TO THE MEMBERS OF
M/S FERRO ALLOYS CORPORATION LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the accompanying financial statements of M/s Ferro Alloys Corporation
Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2022,
the Statement of Profit and Loss (including other comprehensive income). Statement of
Changes in Equity and Statement of Cash Flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies and other
explanatory information (herein after referred to as" financial statements").
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
Companies Act, 2013 ("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, 2022, of its loss (including other
comprehensive income), changes in equity and its cash flows for the year then ended on
that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified
under section 143(10) of the Act. Our responsibilities under those Standards are further
described in the Auditors Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the
ethical requirements that are relevant to our audit of the financial statements under the
provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the Code of Ethics. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Emphasis of matters
1. We refer to Note 9 to the Financial Statements regarding the managements opinion
that there is no decline in the carrying value of loan amounting to Rs. 439.87 CroreSfT
the amount has increased by Rs. 48.29 crores during the financial year 2021-2022 on
account of interest accrued at the rate of 10.5% charged on principal amount of 510.97
Crores advanced to the wholly owned subsidiary M/s Facor Power Limited as it represents a
loan assigned from Rural Electrification Corporation in accordance with the approved
Scheme of CIRP even though the net worth of the subsidiary is fully eroded^ for the
reasons stated therein.
Our opinion is not modified in respect of the above matter.
Information Other than Financial Statements and Auditors Report thereon
The Companys Board of Directors is responsible for the other information. The other
information comprises the information included in the Annual report, but does not include
the financial statements and our auditors report thereon.
The other information is expected to be made available to us after the date of this
auditors report.
Our opinion on the financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other confirmation identified above when it becomes availabie and, in doing so,
consider whether the other information is materialiy inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
When we read other information, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to those charged with governance and
take appropriate action as applicable under the relevant laws and regulations.
Responsibility of management and those charged with governance for financial statements
The Companys Board of Directors is responsible for the matters stated in section
134(5) of the Act with respect to the preparation of these financial statements that give
a true and fair view of the firranctaf position, financtai performance, changes rn equity
and cash hows of the Company in accordance with the accounting principles generally
accepted in India, including the accounting Standards specified under section 133 of the
Act.
This responsibility also includes maintenance of adequate accounting records in
accordance with the provisions of the Act for safeguarding of the assets of the Company
and for preventing and detecting frauds and other irregularities; selection and
application of appropriate implementation and maintenance of 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 statement that give a true and fair view and
are free from materia! misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Companys ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
The Board of Directors are also responsible for overseeing the companys financial
reporting process.
Auditors responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditors report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with SAs
wili always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit In accordance with SAs, we exercise professional judgment and
maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that Is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of interna! control.
• Obtain an understanding of internal cotitrol relevant to the audit In order to
design audit procedures that are appropriate in the circumstances. Under section 143(3)
(i) of the Act, we are also responsible for expressing our opinion on whether the company
has adequate internal financial controls system in place and the operating effectiveness
of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
•
eonciu^cre"on"the"approprjateness"ora^senorthe~goTn"g"coTrceTn"l5a"sTsof^axcoTjntmg"ai^
based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Companys ability to continue
as a going concern. If we conclude that a material! uncertainty exists, we are required to
draw attention in our auditors report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditors report. However,
future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of Lite audit and significanl audll findings. Including any
significant deficiencies In internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order, 2020 ("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, 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, to the extent applicable, 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 appears from our examination of those books;
c. The Balance Sheet, the Statement of Profit and Loss (including Other Comprehensive
Income), the 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, the aforesaid financial statements comply with the Accounting
Standards specified under Section 133 of the Act read with Companies (Indian Accounting
Standards) rules, 2015 as amended;
e. On the basis of the written representations received from the directors as at March
31, 2022 and taken on record by the Board of Directors, none of the directors is
disqualified as at March 31, 2021 from being appointed as a direct of in for its 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. As the company has not paid/provided for any managerial remuneration, accordingly
the provision of section 197 read with schedule V of the act are not applicable to the
company;
h. With respect to the other matters to be included in the Auditors 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:
a) The financial statements disclose the impact of pending litigations on the financial
position of the Company -Refer Note 40 to the financial statements.
b) The Company did not have any long-term contracts including derivatives contracts for
which there were any material foreseeable losses;
c) There were no amounts which were required to be transferred to the Investor
Education and Protection Fund by the Company.
A^HWIN MANKESHWAR
Partner
For and on behalf of
K.K.MANKESHWAR & CO.,
Chartered Accountants
FRN:- 106009W
UDIN: 22046219AHPVMA7644
Nagpur, dated the 21=^ April, 2022
ANNEXURE A TO THE INDEPENDENT AUDITORS REPORT
The Annexure referred to in paragraph 1 under "Report on Other Legal and
Regulatory Requirement" section of our Independent Auditors Report to the members of
the Company on the financial statements for the period ended March 31, 2022, we report
that:
1. (a) The Company has maintained proper records showing full particulars, including
quantitative details and situation of fixed assets.
(b) The fixed assets were physically verified during the year by the Management and
material discrepancies were noticed on such physical verification and have been properly
dealt with in the books of account.
(c) In our opinion and according to the information and explanations given to us and on
the basis of our examination of the registered sale deed / transfer deed / conveyance deed
/ other documents evidencing title of the Company, we report that the title deeds of all
the immovable properties of land and buildings which are freehold, other than
self-constructed buildings, included in the property, plant and equipment are held in the
name of the Company as at the Balance Sheet date.
In respect of immovable properties of land that have been taken on lease and disclosed
as property, plant and equipment in the financial statements, the lease agreements are in
the name of the Company, where the Company is the lessee in the agreement as at Balance
Sheet date.
(d) As per the information and explanation given to us and as per our verification of
the records, the company has not revalued any Property, Plant or Equipment or any
intangible asset.
(e) On the basis of information and explanation given to us no proceedings have been
material or are operating against the company for holding any examination the "Benami
Transactions (Prohibition) Act, 1988 and Rules made thereunder.
2. In respect of Inventories:
(a) The inventories were physically verified during the year by the Management at
reasonable intervals and no material discrepancies were noticed in the physical
verification which were more than 10%.
(b) As per the information and explanation given to us and as per our verification of
the records the company has not been sanctioned with any working capital limits.
3. According to the information and explanation given to us, the Company has not
granted any loan, secured or unsecured to Companies, Firms, Limited Liability Partnership
or other parties covered in the register maintained under Section 189 of Companies Act.
Accordingly, the clause (iii) of paragraph 3 of the Order is not applicable to the
Company.
4. According to the information and explanation given to us, the Company has complied
with the provisions of Sections 185 and 186 of the Act in respect of grant of loans,
making investments and providing guarantees and securities, as applicable.
5. The Company has not accepted any deposit within the meaning of Sections 73 to 76 of
the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly,
the clause (v) of paragraph 3 of the Order is not applicable to the Company and hence not
comment upon.
6. We have broadly reviewed the books of account and records maintained by the Company
relating to the products of 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
Companies Act and we are of the opinion that prima facie the prescribed accounts and
records have been made and maintained. We have, however, not made a detailed examination
of the records with a view to determining whether they are accurate or complete.
7. (a) According to information and explanations given to us and on the basis of our
examination of the books of account and records, the Company has been generally regular in
depositing undisputed statutory dues including Provident Fund, Employees State Insurance,
Income-Tax, Duty of Customs, Goods and Services Tax, Cess and any other statutory dues
with the appropriate authorities though there has been slight delay in few cases.
According to the information and explanations given to us, no undisputed amounts
payable in respect of the above were in arrears as at March 31, 2022 for a period of more
than six months from the date on when they become payable.
(b) According to the information and explanations given to us and the records of the
Company, there is no due in respect of income tax, sales tax, service tax, duty of
customs, duty of excise and value added tax. Goods and Services Tax as on 31st March 2022
which have not been deposited on account of disputes.
Note:
Pursuant to the approval of the order by the Honble NCLT, and as per the terms of the
Resolution Plan, claims were not admitted by the Resolution Professional.
8. The income tax self-assessment return has not been filed for the current financial
year hence ascertaining such income is not possible, the management assures that there
shall be no such transaction.
9. In respect of Borrowings:
(a) In our opinion and according to the Information and explanations given by the
management, the Company has not defaulted in repayment of dues to debentures holders. The
Company did not have any outstanding loans or borrowing dues in respect of a bank,
financial institutions or to government during the year.
(b) According to the Information and explanations given to us the Company has not been
declared as a willful defaulter by any Bank or financial institution or any other lender.
(c) Based upon the audit procedures performed and the information and explanations
given by the management in our opinion the loan obtained from Vedanta Ltd. And Toplight
Ltd. pursuant to resolution plan approved by NCLT is utilized for the purpose it was
obtained.
(d) Based upon the audit procedures performed and the information and explanations
given by the management the Company has not availed any short term borrowings, hence not
commented upon.
(e) Based upon the audit procedures performed and the information and explanations
given by the management the Company has not taken any funds from any entity or person on
account of or to meet the obligations of its subsidiaries, associates or joint ventures.
(f) Based upon the audit procedures performed and the information and explanations
given by the management the Company has not raised loans during the year on the pledge of
securities held in its subsidiaries, joint ventures or associate companies.
10. The Company has not raised any money by way of initial public offer or further
public offer (Including debt instruments) and term loan during the period. Accordingly,
clause (ix) of the paragraph 3 of the Order Is not applicable.
11. According to the information and explanations given to us, no material fraud by the
Company or on the Company by Its officers or employees has been noticed or reported during
the course of our audit.
12. As the Company is not a Nidhi Company, accordingly clause (xil) of paragraph 3 of
the order is not applicable to the Company.
13. According to the information and explanation given by the management, all
transaction with related parties are in compliance with section 188 of Companies Act, 2013
wherever applicable and the details have been disclosed in the notes to financial
Statement, as required by the applicable accounting standards. The provision of section
177 are not applicable to the company and accordingly reporting under clause 3(xiii)
insofar as it relates to section 177 of the Act is not applicable to the company and hence
not commented upon.
14. In respect of Internal audit:
(a) In our opinion the company has Internal audit system commensurate with the size and
nature of business of the company.
(b) The reports of Internal Auditor were considered in carrying out our audit.
15. According to the information and explanations given by the management, the Company
has not entered into non-cash transactions with directors or persons connected with him as
referred to in section 192 of companies act, 2013 and accordingly the provision of clause
(xv) of the Order is not applicable to the company and hence not commented upon.
16. The Company is not required to be registered under section 45-IA of the Reserve
Bank of India Act, 1934.
17. Based upon the audit procedures performed and the information and explanations
given by the management, the company does not have any cash losses in the current and
preceding financial years.
18. There has been no resignation of the statutory auditor in the current financial
year.
19. Based upon the audit procedures performed, the information and explanations given
by the management and on the basis of financial ratios viz. Debt service coverage ratio.
Current ratio, Debtor days and Creditor days we opine that the Company seems to be capable
of meeting its liabilities existing at the date of balance sheet as and when they fall due
within a period of one year from the balance sheet date.
20. Based upon the audit procedures performed and the information and explanations
given by the management, there is no unspent amount of C.S.R expenditure. Accordingly
there is no need of transfer of amount to funds specified in Schedule VII to the Act in
accordance with second proviso to sub-section (5) of section 135 of the said Act.
21. Based upon the audit procedures performed and the information and explanations
given by the management, this report pertains to standalone entity. Accordingly the
provisions of clause 3 (xxi) of the Order are not applicable to the Company and hence not
commented upon.
ASljlWIN MANKESHViMR
Partner
Membership No. 046219
For and on Behalf of
K.K. MANKESHWAR & CO.
Chartered Accountants
FRN : - 106009W
UDIN: 22046219AHPVMA7644
Nagpur, dated the,
21st April, 2022
Annexure- "B" to the Independent Auditors Report
Report on the Internal Financial Controls under Clause (C) 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 M/s Ferro
Alloys Corporation Limited ("the Company") as of 31 March 2022 in conjunction
with our audit of the financial statements of the Company for the year ended on that date.
Managements Responsibility for Internal Financial Controls
The Companys 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 (TCAT). 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 companys 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 Companys 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
NoteO""antrthe"StaTrdaTds""3TrAirditTn"g7Ts"SLreti"bYTCAr^7id"tieemed^^be
prescribed under section 143(10) of the Companies Act, 2013, 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 auditors judgment, including the assessment of the risks of
material misstatement of the 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 Companys internal financial controls system
over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A companys internal financial control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A companys internal financial control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of 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 (3)provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the 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 Interna!
financial controls system over financial reporting and such Internal financial controls
over financial reporting were operating effectively as at 31 March 2022, 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.
A^HWIN MANKESHWAR
Partner
Membership No. 046219 For and on Behalf of
K.K. MANKESHWAR & CO.
Chartered Accountants
FRN ; - 106009W
UDIN: 22046219AHPVMA7644
Nagpur, dated the,
21st April, 2022.
+91-9892691696
