India Steel Works Ltd Directors Report.

To The Members

India Steel Works Limited

1. report on the standalone Financial statements

We have audited the standalone financial statements of nd I IA steeL WorKs LIMIted ("the Company"), which comprise the Balance Sheet as at 31 March 2019, the Statement of Profit and Loss (Other Comprehensive Income) the Cash Flow statement and the statement of change in equity for the year then ended, and a summary of the significant accounting policies and other explanatory information in which is included the standalone financial statement for the year ended on that date of unaudited financial statement of overseas branch.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (the Act) in the manner so required and give a true & fair view in conformity with the Indian accounting standard prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind AS") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2019, its LOSS (other comprehensive income, changes in equity and its cash flows for the year ended on that date.

2. 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 Auditor’s Responsibilities for the Audit of the Standalone Financial Statement 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 standalone financial statements under the provisions of the Act and the Rules made 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 obtain is sufficient & appropriate to provide a base for our opinion.

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 statement.

3. Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be key audit matters to be communicated in our report.

Key Audit Matter:- How the matter was addressed in our Audit:-
1) evaluation of provision and Contingent
Liabilities
As at the Balance Sheet date, the Company has significant open legal cases and other contingent liabilities as disclosed In note no. 32 The assessment of the existence of the present legal or Constructive obligation, analysis of the probability of the related payment require the management to make judgment and estimates in relation to the issues of each matter. We have reviewed and held discussions with the management to understand their processes to identify new possible obligations and changes in existing obligation for compliance with the requirements of Ind AS 37 on Provisions, Contingent Liabilities and Contingent Assets.
We have analysed significant changes from prior periods and obtain a detailed understanding of these items and assumptions applied.
We have held regular meetings with the management and key legal personnel responsible for handling legal matters.
The management with the help of its expert, as needed, have made such judgments and estimates relating to the likehood of an obligation arising and whether there is a need to recognize a provision or disclose a contingent liability. In addition, we have reviewed :
• the details of the proceedings before the relevant authorities including communication from the advocates / experts;
• legal advises / opinions obtained by the management, as needed, from experts in the field of law on the legal cases; minutes of board meetings, including the sub-committees; and
Due to the level of judgment relating to recognition, valuation and presentation of provision and contingent liabilities, this is considered to be a key audit matter. • status of each of the material matters as on the date of the balance sheet.
We have assessed the appropriateness of provisioning based on assumption made by the management and presentation of the significant contingent liabilities in the financial statements.
2) Valuation of inventory :
Inventory forms a significant part i.e. 20% of the Company’s total assets. Inventory comprises of Raw Materials, Finished Goods, Stock in process and Stores and Spares. We have reviewed the stock records and held discussion with the management. We verified arithmetical accuracy of valuation records/reports.

4. Management’s responsibility for the standalone Financial statement

The Company’s and Traded Stock Management and Board of Directors are 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 including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards (INDAS) 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 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, the Management and Board of Directors are responsible for assessing the Company’s 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 Company’s financial reporting process.

5. Auditor’s 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 auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but it not a guarantee that an audit conducted in accordance with SAs will 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 by expected to influence the economic decisions of users taken on the basis of these financial statements.

6. emphasis of Matters

We did not Audited the financial statement of overseas branch included in the financial statement, which constitute the total current assets of Rs.266,289,224/- and net assets of Rs.7,11,136/- as at 31st March 2019, total revenue of Rs. Nil, Net Loss of Rs.18,84,591/- and net cash flow amounting to Rs. 3,59,196/- for the period ended on that date, as considered in the financial statement.

7. 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 exercise of powers conferred by sub-section (11) of Section 143 of the Act, we give in the "Annexure A" a statement on the matters specified in para 3 and 4 of the said order to the extend applicable,

(A) 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 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 it appears from our examination of those books;

c. The report on the unaudited account of overseas branch U/s 143(8) of the Act has been properly dealt by us in preparing this report. Our opinion on the financial statements is not modified in respect of unaudited report.

d. The Balance Sheet, the Statement of Profit and Loss including other comprehensive income, the statement of change in equity and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account; e. in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards prescribed under Section 133 of the Act, read with relevant rules issued there under .

f. on the basis of the written representations received from the directors as at 31 March 2019 and taken on record by the Board of Directors, none of the directors disqualified as at 31 March 2019 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 reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B"

(B) 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 litigation on its financial position in its standalone financial statement Refer Note 33A to the financial statement.

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

iii. there are no amounts which are required to be transferred to the Investor Education and Protection Fund by the Company.

(C) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act.

In our opinion and to the best of our information and according to the explanation given to us, the remuneration paid / provided by the company to its directors during the year is in accordance with the provisions of Section 197 of the Act.

The remuneration paid to any directors is not in excess of the limit laid down U/s 197 of the IT Act. The Ministry of Corporate Affairs has not prescribed other details U/s 197 (16) which requires to be commented by us.

For and on behalf of
Laxmikant Kabra & Co.
Chartered Accountants
Firm Reg. No. 117183W
[CA Laxmikant Kabra ]
Place : Mumbai Partner
Date : 29/05/2019 Membership No. 101839

Annexure A to the Independent Auditors report

ANNEXURE A REFFERRED TO IN INDEPENDENT AUDITORS’ REPORT TO THE MEMBER OF THE COMPANY ON THE FINANCIAL STATEMENT FOR THE PERIOD ENDED 31 MARCH,2019 We Report That -

1. a. The Company has maintained proper records, showing full particulars, including quantitative details and situation of fixed asset;

b. As explained to us the Company has a phased program for physical verification of the fixed asset of the company to cover all locations. In our opinion, the frequency of verification is reasonable, considering the size of the Company. No material discrepancies were noticed verification such carried on during the year, as compared with the available records.

c. According to the information and explanation given to us and on the basis of our examination of the records of the Company, the title deeds of immovable’s and movable properties are held in the name of the company except certain motor vehicles having carrying value of Rs. 35.90 lakhs as at 31/03/2019, is held in the name of directors of company’s behalf.

2. The inventory have been physically verified by the management, except those lying with third parties and for goods in transits. 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 it’s business. No material discrepancies were noticed verification physical of inventories as compared to book records.

3. According to the information and explanation given to us, the Company’s has not granted any loans secured or unsecured during the period to companies firms or other parties covered in the register maintained under section 189 of the companies Act 2013. Therefore comments under clause (a), (b)and (c) are not given.

4. In our opinion and according to the information and explanation given to us, the company has complied the provisions of section 185 and 186 of the Companies Act 2013 to the extend applicable with respect to the loans & investment made.

5. The company has not accepted any deposit from the public in accordance with the provisions of section 73 to76 of the Act or any other relevant provisions of the Act and rules framed there under.

6. According to the information and explanation given to us, cost records were Maintained by the company pursuant to the order of the Central Government under Section 148(1) of the Act.

7. a. According to and on the basis of our examination of the records the company is generally regular in depositing undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, GST, Custom Duty, Cess, Excise Duty, Service Tax, Value added tax, and other material statutory dues during the year with the appropriate authorities. As explain to us, there were no undisputed statutory dues as mention above in Arrears as at 31st March, 2019 for a period of more than 6 months from the date they became payable.

b. According information and explanations given to us the following are the particulars of disputed amounts payable in respect of Sales tax and Central Sales Tax and other statutory dues as at the last day of the period ending 31st March, 2019 -

Name of Status Nature of dues Amount Period to which the amount relates Forum where the dispute is pending
(In Lakhs)
Sales Tax Act Sales Tax 160.11 FY-2014/2015 Sales Tax Officer
Central Excise Act Excise 53.53 FY-2012/2013 DGCI
Central Excise Act Excise 406.30 FY-2012/2013 FTWL
Central Excise Act Excise 37.99 FY-2005/2006 Comm.of Cen Excise
Central Excise Act Excise 9.64 FY-2012/2013 Addl. Com of Cen. Excise

8. Based on our audit procedures and on the basis of information and explanations given by the management, we are of the opinion that the Company has not defaulted in the repayment of dues to banks and financial institute. The company did not have any outstanding dues to debenture holders during the year.

9. The company has not raised any money by way of public issue or further public offer during the year or in the recent past based on the information and explanations given to us by the management.

10. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, its officers or employees, noticed or reported during the period, nor have been informed of such case by the management.

Continuation sheet

11. According to the information and explanation given to us and based on our examination of the books and records of the Company, we are the opinion that the 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 Company Act. 12. In our opinion, the company is not a Nidhi Companies, Therefore, provision of clause 3(xii) of the Order are not applicable to the Company.

13. According to the information and explanation given to us and based on our examination of the records, all the transactions with related parties are in compliance with section 177 and 188 of the Companies Act, 2013 and all the details have been disclosed in the financial statement as per Accounting Standard in Note No - 40 to the Financial Statement.

14. According to the information and explanation given to us and based on our examination of the records, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debenture during the year under review.

15. According to the information and explanation given to us and based on our examination of the records of the Company. The Company has not entered into any non-cash transactions, prescribed U/s 192 of the Companies Act during the year with directors or persons connected with them.

16. The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, paragraph 3 (xvi) of the order is not applicable to the company.

Annexure – B to the Independent Auditors report

AnneXure to tHe Independent AudItor’s report oF eVen dAte on tHe FInAnCIAL stAteMents oF IndIA steeL WorKs LIMIted – 31st March, 2019 report on the Internal Financial Controls under Clause (i) of sub-section 3 of section 143 of the Companies Act, 2013 ("the Act")

Opinion

We have audited the internal financial controls with reference to financial statement of India Steel Works Limited ("the Company") as of March 31, 2019, in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s responsibility for Internal Financial Controls

The company’s management and the Board of Directors are 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

Auditor’s responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial statement based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls with reference to financial statement. 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 were established and maintained and whether 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 judgement, 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 which we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Companies internal financial controls with reference to financial statement.

Meaning of Internal Financial Controls over Financial statement

A company’s internal financial control with reference to financial statement 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 company’s 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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial statement

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 and to the best of our information and according to explanation given to us the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, 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 and on behalf of
Laxmikant Kabra & Co.
Chartered Accountants
Firm Reg. No. 117183W
[CA Laxmikant Kabra ]
Place : Mumbai Partner
Date : 29/05/2019 Membership No. 101839