Sunflag Iron and Steel Company Limited
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Sunflag Iron &Steel Company Limited (the Company") which comprise the balance sheet asat 31st March 2019 the statement of profit and loss (including other comprehensiveincome) the statement of changes in equity and the statement of cash flows for the yearended on that date and notes to the standalone financial statements including a summaryof the significant accounting policies and other explanatory information (hereinafterreferred to as "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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2019 its profit changes inequityand its cash flows for the year ended on that date.
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Act. Ourresponsibilities 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 (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAIs Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
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 a separateopinion on these matters. We have determined the matters described below to the key auditmatters to be communicated in our report.
Information Other than the Standalone Financial Statements 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 Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's information but does notinclude the standalone financial statements and ourauditor'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.
Management's Responsibility forthe Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe IndAS and other accounting principles generally accepted in India.
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.
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.
The Board of Directors are responsible for overseeing the Company' financial reportingprocess.
Auditor's Responsibility forthe Audit of the Standalone 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 standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements 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 orthe 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)(l) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by 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 standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
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 mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("the Order)issued by the Central Government of India in terms of Section 143(11) of the Act we givein the Annexure A a statement on the matters specified in the paragraph 3 and4 of the Order.
2. As required by Section 143(3) of the Act based on our audit 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 of the aforesaidstandalone financial statements.
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) The balance sheet the statement of profit and loss including other comprehensiveincome the statement of cash flows and statement of changes in equity dealt with by thisReport are in agreement with the books of account;
d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act.
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 B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controlsoverfinancial reporting;
g) With respect to the other matters to be included in the Auditors 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; and
h) 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 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations as at 31st March 2019on its financial position in its standalone financial statement - Refer Note 33 to thestandalone financial statements;
ii. 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; and
iii. There has been no delay in transferring amounts required to be transferred tothe investor Education and Protection Fund by the Company.
| ||For S.S. Kothari Mehta & Company |
| ||Chartered Accountants |
| ||Firm Regn. No. 000756N |
| ||C A Sunil Wahal |
|Nagpur ||Partner |
|21st May 2019 ||Membership Number-087294 |
"Annexure - A" to the Independent Auditors Report to the Members ofSunflag Iron & Steel Company Limited on its standalone financial statements dated 21s1May 2019.
Report on the matters specified in paragraph 3 of the Companies (Auditors Report)Order 2016 (the Order") issued by the Central Government of India interms of section 143(11) of the Companies Act 2013 (the Act") asreferred to in paragraph 1 ofReport on Other Legal and Regulatory Requirementssection.
i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) The fixed assets have been physically verified by the management during the yearthe frequency of which in our opinion is reasonable having regard to the size of thecompany and the nature of its assets. No discrepancies were noticed on such verification.
c) In our opinion and according to the information and explanations given to us thetitle deeds of immovable properties are held in the name of the Company.
ii) The Management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.
iii) a) The Company has granted unsecured loans to its subsidiaries Sunflag PowerLimited and Khappa Coal Company Private Ltd. covered in the register maintained underSection 189 of the Act;
b) The above loan is re-payable on demand as agreed. In respect of this loan we areinformed that the company has not demanded repayment of such loan thus there is nodefault on repayment of such loan. In respect of interest on such loan from Khapa CoalCompany Private Limited and Sunflag Power Limited the company has charged interest forthe period 1st April 2018 to 31st March 2019 and waived off as approved in its BoardMeeting.
c) Since there is no overdue amount as on the date the relevant reporting is notapplicable to the company.
iv) In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Act in respect of loans to directors includingentities in which they are interested and in respect of loans and advances giveninvestments made and guarantees and securities given have been complied with by theCompany.
v) In our opinion and according to the information and explanations given to us theCompany has not accepted deposits from the public within the directives issued by theReserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Companies Act and the rules framed there under.
vi) We have broadly reviewed the Cost Accounting records maintained by the Companypursuant to the rules prescribed by the Central Government for the maintenance of costrecords under subsection (1) of section 148 of the Act and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We are howevernot required to make a detailed examination of such books and records.
vii. a) According to the records of the Company examined by us and the information andexplanations given to us the Company is generally regular in depositing its undisputedstatutory dues including Provident Fund Employees State Insurance Income TaxSales-tax Service Tax goods and service tax duty of customs duty of excise valueadded tax cess and any other statutory dues as applicable with the appropriateauthorities during the year and there are no such undisputed amounts payable which haveremained outstanding as at 31st March 2019 for a period of more than six months from thedate they became payable.
b) According to the information and explanations given to us and the records of theCompany examined by us the details of dues of Income Tax Sales Tax duty of customsexcise duty goods and service tax & value added tax which have not been deposited onaccount of any dispute along with the forum where the dispute is pending are as follows: ^jn Lakh)
|Name of Statute ||Nature of dues ||Forum where the dispute is pending ||Period to which the amount relates ||Amount of Dispute ||Amount Deposited |
|Central Excise Act 1944 ||Excise duty ||CESTAT Mumbai ||2013-2014 ||38 ||38 |
|Central Excise Act 1944 ||Excise duty ||CESTAT Mumbai ||2012 - 2013 & 2013-2014 ||242 ||242 |
|Income Tax Act1961 ||Income tax ||Commissioner of Income Tax (Appeals) ||Assessment year 2010 -2011 2011-2012 & 2016-2017 ||321 ||321 |
viii) According to the information and explanations given to us and as per the booksand records examined by us the Company has not defaulted in repayment of its dues to afinancial institution banks and Government. The Company does not have any outstandingdebentures.
ix) According to the information and explanations given by the management the Companyhas not raised any monies byway of initial public offer or further public offer during thefinancial year and the term loans raised by the Company have been applied for the purposefor which they are were obtained.
x) During the course of our examination of the books and records of the Company carriedout in accordance with the generally accepted auditing practices in India no fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe year.
xi) In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid / provided in accordance the requisite approvalsmandated by the provisions of section 197 with Schedule V to the Act.
xii) The Company is not a Nidhi Company. Therefore the provisions of clause 3 (xii) ofthe Order are not applicable to the Company.
xiii) In our opinion and according to the information and explanations given to usduring the course of audit transactions with the related parties are in compliance withsection 177 and section 188 of the Act and the details have been disclosed in the notes tothe standalone financial statements as required by the applicable Indian accountingstandards.
xiv) The Company has not made any preferential allotment and private placement ofshares or fully & partly convertible debentures during the year under audit.Accordingly the provisions of clause 3 (xiv) of the Order are not applicable to theCompany.
xv) In our opinion and according to the information and explanations given to us theCompany has not entered into any non-cash transactions with directors or persons connectedwith him as referred to in section 192 of the Act.
xvi) According to the information and explanations given to us the provisions ofsection 45-IAofthe Reserve Bank of India Act 1934 are not applicable to the Company.
| ||For S.S. Kothari Mehta & Company |
| ||Chartered Accountants |
| ||Firm Regn. No. 000756N |
| ||CASunil Wahal |
|Nagpur ||Partner |
|2Y' May 2019 ||Membership Number-087294 |
"Annexure- B" to the Independent Auditors Report to the Members ofSunflag Iron & Steel Company Limited ('the Company') on its standalone financialstatements dated 21st May 2019.
Report on the Internal Financial Controls underClause (I) of Sub-section 3 of Section143 of the Companies Act 2013 (the Act") as referred to in paragraph 1(f) of Report on Other Legal and Regulatory Requirements section.
We have audited the internal financial controls over financial reporting of SunflagIron & Steel Company Limited (the Company") as of 3T'March 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility forlnternal Financial Controls
The Board of Directors of the Company is responsible for establishing and maintaininginternal financial controls based on "the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued 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 the 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 Act.
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 accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing as specified under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by The Institute of Chartered Accountants ofIndia (ICAI). Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
An 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 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 judgement including the assessment of the risks of materialmisstatement of the Standalone Ind 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 controls systemoverfinancial reporting.
Meaning of Internal Financial Controls over Financial Reporting
ACompany's internal financial control overfinancial reporting is a process designed toprovide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. ACompany's internal financial control overfinancialreporting includes those policies and procedures that:
a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
b) 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
c) 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.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at 31st March 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over financial Reporting issued by The Institute of Chartered Accountants ofIndia (ICAI).
| ||For S.S. Kothari Mehta & Company |
| ||Chartered Accountants |
| ||Firm Regn. No. 000756N |
| ||CA Sunil Wahal |
|Nagpur ||Partner |
|21st May 2019 ||Membership Number - 087294 |