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Modern Steels

BSE: 513303|ISIN: INE001F01019|SECTOR: Steel - Rolling
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Mar 14
Auditor's Report (Modern Steels) Year End : Mar '15
1.  We have audited the accompanying financial statements of Modern
 Steels Limited, which comprise the Balance Sheet as at 31st March,
 2015, the Statement of Profit and Loss and Cash Flow Statement for the
 year ended, and a summary of 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 with respect to the
 preparation and presentation of these standalone financial statements
 that give a true and fair view of the financial position, financial
 performance and cash fows 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. 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.
 
 Auditors'' Responsibility
 
 3.  Our responsibility is to express an opinion on these standalone
 financial statements based on 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 there under.
 
 4.  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.
 
 5.  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 control 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.
 
 6.  We believe that the audit evidence we have obtained is sufficient
 and appropriate to provide a basis for our audit opinion on the
 standalone financial statements.
 
 Opinion
 
 7.  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:
 
 (a) In the case of the Balance Sheet, of the state of affairs of the
 Company as at 31st March, 2015;
 
 (b) In the case of the Statement of Profit and Loss, of the Profit/loss
 of the Company for the year ended on that date; and
 
 (c) In the case of the Cash Flow Statement, of the cash flows of the
 Company for the year ended on that date.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  As required by the Companies (Auditor''s Report) Order, 2015 (the
 Order) issued by the Central Government of India in terms of
 sub-section (11) of section 143 of the Act, we give in the Annexure a
 statement on the matters specified in the paragraph 3 and 4 of the
 Order, to the extent applicable.
 
 2.  As required by Section 143(3) of the Act, we report that:
 
 a.  We have 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 appears from our examination of
 those books.
 
 c.  The Balance Sheet, the Statement of Profit and Loss, and the Cash
 Flow Statement dealt with by this Report are in agreement with the
 books of account.
 
 d.  In our opinion, the Balance Sheet, the Statement of Profit and
 Loss, and the Cash Flow Statement comply with Accounting Standards
 specified under section 133 of the Act read with Rule 7, The Companies
 (Accounts) Rules, 2014.
 
 e.  On the basis of the written representations received from the
 directors as on 31st March, 2015, taken on record by the Board of
 Directors, none of the directors is disqualified as on 31st March,
 2015, from being appointed as a director in terms of Section 164(2) of
 the Act
 
 f.  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 has disclosed the impact of pending litigations on its
 financial position in its 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 derivative contracts
 
 iii. There has been no delay in transferring amounts, required to be
 transferred, to the Investor Education and Protection Fund by the
 Company.
 
 ANNEXURE TO THE AUDITORS'' REPORT
 
 The Annexure referred to in our report to the members of the Company
 for the year ended 31st March, 2015. To the best of our knowledge and
 belief and information & explanation given to us, we further report
 that:- 1.  a) Company has maintained proper records to show full
 particulars including quantitative details & situation of its fixed
 assets.  b) As explained to us, the fixed assets have been physically
 verified by the management at reasonable intervals which in our opinion
 is appropriate having regards to size of the Company and nature of its
 assets. No material discrepancies have been noticed during the year.
 2.  a) The inventory of the Company has been physically verified by the
 management at reasonable intervals during the year.  b) In our opinion
 and according to the information and explanation given to us, the
 procedures of physical verification of inventories followed by the
 Management are reasonable and adequate in relation to the size of the
 Company and nature of its business.  c) The Company has maintained
 proper records of its inventories and no material discrepancies were
 noticed on physical verification.
 
 3.  The Company has granted loans, secured or unsecured to Companies,
 Firms or other parties covered in the register maintained under Section
 189 of the Companies Act, 2013. The same is mentioned herein as per the
 information and explanation given to us by the management.
 
 a) The Company has granted unsecured loan to Modern Automotives Limited
 during the year.  The maximum amount involved during the year is A 1.86
 crores & yearend outstanding is A1.86 crores.
 
 b) The rate of interest and other term & conditions of the above loan
 is, in our opinion, not prima facie prejudicial to the interest of the
 Company.
 
 c) The receipts of principal amounts and interest have been regular as
 per stipulations.
 
 d) There was no overdue amount.
 
 4.  In our opinion the Company''s present internal audit system is
 commensurate with its size and nature of business, for purchase of
 inventory and fixed assets and for the sale of goods and services. The
 Company has regularly identified any weakness & corrective steps have
 been taken.
 
 5.  The Company has accepted deposits from Directors amounting to A
 2.68 crores (including unpaid interest A 0.56 crores) as well as from
 corporate bodies amounting to A 3.94 crores (including unpaid interest
 A 0.16 crores). As per CDR report the amount of A 3.50 crores need to
 be infused & A 2.38 crores needed to be retained separately in form of
 unsecured loans by the Company. The Company has complied with the
 directives issued by the Reserve Bank of India & with the provisions of
 Section 73 to 76 of the Companies Act, 2013 and the rules framed there
 under with regard to the deposits accepted from the public. No order
 has been passed by the Company Law Board or National Company Law
 Tribunal or Reserve Bank of India or any court or any other Tribunal.
 
 6.  On the basis of records produced to us, we are of the opinion that
 prima facie the cost records prescribed by the Central Government of
 India under Section 148(1) of the Companies Act, 2013 have been made &
 maintained & also cost audit will be conducted. We have not carried out
 any detailed examination of such account & records.
 
 7.  (a) According to the books and records as produced
 
 and examined by us in accordance with generally accepted auditing
 practices in India and also based on management representations,
 undisputed statutory dues in respect of Provident Fund, Employee''s
 State Insurance dues, Investor Education and Protection Fund, Income
 Tax, Wealth Tax, Service Tax, Cess and other material statutory dues
 have generally been regularly deposited by the Company during the year
 with the appropriate authorities in India and there were no arrear
 outstanding in respect of above for a period of more than six months as
 on 31st March, 2015.  (b) According to the records of the Company
 examined by us and the information and explanations given to us, there
 are no dues of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Service
 Tax, Excise Duty and Cess which have not been deposited on account of
 any dispute other than the following amounting to A 1.93 crores. The
 details are as under:-
 
 NATURE OF          FORUM WHERE           YEAR          DISPUTED
 DUES/NAME OF       DISPUTE IS PENDING                  AMOUNT
 STATUTES                                                 (RS.)
 
 EXCISE DUTY
 
 CENTRAL            PUNJAB AND HARYANA    1989-90        6,47,885
 EXCISE ACT 1944    HIGH COURT
 
 CENTRAL            COMMISSIONER          2007-08        2,56,533
 EXCISE ACT 1944    (APPEALS),
                    CHANDIGARH 
 
 CENTRAL            COMMISSIONER          2007-08 to     2,59,085
 EXCISE ACT 1944    (APPEALS),            2008-09
                    CHANDIGARH 
 
 CENTRAL            COMMISSIONER          2004-05 to    89,56,212
 EXCISE ACT 1944    (APPEALS),            2006-07
                    CHANDIGARH         
 
 CENTRAL            CESTAT, NEW DELHI     2004-05          78,579
 EXCISE ACT 1944
 
 CENTRAL            CESTAT, NEW DELHI     2002-03 to    15,87,580
 EXCISE ACT 1944                          2004-05
 
 CENTRAL            CESTAT, NEW DELHI     2005-06 to    11,30,998
 EXCISE ACT 1944                          2006-07
 
 CENTRAL            COMMISSIONER          2007-08        2,64,934
 EXCISE ACT 1944    (APPEALS),
                    CHANDIGARH 
 
 CENTRAL            COMMISSIONER          2007-08 to     3,11,332
 EXCISE ACT 1944    (APPEALS),            2008-09
                    CHANDIGARH 
 
 CENTRAL            CESTAT, NEW DELHI     2004-05 to     3,55,235 
 EXCISE ACT 1944                          2005-06
 
 CENTRAL            CESTAE, NEW DELHI     2008-09        1,10,550
 EXCISE ACT 1944
 
 CENTRAL            CESTAT, NEW DELHI     2003-04 to    20,78,246
 EXCISE ACT 1944                          2007-08
 
 CENTRAL            COMMISSIONER          2004-05        5,16,272
 EXCISE ACT 1944    (APPEALS),
                    CHANDIGARH
 
 CUSTOMS DUTY
 
 CUSTOMS ACT        CESTAT, AHMEDABAD     2004-05       25,35,450
 1962
 
 INCOME TAX
 
 INCOME TAX ACT     INCOME TAX A/Y        2005-06        1,64,482
 1961               APPELLATE TRIBUNAL,   & 2006-07
                    CHANDIGARH
 
 8. The Company has accumulated losses as at 31st March, 2015 which are
 more than 50% of the net worth as on that date. It has suffered cash
 loss during the financial year ended on that date and also in the
 immediately preceding financial year.
 
 6.  There are no dues payable to financial institutions or
 debenture-holders. During the year ended 31st March 2015, the company
 has defaulted on timely payment of principal and payment of interest on
 term loans and cash credits. The delay with respect to interest and
 principal on term loans, up to 30 days amounting to A 8,68,820 and A
 25,49,000 respectively and delay between 31-90 days amounted to A
 3,34,51,204 and A 47,77,571 respectively. The delay with respect to
 interest on cash credit up to 30 days amounted to A 40,52,000 and delay
 between 31-90 days amounted to A 2,00,87,889
 
 Apart from above as at the year end, the interest and principal
 outstanding on term loans amounting to A 1,68,59,586 and A 47,77,571 on
 cash credit interest amounted to A 75,61,309 has not been paid toll
 31st March, 2015. As at the balance sheet date the periods of delay in
 these cases were up to 60 days
 
 7.  The Company has not given any guarantee for loans taken by others
 from bank or financial institutions.
 
 8.  In our opinion & according to information & explanation given to us
 the term loans raised during the year have been applied for the purpose
 for which they were raised during the year.
 
 9.  As per the information and explanation given to us and on the basis
 of examination of records, no material fraud on or by the Company was
 noticed or reported during the course of our audit.
 
                                               For Aaryaa & Associates
 
                                                 Chartered Accountants
 
                                         Firm Registration No. 015935N
 
 
 
                                                         Krishan Joshi
 
 Place: Chandigarh                                             Partner
 
 Dated: 28th May, 2015                                    M. No.094478
Source : Dion Global Solutions Limited
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