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Electrosteel Steels
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« Mar 14
Auditor's Report (Electrosteel Steels) Year End : Mar '15
 1.  We have audited the accompanying financial statements of
 Electrosteel Steels Limited (the Company), which comprise the Balance
 Sheet as at 31 March 2015, 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 Standalone 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 standalone 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 for safeguarding 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 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 standalone
 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 thereunder.
 
 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 standalone 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, but not for the purpose of expressing
 an opinion on whether the Company has in place an adequate internal
 financial controls system over financial reporting and the operating
 effectiveness of such controls. 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 2015, 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 Note 40 to the
 financial statements, regarding the preparation of the same on a going
 concern basis. The Company incurred a net loss of Rs. 62,404.23 lacs
 during the year ended March 31,2015 and, as of that date, the Company''s
 current liabilities exceeded its current assets by Rs 163,669.48 lacs,
 further the Company''s net worth has also been substantially eroded as
 at the balance sheet date. However, in view of operationalisation of
 the other project facilities together with the increase in release of
 the working capital limits and the committed infusion of funds, these
 financial statement have been prepared on a going concern basis and no
 adjustment has been made to the carrying value of the assets and
 liabilities.
 
 Report on Other Legal and Regulatory Requirements
 
 10.  As required by the Companies (Auditor''s Report) Order, 2015 (the
 Order) issued by the Central Government of India in terms of Section
 143(11) of the Act, we give in the Annexure a statement on the matters
 specified in paragraphs 3 and 4 of the Order.
 
 11.  As required by Section143(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 matter described in paragraph 9 under the Emphasis of Matters,
 may not have an adverse effect on the functioning of the Company.
 
 f.  on the basis of the written representations received from the
 directors as on 31 March 2015 and taken on record by the Board of
 Directors, none of the directors is disqualified as on 31 March 2015
 from being appointed as a director in terms of Section164(2) of the
 Act;
 
 g.  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 39 to the financial statements,
 has made provision, as required under the applicable law or accounting
 standards, 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 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, 2015
 
 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.
 
 (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 or other parties covered in the register maintained
 under Section 189 of the Act. Accordingly, the provisions of clauses
 3(iii)(a) and 3(iii)(b) of the Order are not applicable.
 
 (iv) In our opinion, there is an adequate internal control system
 commensurate with the size of the Company and the nature of its
 business for the purchase of inventory and fixed assets and for the
 sale of goods and services. During the course of our audit, no major
 weakness has been noticed in the internal control system in respect of
 these areas.
 
 (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) Undisputed statutory dues including provident fund,
 employees'' state insurance, income-tax, sales-tax, wealth 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 with the appropriate authorities. Further, no
 undisputed amounts payable in respect thereof were outstanding at the
 year-end for a period of more than six months from the date they became
 payable.
 
 (b) The dues outstanding in respect of income-tax, sales-tax, wealth
 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         Amount          Period to
                          dues            (Rs.Lacs)         which the
                                                              amount
                                                             relates
 
 Central Excise Act,       Excise Duty       75.97           2009-10
 1944
 
 Service Tax under         Service Tax      2,215.62        2007-08 &
 Finance Act,1994                                           2008-09
 
 Service Tax under         Service Tax      1,510.34        2009-10
 Finance Act,1994
 
 Service Tax under         Service Tax      317.72          2009-10
 Finance Act,1994
 
 Service Tax under         Service Tax      1,071.40        2007-08 to
 Finance Act,1994                                           2011-12
 
 Custom Act, 1962          Custom duty      5,974.73        2008-09 to
                                                            2011-12
 
 
 
 Jharkhand VAT           Value Added Tax    101.61          2010-11
 Act, 2015
 
 Jharkhand VAT           Value Added Tax    273.16          2012-13
 Act, 2015
 
 Jharkhand VAT           Value Added Tax    138.94          2013-14
 Act, 2015
 
 Jharkhand VAT           Value Added Tax    9.11            2008-09 to
 Act, 2015                                                  2010 11
 
 
 
 Name of the statute                  Forum where dispute
                                          is pending
 
 
 
 Central Excise Act,                        CESTAT
 1944
 
 Service Tax under                          CESTAT
 Finance Act,1994
 
 Service Tax under                      Order Awaited.
 Finance Act,1994
 
 Service Tax under                     Order Awaited.
 Finance Act,1994
 
 Service Tax under                         CESTAT
 Finance Act,1994
 
 Custom Act, 1962                   Additional Director
                                 General, Directorate of
                                     Revenue Intelligence,
                                        New Delhi
 
 Jharkhand VAT                          Commissioner
 Act, 2015                           Commercial taxes
 
 Jharkhand VAT                      Deputy Commissioner
 Act, 2015                          of Commercial Taxes
 
 Jharkhand VAT                    Commissioner Commercial
 Act, 2015                                 taxes
 
 Jharkhand VAT                          Commissioner
 Act, 2015                            Commercial taxes
 
 
 (c) There were no amounts which were required to be transferred to the
 Investor Education and Protection Fund by the Company in accordance
 with the relevant provisions of the Companies Act, 1956 (1 of 1956) and
 rules made thereunder
 
 (viii) In our opinion, the Company''s accumulated losses at the end of
 the financial year are not less than fifty percent of its net worth.
 The Company has incurred cash losses in the current and the immediately
 preceding financial year.
 
 (ix) The Company has defaulted in payment of interest dues to the
 following banks and Financial Institutions:
 
 Name of the bank              Amount      Due date        Delay in days
                            (in crores)
 
 Allahabad Bank                 2.60       31-Mar-2015     Not yet paid
 
 Andhra Bank                    1.20       31-Mar-2015     Not yet paid
 
 Bank of Baroda                 1.50       31-Mar-2015     Not yet paid
 
 Bank of India                  1.79       31-Mar-2015     Not yet paid
 
 Bank of Maharashtra            1.15       31-Mar-2015     Not yet paid
 
 Canara Bank                    4.67       31-Mar-2015     Not yet paid
 
 Central Bank of India          1.24       31-Mar-2015     Not yet paid
 
 Corporation Bank               1.67       31-Mar-2015     Not yet paid
 
 Dena Bank                      1.03       31-Mar-2015     Not yet paid
 
 ICICI Bank Ltd                 0.45       31-Mar-2015     Not yet paid
 
 Indian Bank                    1.51       31-Mar-2015     Not yet paid
 
 Indian Overseas Bank           3.79       31-Mar-2015     Not yet paid
 
 J&K Bank                       0.54       31-Mar-2015     Not yet paid
 
 Oriental Bank of Commerce      3.88       31-Mar-2015     Not yet paid
 
 Punjab & Sind Bank             1.09       31-Mar-2015     Not yet paid
 
 Punjab National Bank           5.22       31-Mar-2015     Not yet paid
 
 State Bank of Hyderabad        4.31       31-Mar-2015     Not yet paid
 
 State Bank of India            18.11      31-Mar-2015     Not yet paid
 
 State Bank of Mysore           2.12       31-Mar-2015     Not yet paid
 
 State Bank of Patiala          3.60       31-Mar-2015     Not yet paid
 
 State Bank of Travancore       2.87       31-Mar-2015     Not yet paid
 
 Syndicate Bank                 1.70       31-Mar-2015     Not yet paid
 
 UCO Bank                       4.45       31-Mar-2015     Not yet paid
 
 Union Bank of India            2.57       31-Mar-2015     Not yet paid
 
 United Bank of India           2.98       31-Mar-2015     Not yet paid
 
 Vijaya Bank                    1.85       31-Mar-2015     Not yet paid
 
 Total                         77.89
 
 
 Name of Financial         Amount       Due date          Delay in days
 Institution            (in crores)
 
 HUDCO                       2.73       31-Mar-2015        Not yet paid
 
 Life Insurance
 Corporation of
 India                       1.57       31-Mar-2015        Not yet paid
 
 IL&FS                       0.16       31-Mar-2015        Not yet paid
 
 Total                       4.46
 
 (x) The Company has not given any guarantees for loans taken by others
 from banks or financial institutions. Accordingly, the provisions of
 clause 3(x) of the Order are not applicable.
 
 (xi) In our opinion, the term loans were applied for the purpose for
 which the loans were obtained, though surplus funds which were not
 required for immediate utilization were temporarily used for the
 purpose other than for which the loan was sanctioned.
 
 (xii) No fraud on or by the Company has been noticed or reported during
 the period covered by our audit.
 
 
                                               For B Chhawchharia & Co.
                                                 Chartered Accountants
                                      Firm''s Registration No.: 305123E
 
 
                                                       S K Chhawchharia
 Place : Kolkata                                                Partner
 Date : May 11,2015                               Membership No.:008482
Source : Dion Global Solutions Limited
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