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INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF BHUSHAN STEEL LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Bhushan Steel Limited ("the Company"), which comprises the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information for the year then ended.
Management's Responsibility for the Standalone 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 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. 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.
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.
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.
An audit involves performing procedures to obtain audit evidence about the amounts and 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 control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of 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.
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.
Basis of Qualified Opinion
The Supreme Court of India, vide its order dated 24/09/2014, cancelled number of coal blocks allocated to various entities which includes one coal block allocated to the company and one of its associated company, which were under development. Subsequently, the Government of India has issued the Coal Mines (Special Provision) Act, 2015, which inter–alia deal with the payment of compensation to the effected parties in regard to investments the coal blocks.
No effect has been taken on the value of investment made by the company in the de–allocated coal blocks amounting to Rs.56289.96 Lacs (including expenditure incurred Rs.13546.46 Lacs and advance given Rs.42743.50 Lacs) and Rs.666.00 Lacs in Equity shares/ advance for share capital in the associated company whose coal blocks have been de–allocated. In the opinion of the management the Company/associated company will receive back the payments/expenditure paid/ made, including borrowing cost and other incidental expenditure, relating to de–allocated coal blocks. We are unable to comment on the impact on the value of investment made by the company and its associate in the de–allocated coal blocks and their consequent impact on the Losses for the financial year ended March 31, 2015.
In our opinion and to the best of our information and according to the explanations given to us, except for the matter described in the 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, of the state of affairs of the Company as at 31st March, 2015, and its loss and its cash flows for the year ended on that date.
Emphasis of Matter
a) We draw attention to Note 50 to the financial statements that the managerial remuneration paid for the current financial year is subject to approval of Central Government.
b) We draw attention to Note 48 to the financial statements that in accordance with "5/25" scheme of Reserve Bank of India, the consortium of banks led by State Bank of India as lead Bank has allowed flexible structuring of long term loans by aligning their debt repayment obligations with cash flow generated during their economic life. Pending approval of the scheme by the authorities of respective consortium banks, the company has classified long term borrowings maturity period in accordance with the said scheme.
Our opinion is not modified in respect of above matters.
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 paragraphs 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 sought and, except for the possible effect of the matter described in the Basis of Qualified Opinion paragraph above, obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;
b. Except for the possible effect of the matter described in the Basis of Qualified Opinion paragraph above, 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;
d. Except for the possible effect of the matter described in the Basis of Qualified Opinion paragraph above, in our opinion, the aforesaid standalone financial statement comply with the
Accounting Standards specified under Section 133 of the Act, read with Rule 7 ofthe Companies (Accounts) Rules, 2014;
e. The matters described in the "Basis for Qualified Opinion' and "Emphasis of Matter' paragraphs above, in our opinion may have an adverse effect on the functioning of the Company;
f. On the basis of written representations received from the directors as on March 31, 2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015, from being appointed as a director in terms of section 164 (2) of the Act;
g. The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis of Qualified Opinion paragraph above; and
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 has disclosed the impact of pending litigations on its financial position in its financial statements – Refer Note –29 to the financial statements.
ii The Company has made provision, as required under applicable law or accounting standards, for material foreseeable losses, if any, on long–term contracts including derivative contracts. – Refer Note – 52 to the financial statements.
lii There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
AN N E X U R E
(Referred to in paragraph 1 of our report of even date)
i) In Respect of its Fixed Assets :
a) The company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
b) The Fixed Assets covering significant value were physically verified during the year by the Management at such intervals which in our opinion, provides for the physical verification of all the Fixed Assets at reasonable interval having regard to the size of the Company and nature of its business. According to the information and explanations given to us by the Management, no material discrepancies have been noticed on such verification.
ii) In Respect of its Inventory :
a) As per information and explanations given to us, the inventory of finished goods, semi–finished goods and raw material at works were, during the year, physically verified by the management. In respect of Stores and Spare Parts and stock at yards in the custody of the third party and stocks in transit were verified with the confirmation or statement of account or correspondence of the third parties or subsequent receipt of goods.
b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories of the Company followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.
c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories, no material discrepancies were noticed on such physical verification.
iii) In our opinion and according to information and explanations given to us, the company has not granted any loans, secured or unsecured to companies, firms or other parties listed in the register maintained under Section 189 ofthe Companies Act, 2013.
iv) In our opinion and according to the information and explanations given to us, having regard to explanation that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the company and the nature of its business with regard to the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our Audit we have not observed any continuing failure to correct major weaknesses in such internal control system.
v) To the best of our knowledge, the company has not accepted any deposits covered under section 73 or any other provisions of the Companies Act, 2013.
vi) To the best of our knowledge, the Central Government has prescribed the maintenance of cost records under Section 148 (1) of the Companies Act, 2013, which have been maintained by the company and these have been broadly reviewed by us and we are ofthe opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not, nor we are required, carried out any detailed examination of such accounts and records.
vii) According to the information and explanations given to us, in respect of statutory dues :
a) The Company has generally been regular in depositing undisputed dues including Provident Fund, Investors' Education and Protection Fund, Employees' State Insurance, Income Tax, Sales Tax, Value Added Tax, Wealth Tax, Duty of Custom, Duty of Excise, Cess, Service Tax and any other statutory dues applicable to it with the appropriate authorities and there were no undisputed dues in arrears as at 31st March, 2015 for a period of more than six months from the date they become payable.
b) The disputed statutory dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess aggregating Rs. 96723.64 Lacs (net of paid under protest) that have not been deposited on account of disputed matters pending before appropriate authorities are as under:
c) The company has transferred the amount required to be transferred to Investors' Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 to 1956) and rules made there under within time.
viii) The Company has no accumulated losses, but has incurred cash loss during the financial year covered by our Audit. The Company has not incurred any cash loss in the immediate preceding financial year.
ix) In our opinion and according to the information and explanations given to us, there were delays in repayment of term loans and interest not resulting in default of repayment of dues to Financial Institutions or Banks or Debenture holders.
x) To the best of our knowledge and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from Banks / Financial Institutions.
xi) To the best of our knowledge and according to the information and explanations given to us, the term loans were applied for the purpose for which the loans were obtained, other than temporary deployment pending actual application.
xii) Based upon the audit procedure performed and information and explanations given by the Management, we report that no fraud on or by the Company has been noticed or reported during the year.
For MEHRA GOEL & CO.
Registration No.: 000517N
Sd/– R.K. Mehra
M. NO.: 006102
For MEHROTRA & MEHROTRA
Registration No.: 000226C
Sd/– M.P. Mehrotra
M. NO. : 005699
Place: New Delhi
Dated: 27th May, 2015