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Jindal Steel & Power | Auditor's Report > Steel - Sponge Iron > Auditor's Report from Jindal Steel & Power - BSE: 532286, NSE: JINDALSTEL
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Jindal Steel & Power

BSE: 532286|NSE: JINDALSTEL|ISIN: INE749A01030|SECTOR: Steel - Sponge Iron
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Auditor's Report (Jindal Steel & Power) Year End : Mar '18

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of JINDAL STEEL & POWER LIMITED (“the Company”), which comprise the Balance Sheet as at 31st March, 2018, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended and a summary of the significant accounting policies and other explanatory information (herein after referred to as “standalone financial statements”).

Management’s Responsibility for the standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Secti on 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 including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.

This responsibility also includes maintenance of adequate accounti ng 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, implementati on and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounti ng records, relevant to the preparati on and presentati on of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. In conducting our audit, 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 and the Order issued under Section 143(11) of the Act.

We conducted our audit of the standalone financial statements 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.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the standalone 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 evaluati ng the appropriateness of the accounti ng policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Basis of Qualified Opinion:

We draw attention regarding impact on the net carrying value of fixed assets/investment made in mining assets not been considered for the reason stated in the Note No. 58 to the standalone financial statements of the Company for the year ended 31st March, 2018 and the management’s view about additional levy paid amounting to Rs.1274.46 Crore (being differential amount between Gross and Net) which has not been provided for as stated in the Note No. 57 to the standalone financial statements of the Company for the year ended 31st March, 2018, which has been shown as good and recoverable.

These matters were also qualified by us in our audit report on standalone financial statements for the year ended 31st March, 2017.

Qualified Opinion

In our opinion and to the best of our information and according to the explanati ons given to us, except for the effects / possible effects of our observations stated in “Basis of Qualified Opinion” paragraph above, the aforesaid standalone 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 including the Ind AS, of the state of affairs (financial positi on) of the Company as at 31st March, 2018, and its loss (financial performance including other comprehensive income/loss), its cash flows and the changes in equity for the year ended on that date.

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 of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us during the course of audit, we give in the Annexure “A” a statement on the matters specified in the paragraphs 3 and 4 of the Order.

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 explanati ons 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 and Loss including Other Comprehensive Income, Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.

(d) in our opinion, except for the effect / possible effect of the matters described in ‘Basis of Qualified Opinion’ paragraph above, the aforesaid standalone financial statements comply with the Indian Accounting Standards specified under Section 133 of the Act, read with relevant rules issued thereunder.

(e) the matters described in ‘Basis of Qualified Opinion’ paragraph above, in our opinion, may not have an adverse effect on the functioning of the Company.

(f) on the basis of the written representations received from the directors of the Company as on 31st March, 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2018 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 reporti ng of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure “B”. Our report expresses a modified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls over financial reporting.

(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, 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 No. 41 to the standalone financial statements.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivatives contracts.

iii. There were no delays in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure “A” to the Independent Auditor’s Report (referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date on the Standalone Financial Statements of JINDAL STEEL & POWER LIMITED for the year ended 31st March, 2018)

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified by the management as per the regular programme of periodical physical verification in a phased manner, which, in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. The discrepancies noticed on such physical verification were not material.

(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 included in fixed assets are held in the name of the Company.

(ii) The inventories of the Company [except stock lying with the third parties (read with Note No. 55) and in transit], part of stores and spares, have been physically verified by the management at reasonable intervals. In our opinion, the procedures of physical verification of inventory followed by the management are reasonable in relation to the size of the Company and nature of its business. The discrepancies noticed on such physical verification of inventory as compared to book records were not material.

(iii) The Company has not granted any secured or unsecured loan to any companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Accordingly, the provisions of Clauses 3(iii) (a), (b) & (c) of the Order are not applicable.

(iv) According to the information, explanations and representations provided by the management and based on the audit procedures performed, we are of the opinion that in respect of loans, investments, guarantees and security, the Company has complied with the provisions of the Section 185 and 186 of the Companies Act, 2013.

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from public within the provision of Section 73 to 76 of the Act or any other relevant provisions of the Act and the rules framed there under (to the extent applicable). We have been informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or other Tribunal in this regard.

(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 Section 148(1) of the Act in respect of the Company’s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have, however, not made a detailed examination of the said records with a view to determine whether they are accurate or complete.

(vii) According to the records of the Company and information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employee’s State Insurance, Income Tax, Sales Tax, Service Tax, Goods and Service Tax, Value Added Tax, Custom Duty, Excise Duty, Cess and other material statutory dues with the appropriate authorities, to the extent applicable. There were no undisputed statutory dues payable as at 31 March, 2018 which were outstanding for a period of more than six months from the date they become payable except for Royalty of Rs.0.96 Crore.

(b) The dues in respect of Income Tax, Service Tax, Duty of Customs, Duty of Excise, Goods and Service Tax, Sales Tax and Value Added Tax that have not been deposited with the appropriate authorities on account of any dispute and the forum where the dispute is pending are given below: -

S. No.

Name of Statute

Nature of Dues

Net of Pre- amount Deposit Amount (Rs. In Crore)

Period to which relates

Closing Forum where dispute is pending

1

The Income tax Act,1961

Income Tax

928.25

FY 2004-05 to 2011-12

ITAT, New Delhi

2

The Income tax Act,1961

Income Tax

661.57

FY 2007-08 to 2009-10

Punjab & Haryana High Court

3

Central Sales Tax, 1956

Central Sales Tax

0.09

FY 2005-06

Deputy Commissioner, Sales Tax, Rourkela

4

Central Sales Tax, 1956

Central Sales Tax

0.45

FY 2006-07

Deputy Commissioner, Commercial Tax, Cuttack

5

The Odisha Value Added Tax Act, 2004

State Sales Tax

0.16

FY 2006-07

Deputy Commissioner, Commercial Tax (Appeals), Cuttack

6

The Odisha Value Added Tax Act, 2004

State Sales Tax

17.07

FY 2012-13 to FY 2013-14

Hon’ble Orissa High Court

7

Central Sales Tax, 1956

Central Sales Tax

7.52

FY 2012-13 to FY 2013-14

Hon’ble Orissa High Court

8

Central Excise Act, 1944

Excise Duty

101.34

FY 2011-12 to FY 2014-15

CESTAT, Kolkata

9

Central Excise Act, 1944

Excise Duty

2.81

FY 2011-12 to FY 2014-15

Commissioner (Appeals), BBSR

10

Central Excise Act, 1944

Excise Duty

0.33

FY 2012-13 to FY 2014-15

Asst. Commissioner, CEX

11

Central Excise Act, 1944

Excise Duty

2.43

FY 2012-13 to FY 2014-15

Commissioner, CEX

12

Tamil Nadu Vat

State Sales Tax

0.72

FY 2008-2009 to FY 2009-10

APPEAL FILED (DC)

13

West Bangal Vat

State Sales Tax

0.05

FY 2010-11

PENDING AT REVISION BOARD (Tribunal)

14

Central Sales Tax, 1956

Central Sales Tax

0.09

FY 2010-11

PENDING AT REVISION BOARD (Tribunal)

15

Central Sales Tax, 1956

Central Sales Tax

0.17

FY 2011-12 to FY 2013-14

APPEAL FILED (JC)

16

Central Excise Act, 1944

Excise Duty

139.09

FY 2007-08 to FY 2008-09 & FY 2011-12 to FY 2015-16

CCE,Raipur

17

The Finance Act, 1994

Service Tax

66.99

FY 2010-11 to FY 2015-16

CESTAT - New Delhi

18

Custom Act, 1962

Custom

Duty

13.98

FY 2013-14 to FY 2014-15

CESTAT - Hyderabad

19

Central Excise Act, 1944

Excise Duty

16.65

FY 2011-12 to 2014-15

CESTAT - New Delhi

20

Central Excise Act, 1944

Excise Duty

2.35

FY 2011-12

High Court Bilaspur

21

Custom Act, 1962

Custom

Duty

2.14

FY 2011-12

DCC - Paradeep

22

Custom Act, 1962

Custom

Duty

3.66

FY 2012-13

CESTAT - Kolkata

23

Central Excise Act, 1944

Excise Duty

1.75

FY 2010-11

High Court Bilaspur

24

Custom Act, 1962

Custom

Duty

5.75

FY 2005-06, FY 2011-12 & FY 2014-15

CESTAT, Mumbai

25

Central Excise Act, 1944

Excise Duty

0.66

FY 2012-13 to 2013-14

High Court Bilaspur

26

The Finance Act, 1994

Service Tax

0.38

FY 2011-12 to FY 2015-16

Commissioner (Appeals), Raipur

27

Central Excise Act, 1944

Excise Duty

0.24

FY 2015-16

CCE, Raipur

28

Central Excise Act, 1944

Excise Duty

2.27

FY 2007-08 & FY 2009-10

CESTAT - Delhi

29

Central Excise Act, 1944

Excise Duty

0.05

FY 2003-04

HC, Bilaspur

30

Central Excise Act, 1944

Excise Duty

0.12

FY 2016-17

ACCE, Raigarh

31

Central Excise Act, 1944

Excise Duty

666.45

FY 2009-10 to FY 2013-14

Odisha High Court

32

Central Excise Act, 1944

Excise Duty

19.00

FY 2010-11 to FY 2011-12 & FY 2013-14 to FY 2014-15

CESTAT, BBSR

33

The Finance Act, 1994

Service Tax

39.43

FY 2009-10 to FY 2016-17

Commissioner, Ranchi

34

The Finance Act, 1994

Service Tax

0.10

FY 2015-16 & FY 2017-18

Commissioner Appeal, Ranchi

35

Central Sales Tax, 1956

Central Sales Tax

0.64

FY 2010-11 & FY 2012-13

DCCT, Ramgarh

36

Central Sales Tax, 1956

Central Sales Tax

0.73

FY 2014-15

Commissioner of Commercial Tax, Ranchi

37

Jharkhand VAT Act

State Sales Tax

1.32

FY 2012-13 & FY 2014-15

Commissioner of Commercial Tax, Ranchi

38

Jharkhand VAT Act

State Sales Tax

0.30

FY 2013-14

DCCT, Ramgarh

39

Central Sales Tax, 1956

Central Sales Tax

8.62

FY 2011-12 to FY 2013-14

DCCT, Ramgarh

40

Central Sales Tax, 1956

Central Sales Tax

0.10

FY 2011-12

Commissioner of Commercial Tax, Ranchi

41

Central Excise Act, 1944

Excise Duty

11.39

FY 2010-11

Commissioner of Central Excise, Raipur

42

The Finance Act, 1994

Service Tax

0.15

FY 2015-16 to FY 2016-17

Assistant Commissioner of Central Excise, Raipur

43

Central Excise Act, 1944

Excise Duty

0.28

FY 2015-16 to FY 2016-17

Assistant Commissioner of Central Excise, Raipur

44

The Finance Act, 1994

Service Tax

17.76

FY 2016-17 to FY 2017-18

Director General of Goods & Service Tax, Bhubaneshwar

(viii) In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has defaulted in repayment of dues (including interest) to banks and financial instituti ons at various days during the year. The maximum amount of default on a particular date was Rs.1915.74 Crore (including default of Rs.22.10 Crore w.r.t. debentures) and maximum delay (no. of days) noticed was less than 90 days (maximum delay of less than 90 days w.r.t. debentures). As at 31 March, 2018, there was no overdue financial obligations to banks/ financial institutions/ debenture holders.

(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). Money raised on term loans have been applied for the purposes for which loans were raised.

(x) Based on the audit procedure performed and according to the information and explanations given to us by the management, no fraud by the Company or no material fraud on the Company by its officers or employees has been noticed or reported during the year.

(xi) In our opinion and according to the information and explanations given to us, managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V of the Companies Act, 2013, except for Remuneration paid to Key Management Personnel, subject to Shareholders and Central Government’s approval, as stated in footnote to Note No. 54 B.

(xii) The Company is not a Nidhi company and hence reporting under clause 3(xii) of the Order is not applicable to the Company.

(xiii) In our opinion and according to the information and explanations given to us, the Company is in compliance with Secti ons 177 and 188 of the Companies Act, 2013 where applicable, for all transacti ons with the related parties and the details of related party transactions have been disclosed in the standalone financial statements as required by the applicable accounting standards [Read with Note No. 54 B].

(xiv) In our opinion and according to the information and explanations given to us, the Company is in compliance with the Section 42 of the Companies Act, 2013 with respect to preferenti al allotment and/or private placement of shares during the year as stated in Note No. 21(a) [allotment of equity shares and converti ble warrants to promoter group entities on preferential basis and allotment of equity shares by way of Qualified Institutional Placement] and the amounts raised have been used for the purposes for which the funds were raised except for Rs.482 Crore which is unutilized and has been parked in working capital. The Company has not made allotment of any fully or partly convertible debentures during the year.

(xv) In our opinion and according to the information and explanations given to us, during the year, the Company has not entered into non-cash transactions with its Directors or persons connected to its directors and hence provisions of Section 192 of the Companies Act, 2013 are not applicable to the Company.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For LODHA & CO.

Chartered Accountants

ICAI-FRN: 301051E

N.K. LODHA

Place: New Delhi Partner

Date: 9th May, 2018 Membership No. 085155

Source : Dion Global Solutions Limited
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