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Scan Steels

BSE: 511672|ISIN: INE099G01011|SECTOR: Steel - Sponge Iron
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Mar 16
Auditor's Report (Scan Steels) Year End : Mar '18

Report on the Ind AS Financial Statements

We have audited the accompanying financial statements of Scan Steels Limited [the ‘’Company’’], which comprise the Balance Sheet as at March 31, 2018, the statement of Profit and Loss [including other comprehensive income] and the statement of cash flows and the statement of changes in equity for the year then ended and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Ind AS Financial Statements

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 and presentation of these Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income and cash flows and changes in equity of the company in accordance with the accounting principles generally accepted in India, including the Indian 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 Ind AS 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 Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters that are required to be included in the audit report under the provisions of the Act and the Rules made there under.

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 Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Ind AS 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 Ind AS 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 Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Ind AS financial statements.

Opinion

In our opinion, and to the best of our information and according to the explanations given to us, the aforesaid Ind AS 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 March 31, 2018, and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

Without qualifying our opinion, we draw attention to

i. Note - 40 to the financial statements which describes the approval of the restructuring arrangement by the lead banker State Bank of India and about recognition of interest cost of other members.

ii. Note - 41 to the financial statements which describes on steps taken by the company for transition to Ind AS compliances.

Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1 . As required by the Companies [Auditor’s Report] Order, 201 6[‘’the Order’’] issued by the Central Government of India in terms of sub-section [11] of section 143 of the Companies Act, 2013, we give in the ‘Annexure A’; a statement on the matters specified in the paragraph 3 and 4 of the said order, to the extent applicable.

2. 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 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 and the statement of cash flows and the statement of changes in equity dealt with by this report are in agreement with the books of account.

d. In our opinion, the aforesaid Ind AS financial statements comply with the accounting standards specified under section 1 33 of the Act, read with rule 7 of the Companies [Accounts] Rules, 2014

e. On the basis of the written representations received from the Directors as on 31 st March 201 8 and taken on record by the Board of Directors, none of the Directors are disqualified as on 31st March 2018from 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 and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure B’;

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, 201 4, 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 Ind AS financial statements. Refer Note-28 to the 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, required to be transferred, to the Investor Education and Protection Fund by the company.

Annexure-A to the Independent Auditors’ Report

(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)

The Annexure referred to in our Independent Auditor’s Report to the members of Scan Steels Limited [the Company] on the Ind AS financial statements for the year ended March 31, 2018, we report that:

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

[b] The Company has a regular programme of physical verification of its fixed assets, by which all fixed assets are verified in a phased manner over a period of two years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to such program, a portion of fixed asset has been physically verified by the management during the year and no material discrepancies were noticed on such verification.

[c] The deed of immovable properties are held in the name of the Company in almost all cases excepting for

- Freehold land of 7.68 Acres situated in Village Raiberna and Laing, Sundergarh which is in the name of M/s. Shristi Ispat Limited, the company which was merged in to this company during 2005.

- Land of 14.88 Acres occupied by the company situated in Village-Kudithini, Bellary, Karnataka.

[ii.] a. The inventory has been physically verified by the management during the year. In our opinion, the frequency of such verification is reasonable.

b. The discrepancies noticed on the aforesaid verification between the physical stocks and book records were not material.

[iii] According to the information and explanations given to us, no loan has been granted by the Company [secured/ unsecured loans] to companies/ firms/ limited liability partnerships or other parties covered in the register maintained under section 189 of the Act.Accordingly reporting on interest and its repayment are not applicable.

[iv.] In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of section 185 and 186 of the Act in respect of grant of loans, making investments and providing guarantees and securities, as applicable.

[v.] In our opinion and according to the information and explanations given to us, the Company has accepted deposits from the public and complied in accordance with Chapter-VI [section 73 to 76] of the Act.

[vi.] We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under sub-section [1] of section 148 of the Act, 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 records.

[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, goods and services tax ,cess and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities.

[b] According to the information and explanations given to us, the following dues of Customs Duty, Income Tax, VAT, Goods and Services Tax and Entry Tax have not been deposited by the Company on account of disputes:

STATEMENT OF DISPUTED DUES

SI

No.

Name of the Statute

Period

Nature of Dues

Amount (Rs. ‘Lakhs’)

Forum where dispute is pending

1

Orissa Sales Tax Act

2001-2002

OST

0.63

Sales Tax Tribunal, Cuttack

2

Entry Tax Act

2001-2002

ENTRY

TAX

0.09

Sales Tax Tribunal, Cuttack

3

Orissa Sales Tax Act

2002-2003

OST

11.00

Assistant Commissioner of Commercial Tax, RKL

4

Orissa Sales Tax Act

2004-2005

OST

3.66

OST Tribunal, Cuttack

5

Entry Tax Act

2004-2005

ENTRY

TAX

3.45

OST Tribunal, Cuttack

6

Orissa Sales Tax Act

2005-2006

OST

100.62

High Court of Odisha, Cuttack

7

Entry Tax Act

2005-2006

ENTRY

TAX

16.79

High Court of Odisha, Cuttack

8

Central Sales Tax Act

2005-2006

CST

4.25

High Court of Odisha, Cuttack

9

OVAT , Act

2006-2007

OVAT

101.28

High Court of Odisha, Cuttack

10

Central Sales Tax Act

2006-2007

CST

153.29

High Court of Odisha, Cuttack

11

Entry Tax Act

2006-2007

ENTRY

TAX

30.73

High Court of Odisha, Cuttack

12

OVAT , Act

2007-08 & 2008-09

OVAT

1.10

Additional CST Northern Zone

13

Entry Tax Act

2007-08 & 2008-09

ENTRY

TAX

0.67

Additional CST Northern Zone

14

Central Sales Tax Act

2007-08 & 2008-09

CST

0.93

Additional CST Northern Zone

15

Central Sales Tax Act

01.08.2008

to

28.02.2011

CST

3.18

Additional CST Northern Zone

16

OVAT, Act

01.04.2009

to

31.03.2011

OVAT

1.98

Additional CST Northern Zone

17

Entry Tax Act

01.04.2009

to

31.03.2011

ENTRY

TAX

4.55

Additional CST Northern Zone

18

OVAT, Act

01.08.2008

to

28.02.2011

OVAT

1499.34

OST Tribunal, Cuttack / Stay Revision Commissioner

19

Entry Tax Act

01.08.2008

to

28.02.2011

ENTRY

TAX

315.77

OST Tribunal, Cuttack / Stay Revision Commissioner

20

OVAT , Act

04.04.2012

to

31.03.2014

OVAT

2.71

Commissioner Cuttack , Revision

21

Entry Tax Act

01.04.2012

to

31.03.2014

ENTRY

TAX

21.05

Commissioner Cuttack, Revision

22

Central Sales Tax Act

01.04.2012

to

31.03.2014

CST

5.38

Commissioner Cuttack, Revision

23

Central Sales Tax Act

01.04.2014 to

30.09.2015

CST

1.54

DCCT, Rourkela

24

Central Sales Tax Act

01.04.2016 to

31.03.2017

CST

1.14

DCCT, Rourkela

25

Custom Act 1962

2012 & 2013

Custom

Duty

132.04

Customs, Excise& Service Tax Appellate Tribunal,

Bangalore

26

Income Tax act

2009-10 & 2011-12

Income

Tax

88.94

The Commissioner of Income Tax(appeals)

Total

2506.10

(vii) In our opinion and according to the information and explanations given to us, the Company has defaulted in repayment of dues to banks who have declared the same as non-performing in respect of the following amounts:

Particular

Nature of Loan

Period of Default

Principal Amount outstanding in Books of Account as at 31st March 2018 (Rs. In Lakhs)

Remarks

Oriental Bank of Commerce

Cash Credit

30th April,2016 to 31st March, 2018.

1265.00

Refer Note No-40 and 12 to Financial Statements.

Punjab National Bank.

Cash Credit

30th April,2016 to 31st March, 2018.

2527.00

IDBI Bank

Cash Credit

30th June, 2016 to 31st March, 2018.

1760 .00

Term Loan

368 .00

Bank of India

Cash Credit

30th June, 2017 to 31st March, 2018.

1306.00

(ix.) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were raised. The Company has not raised any money by way of initial public offer or further public offer (including debt instruments) during the year.

(x.) According to the information and explanations given to us, no fraud by the Company or on 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, managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies 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 1 77 and 1 88 of the Companies Act, 2013 and the details of such transactions have been disclosed in the Ind AS financial statements of the Company as required by the applicable accounting standards.

(xiv) Based upon audit procedures performed and the information and explanations given by the management, The company has allotted on Preferential basis 8,00,000 no of equity shares at a premium as decided by the Board of Directors out of the conversion of warrants allotted earlier. (Refer Note - 42)

(xv.) The Company has not entered into any non-cash transactions with its directors or persons connected with them. Accordingly, the provisions of clause 3(xv) of the Order 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. Accordingly, the provisions of clause 3(xvi) of the order are not applicable to the Company.

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

We have audited the internal financial controls over financial reporting of Scan Steels Limited (“the Company”) as of March 31, 2018 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) and the Standards on Auditing, (the ‘Standards’) issued by ICAI and deemed to be prescribed under section 1 43 (1 0) of the Companies Act, 201 3, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of theInd AS financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ind AS financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of Ind AS financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the Ind AS financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For SRB & Associates

Chartered Accountants

F.Regd. No-310009E

B. Mohanty

30th May, 2018 Partner

Bhubaneswar M. No:056264

Source : Dion Global Solutions Limited
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