You are here » Home » Companies » Company Overview » Sunflag Iron & Steel Company Ltd

Sunflag Iron & Steel Company Ltd.

BSE: 500404 Sector: Metals & Mining
NSE: SUNFLAG ISIN Code: INE947A01014
BSE 12:07 | 06 May 78.65 1.65
(2.14%)
OPEN

77.90

HIGH

80.80

LOW

77.55

NSE 11:59 | 06 May 78.70 1.60
(2.08%)
OPEN

77.85

HIGH

80.80

LOW

77.25

OPEN 77.90
PREVIOUS CLOSE 77.00
VOLUME 61111
52-Week high 84.50
52-Week low 25.45
P/E 13.51
Mkt Cap.(Rs cr) 1,417
Buy Price 78.55
Buy Qty 247.00
Sell Price 78.65
Sell Qty 20.00
OPEN 77.90
CLOSE 77.00
VOLUME 61111
52-Week high 84.50
52-Week low 25.45
P/E 13.51
Mkt Cap.(Rs cr) 1,417
Buy Price 78.55
Buy Qty 247.00
Sell Price 78.65
Sell Qty 20.00

Sunflag Iron & Steel Company Ltd. (SUNFLAG) - Auditors Report

Company auditors report

To

The Members

Sunflag Iron and Steel Company Limited

Report on the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Sunflag Iron& Steel Company Limited ("the Company") which comprise the balancesheet as at 31 March 2020 the statement of profit and loss (including other comprehensiveincome) cash flow statement and the statement of changes in equity for the year thenended and notes to the standalone financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred 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 (Ind AS') prescribedunder section 133 of the Act and the Rules issued thereunder and other accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2020 and its profit (including other comprehensive income) its cash flows and thechanges in equity for the year ended on that date.

Basis for Opinion

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 together with the ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone financial statements.

Emphasis of Matter

We draw attention to Note No. 48 to the standalone financial statements whichdescribes the uncertainties and the impact of Covid-19 pandemic on the Company'soperations and financial results as assessed by the management. The impact of theseuncertainties on the Company's operations is dependent on future developments Our opinionis not modified in respect of this matter.

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 year.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.

Key Audit Matter Auditor's Response
1. Recognition of revenue measurement presentation and disclosure as per Ind AS-115 "Revenue from Contracts with Customers". (Refer Sub-note No. XVI of Note 2 of Accounting Policy. Our procedures included but were not limited to the following :
l We performed walkthroughs to understand the key processes and identify key controls related Ind AS 115 "Revenue from Contracts with Customers"
l On a sample basis we performed testing to verify physical deliveries of product in the year to ascertain transfer of control.
l We performed revenue cut-off testing by reference to bill dates of sales recorded either side of the financial year end had legally completed; and
l Selected a sample of sales contracts and read analysed and identified the distinct performance obligations in these contracts.
Based on our audit procedures we have concluded that revenue is appropriately recognized and that there was no evidence of management bias.
2. Evaluation of uncertain civil and indirect tax positions and recoverability of amount deposited under protest as recoverable. Obtained details of completed tax assessments of earlier years and demands as on 31 March 2019 from management of the Company. We have done assessment of the managements underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Based on management estimates the liability against these matters are not yet certain hence the same has been shown as contingent liability in the current standalone financial statements.
The Company has material uncertain civil and indirect tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. The eventual outcome of these litigations is uncertain and the positions taken by the management of the Company are based on the application of significant judgement and estimation. The review of these matters requires application and interpretation of tax laws and reference to applicable judicial pronouncements. l Understanding and evaluating process and controls designed and implemented by the management including testing of relevant controls;
Based on management judgement and the advice from legal and indirect tax Consultants and considering the merits of the case the Company has recognized provisions wherever required and for the balance matters where the management expects favourable outcome these litigations have been disclosed as contingent liabilities in the standalone financial statements unless the possibility of out flow of resources is considered to be remote. l Gaining an understanding of the civil and indirect tax related litigations through discussions with the management including the significant developments additions and settlements during the year and subsequent to 31 March 2020;
Given the uncertainty and application of significant judgment in this area in terms of the eventual outcome of litigations we determined this to be a key audit matter. l Verifying demand notices received from various indirect tax authorities and evaluating the Company's written responses to those matters;
l Evaluating the management's assessment on the likely outcome and potential magnitude by involving experts on complex or significant matters as considered necessary; and
l Assessing the adequacy of the Company's disclosures.
We did not identify any significant exceptions to the management's assessment of the ongoing civil and indirect tax litigations as a result of the above procedures.

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 our auditor's report thereon. The annualreport is expected to be made available to us after the date of this Auditors' Report. Ouropinion on the standalone financial statements does not cover the other information and wedo 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 therein we are required to report the matter to those charged withGovernance.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance includingother comprehensive income cash flows and changes in equity of the Company in accordancewith Ind AS and other accounting principles generally accepted in India including theIndian Accounting Standards prescribed under Section 133 of the Act read with relevantRules issued thereunder.

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 for the 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:

l Identify and assess the risks of material misstatement of the standalone financialstatements risk and obtain audit evidence that is sufficient and appropriate to providea basis for over opinion. The risk of not detecting a material mistatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control. lObtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies act 2013 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.

l Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

l Conclude on the appropriateness of management's use of the going concern basis ofaccounting 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.

l Evaluate the overall presentation structure and content of the Standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent 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 (Auditor's 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 and 4 of theOrder.

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.

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 statement of cash flow and statement of changes in equity dealt with by thisReport are in agreement with the books of accounts;

d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with relevant Rulesissued thereunder;

e) On the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2020 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 controls overfinancial reporting;

g) In our opinion and according to the information and explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe 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 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations as at 31 March 2020 onits financial position in its standalone financial statements refer Note 33;

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 amount required to be transferred to theinvestor Education and Protection Fund by the Company.

"Annexure A" to the Independent Auditor's Report to the Members of SunflagIron & Steel Company Limited on its standalone financial statements dated 26 June2020.

Report on the matters specified in paragraph 3 of the Companies (Auditor's Report)Order 2016 ("the Order") issued by the Central Government of India in terms ofsection 143(11) of the Companies Act 2013 ("the Act") as referred to inparagraph 1 of ‘Report on Other Legal and Regulatory Requirements' section.

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.

The inventory has been physically verified by the management during the year. In ouropinion the frequency of verification is reasonable. No material discrepancies werenoticed on such physical verification. Inventories lying with third parties have beenconfirmed by them as at year-end and no material discrepancies were noticed in respect ofsuch confirmations.

The Company has granted unsecured loans to companies covered in the register maintainedunder section 189 of theAct.

a) In our opinion and according to the information and explanations given to us theterms and conditions of the loans are not prejudicial to the interest of the Company.

b) The aforesaid loan is repayable 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 thesesubsidiaries the Company has charged interest for the periodApril 01 2019 to March 312020 and waived off as approved in its board meeting.

c) Since there is no overdue amount of loan granted to Company listed in the registermaintained under Section 189 of the Act hence reporting under this clause is notapplicable to the Company.

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 theAct as applicablein respect of loans to directors including entities in which they are interested and inrespect of loans and advances given investments made and guarantees and securitiesgiven.

v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the meaning of directivesissued by the Reserve Bank of India and provisions of sections 73 to 76 or any otherrelevant provisions of theAct and the Rules framed thereunder.

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 sub-section (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 undisputedstatutory dues including Employees' Provident Fund Employees' State Insurance InvestorEducation and Protection Fund Income Tax Goods & Service Tax Custom Duty Cess andany other material statutory dues as applicable with the appropriate authorities duringthe year and there are no such undisputed amounts payable which have remained outstandingas at March 31 2020 for a period of more than six months from the date they becamepayable.

b) According to the records of the Company there are no dues in respect of Income-taxSales-tax Service-tax Customs Duty Excise Duty and Value added tax which have not beendeposited with the appropriate authorities on account of dispute and the forum where thedispute is pending are given below:

(Rs.in 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 Act1944 Excise duty CESTAT Mumbai 2012 - 2013 & 2013 - 2014 242 242
Income Tax Act1961 Income tax Deputy Commissioner of Income Tax (CPC) Assessment year 2016 - 2017 47 47
Income Tax Act1961 Income tax Deputy Commissioner of Income Tax (CPC) Assessment year 2017 - 2018 168 168
Income Tax Act1961 Income tax DCIT/ACIT Circle 2 Assessment year 2017 - 2018 34 -

viii) In our opinion and according to the information and explanations given to us weare of the opinion that the Company has not defaulted in repayment of dues to banks. TheCompany has not taken any loan from the financial institution or Government nor has anydues to debenture holders.

ix) In our opinion and according to the information and explanations given to us theCompany has not raised any money way of initial public offer / further public offer.Further term loans taken during the year were applied for the purpose for which the loanwere obtained.

x) In our opinion and according to the information and explanations given to us wereport that no fraud by the Company or on the Company by the officers and employees of theCompany has been noticed or reported during the year.

xi) In our opinion and according to the information and explanations given to us themanagerial remuneration has been paid / provided in accordance with the provisions ofsection 197 of 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) According to the information and explanations given by the managementtransactions with the related parties are in compliance with Section 177 and 188 of Actand the details have been disclosed in the notes to the standalone financial statementsas required by the applicable Indian accounting standards.

xiv) According to the information and explanations given to us and on an overallexamination of the books of account the Company has not made any preferential allotmentand private placement of shares or fully & partly convertible debentures during theyear under audit. Accordingly the provisions of clause 3(xiv) of the Order are notapplicable to the Company.

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-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

"Annexure B" to the Independent Auditor's Report to the Members of SunflagIron & Steel Company Limited on its standalone financial statements dated 26 June2020.

Report on the Internal Financial Controls under Clause

(i) of Sub-section 3 of Section 143 of the Act as referred to in paragraph 2(f) of‘Report on Other Legal and Regulatory Requirements' section.

We have audited the internal financial controls over financial reporting of SunflagIron and Steel Company Limited ("the Company") as of 31 March 2020 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

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 accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the Institute ofChartered Accountants of India. Those Standards and the Guidance Note require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.

Our audit of internal financial controls over financial reporting 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 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 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 financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that:

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 ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

SUNFLAG IRON AND STEEL COMPANY LIMITED NAGPUR

.