To the Members of VISA Steel Limited
REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
1. We have audited the standalone financial statements of VISA Steel Limited ("theCompany") which comprise the standalone balance sheet as at March 31 2020 and thestandalone statement of profit and loss (including other comprehensive income) standalonestatement of changes in equity and standalone statement of cash flows for the year thenended and notes to the standalone financial statements including a summary of thesignificant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of matter referred to in Basis of Qualified Opinionparagraph 2 below the aforesaid standalone financial statements give the informationrequired by the Companies Act 2013 ("Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2020 and loss and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
BASIS FOR QUALIFIED OPINION
2. We draw attention to Note 16D of the accompanying Standalone Financial Statementswith regard to non-recognition of interest expense on the borrowings of the Company. Theaccumulated interest not provided as on March 31 2020 is Rs. 5920.84 million (includingRs. 1459.69 million for FY 2016-17 Rs. 1552.29 million for FY 2017-18 Rs. 1465.46million for FY 2018-19 and Rs. 1443.40 million for the FY 2019-20 respectively) which isnot in accordance with the requirement of Ind AS 23: Borrowing Cost' read with IndAS 109: Financial Instruments'.
Had the aforesaid interest expense been recognized finance cost for the year endedMarch 31 2020 would have been Rs. 1611.46 million instead of the reported amount of Rs.168.06 million. Total expenses for the year ended March 31 2020 would have been Rs.6167.87 million instead of the reported amount of Rs. 4724.47 million. Net loss aftertax for the year ended March 31 2020 would have been Rs. 2291.86 million instead of thereported amount of Rs. 848.46 million. Total Comprehensive Income for the year ended March31 2020 would have been Rs. (2297.51) million instead of the reported amount of Rs.(854.11) million other equity would have been Rs. (6726.31) million againstreported Rs. (805.47) million other current financial liability would have been Rs.16522.99 million instead of reported amount of Rs. 10602.15 million and Loss per sharefor the year ended March 31 2020 would have been Rs. 19.79 instead of the reported amountof Rs. 7.33.
The above reported interest has been calculated using Simple Interest rate.
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Act and the Rules there under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion.
MATERIAL UNCERTAINTY RELATING TO GOING CONCERN
4. We draw attention to Note - 37 to the standalone financial statements regarding thepreparation of the statement on going concern basis for the reason stated therein. TheCompany has accumulated losses and has also incurred losses during the year ended March31 2020. As on date the Company's current liabilities are substantially higher than itscurrent assets and the Company's net worth has also been fully eroded after consideringunprovided interest. Further the State Bank of India (financial creditor) had filed anapplication before National Company Law Tribunal (NCLT) Kolkata Bench for initiatingCorporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code (IBC)which stands dismissed by NCLT Cuttack Bench. SBI has preferred an Appeal before NationalCompany Law Appellate Tribunal (NCLAT) New Delhi which is pending and the matter issub-judice. These conditions indicate the existence of a material uncertainty that maycast significant doubt on the Company's ability to continue as going concern and thereforeit may be unable to realise its assets and discharge its liabilities including potentialliabilities in the normal course of business.
All the assets including non-current assets and liabilities are still being carried attheir book value. The appropriateness of assumption of going concern and evaluation ofrecoverable value of its non-current assets is critically dependent upon the debtresolution of the Company which is under process the Company's ability to raise requisitefinance generate cash flows in future to meet its obligations and to earn profits infuture.
The ability of the Company to continue as a going concern is solely dependent on thesuccessful outcome of these conditions which are not wholly within the control of theCompany.
Management of the Company has prepared the statement on going concern basis based ontheir assessment of the successful outcome of the debt resolution which will enhance theCompany's viability and accordingly no adjustments have been made to the carrying value ofthe assets and liabilities. Our opinion is not qualified in respect to the above matters.
EMPHASIS OF MATTER
5. We draw your attention to the following matters:
Refer Note 36 to the Statement regarding accounting for transfer of Special SteelUndertaking pursuant to the Scheme of Arrangement ("the scheme") approved bythe National Company Law Tribunal vide its order dated July 8 2019 all the assets andliabilities of the Special Steel Undertaking of Visa Steel Limited ("transferorCompany" or "the Company") has been transferred to and vested in the VisaSpecial Steel Limited (a wholly owned step down subsidiary) ("VSSL""transferee Company") at their respective book values on a going concern basisfrom April 1 2013 being the appointed date. Effective date of the scheme is July 13 2019being the date on which certified copy of the order sanctioning the said scheme is filedwith the Registrar of Companies Cuttack.
On January 17 2020 Hon'ble Supreme Court of India vide its ex-parte order in CivilAppeal No. 56 of 2020 filed by State Bank of India has ordered issuance of notice and inthe meanwhile stayed the aforesaid NCLT Order. The NCLT Order had been given effect to andstood implemented by the Company prior to January 17 2020.
To give the impact of the sanctioned scheme the Standalone Financial Statement of theCompany for the year ended March 31 2019 were revised and the same were approved by theBoard of Directors in their meeting held on October 18 2019 and audited by us on which wehave issued our audit report dated October 18 2019 and same were approved by the membersin their meeting held on December 23 2019. In compliance to the sanctioned schemes thecompany has transferred various income expenses assets and liabilities related tospecial steel undertaking to VSSL from 1st April 2013 resulting in accumulated receivableof Rs. 3742.89 million from VSSL as on March 31 2020 (previous year Rs. 3718.64million). Since the matter is pending with Hon'ble Supreme Court the impact of thesanctioned scheme considered as above on financial statements including aforesaidreceivable from a subsidiary VSSL is dependent on the final judgment of the Hon'bleSupreme Court.
Our opinion is not qualified in respect to the above matter.
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITORS' REPORT THEREON
6. The Company's management and Board of Directors are responsible for the preparationof other information. The other information comprises the information included in theManagement Discussion and Analysis Board's Report including Annexures to Board's ReportCorporate Governance Report Shareholder's Information but does not include thestandalone financial statements and our auditors' report thereon. The other information isexpected to be made available to us after the date of this auditor's report.
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 identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated. When we read the other information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.
KEY AUDIT MATTERS
7. 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 aseparate opinion on these matters. For each matter below our description of how our auditaddressed the matter is provided in that context.
INDEPENDENT AUDITORS' REPORT
|The key audit matter ||How the matter was addressed in our audit |
|A. Related Party Transactions || |
|Refer to Note 44 to the financial statements. A significant part of the Company's Revenue and purchases of coal and coke relates to transactions with related party. The details of Related Party Transactions have been disclosed in note no 44 Related Party Transactions. Transactions with other related party for revenue generation is 87% of total revenue and coal and coke purchased is almost 98% of total coal and coke purchased. Transactions with related parties are significant for audit due to the materiality of revenue and purchase of coal and coke which are from other related parties and possible transfer price risk associated with transactions with related parties. ||We addressed the Key Audit Matter as follows :- |
| ||1) We reviewed the policy of the Company with respect to related party transactions. |
| ||2) We reviewed the minutes of the meeting of the Audit Committee and Board. |
| ||3) We reviewed the list of Related party identified by the Company. |
| ||4) We performed the sales process / procurement process walk through and tested the controls. |
| ||5) We obtained the transfer pricing document prepared by the Company and assessed the Key Assumptions. |
| ||6) We have assessed the application of transfer price documents in executing the transactions. |
| ||7) We reviewed compliance with Section 177 & 188 of the Companies Act 2013 for related party transaction. |
| ||8) We reviewed whether transactions between related parties are on normal commercial terms and conditions no more favorable than those otherwise available to other parties considering the present financial position of the Company. |
| ||9) We reviewed the disclosure of related party transactions as per Ind AS 24. |
| ||Conclusion : |
| ||Our audit procedures did not lead to any reservations regarding the related party transactions and its disclosure. |
|B. Valuation of Inventories ||How our audit addressed the key audit matter: |
|Refer to Note 7 to the financial statements. As described in the accounting policies in note 2.2.7 to the financial statements inventories are carried at the lower of cost and net realisable value. As a result the management applies judgment in determining the appropriate provisions for obsolete stock based upon a detailed analysis of old inventory net realisable value below cost based upon future plans for sale of inventory. ||We obtained assurance over the appropriateness of the management's assumptions applied in calculating the value of the inventories and related provisions by:- |
| ||1. Completed a walkthrough of the inventory valuation process and assessed the design and implementation of the key controls addressing the risk. |
| ||2. Verifying the effectiveness of key inventory controls operating over inventories; including sample based physical verification. |
| ||3. Verifying for a sample of individual products that costs have been correctly recorded. |
| ||4. Comparing the net realisable value to the cost price of inventories to check for completeness of the associated provision. |
| ||5. Reviewing the historical accuracy of inventory provisioning and the level of inventory write-offs during the year. |
| ||6. Recomputing provisions recorded to verify that they are in line with the Company policy. |
| ||Conclusion: |
| ||Based on the audit procedures performed we are satisfied that the valuation of inventory is appropriate. |
MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS
8. The Company's management and Board of Directors are responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the state of affairs loss andother comprehensive income changes in equity and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the IndianAccounting Standards (Ind AS) specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the standalone financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management and Board of Directors areresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing the Company's financial reportingprocess.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS
9. 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 judgment 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 or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness 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.
10. Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in
(i) planning the scope of our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the financialstatements.
11. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
12. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.
13. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalone financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditors' report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
14. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government in terms of section 143 (11) of the Act we give in the"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder to the extent applicable.
15. 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 except for the matter referred to in paragraph 2 above proper booksof account as required by law have been kept by the Company so far as it appears from ourexamination of those books.
c) The standalone balance sheet the standalone statement of profit and loss (includingother comprehensive income) the standalone statement of changes in equity and thestandalone statement of cash flows dealt with by this Report are in agreement with thebooks of account.
d) In our opinion except for the matter referred to in paragraph 2 above theaforesaid standalone financial statements comply with the Ind AS specified under section133 of the Act.
e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in "Annexure B".
g) With respect to the matter to be included in the Auditors' Report under section197(16): In our opinion and according to the information and explanations given to us theremuneration paid by the company to its directors during the current year is in accordancewith the provisions of Section 197 of the Act. The remuneration paid to any director isnot in excess of the limit laid down under Section 197 of the Act.
h) With respect to the other matters to be included in the Auditors' 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 March 31 2020 onits financial position in its standalone financial statements - Refer Note 35A to thestandalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts forwhich 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 during the year ended March 31 2020.
ANNEXURE A TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 14 of the Independent Auditors' Report of even date to themembers of VISA Steel Limited on the standalone financial statements as of and for theyear ended March 31 2020.
We report that:
i. In respect of its fixed assets:
(a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.
(c) The title deeds of immovable properties as disclosed in Note 3A on fixed assets tothe standalone financial statements are held in the name of the Company.
ii. The physical verification of inventory have been conducted at reasonable intervalsby the Management during the year. The discrepancies noticed on physical verification ofinventory as compared to book records were not material.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theAct. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and (iii)(c) of thesaid Order are not applicable 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 the Companies Act 2013in respect of the loans and investments made and guarantees and security provided by itas applicable.
v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.
vi. Pursuant to the rules made by the Central Government of India the Company isrequired to maintain cost records as specified under Section 148(1) of the Act in respectof its products. We have broadly reviewed the same and are of the opinion that primafacie the prescribed accounts and records have been made and maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion except for dues in respect of goods andservices tax the Company is generally regular in depositing undisputed statutory dues inrespect of provident fund employees state insurance and income tax though there has beena slight delay in a few cases and is regular in depositing undisputed statutory duesincluding sales tax excise service tax duty of customs value added tax cess and othermaterial statutory dues as applicable with the appropriate authorities. The extent ofarrears of statutory dues outstanding as at March 31 2020 for a period of more than sixmonths from the date they became payable are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs. in Millions) ||Period to which the amount relates ||Due Date ||Date of Payment |
|Goods & Service tax 2017 ||Interest ||0.00 ||Jul-17 ||28-Aug-17 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||2.80 ||Aug-17 ||20-Sep-17 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||5.21 ||Sep-17 ||20-Oct-17 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||3.38 ||Oct-17 ||20-Nov-17 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.28 ||Nov-17 ||20-Dec-17 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.10 ||Dec-17 ||22-Jan-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||1.31 ||Jan-18 ||20-Feb-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.15 ||Feb-18 ||20-Mar-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.13 ||Mar-18 ||20-Apr-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.03 ||Apr-18 ||22-May-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.24 ||May-18 ||20-Jun-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.24 ||Jun-18 ||20-Jul-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.22 ||Jul-18 ||24-Aug-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.34 ||Aug-18 ||20-Sep-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.21 ||Sep-18 ||25-Oct-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.12 ||Oct-18 ||20-Nov-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.16 ||Nov-18 ||20-Dec-18 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.19 ||Dec-18 ||20-Jan-19 ||Not yet Paid |
ANNEXURE A TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 14 of the Independent Auditors' Report of even date to themembers of VISA Steel Limited on the standalone financial statements as of and for theyear ended March 31 2020.
|Name of the statute ||Nature of dues ||Amount ( Rs. in Millions) ||Period to which the amount relates ||Due Date ||Date of Payment |
|Goods & Service tax 2017 ||Interest ||0.21 ||Jan-19 ||22-Feb-19 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.18 ||Feb-19 ||20-Mar-19 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.31 ||Mar-19 ||23-Apr-19 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.19 ||Apr-19 ||20-May-19 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.31 ||May-19 ||20-Jun-19 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.10 ||Jun-19 ||20-Jul-19 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.08 ||Jul-19 ||22-Aug-19 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.11 ||Aug-19 ||20-Sep-19 ||Not yet Paid |
|Goods & Service tax 2017 ||Interest ||0.02 ||Sep-19 ||20-Oct-19 ||Not yet Paid |
|Total || ||16.62 || || || |
The above table excludes the undisputed cases pertaining to the Special Steelundertaking transferred into VISA Special Steel Limited pursuant to the Scheme assanctioned by National Company Law Tribunal Cuttack Bench dated July 8 2019 which arestill being pursued in the Company's name.
(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of goods and service tax and duty of customswhich have not been deposited on account of any dispute. The particulars of dues of incometax sales tax duty of excise service tax and value added tax as at March 31 2020 whichhave not been deposited on account of a dispute are as follows:
|Name of the statute ||Nature of dues ||Amount Rs. ( In Million) ||Period to which the amount relates ||Forum where the dispute is pending |
|Central Excise Act 1944 ||Duty of Excise ||10.46 ||Financial Year 2008-09 to 2010-11 ||Custom Excise & Service Tax Appellate Tribunal Kolkata |
|Service Tax under Finance Act 1994 ||Service Tax ||39.02 ||Financial Year 2011-12 to 2014-15 ||Commissioner CGST& Central Excise and Customs |
|Service Tax under Finance Act 1994 ||Service Tax ||15.61 ||Financial Year 2010-11 to 2011-12 ||Commissioner of Central Excise (Appeals) |
|Central Sales Tax Act1956 ||Central Sales Tax ||0.02 ||Financial Year 1999-2000 ||Sales tax Tribunal Orissa |
|Andhra Pradesh Value Added Tax Act 2005 ||CST & VAT ||0.96 ||Financial Year 2013-14 to 2017-18 ||Additional Commissioner of Commercial Taxes Vijayawada |
|Odisha Value Added Tax Act 2005 ||Entry Tax ||8.11 ||Financial Year 2004-05 & 2012-13 ||High Court of Odisha |
|Odisha Value Added Tax Act 2005 ||Odisha VAT ||0.02 ||Financial Year 2013-14 & 2014-15 ||Additional Commissioner of Commercial Taxes Cuttack |
The above table excludes the disputed cases pertaining to the Special Steel undertakingtransferred into VISA Special Steel Limited pursuant to the Scheme as sanctioned byNational Company Law Tribunal Cuttack Bench dated July 8 2019 which are still beingpursued in the Company's name.
viii. According to the records of the Company examined by us and the information andexplanations given to us except for loans or borrowings from banks and financialinstitutions aggregating to Rs. 16277.63 Million for the period as set out below theCompany has not defaulted in repayment of loans or borrowings to any financial institutionor bank or Government or dues to debenture holders as at the balance sheet date.
| || || |
Amount (Rs. in Million)
|Name of Lender ||Nature of dues ||Less than 12 months ||More than 12 months ||Total |
|Asset Care and Reconstruction Enterprise Limited ||Principal & Interest ||656.07 ||2679.15 ||3335.22 |
|Bank of India ||Principal & Interest ||55.01 ||177.63 ||232.63 |
|Canara Bank ||Principal & Interest ||284.26 ||1208.74 ||1493.00 |
|Edelweiss Asset Reconstruction Company Limited ||Principal & Interest ||25.00 ||87.22 ||112.22 |
|Exim Bank ||Principal & Interest ||107.49 ||476.10 ||583.59 |
|HUDCO ||Principal & Interest ||180.60 ||721.03 ||901.63 |
|Punjab & Sind Bank ||Principal & Interest ||66.26 ||260.92 ||327.18 |
|Punjab National Bank ||Principal & Interest ||1003.62 ||3989.03 ||4992.65 |
|State Bank of India ||Principal & Interest ||423.45 ||2220.94 ||2644.39 |
|Union Bank of India ||Principal & Interest ||333.99 ||1321.13 ||1655.12 |
|Total || ||3135.75 ||13141.88 ||16277.63 |
Note: The unprovided interest amount reported above has been calculated by themanagement at simple interest.
ix. In our opinion and according to the information and explanations given to us theCompany has not raised any moneys by way of initial public offer or further public offer(including debt instruments) and term loan during the year.
x. 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 andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.
xi. The Company has paid / provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.
xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of such related partytransactions have been disclosed in the standalone financial statements as required underInd AS 24 Related Party Disclosures specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.
xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.
xv. The Company has not entered into any noncash transactions with its directors orpersons connected with him. 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.
ANNEXURE B TO INDEPENDENT AUDITORS' REPORT
Referred to in paragraph 15 (f) of the Independent Auditors' Report of even date to themembers of VISA Steel Limited on the standalone financial statements for the year endedMarch 31 2020.
REPORT ON THE INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS UNDERCLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE ACT
1. We have audited the internal financial controls with reference to financialstatements of VISA Steel Limited ("the Company") as of March 31 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.
MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS
2. The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal financial controls with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting 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 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 Companies Act 2013.
3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditingprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlswith reference to financial statements. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to financialstatements were established and maintained and whether such controls operated effectivelyin all material respects.
4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of such internal financialcontrols assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone financial statements whether due tofraud or error.
5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the Company's internal financialcontrols with reference to financial statements.
MEANING OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS
6. A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements includes those policies and procedures that :
i. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
ii. 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
iii. 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 WITH REFERENCE TO FINANCIALSTATEMENTS
7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial controls with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
BASIS FOR QUALIFIED OPINION
8. According to the information and explanations given to us and based on our auditthe following material weakness has been identified in the operating effectiveness of theCompany's internal financial controls with reference to financial statements as at March31 2020: The Company's internal financial controls relating to application of appropriatepolicies and procedures that provide reasonable assurance that transactions are recordedas necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles were not operating effectively which resulted innon-recognition of interest expense as indicated in Note 16D to the standalone financialstatements.
9. A material weakness' is a deficiency or a combination of deficiencies ininternal financial controls with reference to financial statements such that there is areasonable possibility that a material misstatement of the company's annual or interimfinancial statements will not be prevented or detected on a timely basis.
10. In our opinion the Company has in all material respects an adequate internalfinancial controls with reference to financial statements and except for the effects ofthe material weakness described in the Basis for Qualified Opinion paragraph above suchinternal financial controls with reference to financial statements were operatingeffectively as at March 31 2020 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.
11. We also have audited in accordance with the Standards on Auditing issued by theInstitute of Chartered Accountants of India as specified under Section 143(10) of theAct the standalone financial statements of Visa Steel Limited which comprise the BalanceSheet as at March 31 2020 and the related Statement of Profit and Loss including othercomprehensive income and Cash Flow Statement and the Statement of changes in equity forthe year ended and a summary of significant accounting policies and other explanatoryinformation. Resultant impact of this material weakness has been appropriately consideredin our audit of the March 31 2020 standalone financial statements of VISA Steel Limitedand this report affect our report dated July 30 2020 which expressed a qualified opinionon those financial statements.