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Sagardeep Alloys Ltd.

BSE: 510200 Sector: Metals & Mining
NSE: SAGARDEEP ISIN Code: INE976T01013
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Sagardeep Alloys Ltd. (SAGARDEEP) - Auditors Report

Company auditors report

TO

THE MEMBERS OF

SAGARDEEP ALLOYS LIMITED

Opinion

We have audited the accompanying standalone financial statements of SAGARDEEP ALLOYSLIMITED ("the Company") which comprise the Balance Sheet as at 31stMarch 2019 the Profit and Loss Statement the Cash Flow Statement for the Periodended and a summary 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 the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31st March 2019 and its profit and its cash flows for theyear/period ended on that date.

Basis of Our Opinion

We conducted our audit in accordance with the standard on auditing (SAs) specifiedunder section 143(10) of the companies act 2013. Our responsibilities under thosestandards are further described in the auditor's responsibilities for the audit of thestandalone financial statements section of our report.

We are independent of the company in accordance with the code ethics issued by theinstitute of chartered accountants of India together with ethical requirements that arerelevant to our audit of standalone financial statement under the provisions of thecompanies act 2013 and rules there under and we have fulfilled our 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.

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 standalone financial statements as awhole and in forming our opinion thereon and we do not provide separate opinion on thesematters.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE 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 preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting 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 records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

AUDITORS' RESPONSIBILITY

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made there under. We conducted our audit inaccordance with the Standards on Auditing specified under Section 143(10) of the Act.

Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the standalone financial statementsare free from material misstatements. An audit involves performing procedures to obtainaudit evidence about the amounts and disclosures in the standalone financial statements.

The procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud or error. In making those risk assessments the auditor considers internal financialcontrol relevant to the Company's preparation of the standalone financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances but not for the purpose of expressing an opinion on whether the Company hasin place an adequate internal financial controls system over financial reporting and theoperating effectiveness of such controls.

An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of the accounting estimates made by the Company's directors as well asevaluating the overall presentation of the standalone financial statements. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

As required by Section 143(3) of the Act we report that: a) We have sought andobtained all the information and explanations which to the best of our knowledge andbelief 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) Not Applicable

d) the balance sheet the statement of profit and loss dealt with by this Report are inagreement with the books of account;

e) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014;

f) Not Applicable

g) On the basis of the written representations received from the directors as on 31stMarch2019 taken on record by the Board of Directors none of the directors is disqualified ason 31stMarch 2019 from being appointed as a director in terms of Section 164(2) of the Act.

h) Not Applicable

i) In our opinion the company has adequate internal financial control system in placeand operating effectively.

j) With respect to the other matters included in the auditor's report and to best ofour information and according to the explanation given to us.

1. The company has disclosed the impact of pending litigation on its financial positionin its financial statement if any.

2. 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.

3. There has been no delay in transferring amounts required to be transferred to theinvestor's education and protection fund by the company if any.

For Piyush J. Shah & Co.

Chartered Accountants

FRN: 121172W

Piyush J. Shah

Partner

M. No: 108670

Place: Ahmedabad

Date: 30th May 2019

Annexure - A to the Auditors' Report

The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the Period 01-04-2018 to 31-03-2019 wereport that:

i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The company has a regular programme of physical verification of its fixed assets bywhich fixed assets are verified in a phased manner over a period of three years. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification. In our opinion this periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets.

(c) The title deeds of immovable properties are held in the name of the company.

ii) The Inventories have been physically verified during the year by the management. Inour opinion and according to the information and explanations given to us the company hasmaintained proper records of inventory. As explained to us there were no materialdiscrepancies noticed on physical verification of inventory as compared to book recordsand the same has been properly dealt with in books of accounts. iii) The Company hadgranted loans to parties covered in the register maintained under section 189 of theCompanies Act 2013 (‘the Act').

(a) Terms and conditions of such loan are not prejudicial to the company

(b) Schedule of repayment of principal and interest are not stipulated but repayment orreceipt are on regular basis

(c) Not Applicable

iv) In our opinion and according to the information and explanations given to us inrespect of loans investments guarantees and security provisions of section 185 and 186of the Companies Act 2013 had been complied with.

v) The company had not accepted any deposits from public therefore the directivesissued by the Reserve Bank of India and the provisions of sections 73 to 76 or any otherrelevant provisions of the Companies Act 2013 and the rules framed there under is notapplicable.

vi) The Central Government has prescribed the maintenance of cost records under section148(1) of the Act for the goods supplied by the Company. In our opinion and according tothe information and explanations given to us the company had maintained proper costrecords.

vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax cess and othermaterial statutory dues have been regularly deposited during the year by the Company withthe appropriate authorities. As explained to us the Company did not have any dues onaccount of employees' state insurance and duty of excise.

According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax wealth tax service tax dutyof customs value added tax cess and other material statutory dues were in arrears as at31st March 2018 for a period of more than six months from the date they becamepayable.

(b) According to the information and explanations given to us there are no materialdues of wealth tax duty of customs and cess which have not been deposited with theappropriate authorities on account of any dispute. However according to the informationand explanations given to us the following dues of sales tax have not been deposited bythe company on account of dispute:

Name of Statue Nature of Dues Amount (In Rs.) Period to which relates Forum where dispute is pending
Gujarat VAT Act Sales Interest Penalty Tax and 2328175/- 2009-10 DCCT-A
Gujarat VAT Act Sales Interest Penalty Tax and 48200824/- Tribunal
Gujarat VAT Act Sales Tax 18385414/- 2010-11 DCCT-A
Interest and
Penalty
Gujarat VAT Act Sales Interest Penalty Tax and 4096251/- 2011-12 DCCT-A
Gujarat VAT Act Sales Interest Penalty Tax and 80758272/- 2013-14 DC-Appeal-1

viii) The company had not defaulted in repayment of loans or borrowing to a financialinstitution bank Government or dues to debenture holders.

ix) According to the information and explanations given to us the company had notraised any money by way of Initial Public Offer or Further Public Offer and term loans.

x) According to the information and explanations given to us no material fraud on orby the Company has been noticed or reported during the course of our audit.

xi) According to the information and explanations given to us managerial remunerationhad been paid or provided in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Companies Act.

xii) In our opinion the company is not Nidhi company. Therefore the provisions asmentioned in the Nidhi Rules 2014 are not applicable to the company.

xiii) In our opinion and according to the information and explanations given to us alltransactions with the related parties are in compliance with sections 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the FinancialStatements etc. as required by the applicable accounting standards. xiv) According to theinformation and explanations given to us the company had not made preferential allotmentof shares during the year/period under review and the requirement of section 42 of theCompanies Act 2013 and other provisions are not applicable.

xv) According to the information and explanations given to us the company had notentered into any non-cash transactions with directors or persons connected with him.

xvi) In our opinion the company is not a Non Banking Finance Company therefore therequirement to register under section 45-IA of the Reserve Bank of India Act 1934 in notapplicable.

For Piyush J. Shah & Co.

Chartered Accountants

FRN: 121172W

Piyush J. Shah

Partner

M. No: 108670

Place: Ahmedabad

Date: 30th May 2019

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 SAGARDEEPALLOYS LIMITED ("the Company") as of 31st March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear 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 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 the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

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 deemed to be 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 procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud or error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over 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 authorizations 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 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.

Opinion

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 31st March 2019based on 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 Piyush J. Shah & Co.

Chartered Accountants

FRN: 121172W

Piyush J. Shah

Partner

M. No: 108670

Place: Ahmedabad

Date: 30th May 2019