To the Members of
ELECTROSTEEL STEELS LIMITED
Report on the Financial Statements
1. We have audited the accompanying financial statements of ELECTROSTEEL STEELS LIMITED (the Company),
which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss, the Cash Flow
Statement for the year then ended, and a summary of the significant accounting policies and other explanatory
information.
Management''s Responsibility for the Financial Statements
2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the
Companies Act, 2013 (the Act) with respect to the preparation of these financial statements, that give a true
and fair view of the financial position, financial performance and cash flows of the Company in accordance
with the accounting principles generally accepted in India, including the Accounting Standards specified
under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended). This
responsibility also includes maintenance of adequate accounting records in accordance with the provisions of
the Act; safeguarding the assets of the Company; preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial statements that give a true and fair view and
are free from material misstatement, whether due to fraud or error.
Auditor''s Responsibility
3. Our responsibility is to express an opinion on these financial statements based on our audit.
4. We have taken into account the provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the provisions of the Act and the Rules
made there under.
5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10)
of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
6. An audit involves performing procedures to obtain audit evidence about the amounts and the
disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including
the assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal financial controls relevant to the
Company''s preparation of the financial statements that give a true and fair view in order to design audit
procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness
of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s
Directors, as well as evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion on the financial statements.
8. Opinion
In our opinion and to the best of our information and according to the explanations given to us, the
aforesaid financial statements give the information required by the 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 31 March 2016, and its loss and its cash flows for the year ended on that
date.
Emphasis of Matters
9. Without qualifying our opinion, we draw attention to the following Notes to the financial
statements:
9.1. Note No. 27, regarding the revenue recognized as Exceptional Item. The company, consequent to the
delayed execution of contracts by certain vendors/suppliers/service providers of plant, equipments, civil and
erection commissioning etc. has incurred Loss of Profit in past. The part of such claim of Loss of Profit as
assessed by the Company has been recovered from the available balance in the respective Supplier''s Accounts
and recognized as income in the Statement of Profit and Loss for the year. The unrecovered such Loss of
Profit will be accounted for in the year significant certainty of recovery is established.
9.2 Note No. 41, regarding the preparation of these financial statements on a going concern basis. The
Company incurred a net loss of Rs. 32,654.67 lacs during the year ended March 31, 2016 and, as of that date,
the Company''s current liabilities exceeded its current assets by Rs 320,780.13 lacs, further the Company''s
net worth has also been substantially eroded as at the balance sheet date. Since the full compliance of the
sanctioned CDR package could not be made with, the lenders have invoked Strategic Debt Restructuring (SDR)
pursuant to RBI circulars dated 08.06.2015 & 24.09.2015, the implementation is under progress. However, in
view of the increase in the operations of the production facilities and the Company''s EBIDTA being positive
also in this year, these financial statements have been prepared on a going concern basis and no adjustment
has been made to the carrying value of the assets and liabilities.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
10. 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 give in the Annexure A a statement on the
matters specified in paragraphs 3 and 4 of the Order.
11. 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 best of our knowledge
and belief were necessary for the purpose 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 financial statements dealt with by this report are in agreement with the books of account;
d. In our opinion, the aforesaid financial statements comply with the Accounting Standards specified
under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);
e. The two matters described in paragraph 9 under the emphasis of matters paragraph, in our opinion
may have adverse effect on the functioning of the company;
f. On the basis of the written representations received from the directors as on 31 March 2016 and
taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 from
being appointed as a director in terms of Section 164(2) of the Act;
g. With respect to the adequacy of the internal financial controls over financial reporting (IFCoFR)
of the Company and the operating effectiveness of such controls refer to our separate report in Annexure
''B''.
h. With respect to the other matters to be included in the Auditor''s Report in accordance with Rule
11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and
according to the explanations given to us:
i. the Company does not have any pending litigations which would impact its financial position;
ii. the Company, as detailed in Note 40 to the financial statements, has made provision, as required
under the applicable laws or accounting for material foreseeable losses, if any, on long-term contracts
including derivative contracts;
iii. there were no amounts which were required to be transferred to the Investor Education and
Protection Fund by the Company.
Annexure A to the Independent Auditor''s Report of even date to the members of Electrosteel
Steels Limited, on the financial statements for the year ended 31st March, 2016
Based on the audit procedures performed for the purpose of reporting a true and fair view on the
financial statements of the Company and taking into consideration the information and explanations given to
us and the books of account and other records examined by us in the normal course of audit, we report
that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative
details and situation of fixed assets.
(b) As planned, a part of the fixed assets have been physically verified by the management during the
year and no material discrepancies were noticed on such verification. In our opinion, the frequency of
verification of the fixed assets is reasonable having regard to the size of the Company and the nature of its
assets.
(c) According to the information and explanations given to us and on the basis of our examination of
the records of the Company, the title deeds of immovable properties are held in the name of the Company
except for 61 no''s of cases of Freehold land comprising of 222.29 acres aggregating to amount of Rs.
1,550.26 lacs- registration pending for approval of Government of Jharkhand, Department of revenue.
(ii) (a) The management has conducted physical verification of inventory at reasonable intervals
during the year.
(b) The procedures of physical verification of inventory followed by the management are reasonable and
adequate in relation to the size of the Company and the nature of its business.
(c) The Company is maintaining proper records of inventory and no material discrepancies between
physical inventory and book records were noticed on physical verification.
(iii) The Company has not granted any loan, secured or unsecured to companies, firms, LLP or other
parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of
clauses 3(iii)(a),3(iii)(b) and 3(iii)(c)of the Order are not applicable.
(iv) The Company does not have any loan, investment, guarantees and securities. Accordingly the
provisions clause 3(iv) of the Order is not applicable.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and
the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v)
of the Order are not applicable.
(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules
made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of
the Act in respect of Company''s products/services and are of the opinion that, prima facie, the
prescribed accounts and records have been made and maintained. However, we have not made a detailed
examination of the cost records with a view to determine whether they are accurate or complete. As informed,
the cost audit for the year is under progress.
(vii) (a) According to the information and explanations given to us and on the basis of our
examination of the records of the Company, amounts deducted/accrued in the books of account in respect of
undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax,
service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as
applicable, have generally been regularly deposited to the appropriate authorities. Further, no
undisputed amounts payable in respect thereof were outstanding on the year-end for a period of more than six
months from the date they became payable.
(b) According to the information and explanations given to us, the following dues outstanding in respect
of income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax and cess on account
of any dispute, are as follows:
|
Name of the statute
|
Nature of dues
|
Amount
(Rs.Lacs)
|
Period to which the amount relates
|
Forum where dispute is pending
|
|
Central Excise Act, 1944
|
Excise Duty
|
75.97
|
2009-10
|
CESTAT
|
|
Service Tax under Finance Act,1994
|
Service Tax
|
2,215.62
|
2007-08 & 2008-09
|
CESTAT
|
|
Service Tax under Finance Act,1994
|
Service Tax
|
317.72
|
2009-10
|
CESTAT
|
|
Service Tax under Finance Act,1994
|
Service Tax
|
1,071.40
|
2007-08 to 2011-12
|
CESTAT
|
|
Service Tax under Finance Act,1994
|
Service Tax
|
13.34
|
2014-15
|
The Joint Commissioner of Service Tax, Kolkata
|
|
Name of the statute
|
Nature of dues
|
Amount
(Rs.Lacs)
|
Period to which the amount relates
|
Forum where dispute is pending
|
|
Custom Act, 1962
|
Custom duty
|
5,974.73
|
2008-09 to 2011-12
|
Additional Director General, Directorate of Revenue Intelligence, New Delhi
|
|
Custom Act, 1962
|
Custom duty
|
19,569.38
|
2009-10 & 2010-11
|
Principal, Additional Director General, Directorate of Revenue Intelligence, Kolkata Zonal
Unit
|
|
Custom Act, 1962
|
Custom duty
|
10,267.82
|
2008-09 & 2009-10
|
Principal, Additional Director General, Directorate of Revenue Intelligence, Kolkata Zonal
Unit
|
|
Jharkhand VAT Act, 2015
|
Value Added Tax
|
101.61
|
2010-11
|
Commissioner Commercial taxes, Jharkhand
|
|
Jharkhand VAT Act, 2015
|
Value Added Tax
|
273.16
|
2012-13
|
Deputy Commissioner of Commercial Taxes, Jharkhand
|
|
Jharkhand VAT Act, 2015
|
Value Added Tax
|
8,196.22
|
2011-12
|
Commissioner Commercial Taxes, Jharkhand
|
|
Jharkhand VAT Act, 2015
|
Value Added Tax
|
3,936.83
|
2012-13
|
Commissioner Commercial Taxes, Jharkhand
|
|
Jharkhand VAT Act, 2015
|
Value Added Tax
|
138.94
|
2013-14
|
Commissioner Commercial taxes, Jharkhand
|
|
Jharkhand VAT Act, 2015
|
Value Added Tax
|
9.11
|
2008-09 to 2010-11
|
Commissioner Commercial taxes, Jharkhand
|
|
Central Sales Tax, 1956
|
Central Sales Tax
|
115.08
|
2011-12
|
Commissioner Commercial taxes, Jharkhand
|
|
Central Sales Tax, 1956
|
Central Sales Tax
|
392.78
|
2012-13
|
Commissioner Commercial taxes, Jharkhand
|
(viii) The Company has defaulted in the payment of principal as well as interest dues to the following
banks and Financial Institutions:
Amount (in Lakhs)
|
Name of the Bank
|
Principal
|
Period
|
Interest
|
Period
|
|
Allahabad Bank
|
1,650.28
|
December 2015 to March 2016
|
3,151.46
|
April 2015 to March 2016
|
|
Andhra Bank
|
6,44.37
|
December 2015 to March 2016
|
1,230.11
|
April 2015 to March 2016
|
|
Bank of Baroda
|
966.01
|
December 2015 to March 2016
|
1,833.72
|
April 2015 to March 2016
|
|
Bank of India
|
1,137.69
|
December 2015 to March 2016
|
2,172.90
|
April 2015 to March 2016
|
|
Bank of Maharashtra
|
724.99
|
December 2015 to March 2016
|
1,385.00
|
April 2015 to March 2016
|
|
Canara Bank
|
2,864.80
|
December 2015 to March 2016
|
5,538.51
|
April 2015 to March 2016
|
|
Central Bank of India
|
766.71
|
December 2015 to March 2016
|
1,476.56
|
April 2015 to March 2016
|
|
Corporation Bank
|
1,036.39
|
December 2015 to March 2016
|
1,994.64
|
April 2015 to March 2016
|
|
Dena Bank
|
662.40
|
December 2015 to March 2016
|
1,258.32
|
April 2015 to March 2016
|
|
Name of the Bank
|
Principal
|
Period
|
Interest
|
Period
|
|
ICICI
|
239.25
|
December 2015 to March 2016
|
406.48
|
June 2015 to March 2016
|
|
Indian Bank
|
951.57
|
December 2015 to March 2016
|
1,818.98
|
April 2015 to March 2016
|
|
Indian Overseas Bank
|
2,397.05
|
December 2015 to March 2016
|
4,600.58
|
April 2015 to March 2016
|
|
J&K Bank
|
342.76
|
December 2015 to March 2016
|
654.28
|
April 2015 to March 2016
|
|
Oriental Bank of Commerce
|
2,490.71
|
December 2015 to March 2016
|
4,735.19
|
April 2015 to March 2016
|
|
Punjab & Sind Bank
|
684.32
|
December 2015 to March 2016
|
1,306.29
|
April 2015 to March 2016
|
|
Punjab National Bank
|
3,299.91
|
December 2015 to March 2016
|
6,271.20
|
April 2015 to March 2016
|
|
State Bank of Hyderabad
|
2,734.55
|
December 2015 to March 2016
|
5,215.50
|
April 2015 to March 2016
|
|
State Bank of India
|
11,375.76
|
December 2015 to March 2016
|
21,708.37
|
April 2015 to March 2016
|
|
State Bank of Mysore
|
1,338.54
|
December 2015 to March 2016
|
2,562.45
|
April 2015 to March 2016
|
|
State Bank of Patiala
|
2,212.53
|
December 2015 to March 2016
|
4,267.25
|
April 2015 to March 2016
|
|
State Bank of Travancore
|
1,788.39
|
December 2015 to March 2016
|
3,444.39
|
April 2015 to March 2016
|
|
Syndicate Bank
|
905.86
|
December 2015 to March 2016
|
2,012.35
|
April 2015 to March 2016
|
|
UCO Bank
|
2,797.77
|
December 2015 to March 2016
|
5,355.63
|
April 2015 to March 2016
|
|
Union Bank of India
|
1,610.23
|
December 2015 to March 2016
|
3,096.74
|
April 2015 to March 2016
|
|
United Bank of India
|
1,875.48
|
December 2015 to March 2016
|
3,580.38
|
April 2015 to March 2016
|
|
Vijaya Bank
|
1,152.22
|
December 2015 to March 2016
|
2,213.88
|
April 2015 to March 2016
|
|
HUDCO
|
1,651.99
|
December 2015 to March 2016
|
3,224.90
|
April 2015 to March 2016
|
|
IL&FS
|
105.31
|
December 2015 to March 2016
|
187.04
|
April 2015 to March 2016
|
|
LIC of India
|
951.24
|
December 2015 to March 2016
|
1,856.94
|
April 2015 to March 2016
|
|
SREI
|
2,986.00
|
March 2016
|
3,932.32
|
April 2015 to March 2016
|
|
SREI
|
1,137.45
|
July 2015 to March 2016
|
7.33
|
April 2015 to March 2016
|
(ix) Company did not raise any money by way of initial public offer or further public offer (including
debt instrument) during the year. Further disbursement of Term loan received during the year, term loans were
applied for the purpose they were raised.
(x) According to the information and explanations given to us, no material fraud by the Company or on
the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) According to the information and explanations given to us and based on our examination of the
records of the Company, the Company has paid /provided for managerial remuneration in accordance with the
requisite approvals mandated by the provisions of section 197 read with schedule V to the Act.
(xii) In our opinion and according to the information and explanations given to us, the Company is not
a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on our examination of the
records of the Company, transactions with the related parties are in compliance with section 177 and 188 of
the Act where applicable and details of such transactions have been disclosed in the financial statements as
required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and based on our examination of the
records of the Company, the Company has not made any preferential allotment or private placement of shares or
fully or partly convertible debentures during the year.
(xv) According to the information and explanations given to us and based on our examination of the
records of the Company, the Company has not entered into non cash transactions with directors or persons
connected with him.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India
Act, 1934.
For B Chhawchharia & Co.
Chartered Accountants
Firm''s Registration No.: 305123E
S K Chhawchharia
Place : Kolkata
Partner
Date : May 13, 2016
Membership No.:008482 |
0.15 (3.06%)