Rohit Ferro Tech Ltd.
|BSE: 532731||Sector: Metals & Mining|
|NSE: ROHITFERRO||ISIN Code: INE248H01012|
|BSE 00:00 | 07 Apr||Rohit Ferro Tech Ltd|
|NSE 05:30 | 01 Jan||Rohit Ferro Tech Ltd|
|BSE: 532731||Sector: Metals & Mining|
|NSE: ROHITFERRO||ISIN Code: INE248H01012|
|BSE 00:00 | 07 Apr||Rohit Ferro Tech Ltd|
|NSE 05:30 | 01 Jan||Rohit Ferro Tech Ltd|
The Members of Rohit Ferro - Tech Limited
(A company under Corporate Insolvency Resolution Process vide NCLT Order)
Report on the Audit of Standalone Financial Statements Qualified Opinion
We have audited the accompanying Standalone Financial Statements of ROHIT FERRO - TECHLIMITED ("the Company") which comprise the Balance Sheet as at March 31 2021the Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year ended on that date and asummary of the significant accounting policies and other explanatory information(hereinafter referred to as "the Standalone Financial Statements").
The Hon'ble National Company Law Tribunal ("NCLT") Kolkata Bench admittedthe Corporate Insolvency Resolution Process ("CIRP") application filed by aFinancial Creditor of Rohit Ferro Tech Limited (the Company) and appointed an InterimResolution Professional (RP) in terms of the Insolvency and Bankruptcy Code 2016 (thecode) vide order dated 7th February 2020 and was subsequently confirmed by the Committeeof Creditors (CoC) as the Resolution Professional (RP) in its 1st CoC meeting held on 5thMarch 2020 as approved by virtue of e-voting by the CoC members on 13th March 2020. Inview of pendency of CIRP the management of the affairs of the company and power of theBoard of Directors are now vested with RP. These standalone financial statements have beenprepared by the management of the company and certified by CFO and approved by RP.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effect of the matter described in the basis forqualified opinion section of our report the aforesaid Standalone Financial Statementsgive the information required by the Companies Act 2013 ("the Act") in themanner so required and give a true and fair view in conformity with the Indian AccountingStandards prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended ("Ind AS") and other accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2021 the loss and total comprehensive loss changes in equity and its cash flowsfor the year ended on that date.
Basis for Qualified Opinion
i. We draw your attention to Note No. 39 of the accompanying standalone FinancialStatement regarding non provision of interest expense on the borrowings of the Company forthe period till date of commencement of CIRP i.e. 7th February 2020 amounting to Rs108797.67 lakhs (penal interest and charges thereof remain unascertained) which is not inaccordance with the requirements of Ind AS 23: Borrowing Costs read with Ind AS 109:Financial Instruments.
The above reported interest has been calculated using Simple Interest rate.
ii. As referred in Note No 28 of the Standalone Financial Statements "TradeReceivables" "Trade payables" "Advances from Customer""Advances Recoverable in Cash or Kind" and "Advance to Suppliers and OtherParties" etc includes balances remaining outstanding for a substantial period. Thebalances are subject to confirmation/reconciliation. In the absence of above and othercorroborative evidence we are unable to comment on the extent to which such balances arerecoverable. The reported standalone Financials might have consequential impact whichremains unascertained.
iii. As mentioned in Note No. 37 to the standalone financial statements pursuant tocommencement of CIRP of the Company under Insolvency and Bankruptcy Code 2016 there arevarious claims submitted by the financial creditors operational creditors employees andother creditors to the RP. The overall obligations and liabilities including interest onloans and the principal amount of loans shall be determined during the CIRP. Pending finaloutcome of the CIRP no accounting impact in the books of accounts has been made inrespect of excess short or non-receipts of claims for operational and financialcreditors. Hence consequential impact if any is currently not ascertainable and we areunable to comment on possible financial impacts of the same.
iv. We have been informed by RP that certain information including minutes of CoCmeeting and the outcome of certain procedures carried out as part of CIRP process couldnot be shared with anyone other than Committee of Creditors and NCLT. Accordingly we areunable to comment on the possible impact presentation and disclosures if any onaforesaid information not provided to us.
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities 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 together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Companies Act 2013 and the Rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ourqualified opinion.
Material Uncertainty Relating to Going Concern
As mentioned in Note No. 38 to the standalone financial statements the Company hasbeen referred to National Company Law Tribunal under the Insolvency and Bankruptcy Code2016 and its net worth has been fully eroded as on 31.03.2021. Since Corporate InsolvencyResolution Process (CIRP) is currently in progress as per the Code it is required thatthe Company be managed as going concern during CIRP. By virtue of corporate insolvencyresolution process the Resolution Professional has filed the Resolution Plan (as approvedby the CoC on June 5 2021) with the National Company Law Tribunal Kolkata Bench on June7 2021 for its subsequent approval thereupon. Accordingly the standalone financialstatements are continued to be prepared on going concern basis. However there exists amaterial uncertainty and the same is dependent upon the resolution plan to be approved byNCLT. The appropriateness of the preparation of standalone financial statements on goingconcern basis is critically dependent upon CIRP as specified in the IBC Code.
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
i. We draw your attention to Note 35 to the standalone financial statements whichexplain the uncertainties and the management's assessment of the financial impact due tothe lock-downs and other restrictions and conditions related to the COVID-19 pandemicsituation for which a definitive assessment of the impact in the subsequent period ishighly dependent upon circumstances as they evolve.
ii. Substantial amount of statutory dues amounting to Rs 3716.98 lakhs has becomeoverdue and remain unpaid. Interest penalty if any in respect of the same has remainedunascertained and unaccounted for.
iii. It has been observed that the financial statement of the company for the year2019-20 has not been adopted on its Annual General Meeting (AGM) [adjourned 20th AGM] heldon 13th November 2020 and the same is not yet adopted thereafter till date. The companyhas filed AOC 4 MGT 15 for the Financial Year ended 31.03.2020 in compliance with ROC.The company has intimated to the listing department (NSE / BSE) voting result along withScrutinizer's Report of the adjourned 20th Annual General Meeting (AGM) relating tofinancial year 2019-20 giving reason thereof.
By virtue of first proviso to section 137(1) the financial statements along with thedocuments will be considered provisional till the time the adopted financial statementsare filed with ROC. Hence the financial statement for the year 2019-20 is stillconsidered as provisional.
Our opinion is not modified in respect of this matter.
Information other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for other information. The otherinformation comprises the information included in the Company's Annual Return but does notinclude the Standalone Financial Statements and our Auditor's report thereon.
Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the Standalone Financial Statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.
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.
Responsibility of the Management for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 with respect to the preparation of these Standalonefinancial statements that give a true and fair view of the financial position andfinancial performance and cash flow of the Company in accordance with the accountingprinciples generally accepted in India including the accounting Standards specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate implementation and maintenance of accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process.
As The Corporate Insolvency Resolution Process has been initiated in respect of thecompany under the provision of the Insolvency and Bankruptcy Code 2016 (The Code) by theNational Company Law Tribunal (NCLT) Kolkata Bench vide its order dated 7th February2020 the powers of the Board of Directors stand suspended as per section 17 of the Codeand such power is being exercised by the Resolution Professional appointed by the NCLT bythe said order under the provisions of the Code.
This statement which is the responsibility of the company's management and has beensigned by Chief Financial Officer (CFO) of the company and taken on record by theResolution Professional.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken 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:
Identify and assess the risks of the material misstatement of the standalonefinancial statement whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide 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.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Companies Act 2013 we are also responsible for expressing our opinionon whether 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 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 standalone 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 StandaloneFinancial Statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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 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 financial statementsof the current period and are therefore the
key audit matters. We describe these matters in our auditors' report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.
Report on Other Legal and Regulatory Requirements
I. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government
Of India in terms of sub-section(ll) of Section 143 of the Companies Act 2013 we givein the Annexure A a
Statement on the matters specified in paragraphs 3 and 4 of the Order to the extentapplicable.
II. As required by Section 143(3) of the Act we report that:
a) Except for the possible effect of the matter described in the basis for qualifiedopinion section of our report we have sought and obtained all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof our audit.
b) Except for the possible effect of the matter described in the basis for qualifiedopinion section of our report in our opinion proper books of account as required by lawhave been 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 the statement of changes in equity dealt with by thisReport are in agreement with the books of accounts.
d) Except for the possible effect of the matter described in the basis for qualifiedopinion section of our report in our opinion the aforesaid standalone financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Rule 7 of the Companies (Accounts) Rules 2014.
e) The matter described in the basis for qualified opinion section of our report mayhave adverse effect on the functioning of the company.
f) 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.
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".
h) 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 opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.
i) 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:
a) The Company has disclosed the impact of pending litigations on the financialposition in the Standalone Financial Statements. Refer Note 27 to its standalone financialstatements.
b) The Company did not have any long term contracts including derivative contracts forwhich there were any material foreseeable losses;
c) The company does not have any amount of unpaid dividend required to be transferredto the Investor Education and Protection Fund.
"Annexure A" to Independent Auditors' Report
The Annexure A referred to in paragraph 1 under the heading 'Report on Other Legal& Regulatory Requirements'
of our report of even date to the standalone financial statements of the Company forthe year ended March 31
2021 we report that:
(i) (a) The Company is maintaining proper records showing full particulars includingquantitative details and
situation of property plant and equipment.
(b) The Property plant and equipment of the Company have been physically verified bythe management during the year and no material discrepancies were noticed on suchverification. In our opinion the periodicity of physical verification is reasonablehaving regard to the size of the company and nature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) The inventory has been physically verified by the management during the year atreasonable intervals. In our opinion the frequency of such verification is reasonable. Thediscrepancies noticed on verification between the physical stocks and the book recordswere not material having regard to the size of the operation of the Company and the samehave been properly dealt with in the books of account.
(iii) The company has not granted any loans secured or unsecured to companies firmsor other parties covered in the register maintained under section 189 of the Companies Act2013. Therefore the reporting under Paragraph 3(iii) is not applicable to the company.
(iv) In our opinion and according to the information and explanation given to us theCompany has complied with the provisions of section 185 and 186 of the Companies Act 2013in respect of grant of loans making investments and providing guarantees and securitiesas applicable.
(v) The Company has not accepted any deposits from the public and consequently thedirectives issued by Reserve Bank of India and provisions of Section 73 to Section 76 orany other relevant provisions of the Companies Act 2013 and the Companies (Acceptance ofDeposit) Rules 2015 with regard to the deposits accepted from the public are notapplicable to the company.
(vi) We have broadly reviewed the books of account maintained by the Company in respectof manufacture of Ferro alloys & Minerals and Iron & steel pursuant to the Rulesmade by the Central Government for the maintenance of cost records under Section 148(1) ofthe Companies Act 2013 and we are of the opinion that prima facie the records have beenmaintained. We have however not made a detailed examination of the records with a view todetermining whether they are accurate and complete.
(vii) (a) According to the information and explanation given to us and on the basis ofour examination of
the books of account the Company has generally delayed in depositing undisputedstatutory dues including Provident Fund Income tax sales tax Service Tax Duty ofcustoms value added tax GST cess and other statutory dues during the year withappropriate authorities.
According to the information and explanation given to us no undisputed amounts payablein respect of the above were in arrears as at March 31 2021 for a period of more than sixmonths from the date on when they become payable except the following:
Statutory Liabilities unpaid for a period exceeding six months as on 31.03.2021
(b) According to the information and explanations given to us and records of thecompany examined there were no dues in respect of provident fund employees stateinsurance income taxes sales taxes/ value added taxes service taxes duty of customsexcise duties GST cess etc. which have not been deposited with the appropriateauthorities on account of any dispute except the followings:
Disputed Liabilities remain unpaid as on 31.03.2021
(viii) Based upon the audit procedures performed and according to the records of theCompany examined by us and the information and explanation given to us the Company hasdefaulted in payment of interest and repayment of principal on borrowings to banks asfollows:
WORKING CAPITAL TERM LOAN
FUNDED INTEREST TERM LOAN
(' in lakhs)
WORKING CAPITAL LOAN
The non-provision of interest expenses amounting to Rs 108798 lakhs for the periodtill date of commencement of CIRP i.e. 7th February 2020 amounting to Rs 108797.67 lakhsas referred in Note No. 39 of the Standalone Financial Statements continued to be adefault. The company does not have any loans or borrowings from the government and has notissued any Debentures.
(ix) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not raised moneys by way of initial public issue/follow-on offer (including debt instruments) and term loans.
(x) Based upon the audit procedures performed and the information and explanationsgiven by the management we report that no fraud by the Company or on the company by itsofficers or employees has been noticed or reported during the year.
(xi) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act 2013.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore the reporting under Paragraph 3 (xii) of theOrder is not applicable to the Company.
(xiii) In our opinion and according to the information and explanations given to usall transactions with the related parties are in compliance with Section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the StandaloneFinancial Statements as required by the applicable Accounting Standards.
(xiv) According to the information and explanation given to us and based on ourexamination of the records of the company the company has not made any preferentialallotment or private placement of shares of fully or partly convertible debentures andhence reporting under paragraph 3(xiv) of the Order is not applicable to the Company.
(xv) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with them. Accordingly the reporting under Paragraph 3(xv) of the Order is not applicable to the Company and hence not commented upon.
(xvi) In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934.
"Annexure B" to Independent Auditors' Report
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 M/s. ROHITFERRO-TECH LIMITED ("the Company") as of 31st March 2021 in conjunction withour audit 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 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 adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing issued by ICAI and prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.
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 judgment 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 Standalone financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial 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 adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2021 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.