uncertainty related to Going Concern
We draw attention to Note 34 to the financial statement which indicates that duringthe year ended 31st March 2020 the Company's current liabilities exceeded its currentassets by INR 275.68 Crores. These events or conditions along with other matters as setforth in Note 35 indicate that a material uncertainty exists that may cast significantdoubt on the Company's ability to continue as a going concern. However the Ind ASfinancial statements of the Company have been prepared on a going concern basis for thereasons stated in the said note.
Emphasis of Matter
We draw attention to:
1) Note no. 32 of Ind AS Financial Statement stating that the company has un favourablemarket condition for steel industry which has resulted in pressure on the realization ofreceivable stock and selling prices.
2) Note no. 33 of Ind AS Financial Statement stating that company has submitted itsproposal to the consortium banks towards settlement of its borrowing through One TimeSettlement. This proposal is under active consideration by the consortium banks. Meanwhilethe bankers have taken symbolic possession of the collaterals of the company comprising offactory land factory building office building and plant and machinery located atSilvassa.
3) Note no. 35 of Ind AS Financial Statement stating that some of the balances of TradeReceivables Deposits Loans & Advances Advances received from customers Liabilityfor expenses and Trade Payable are subject to confirmation from the respective parties andconsequential reconciliation/adjustment arising there from if any.
Our Conclusion is not modified in respect of these 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. Inaddition to the matter described in the Basis for Qualified Opinion section emphasis ofmatter and Material Uncertainty Related to Going Concern section of our report we havedetermined the matters described below to be the key audit matters to be communicated inour report.
|Sr. No. Key Audit Matter ||Auditor's Response |
|1 Provision and Writeoff of Trade Receivables: Exceptional item represents provision for doubtful debts of Rs. 31606172 related to discount receivables from few vendors. ||We have involved our internal experts to review the nature of amount recoverable and found that company has initiated legal action to recover the debts before providing long outstanding doubtful debts of INR 31606172. The company foresees remote chances of recovery of the said debts and hence has provided for doubtful debts/written off. |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the Director'sreport and annexure to the same but does not include the standalone financial statementsand our auditor's report thereon. The Director's report and its annexures are expected tobe made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements ourresponsibility is to read the other information "identified above when it becomesavailable" and in doing so consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained during the course ofour audit or otherwise appears to be materially misstated.
When we read the Director's report and its annexures if we conclude that thereis a material misstatement therein we are required to communicate the matter to thosecharged with governance as required under SA 720 'The Auditor's responsibilities Relatingto Other Information''
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding 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 statement that givea 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 Responsibility for the Auditor the 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 skepticism through out the audit. We also:
Identify and assess the risks of materials 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 omission misrepresentations or the override of internationalcontrol.
Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143 (3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany 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 the 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 statement or if such disclosures are inadequate to modify our opinion. Ourconclusions 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 consider quantitative materiality and qualitative factors in
(i) Planning the scope of our audit work and in evaluating the results of our works;and
(ii) To evaluate the effect of any identified misstatements in the financialstatements.
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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by section 143(3) of the Act based on our audit we report that:
a) We have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit.
b) Except for the possible effects of the matters described in the Basis for QualifiedOpinion section 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 the Statement of Profit and Loss including Other ComprehensiveIncome the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of account.
d) Except for the possible effects of the matters described in the Basis for QualifiedOpinion section above in our opinion the aforesaid financial statements comply with theInd AS specified under Section 133 of the Act.
e) The matters described in the Basis for Qualified Opinion section above and Materialuncertainty related to Going Concern section above in our opinion may have an adverseeffect on the functioning of the Company.
f) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act.
g) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion section above.
h) 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 A". Our report expresses unmodified opinion on theoperating effectiveness of the Company's internal financial controls over financialreporting for the reasons stated therein.
i) 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.
j) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143 (11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
| ||FOR PIPARA & CO LLP CHARTERED ACCOUNTANTS (FRN No. 107929W/W100219) |
|Date : 30th June 2020 |
Place : Mumbai
|Bhawik Madrecha PARTNER M.No.163412 UDIN : 20163412AAAACQ7879 |
Annexure A to the Independent Auditors' Report
Referred to in paragraph 1(h) under the heading 'Report on other Legal and RegulatoryRequirements' of the Independent Auditors' Report of even date to the members of PrakashSteelage Limited on the financial statements for the year ended 31st March2020:
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of PrakashSteelage Limited ("the Company") as of 31st March 2020 inconjunction with our audit of the Ind AS financial statements of the Company for the yearended 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to respective company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit.
We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the" Guidance Note") issued by theInstitute of Chartered Accountants of India and the Standards on Auditing prescribed underSection 143(10) of the Companies Act 2013 to the extent applicable to an audit ofinternal financial controls. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial 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 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
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 to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2020 based on thecriteria for internal financial control over financial reporting established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India".
| ||FOR PIPARA & CO LLP |
| ||CHARTERED ACCOUNTANTS |
| ||(FRN No. 107929W/W100219) |
| ||Bhawik Madrecha |
|Date : 30th June 2020 ||PARTNER |
|Place : Mumbai ||M.No.163412 |
Annexure B to the Independent Auditors' Report
Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements' ofthe
Independent Auditors' Report of even date to the members of Prakash Steelage Limited onthe financial statements for the year ended 31st March 2020
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) According to the information and the explanation given to us the fixed assets ofthe Company have been physically verified by the Management during the year and nomaterial discrepancies have been noticed on such verification. In our opinion thefrequency of verification is reasonable.
(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed/transfer deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the company as at the balance sheetdate.
ii. According to the information and explanations given to us and the records examinedby us the inventories were physically verified during the year by the management at theyear end. No material discrepancies have been noticed on such verification.
iii. The company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189 of the Companies Act 2013. Therefore the provision of Clause 3(iii) (iii)(a) (iii)(b) and (iii)(c) of the said Order are not applicable to the Company.
iv. In our opinion and according to the information and explanations given byManagement the company has complied with the provisions of Section 186 of Companies Act2013 in respect of making investments. Further company has not grant any loans andadvances or given any guarantee or provided any security covered under section 185 ofCompanies Act 2013 hence the section 185 is not applicable to the company.
v. The Company has not accepted any deposits during the year and does not have anyunclaimed deposits within the meaning of section 73 to 76 of the Act and Rules framedthere under to extent notified.
vi. We have not been made available cost audit report till the date of signing ofIndependent Auditor's Report for the year ended March 2020 and therefore we are unableto comment that whether the company has maintained the relevant cost records prescribedunder sub-section 1 of Section 148oftheAct.
vii. According to the information and explanations given to us and as shown by ourexamination of the books of accounts:
(a) The Company has generally been regular in depositing undisputed statutory duesincluding provident fund employees' state insurance income-tax good and service taxCess and other material statutory dues applicable to it to the appropriate authorities.According to Information and explanations given to us no undisputed amounts payable inrespect of the above were in arrears as at March 2020 for a period of more than sixmonths from the date on when they become payable.
(b) According to the information and explanations given to us and the records of theCompany examined by us the dues in respect of sales tax income tax duty of customs service tax GST entry tax value added tax central sales tax duty of excise whichhave not been deposited with the appropriate authority on account of any dispute are asunder:
|Sr. No. Name of the Statute ||Nature of the Dues ||Financial Year to which amount pertains ||Amount (Rs.) ||Forum where dispute is pending |
|1 Bombay Sales Tax Act ||Sales Tax ||1994-95 ||79202/- ||Dy. Comm. Sales Tax (Appeal) IV Mumbai |
|2 Bombay Sales Tax Act ||Sales Tax ||1995-96 ||59317/- ||Dy. Comm. Sales Tax (Appeal) IV Mumbai |
|3 Central Sales Tax Act 1958 ||Central Sales Tax ||1995-96 ||285360/- ||Dy. Comm. Sales Tax (Appeal) IV Mumbai |
|4 Central Excise Act 1944 ||Excise Duty Rebate ||2010-11 ||551080/- ||Joint Secretary Ministry of Finance |
|5 Central Excise Act 1944 ||Cenvat Credit & Penalty ||2016-17 ||4334902/- ||Customs Excise & Service Tax Appellate Tribunal Ahmedabad |
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 borrowing tovarious banks during the previous years. The impact of the same on the loss for thecurrent year and its consequent effect on the Liabilities and Reserve & surplus is notascertainable. The period and amount of defaults are as under:
|Sr. No. Name of Lenders ||Amount Outstanind (in INR Lakhs) ||Date of NPA ||Period of default from the date of NPA (Days) |
|1 Bank of Baroda ||3167.70 ||18-12-2016 ||1199 |
|2 Bank of India ||6740.65 ||30-06-2016 ||1370 |
|3 Union Bank of India ||3387.02 ||31-01-2017 ||1155 |
|4 Vijaya Bank ||8489.79 ||29-05-2016 ||1402 |
|Total ||21785.15 || || |
ix. The company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause (ix) ofthe Order is not applicable.
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 explanation given to us we have neither come across anyinstances of material fraud by the company or on the company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by themanagement.
xi. According to the information and explanation given to us and based on ourexamination of the records of the company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsections 197 read with Schedule V to the Act.
xii. The company is not a Nidhi Company and hence reporting under clause (xii)of theorder is not applicable.
xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and Section 188 of the Companies Act 2013where applicable for all the transactions with the related parties and the details of therelated party transactions have been disclosed in the financial statements as required bythe applicable accounting standards.
xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to usduring the year the Company has entered into non-cash transactions with its directors orpersons connected with them.
xvi. The company is not required to be registered under section 45-IAof the ReserveBank of India Act 1939. Accordingly the provisions of Clause 3(xiv) of the Order are notapplicable to the Company.
| ||FOR PIPARA & CO LLP |
| ||CHARTERED ACCOUNTANTS |
| ||(FRN No. 107929W/W100219) |
| ||Bhawik Madrecha |
|Date : 30th June 2020 ||PARTNER |
|Place : Mumbai ||M.No.163412 |