The Members of WELCAST STEELS LIMITED Ahmedabad.
Report on the audit of financial statements Opinion
We have audited the accompanying financial statements ofWELCAST STEELS LIMITED("the Company") which comprise the Balance Sheet as at March 31 2020 and theStatement of Profit and Loss (including other comprehensive income) Statement of Changesin Equity and Statement of Cash Flows for the period then ended and notes to thefinancial statements including a summary of significant accounting policies and otherexplanatory information (herein after referred to as "the financialstatements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid INDAS financial statements give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 312020 and its loss changes in equity and its cashflows for the period ended on that date.
Basis for opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's responsibilities for the Audit of the financial statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India (ICAI) together with theindependence requirements that are relevant to our audit of the 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 ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the financial statements.
Key audit matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report:
|Sr.No. ||KeyAudit Matter ||Auditor's Response |
|1. ||Related party transaction - The gross revenue of the company is mainly from related party. Determination of arm's length transaction is dependent of various business decisions and judgments made by the management. ||We assessed the Company's process to identify the cost of the product and the selling price. Our Audit approach consisted of testing and operating effectiveness of the substantive testing as follows: - |
| ||Refer Note: 37 Of the Financial Statements. || Selected few sample of continuing and new purchase orders and performed the following procedures: |
| || || Studied and analysed the comparable data provided by the company |
| || || Studies and analysed the agreement between Related Party |
| || || Considered the factors like pricing mechanism Terms of supply Payment Terms Volume of Business past history and continuity of the business and veracity of management judgments in determining arm's length transaction. |
|2. ||Evaluation of Contingent Liabilities. Refer Notes: 35 of the Financial Statements ||We have gone through the expert opinion obtained by the company representations made by the company to the concerned authorities other related correspondence on the issues raised by the concerned authorities and management judgments and assessed the probability of contingency. |
Information other than the financial statements and auditors 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 andAnalysis Board's Report includingAnnexure to Board Report and CorporateGovernance Report but does not include the financial statement and our auditor's reportthereon.
Our opinion on the financial statements does not cover the other information and we donot express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse 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 reportin this regard.
Management's responsibilities for the financial statements
The Company's Board of Directors is responsible for matters stated in section 134(5) oftheAct with respect to the preparation of these financial statements that give a true andfair view of the financial position financial performance total comprehensive incomechanges in equity and the cash flows of the Company in accordance with the INDAs and otheraccounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of theAct forsafeguarding of the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
In preparing the financial statements the management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so. The Board of Directors is also responsible for overseeing theCompany's financial reporting process.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal controls 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 control system in place and the operating effectiveness ofsuch 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings that we identifyduring 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 them allrelationships and other matters that may reasonably be thought to bear on our independenceand 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 sub-section (11) of section 143 oftheAct and in terms of the information and explanations sought by us and given by thecompany we give a statement on the matters specified in paragraphs 3 and 4 of the Order.
(i) As per the books and records examined by us in the normal course of audit based onsuch audit check that we considered necessary and appropriate and to the best of ourknowledge and belief we state that:
(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 yearand no material discrepancies were noticed on such verification.
(c) The title deeds of immovable properties are held in the name of the company.
(ii) The Inventory has been physically verified during the year by the management. Inour opinion the frequency of verification is reasonable. The discrepancies noticed onverification between the physical stocks and the book records were not material havingregard to the nature of business and volume of operations and the same have been properlydealt with in the books of accounts.
(iii) The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnership Firms or other parties covered in the register maintainedunder section 189 of the Companies Act 2013 ("theAct') hence the question of grantof such loans being prejudicial to company's interest schedule of repayment of interestand principal receipt of principal and interest on regular basis and steps for recoveryof overdue amount for more than 90 days as per clause (iii) of the Order does not arise.
(iv) The company has not granted any loans investments nor given guarantees/securityto any party attracting the provisions of section Sec 185 and 186 of the Companies Act2013 hence the question of compliance with the said provisions as per clause (iv) of theOrder does not arise.
(v) The company has not accepted any deposits from the public hence the question ofcompliance with the directives issued by the Reserve Bank of India and the provisions ofsection 73 to 76 and other relevant provisions of the CompaniesAct 2013 and the rulesframed there under as per clause (v) of the Order does notarise.
(vi) We have broadly reviewed the books of accounts relating to materials Labour andother items of cost maintained by the company pursuant to the Rules made by the CentralGovernment for the maintenance of cost records under section 148(1) of the Act and we areof the opinion that prima facie the prescribed accounts and records have been made andmaintained. We have not however made a detailed examination of the records with a viewto determine whether they are accurate or complete.
(vii) (a) According to the records of the Company the company is regular in depositingwith the appropriate authorities
undisputed statutory dues including Provident Fund Employees'State Insurance IncomeTax Sales Tax Service Tax Goods & Services Tax Duty of Customs Duty of ExciseValue Added Tax Cess and other material statutory dues to the extent applicable to it.
(b) According to the information and explanation given to us and based on the recordsverified by us we state that no undisputed amount payable in respect of Provident fundEmployees State Insurance Income Tax Sales Tax Service Tax Goods & Services TaxValue Added Tax Duty of Customs Duty of Excise or Cess which have remained outstandingas at 31st March 2020 for a period of more than six months from the date they becamepayable.
(c) According to the information and explanations given to us there are no dues ofIncome Tax Sales Tax Value
Added Tax Service Tax Goods & Services Tax Duty of Customs Duty of Excise orCess the dues which have not been deposited on account of dispute except as statedbelow-
|Sl No ||Statute ||Nature of Liabilities ||Amount in dispute (' in Lakhs) ||Period to which amount relates ||Forum where Dispute pending |
|1 ||Finance Act1994 ||Service Tax ||116.64 ||September 2004 to August 2006 ||Customs Excise & Service Tax Appellate Tribunal Bangalore. |
(viii) In our opinion the Company has not defaulted in repayment of dues to banks. Thecompany has neither borrowed any loans from Financial Institutions other than banksGovernment nor issued any debentures and consequently the question of default in repaymentdoes not arise.
(ix) The company has not raised any money by way of initial public offer or furtherpublic offer and the company has not taken any term loans from banks or financialinstitutions during the year. Hence the question of application of moneys raised byway ofinitial public offer further public offer and term loans for the purpose for which theywere raised does notarise.
(x) To the best of our knowledge and according to the information and explanationsgiven to us no material fraud by the company or on the company by its officers oremployees has been noticed or reported during the year.
(xi) The Company has not paid any managerial remuneration other than Directors' SittingFees within the meaning of sec
197 read with Schedule V to theAct. Hence the provisions of Clause XI of the Order arenot applicable.
(xii) The Company is not a Nidhi Company. Therefore the provisions of clause (xii) ofthe Order are not applicable to the Company.
(xiii) In our opinion the company has complied with the provisions of Sections 177 and188 of the Act and the disclosure of such transactions in the Financial Statements etc.as required by applicable Accounting Standards in respect of transactions entered intowith related parties.
(xiv) The company has not made any preferential allotment/ private placement of shares/fully or partly convertible debentures during the year hence the requirement ofcompliance with provisions of Section 42 of the Act and utilization of amounts so raisedfor the purpose for which the funds were raised as per clause (xiv) of the Order doesnotarise.
(xv) In our opinion the Company has not entered into any non-cash transactions withdirectors or persons connected with him; hence the requirement of compliance to provisionsof Section 192 of the Act as per clause (xv)ofthe Order does notarise.
(xvi) The company is not required to be registered under Sec 45-IA of the Reserve Bankof India Act 1934 hence the requirements of clause (xvi) of the Order does notarise.
2. As required by section 143(3) of theAct we report that:
(i) 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;
(ii) 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;
(iii) The Balance Sheet Statement of Profit and Loss Cash Flow Statement andStatement of Changes in Equity dealt with by this Report are in agreement with the booksof account;
(iv) In our opinion the aforesaid financial statements comply with the IndianAccounting Standards specified under Section 133 of theAct read with Companies(IndianAccounting Standards) Rules 2015.
(v) On the basis of the written representations received from the directors as on31stMarch 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2020 from being appointed as a director in terms of Section164(2) of theAct.
(vi) With respect to the adequacy of the internal financial controls over financialreporting of the company and the operating effectiveness of such controls refertoourseparate report in "AnnexureA";
(vii) With respect to the other matters to be included in theAuditor's Report inaccordance with requirements of section 197 (16) of theAct as amended:
In our opinion and to the best of our information and according to the explanationsgiven to us company has not paid any managerial remuneration other than directors sittingfees for attending board and committee meetings during the year the remuneration paid bythe Company to its directors during the year is in accordance with the provisions ofsection 197 of theAct and
(I) 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:
(a) The Company has disclosed the impact of pending litigations on its financialposition in its financial statements- Refer Note No. 35 to the financial statements.
(b) As explained to us the Company does not foresee any loss on long-term contractentered in to. The company has not entered in to any derivative contracts. In view of theabove the question of making provision does not arise;
(c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
(d) The disclosure requirement as envisaged in Notification G.S.R 308(E) dated30thMarch 2017 is not applicable to the Company for the year.
| || ||For GANAPATH RAJ & CO. |
| || ||CHARTERED ACCOUNTANTS |
| || ||FIRM REG NO:-000846S |
| || ||C. GANAPATH RAJ |
|PLACE : ||Bengaluru ||PARTNER |
|DATE : ||15th June 2020 ||MEMBERSHIP NO.022955 UDIN 20022955 AAAAAW5336 |
ANNEXURE A - TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIALSTATEMENTS OF WELCAST STEELS LIMITED Report on the Internal Financial Controls underClause (i) of Sub-section 3 of Section 143 of the CompaniesAct 2013 ("theAct")
We have audited the internal financial controls overfinancial reporting of WelcastSteels limited ("the Company") as of March 312020 in conjunction with our auditof the financial statements of the company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial control 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 Reporting(Guidance Note") issued by the Institute of CharteredAccountants of India(ICAI'). These responsibilities include the design implementation and maintenanceof adequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding 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 CompaniesAct 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols overfinancial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Companies Act2013 to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the ICAI. 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 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 overfinancial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the 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. A company's internal financial control over financialreporting includes those policies and procedures that
(1) Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) 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
(3) 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 overfinancialreporting 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 the Company has in all material respects an adequate internalfinancial controls system overfinancial reporting and such internal financial controlsoverfinancial reporting were operating effectively as at March 312020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note.
|Place: Bengaluru ||For GANAPATH RAJ & CO |
|Date: 15th June 2020 ||Chartered Accountants |
| ||(FRN 000846S) |
| ||C. GANAPATH RAJ |
| ||PARTNER |
| ||Membership No.022955 |
| ||UDIN 20022955 AAAAAW5336 |