INDIA STEEL WORKS LIMITED
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the standalone Ind AS Financial Statements of INDIA STEEL WORKS LIMITED which comprise the Balance Sheet as of March 31,2021, the Statement of Profit & Loss including Statement of Other Comprehensive Income, Cash Flow Statement and Statement of Changes in Equity for the year then ended and notes to the standalone Ind AS financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS financial statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, and its LOSS, other comprehensive expenses, changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit of the standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there under, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS financial statements.
Emphasis of the Matter
a. In absence of information of investee company, we are unable to determine the fair value of the investments as on reporting date. Hence the same are carried at cost and no provision for diminution, if any in value of such investments in made.
b. No effect is given in respect of settlement deed with the creditor resulting into possible reduction in liability to the extent of Rs.77.04 crores, after taking credit of Rs.11.83 crores on the basis of the payment made before the review of the said financial results.
c. In the absence of uncertainties of making profit in immediate future the company has decided not to create Asset/ Liability on account of Deferred Tax.
d. Inventories have been bifurcated into current and non-current assets amounting to Rs.33.91 crores and Rs.202.77 crores respectively depending on the expected realization/ consumption of the same.
e. The impairment in value of non-moving inventories amounting to Rs.22.48 crores is derived based on the physical verification and technical evaluation done by an independent valuer.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Going Concern
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Our audit procedures included
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As of 31 March 2021, the Company’s current liabilities exceed its current assets. Also, company is continuously incurring losses. The directors of the Company have formed a judgement that the going concern basis is appropriate in preparing the financial statements.
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Going through the business planning process and assessing the design, implementation, and operating effectiveness of management’s key internal controls over the assessment of going concern, including the preparation of cash flow forecasts.
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As of 31 March 2021, the Company’s current liabilities exceed its current assets. Also, company is continuously incurring
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Going through the business planning process and assessing the design, implementation, and operating effectiveness of
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Going Concern
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Our audit procedures included
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losses. The directors of the Company have formed a judgement that the going concern basis is appropriate in preparing the financial statements.
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management’s key internal controls over the assessment of going concern, including the preparation of cash flow forecasts.
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The directors of the Company made their assessment of going concern by preparing a cash flow forecast in which some key; assumptions were applied. These key assumptions included forecasts of sales volumes, average selling prices, raw material costs and the availability of banking and other financing facilities.
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Evaluating the key assumptions in the cash flow forecasts (including future revenue, gross profit, operating expenses and capital expenditure) with reference to historical production information, current performance, internal investment and production plans, and market and other external available information,
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We identified going concern as a key audit matter because a significant degree of management judgement is involved in making this assessment and in forecasting the future cash flows of the Company which are inherently uncertain and because the management judgement and _ inherently uncertainties and because the management judgement and _ inherent uncertainties could have significant impact on the basis of preparation of the financial statements and could be subject to management bias.
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Considering the accuracy and reliability of cash flow forecasts made by management in prior years by comparing them with the current year’s results.
We also checked if any waivers were obtained from the financial institutions from which borrowings are made.
Based on our procedures we noted that the key assumptions used in the forecasts were within a reasonable range of our expectations.
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Revenue Recognition
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Our audit procedures to assess the recognition of revenue included the following:
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The Company’s revenue is derived from the sale of steel products.
The Company recognizes revenue when the control is transferred to the customer. The terms set out in the Company’s sales contracts relating to goods acceptance by customers are varied. Accordingly, the terms and conditions of sales contracts may affect the timing of recognition of sales to customers as each sales contract could have different terms relating to customer acceptance of the goods sold.
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Evaluating the design, implementation, and operating effectiveness of key internal controls over the existence, accuracy and timing of revenue recognition.
Performed substantive test of details over revenue recognized throughout the period by selecting a sample of transactions to ensure that the samples selected meet the revenue recognition criteria and are appropriately recorded;
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We identified the recognition of revenue as a key audit matter because revenue is one of the key performance indicators of the Company and is, therefore, subject to an inherent risk of misstatement to meet targets or expectations and because errors in the recognition of revenue could have a material impact on the Company.
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Tested sample transactions around the period end to end sure they were recorded in the correct period; and tested journal entries posted to revenue accounts focusing on unusual or irregular items, if any.
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Contingent Liabilities (Note No. 35) Evaluation of uncertain tax positions
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Our audit procedures include the following substantive procedures:
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The Company operates in multiple jurisdictions and is subject to periodic challenges by local tax authorities on account of tax matters during the normal course of business including transfer pricing and indirect tax matters. These involve significant management judgment to determine the possible outcome of the uncertain tax positions, consequently having an impact on related accounting and disclosures in the
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Obtained understanding of key uncertain tax positions and,
We -
• Read and analyzed select key correspondences external legal opinions / consultations by management for key uncertain tax positions.
• Discussed with appropriate senior management and
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Going Concern
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Our audit procedures included
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standalone financial statements. Refer Note 35 to the standalone financial statements.
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evaluated management’ s underlying key assumptions in estimating the tax provisions and • Assessed management’ s estimate of the possible outcome of the disputed cases.
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Other Information
The Company’s Board of Directors is responsible for the other information. The other information comprises the Board’s report including annexure to Board’s report but does not include the Standalone Ind AS Financial Statements and our auditor’s report thereon.
Our opinion on the Standalone Ind AS financial statements does not cover-the other information and we do note express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Standalone Ind AS financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.
Management’s Responsibility for the Standalone Ind AS Financial Statements
These Standalone Financial Results have been prepared on the basis of the annual Standalone Financial Statements. The Company's Board of Directors are responsible for the preparation and presentation of these Standalone Financial Results that give a true and fair view of the net profit and other comprehensive income and other financial information of the Company and the balance sheet and the statement of cash flows in accordance with the recognition and measurement principles laid down in the Indian Accounting Standards prescribed under Section 133 of the Act read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 and Regulation 52 of the Listing Regulations. The Board of Directors of the Company are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the Standalone Financial Results by the Directors of the Company, as aforesaid.
In preparing the Standalone Financial Results, the Board of Directors of the Company are responsible for assessing the ability of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors of the Company are responsible for overseeing the financial reporting process of the Company.
Auditor’s Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Financial Results as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Results.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the Standalone Financial Results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design 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 has adequate internal financial controls with reference to Standalone Financial Statements in place and the operating effectiveness of such controls.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.
4. Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Standalone Financial Results 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’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the Standalone Financial Results including the disclosures, and whether the Standalone Financial Results represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
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 Companies Act, 2013, we give in the ‘Annexure -A’ a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
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 best of 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 the Company so far as it appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit & Loss including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this report are in agreement with the books of account.
d) In our opinion and to the best of our information and according to the explanation given to us, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as on year ended March 31,2021
e) On the basis of the written representations received from the directors as on 31st March, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2021from being appointed as a director in terms of Section 164(2) of the Act
f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these standalone Ind AS financial statements and the operating effectiveness of such controls, refer to our separate Report in “Annexure B” to this report:
g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11of the Companies (Audit
and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone Ind AS financial statements Refer Note 35 to the standalone Ind AS financial statements.
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Company.
3. In our opinion, the managerial remuneration for the year ended 31 March 2021 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act; The Ministry of Corporate Affairs has not prescribed other details under section 197 (16) which are required to be commented by us.
For Laxmikant Kabra & Co LLP Chartered Accountants Firm Reg. No.: 117183W/ W100736
Place: Thane CA Laxmikant Kabra
Date: 20th August 2021 Partner
Membership No.: 101839 UDIN: 21101839AAAAGQ5105
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