The Members of Southern Ispat & Energy Ltd.
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Southern Ispat& Energy Ltd ("the Company") which comprise the Balance Sheet as atMarch 31 2015 and the Statement of Profit and Loss and Cash Flow Statement for the yearthen ended and a summary of significant accounting policies and other explanatoryinformation in which the returns for the year ended on that date audited by the branchauditors of the company s branches at Jabalpur(M.P.) and Mumbai (M.H.) are incorporated.
Managements 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 preparationand presentation of these standalone financial statements that give a true and fair viewof the financial position financial performance and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate 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 statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
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 thereunder. 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 perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on the auditors judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company s preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing anopinion on whether the Company has in place an adequate internal financial controls systemover financial reporting and the operating effectiveness of such controls. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company s Directors as well asevaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the 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 31 March 2015 and its profit and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the following matters in the notes to the financial statements:-
a. Note No.3 to the financial statements which describes regarding certain disclosurerelating to Micro / Small / Medium Enterprises.
b. Note No.4 to the financial statements which describe regarding non provision onLoans & advances which seems to be irrecoverable/ doubtful.
c. Note No.7 to the financial statements which describes regarding confirmations ofdebtors creditors loans & advances Secured Loans subject to reconciliation if any.
d. Note No.10 (b) to the financial statements which describe gratuity calculation isnot as prescribed in AS 15.
e. Note No.16 to the financial statements which describes regarding non provision onInterest on over dues of pending statutory dues.
f. Note No. 17 to the financial statements which describes non compliance and nonfiling of e-forms related to capital increase and share allotment to members
Our opinion is not modified in respect of these matters.
We did not audit the financial statements / information of two branches included in thestandalone financial statements of the company whose financial statements reflect totalassets of Rs 5721.63 Lacs as at 31stMarch 2015 and total revenues of Rs12584.67 lacs for the year ended on that date as considered in the standalone financialstatements. The Financial statements / Information of these branches have been audited bythe branch auditor whose report have been furnished to us and our opinion in so far as itrelates to the amount and disclosure included in respect of these branches is basedsolely on the report of such branch auditors.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor s Report) Order 2015 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure a statement on the matters specified in the paragraph 3and 4 of the Order to the extent applicable.
2. As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books and proper returnsadequate for the purposes of our audit have been received from the branches not visited byus.
(c) The reports on the accounts of the branch offices of the company audited undersection 143(8) of the Act by the branch auditors have been sent to us and have beenproperly dealt with by us in preparing this report.
(d) In our opinion the balance sheet the statement of profit and loss and the cashflow statement dealt with by this Report are in agreement with the books of account andwith the returns received from the branches not visited by us;
(e) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
(f) On the basis of the written representations received from the four directors as on31 March 2015 taken on record by the Board of Directors none of the above directors isdisqualified as on 31 March 2015 from being appointed as a director in terms of Section164 (2) of the Act; Further we are unable to comment on disqualification of remaining twodirectors as at 31 March 2015 from being appointed as a director in terms of Section 164(2) of the Act as board has not received any written representations from them and
(g) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to other matters to be included in theAuditor s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements Refer Note no 2 to the financial statements
(ii) The Company did not have any long-term contracts including derivative contractsincluding derivative contracts for which there were any material foreseeable losses
(iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the company.
ANNEXURE TO THE AUDITORS REPORT
The Annexure referred to in our Independent Auditors Report to the members of theCompany on the financial statements for the year ended 31st March 2015 wereport that :
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The major assets have been physically verified by the management on a sample basisduring the year and in our opinion the frequency of verification is reasonable havingregard to the size of the company and the nature of its assets. As informed to us nomaterial discrepancies noticed on such verification.
ii) a) The inventory has been physically verified by the management during the year andin our opinion the frequency of verification is reasonable.
b) In our Opinion and according to the Information and explanations given to us theprocedure of physical verification of inventories followed by the management is reasonableand adequate in relation to the size of the company and the nature of its business.
c) In our opinion the company has maintained proper records of inventory. Thediscrepancies noticed on verification between physical stocks and book records were notmaterial in relation to the operations of the company and have been properly dealt with inthe books of accounts.
iii) The Company has not granted any loan to company covered in the register maintainedunder section 189 of the Companies Act 2013.
iv) In our opinion and according to the information and explanations given to us thereare adequate internal control procedures commensurate with the size of the company and thenature of its business with regard to the purchase of inventory fixed assets and withregard to the sale of goods & services. Further on the basis of our examination ofthe books and records of the Company carried out in accordance with the generallyaccepted auditing practices in India we have neither come across nor have we beeninformed of any instances of major weakness in the aforesaid internal control procedures.
v) Based on our scrutiny of the company s records and according to the information andexplanation provided by the management in our opinion the Company has not accepted anyloans or deposits which are deposits within the meaning of Rule 2(b) of Companies(Acceptance of Deposit s) Rules2014.
vi) We have broadly reviewed the records maintained by the Company pursuant to therules made by the Central Government for the maintenance of cost records under section148(1) of the Act and we are of the opinion that prima facie the prescribed accounts andrecords have been made and maintained. However we have not made a detailed examination ofthe records.
vii) a) On the basis of our examination of records and according to the information andexplanation given to us the company is regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees state insurance income taxsales tax wealth tax service tax custom duty excise duty vat cess and otherstatutory dues with the appropriate authorities except in certain cases where dues havebeen deposited after due date along with Interest charged thereon and there are noundisputed statutory dues as above which are outstanding as at the last day of thefinancial year concerned for a period of six months from the date they become payableexcept TDS Rs 19.57 Lacs VAT Rs 0.38 Lacs Service tax Rs 32.62 Lacs PF Rs 1.95 LacsESIC Rs 0.50 Lacs MCA Filing Fee Rs 143.20 Lacs.
b) However as per records and according to the information and explanation given to usthe following dues of sales tax wealth tax custom duty excise duty vat have not beendeposited by the company with the concerned authorities on account of dispute :-
|Name of the statute ||Nature of the dues ||Amount (Rs. In Lacs) ||Period to which the amounts relate ||Forum where pending |
|Kerala Commercial Taxes ||Commercial Taxes Value Added Tax ||30.74 ||2005-06 ||Sales Tax Appellate Tribunal Additional Bench Palakkad |
| || ||120.45 ||2006-07 || |
| || ||2.80 ||2006-07 || |
| || ||105.06 ||2007-08 ||Assistant Commissioner (Assessment) Commercial Taxes Palakkad |
c) According to information and explanation provided by the management there was noamount required to be transferred to investor education and protection fund in accordancewith relevant provisions of the Companies Act1956(1of 1956) and rules made there under.
viii) The Company has neither accumulated losses as at the end of the financial yearnor it has any cash loss either during the current financial year or in the immediatelypreceding financial year.
ix) In our opinion and according to the information and explanations given to us theCompany has defaulted in repayment of dues to State Bank of India amounting to Rs.319.57Lacs. Further State Bank of India has assigned Advances to ARCIL under section 5 ofSARFAESI Act Vide Assignation Agreement Dated 26.03.2014 together with all underlyingsecurities rights title and interest in respect thereof.
x) As informed to us by the Management of the Company the company has not given anyguarantee for loans taken by others from banks or financial institutions.
xi) The Company has not obtained any term loans from any banks or FinancialInstitutions.
xii) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India we haveneither come across any instance of fraud on or by the Company noticed and reportedduring the year nor have we been informed of such case by the Management.
| ||For SUNIL JOHRI & ASSOCIATES |
| ||CHARTERED ACCOUNTANTS |
| ||FIRM REG. NO. 005960C |
| ||Sd/- |
| ||SUNIL JOHRI |
|PLACE: RAIPUR (C.G.) ||PARTNER |
|DATED: 30.05.2015 ||MEMBERSHIP NO: 074654 |