Rathi Steel & Power Ltd.
|BSE: 504903||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE336C01016|
|BSE 00:00 | 03 Dec||Rathi Steel & Power Ltd|
|NSE 05:30 | 01 Jan||Rathi Steel & Power Ltd|
|BSE: 504903||Sector: Metals & Mining|
|NSE: N.A.||ISIN Code: INE336C01016|
|BSE 00:00 | 03 Dec||Rathi Steel & Power Ltd|
|NSE 05:30 | 01 Jan||Rathi Steel & Power Ltd|
To the Members of M/s. RATHI STEEL AND POWER LIMITED Opinion
We have audited the accompanying standalone financial statements of M/s. RATHI STEELAND POWER LIMITED (the company') which comprise the balance sheet as at 31 March2021 the statement of profit and loss (including Other Comprehensive Income) and theStatement of Cash Flows for the year then ended and a summary of the significantaccounting policies and other explanatory information (hereinafter referred to as"the Standalone financial statements")
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the 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 and other accounting principles generally accepted in India of the stateof affairs of the Company as at March 31 2021 the Loss and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
Emphasis of Matter
1. We draw attention to note no. 15 to the financial statements regarding thepresentation of the same on-going concern basis. The company has incurred a net loss ofRs. 3573894.00 during the year ended on March 31 2021 and as on that date the company'scurrent liabilities exceed its current assets by Rs. 2132395848.00 and company's networth has been fully eroded. Majority lenders since have assigned Debt to ARCs Companyhas approached the ARCs for restructuring of debt for long term revival of the Company inthe interest of all its stakeholders and efforts are made as well as to maximize theoperating levels / minimize the costs.
Considering the above measures these financial statements have been prepared on a goingconcern basis on the strength of continued support of the promoters bankers / ARCs /other lenders and signs of recovery in general economic scenario. Our opinion is notqualified in respect of this matter.
2. Lenders to the Company have since exited the approved CDR scheme in view of defaultsmade by the Company in meeting its debt obligations as per restructuring scheme approvedby CDR EG hence not considered any obligation as current liability. Interests on securedloans have been provided in the books of accounts to the extent provided by the lenders.
Management's Responsibility for the 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 preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding 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 standalone financial statements Management of Company is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Management of Company either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so. The Board of Directors areresponsible for overseeing the Company's financial reporting process.
Auditor's Responsibility for the Audit of the Standalone 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 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 these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
1. Identifies and assesses the risks of material misstatement of the entity's financialstatements whether due to fraud or error designs and performs audit proceduresresponsive to those risks and obtains audit evidence that is sufficient and appropriateto provide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
2. Obtains 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.
3. Evaluates the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by the management.
4. Concludes on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the entity'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 the auditor'sreport. However future events or conditions may cause the company to cease to continue asa going concern.
5. Evaluates 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
6. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that the auditor identifies during the audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicates with themall relationships and other matters that may reasonably be thought to bear on theauditor's independence 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 theauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances the auditor determines that a matter should not becommunicated in the auditor's report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure A' statement on the matters specified in theparagraph 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 and the cash flow statementdealt with by this Report are in agreement with the books of account;
d. In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
e. The matters mentioned in Emphasis of Matter above in our opinion may have anadverse effect on the functioning of the Company.
f. On the basis of the written representations received from directors as on 31st March2020 taken on record by the Board of Directors none of the directors is disqualified ason 31st March 2020 from being appointed as a director in terms of Section 164 (2) of theAct;
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" and
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 financial Statements - Refer Note 2 to the Notes to Accounts attached tofinancial statements;
j. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any; and
k. There was no amount required to be transferred to the Investor Education andProtection Fund in accordance with the relevant provisions of the Act and rules made thereunder.
Annexure -A to the Independent Auditors' Report the Annexure referred to in ourIndependent Auditors' Report to the members of the Company on the standalone financialstatements for the year ended 31st March 2021 we report that: -
1. In respect of fixed assets:
a. The company has been maintaining details showing full particulars includingquantitative details of fixed assets.
b. We have been informed that physical verification of fixed assets has been conductedby the management at reasonable intervals and no material discrepancies were noticed bythem.
c. According to the information and explanations given to us the title deeds ofimmovable properties as disclosed in the Financial statements are held in the name ofthe company
2. In respect of inventories:
According to the information and explanations given to us the physical verification ofinventory (excluding stocks lying with third parties) has been conducted by the managementat reasonable intervals. The physical verification of finished goods and raw material hasbeen done on estimation basis from time to time due to the nature of the business andthe cost involved and discrepancies if any were properly dealt with in the accounts. Inrespect of goods inventory lying with third parties these have substantially beenconfirmed by them.
3. The Company has not granted any loans secured or unsecured to companies firmslimited liability partnership or other parties covered in the register maintained undersection 189 of the Companies Act 2013 (the Act'). Accordingly paragraph 3 (iii)(a) (b) and (c) of the order is not applicable to the Company.
4. In our opinion and according to the information and explanations given to us theCompany has not granted any loans made any investment given any guarantee or securitysecured or unsecured to any companies firms or other parties except surety with SalesTax department for other Companies as covered under section 185 and 186 of the Act overand above the limits prescribed under these sections.
5. The Company has not accepted any deposits from the public and therefore thedirectives issued by Reserve Bank of India and provisions of Section 73 to 76 or any otherrelevant provisions of the Companies Act 2013 and rules framed there under do not applyto the Company.
6. As informed to us the Central Government has prescribed maintenance of cost recordsunder section 148(1) of the Companies Act 2013 in respect of manufacturing activities ofthe Company. We have broadly reviewed accounts and records of the Company in thisconnection and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have not however made a detailed examination of thesame.
7. (a) The Company has not been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State
Insurance Income Tax Goods and Service Tax Custom Duty Cess and other materialstatutory dues with the appropriate authorities to the extent applicable and undisputedamounts of approx. Rs. 13.01 Crores is payable in respect of provident fund income taxsales tax GST service tax Excise Duty Entry Tax value added tax cess and othermaterial statutory dues as at 31 March 2021 for a period of more than six months from thedate they became payable.
(b) According to the information and explanations given to us the particulars of duesof income tax excise duty service tax value added tax which have not been deposited onaccount of any dispute are as follows:
8. The Company had been defaulting in repayment of dues to banks since 2014-15. Theentire outstanding balance has been called by the banks. However majority lenders i.e.Bank of Baroda State Bank of India and Dena Bank have assigned debts to ARCs M/s AssetCare and Reconstruction Enterprise Ltd and KVB to JM Financial Asset ReconstructionCompany Ltd.
9. According to the information and explanations given to us during the year theCompany has not raised any fresh share capital and term loans and hence clause 3(ix) isnot applicable.
10. According to the information and explanations given to us no fraud on or by theCompany has been noticed or reported during the course of our audit.
11. According to the information and explanations given to us and based on ourexamination of the records the Company has paid / provided for managerial remuneration inaccordance with the requisite approvals mandated by the provisions of section 197 readwith schedule V to the Act.
12. In our opinion and according to the information and explanation given to us theCompany is not a Nidhi company.
13. According to the information and explanations given to us and based on ourexaminations of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Act where applicable and the details have beendisclosed in the financial statements as required under applicable Accounting Standard.
14. According to the information and explanations given to us and based on ourexaminations of the records the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder report.
15. According to the information and explanations given to us and based on ourexaminations of the records the Company has not entered into non-cash transaction withdirectors or person connected with them.
16. The Company is not required to be registered under Section 45 IA of the ReserveBank of India Act 1934. Accordingly the provision of the Clause 3 (xvi) of the order isnot applicable to the Company.
Annexure-B to the Independent Auditors' Report the Annexure referred to in ourIndependent Auditors' Report to the members of the Company on the standalone financialstatements for the year ended 31 March 2021 we report that: -
Report on the Internal Financial Controls under Clause (i) of Sub-Section 3 of Section143 of the Companies Act 2013.
We have audited the internal financial controls over financial reporting of Rathi Steeland Power Limited ("the Company") as of 31 March 2021 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal controls over financial reporting criteriaestablished by the Company considering the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India ("ICAI").These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and timely preparation of reliablefinancial information as required under the Companies Act 2013 ("the Act")
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 Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standard on Auditing issued by ICAI and deemed to beprescribed under section 143 (10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ACAI. 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 controls 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 control systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial controls over financial reporting is a process designedto provided 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 controls 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 authorization of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could havematerial effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitation 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 controlsover financial reporting may become inadequate because of the changes in the conditionsor that the degree of compliance with the policies if procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2021 based on theinternal controls over financial reporting criteria established by the Company consideringthe essential components of internal controls stated in the Guidance Note on audit ofInternal Financial Controls Over Financial Reporting issued by ICAI.