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Scan Steels Ltd.

BSE: 511672 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE099G01011
BSE 00:00 | 27 Jul 50.30 2.35
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NSE 05:30 | 01 Jan Scan Steels Ltd
OPEN 50.30
PREVIOUS CLOSE 47.95
VOLUME 65552
52-Week high 50.30
52-Week low 14.50
P/E 5.03
Mkt Cap.(Rs cr) 263
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 50.30
CLOSE 47.95
VOLUME 65552
52-Week high 50.30
52-Week low 14.50
P/E 5.03
Mkt Cap.(Rs cr) 263
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 theFinancial Statements Opinion

We have audited the financial statements of Scan Steels Limited ("theCompany") which comprise the Balance Sheet as at 31st March 2019 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 2019 and Profit/Loss (changes in equity)and its cash flows for the year ended onthat date.

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 ofthe Financial 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
Principal Audit Procedures
1. Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contract with Customers"(NewRevenue Accounting Standard). We assessed the Company’s process to identify the impact of adoption of the new revenue accounting standard.
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.
• Read analysised 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.
The application of the new revenue accounting standard 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. Additionally new revenue accounting standard contains 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. Refer Notes 1.5 and 17 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 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.
• Performance 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 which 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 recognised. 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 uncertain tax including matters dispute which significant judgement determing the outcome of these disputes. Obtained details of completed tax assessments and demands for the year ended March 31 2019 from management. We material involved our internal experts to challenge the management’s positions underlying assumptions in estimating the tax provision and under the possible outcome of the disputes. Our internal experts involves also considered legal precedence and other rulings in to evaluating management’s position on these uncertain tax possible positions. Additionally we considered the effect of new information in respect of uncertain tax positions as at April 1 2018 to evaluate whether any change was required to management’s position on these uncertainties.
Refer Note 28 to the Financial Statements.

Information Other than the Financial Statements and Auditor’s Report Thereon TheCompany’s Board of Directors is responsible for the preparation of the otherinformation.

The other information comprises the information included in the Management Discussionand Analysis of Board’s Report including Annexures to board’s Report BusinessResponsibility Report Corporate Governance and Shareholder’s Information but doesnot include the financial statements and our auditor’s report thereon. Our opinion onthe financial statements does not cover the other information and we do not express anyform of assurance conclusion thereon. In connection with our audit of the financialstatements our responsibility is to read the other information and in doing so considerwhether the other information is materially inconsistent with the financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated. If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing 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 andother irregularities; selection and application of appropriate implementation andmaintenance of 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 financialstatement that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

Inpreparingthefinancialstatementsmanagement is responsible for assessing theCompany’s ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. Those Board of Directors are also responsible for overseeing theCompany’s financial 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 ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSA’s 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.

Other Matter

Without qualifying our opinion we draw attention to:

i. Note-40to the financial statements which describes the reclassification of allNon-Performing Assets as standard assets and reversal of interest to the tune waived offby the lenders.

ii. Note-41 to the financial statements which describes on steps taken by thecompany for transition to Ind AS Compliances.

iii. Note-42 to the financial statements which describes the impact of expectedcredit loss on trade receivables.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in the Annexure a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.

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 [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 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 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 A". g) With respect to the other matters tobe included in the Auditor’s Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014 in our opinion and to the best of our information andaccording 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 28 to the financialstatements; [or the Company does not have any pending litigations which would impact itsfinancial position

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 in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

For SRB & Associates
Chartered Accountants
F.Regd. No-310009E
B. Mohanty
30th May 2019 Partner
Bhubaneswar M. No: 056264

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 ofScan Steels Limited (the Company) on the Ind AS financial statements for the year endedMarch 31 2019 we report that:

(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 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 and Laing SundergarhOdisha which is in the name of M/s. Shristi Ispat Limited the company which was merged into this company during 2005.

• Land of 14.88 Acres occupied by the company situated in Village-KudithiniBellary Karnataka.

• Land of 7.95 Acres occupied by the company situated in Village-Raiberna andLaing Sundergarh Odisha which is in the name of Mr. Sawarmal Gadodia.

(ii.) a. The inventory has been physically verified by the management during the year.In our opinion the frequency of such verification is reasonable. b. The discrepanciesnoticed on the aforesaid verification between the physical stocks and book records werenot material.

(iii) Accordingtotheinformationandexplanations given to us no loan has been granted bythe Company (secured/ unsecured loans) to companies/ firms/ limited liability partnershipsor other parties covered in the register maintained under section 189 of the Act.Accordingly reporting on interest and its repayment are not applicable.

(iv.) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.

(v.) In our opinion and according to the information and explanations given to us theCompany has accepted deposits from the public and complied in accordance with Chapter-VI(section 73 to 76) of the Act.

(vi.) We have broadly reviewed the books of account maintained by the Company pursuantto the rules prescribed by the Central Government for maintenance of cost records undersub-section (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 basisof our examination of the records of the Company amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including provident fund employees’state insurance income-tax sales tax service tax duty of customs duty of excisevalue added tax goods and services tax cess and other material statutory dues have beengenerally regularly deposited during the year by the Company with the appropriateauthorities.

(b) Accordingtotheinformationandexplanations given to us the following dues of CustomsDuty Income Tax VAT Goods and Services Tax and Entry Tax have not been deposited by theCompany on account of disputes:

STATEMENT OF DISPUTED DUES

SI No . Name of the Statute Period Nature of Dues Amount (Rs. ‘Lakhs’) Forum where dispute is pending
1 Orissa Sales Tax Act 2001-2002 OST 0.63 Sales Tax Tribunal Cuttack
2 Entry Tax Act 2001-2002 ENTRY TAX 0.09 Sales Tax Tribunal Cuttack
3 Orissa Sales Tax Act 2002-2003 OST 11.00 Assistant Commissioner of Commercial Tax RKL
4 Orissa Sales Tax Act 2004-2005 OST 3.66 OST Tribunal Cuttack
5 Entry Tax Act 2004-2005 ENTRY TAX 3.45 OST Tribunal Cuttack
6 Orissa Sales Tax Act 2005-2006 OST 100.62 High Court of Odisha Cuttack
7 Entry Tax Act 2005-2006 ENTRY TAX 16.79 High Court of Odisha Cuttack
8 Central Sales Tax Act 2005-2006 CST 4.25 High Court of Odisha Cuttack
9 OVAT Act 2006-2007 OVAT 101.28 High Court of Odisha Cuttack
10 Central Sales Tax Act 2006-2007 CST 153.29 High Court of Odisha Cuttack
11 Entry Tax Act 2006-2007 ENTRY TAX 30.73 High Court of Odisha Cuttack
12 OVAT Act 2007-08 & 2008-09 OVAT 1.10 Additional CST Northern Zone
13 Entry Tax Act 2007-08 & 2008-09 ENTRY TAX 0.67 Additional CST Northern Zone
14 Central Sales Tax Act 2007-08 & 2008-09 CST 0.93 Additional CST Northern Zone
15 Central Sales Tax Act 01.08.2008 to 28.02.2011 CST 3.18 Additional CST Northern Zone
16 OVAT Act 01.04.2009 to 31.03.2011 OVAT 1.98 Additional CST Northern Zone
17 Entry Tax Act 01.04.2009 to 31.03.2011 ENTRY TAX 4.55 Additional CST Northern Zone
18 OVAT Act 01.08.2008 to 28.02.2011 OVAT 1499.34 OST Tribunal Cuttack / Stay Revision Commissioner
19 Entry Tax Act 01.08.2008 to 28.02.2011 ENTRY TAX 315.77 OST Tribunal Cuttack / Stay Revision Commissioner
20 OVAT Act 04.04.2012 to 31.03.2014 OVAT 2.71 Commissioner Cuttack Revision
21 Entry Tax Act 01.04.2012 to 31.03.2014 ENTRY TAX 21.05 Commissioner Cuttack Revision
22 Central Sales Tax Act 01.04.2012 to 31.03.2014 CST 5.38 Commissioner Cuttack Revision
23 Central Sales Tax Act 01.04.2014 to 30.09.2015 CST 1.54 DCCT Rourkela
24 Central Sales Tax Act 01.04.2016 to 31.03.2017 CST 1.14 DCCT Rourkela
25 Custom Act 1962 2012 & 2013 Custom Duty 132.04 Customs Excise& Service Tax Appellate
26 Income Tax act 2009-10 & 2011-12 Income Tax 88.94 Tribunal Bangalore The Commissioner of Income Tax(appeals)
27 OVAT Act 01.04.2015 to 31.03.2016 OVAT 2.20 Assistant Commissionaire of Taxes Rourkela
28 OVAT Act 01.04.2016 to 31.06.2017 OVAT 1.03 Assistant Commissionaire of Taxes Rourkela
29 Central Sales Tax Act 01.04.2016 to 31.06.2017 CST 1.22 Assistant Commissionaire of Taxes Rourkela
Total 2510.56

(viii) The company has not defaulted in repayment of any loans or borrowings fromfinancial institution bank Government or due to debenture holders Refer Note-40to the financial statements.

(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 managerialremuneration has been paid or provided in accordance with the requisite approvals mandatedby the provisions of section 197 read with Schedule V to the Companies Act.

(xii.) In our opinion and according to the information and explanations given to usthe Company 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 proceduresperformed and the information and explanations given by the management the company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible 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
B. Mohanty
30th May 2019 Partner
Bhubaneswar M. No: 056264

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 2019 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 safeguardingof its 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 the Companies Act2013 to the extent applicable to an audit of internal financial controls both applicableto an audit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects. Our auditinvolves performing procedures to obtain audit evidence about the adequacy of the internalfinancial controls system over financial reporting and their operating effectiveness. Ouraudit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor’s judgment including the assessment of the risks of materialmisstatement of theInd AS 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of Ind AS financial statements for external purposes in accordancewith generally accepted accounting principles. A company’s internal financial controlover financial 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 2019 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
B. Mohanty
30th May 2019 Partner
Bhubaneswar M. No: 056264

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