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Scan Steels Ltd.

BSE: 511672 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE099G01011
BSE 00:00 | 25 Nov 35.30 1.05
(3.07%)
OPEN

34.20

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35.80

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34.05

NSE 05:30 | 01 Jan Scan Steels Ltd
OPEN 34.20
PREVIOUS CLOSE 34.25
VOLUME 22278
52-Week high 55.00
52-Week low 27.20
P/E 4.74
Mkt Cap.(Rs cr) 185
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 34.20
CLOSE 34.25
VOLUME 22278
52-Week high 55.00
52-Week low 27.20
P/E 4.74
Mkt Cap.(Rs cr) 185
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Scan Steels Ltd. (SCANSTEELS) - Auditors Report

Company auditors report

To the Members of Scan Steels Limited Report on the Financial Statements Opinion

We have audited the financial statements of Scan Steels Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2021 and the Statementof Profit and Loss Statement of Changes in Equity and Statement of Cash Flows for theyear then ended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2021 its Profit changes in equity and its cash flows for the year ended on thatdate.

Basis for Opinion

We conducted our audit in accordance with the Standards 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 theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for 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 financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.

Sl.No. Key audit Matter Auditor's Response
1. Application of Ind AS 115 "Revenue from Contract with Customers") involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognized over a period. Disclosures which involve collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. Principal Audit Procedures
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
Evaluated the design of internal controls relating to implementation of the new revenue accounting standard.
Selected a sample of continuing and new contracts and tested the operating effectiveness of the internal control relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation reperformance and inspection of evidence in respect of operation of these controls.
Tested the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard.
Selected a sample of continuing and new contracts and performed the following procedures:
Read analyzed and identified the distinct performance obligations in these contracts.
Compared these performance obligations with that identified and recorded by the Company.
Considered the terms of the contracts to determine the transaction parties including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
Refer Notes 1.5 and 1.7 to the Financial Statements. Sample in respect of revenue recorded for time and material contracts were tested using a combination of approved time sheets including customer acceptances subsequent invoicing and historical trend of collections and disputes.
In respect of samples relating to fixed price contract progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and budgeting systems. We also tested the access and change to management controls relating to these systems.
Sample of revenues disaggregated by type and service offering was tested with the performance obligations specified in the underlying contracts.
Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings.
We reviewed the collation of information and the logic of the report generated from the budgeting system used to prepare the disclosure relating to the periods over the remaining performance obligations will be satisfied subsequent to the balance sheet date.
The standard is applied retrospectively and the cumulative effect of applying this standard is recognized. The adoption of Ind AS 115 did not have any significant impact for the company.

 

2. Evaluation of uncertain tax positions Principal Audit Procedures
The company has material uncertain tax positions including matters under dispute which involves significant judgement to determing the possible outcome of these disputes. Refer Note 25 to the Financial Statements. Obtained details of completed tax assessments and demands for the year ended March 31 2021 from management. We involved our internal experts to challenge the management's underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2020 to evaluate whether any change was required to management's position on these uncertainties.
3 Contingent Liabilities against litigation and claims We have obtained an understanding of the company's internal instructions and procedures in respect of estimation and disclosure of contingent liabilities and adopted the following audit procedures: Understood and tested the design and operating effectiveness of control established by the management for obtaining all relevant information for pending litigation cases.
Discussed with the management any material developments and latest status of legal matters.
Read various correspondences and related documents pertaining to litigation cases and relevant external legal opinions obtained by the management and performed various substantive procedures on calculation supporting the disclosure of contingent liabilities. Examined management's judgment and assessment those matters that are not disclosed as the probability of material outflow is considered to be remote.
Reviewed the adequacy and completeness of disclosures. Based on the above procedures performed estimation and disclosure of contingent liabilities are considered to be adequate and reasonable.
4. a) Disclosure for COVID 19 We have obtained an understanding of the requirement as per ICAI guideline and SEBI circular dated 20 May2020 relating to COVID -19 and following audit procedure were adopted.
The Company has assessed the potential impact of COVID -19 and no impact is expected on its ability to continue as a goingconcernandmeeting its obligation since the majority of the company's existing arrangement in production and sales is not affected.
b) Modified Audit Procedure because of COVID-19 Discussed with the management to understand the business and assessed if there was any impact on production sales capital projects and inventory management.
Because of extended period of lockdown in the country due to pandemic and consequent travel restrictions audit in the operating locations of the company could not be undertaken. Accordingly the audit procedure required modification to facilitate remote location audit. Assessed the impact on property plant and equipment and effect on on going contracts and arrangement.
Based on the audit procedures involved we found assessment made by the management in relation to impact as reasonable.
To complete the audit from a remote location within a prescribed time schedule a road map was prepared and discussed with the company.
The company provided us access to their accounting system for verification of books of accounts and various documents backed by tele conference video conference email and other communication systems to complete the audit.
We also verified the scanned document produced to us from time to time as audit evidences.
Our observations were addressed through regular video conferences and scanned documents.
We also relied upon and performed audit procedures in accordance with guidance issued by the Institute of Chartered Accountants of India for the audit and accounting procedures under COVID situation.

InformationOtherthantheFinancialStatements 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 ManagementDiscussion and Analysis of Board's Report including Annexures to board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the financial statements and our auditor's report thereon. Our opinion on thefinancial statements does not cover the other information and we do not express any formof assurance conclusion thereon. In connection with our audit of the financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained during the course of our audit or otherwise appears to be materiallymisstated. 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.

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 preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance (changes in equity) and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the accountingStandards specified under section 133 of the Act. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of the assets of the

Company and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate implementation and maintenance of accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statement that give a true and fair view andare free from material misstatement whether due to fraud or error.Inpreparingthefinancialstatementsmanagement is responsible for assessing the Company'sability to continue as a going concern disclosing as applicable matters related togoing concern and using the going concern basis of accounting unless management eitherintends to liquidate the Company or to cease operations or has no realistic alternativebut to do so. Those Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.

Auditor's Responsibilities for the Audit of 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 SA'swill 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.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure-A a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable. As required bySection 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 and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus.

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 financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on 31stMarch 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2021 from being appointed as a director in terms of Section164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".

g) With respect to the other matters to be included in the Auditor's Report inaccordance with 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. TheCompany has disclosed the impact of pending litigations on its financial position in itsfinancial statements – Refer Note 25 to the financial statements; ]

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses. iii. There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company.

For SRB & Associates
Chartered Accountants
F.Regd. No-310009E
Sd/-
15th June 2021 K. P. Swain
Bhubaneswar Partner
UDIN: 21306323AAAADL2138 M. No: 306323

Annexure-A to the Independent Auditors' Report

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

The Annexure referred to in our Independent Auditor's Report to the members of ScanSteels Limited (the Company) on the Ind AS financial statements for the year endedMarch 31 2021 we report that: (i) (a) The Company has maintained proper records showingfull particulars including quantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assetsby which all fixed assets are verified in a phased manner over a period of two years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Pursuant to such program a portion offixed asset has been physically verified by the management during the year and no materialdiscrepancies were noticed on such verification.

(c) The deed of immovable properties are held in the name of the Company in almost allcases excepting for Freehold land of 7.68 Acres situated in Village Raiberna andLaing Sundergarh Odisha which is in the name of M/s. Shristi Ispat Limited the companywhich was merged in to this company during 2005.

Land of 24.820 Acres occupied by the company situated in Village-KudithiniBellary Karnataka on long term lease basis.

Land of 7.95 Acres occupied by the company situated in Village-Raiberna and LaingSundergarh Odisha which is in the name of one of the relative of Key ManagerialPersonnel on long term lease basis.

Land area of Acres 5.000 occupied by thecompanysituatedinVillage-LaingSundergarh Odisha on long term lease basis.

(ii) a.The inventory has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable. b. he discrepancies noticedon the aforesaid verification between the physical stocks and book records were notmaterial.

(iii) According to the information and explanations given to us no loan has beengranted by the Company (secured/ unsecured loans) to companies/ firms/ limited liabilitypartnerships or other parties covered in the register maintained under section 189 of theAct. Accordingly reporting on interest and its repayment are not applicable. (iv) In ouropinion and according to the information and explanations given to us the Company hascomplied with the provisions of section 185 and 186 of the Act in respect of grant ofloans making investments and providing guarantees and securities as applicable. (v) Inour opinion and according to the information and explanations given to us the Company hasnot accepted any deposits from the public and complied in accordance with Chapter-VI(section 73 to 76) of the Act.

(vi) We have reviewed the books of account maintained by the Company pursuant to therules prescribed by the Central Government for maintenance of cost records undersubsection (1) of section 148 of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the records.

(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 employees' stateinsurance income-tax sales tax duty of customs duty of excise goods and services taxcess and other material statutory dues have been generally regularly deposited during theyear by the Company with the appropriate authorities. There were no undisputed statutorydues payable as at March 31 2021 which were outstanding for a period of more than sixmonths from the date they become payable.

(b) Details of disputed dues in respect of income tax or sales tax or duty of customsor value added tax or entry tax and other statutory dues which have not been deposited onaccount of disputes are given as below.

Name of the Statute Nature of Dues Period to which the amount relates Amount (In Rs ‘Lakhs') Forum where dispute is pending
Custom Act 1962 Custom Duty 2012 & 2013 111.58 Customs Excise & Service Tax Appellate Tribunal Bangalore
SEBI Act SEBI 01.04.2014 to 30-09-2015 NIL Securities Appellate Tribunal
01.04.2012 to 31.03.2014 5.38 Commissioner Cuttack Revision
01.04.2014 to 30.09.2015 1.54 DCCT Rourkela
01.04.2016 to 31.03.2017 0.25 DCCT Rourkela
01.08.2008 to 28.02.2011 3.18 Additional CST
CST Northern Zone
Central Sales Tax Act
2005-2006 2.11 High Court of Odisha Cuttack
2006-2007 153.29 High Court of Odisha Cuttack
2007-08 & 2008-09 0.93 Additional CST Northern Zone
01.04.2009 to 31.03.2011 4.55 Additional CST Northern Zone
01.04.2012 to 31.03.2014 18.74 Commissioner Cuttack Revision
01.08.2008 to 28.02.2011 315.77 OST Tribunal Cuttack / Stay Revision Commissioner
2001-2002 0.09 Sales Tax Tribunal Cuttack
Entry Tax Act Entry Tax 2004-2005 3.45 OST Tribunal Cuttack
2005-2006 16.79 High Court of Odisha Cuttack
2006-2007 30.73 High Court of Odisha Cuttack
2007-08 & 2008-09 0.67 Additional CST Northern Zone
2001-2002 0.63 Sales Tax Tribunal Cuttack
Odisha Sales Tax Act OST 2002-2003 11.00 Assistant Commissioner of Commercial Tax RKL
2004-2005 3.66 OST Tribunal Cuttack
2006-2007 14.38 Odisha Sales Tax Tribunal Cuttack
01.04.2009 to 31.03.2011 1.98 Additional CST Northern Zone
OVAT ACT OVT 01.04.2015 to 31.03.2016 2.20 Assistant Commissionaire of Taxes Rourkela
01.04.2016 to31.06.2017 0.95 Assistant Commissionaire of Taxes Rourkela
OVAT ACT OVT 01.08.2008 to 28.02.2011 1499.34 OST Tribunal Cuttack / Stay Revision Commissioner
2007-08 & 2008-09 1.10 Additional CST Northern Zone

(viii) The company has not defaulted in repayment of any loans or borrowings fromfinancial institution bank Government or due to debenture holders.

(ix) In our opinion and according to the information and explanations given to us theterm loans taken by the Company have been applied for the purpose for which they wereraised. The Company has not raised any money by way of initial public offer or furtherpublic offer (including debt instruments) during the year.

(x) According to the information and explanations given to us no fraud by the Companyor on by its officers or employees has been noticed or reported during the course of ouraudit.

(xi) According to the information and explanations given to us managerial remunerationhas 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 and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with section 177 and 188 of the Companies Act 2013 and the details of suchtransactions have been disclosed in the Ind AS financial statements of the Company asrequired by the applicable accounting standards.

(xiv) Based upon audit procedures performed and the information and explanations givenby the management the company has not made any preferential allotment or private placementof shares or fully or partly convertible debentures during the year hence the clause(xiv) of the paragraph 3 of the Order is not applicable.

(xv) The Company has not entered into any non-cash transactions with its directors orpersons connected with them. Accordingly the provisions of clause 3(xv) of the Order arenot applicable to the Company.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly the provisions of clause 3(xvi) of the order are notapplicable to the Company.

For SRB & Associates
Chartered Accountants
F.Regd. No-310009E
Sd/-
K. P. Swain
15th June 2021
Partner
Bhubaneswar
M. No: 306323
UDIN: 21306323AAAADL2138

Annexure -B to the Independent Auditors' Report

(Referred to in paragraph 2 (f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

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 ScanSteels Limited ("the Company") as of March 31 2021 in conjunction with ouraudit of the Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (‘ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation 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 (the‘Standards') 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 aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the Ind-AS financial statements whether due to fraud orerror.

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 Ind AS 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 (i) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (ii) provide reasonableassurance that transactions are recorded as necessary to permit preparation of Ind ASfinancial 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 (iii) 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 Ind ASfinancial 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 over financial reporting and such internal financial controls overfinancial reporting were operating effectively as at March 31 2021 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For SRB & Associates
Chartered Accountants
F.Regd. No-310009E
Sd/-
15th June 2021 K. P. Swain
Bhubaneswar Partner
UDIN: 21306323AAAADL2138 M. No: 306323

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