Jindal Stainless Ltd Directors Report.

To the Members of

Jindal Stainless Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of Jindal Stainless Limited (‘the Company), which comprise the Balance Sheet as at 31 March 2020, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

2. 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 (‘Act) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India including Indian Accounting Standards (‘Ind AS) specified under section 133 of the Act, of the state of affairs of the Company as at 31 March 2020, and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditing 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.

Key Audit Matters

4. 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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

5. We have determined the matters described below to be the key audit matters to be communicated in our report.

Key audit matter How our audit addressed the key audit matter
Valuation of investment in associate and subsidiary company
We draw reference to note 4 to the standalone financial statements. Our audit procedures were focused on obtaining sufficient appropriate audit evidence that the carrying value of investments in the associate Jindal United Steel Limited and subsidiary PT. Jindal Stainless Indonesia are not materially misstated. These procedures included, but were not limited to, the following:
The Company has investment in equity instruments of its associate Jindal United Steel Limited and subsidiary company PT. Jindal Stainless Indonesia amounting to 175.05 crores and 54.68 crores, respectively. Such investments in the aforesaid associate and subsidiary company are accounted for at cost in accordance with Ind AS 27, Separate Financial Statements. The Company assesses the recoverability of these investments when impairment indicators exist by comparing the fair value (less costs of disposal) and carrying amount of the investment as on the reporting date in accordance with Ind AS 36, Impairment of Assets. We obtained an understanding of managements processes and controls for determining the fair valuation of investments. The understanding was obtained by performance of walkthroughs which included inspection of documents produced by the Company and discussion with those involved in the process of valuation.
The aforesaid investments are not traded in the recognized stock exchange. The fair values of the investments are determined by a management-appointed independent valuation specialist based on discounted cash flow (‘DCF) method. The process of computation of fair valuation for such investments using DCF method is complex. Managements assessment of the fair valuation of investment requires estimation and judgement around assumptions used. The key assumptions underpinning managements assessment of the fair valuation include, but are not limited to, projections of future cash flows, growth rates, discount rates, estimated future operating and capital expenditure. The application of significant judgment in this matter required substantial involvement of internal valuation experts on the audit engagement. In addition to the evaluation of design and testing the operating effectiveness of controls implemented for identification of impairment indicators and measurement of impairment provisions, we also performed the following procedures:
Accordingly, assessment of impairment loss to be recognised, if any, on the carrying value of investment made in the associate and subsidiary company has been considered as be a key audit matter for current years audit. • Assessed the qualification and objectivity of the management-appointed independent valuation specialist to determine the fair value of investments;
• Assessed the appropriateness of valuation methodology used for the fair valuation computation with the help of an auditors expert, and tested the mathematical accuracy of managements model;
• Reconciled the cash flow projections to the business plans approved by the Companys management;
• Challenged the managements assessment of underlying assumptions used for the cash flow projections including the implied growth rates, considering evidence available, including the impact of COVID-19 pandemic, where appropriate to support these assumptions and our understanding of the business;
• Tested the discount rate and long-term growth rates used in the forecast including comparison to economic and industry forecasts where appropriate;
• Evaluated the sensitivity analysis performed by management in respect of the key assumptions such as discount and growth rates to ensure there was sufficient headroom with respect to the estimation uncertainty impact of such assumptions on the fair value calculation;
• Engaged internal valuation experts to obtain additional comfort on the valuation technique used by managements valuation expert;
• Obtained written representations from management and those charged with governance on whether the significant assumptions used in valuation of the investments in the associate company and subsidiary company are considered reasonable.
• Evaluated the adequacy and appropriateness of disclosures in relation to the investments in associate company and subsidiary company, in the financial statements including the related impairment indicators.
Recoverability of Minimum Alternate Tax (MAT) Credit
As at 31 March 2020, the Company has recognised Minimum Alternate Tax (MAT) credit amounting to 77.65 crores, within deferred tax assets. On that date, the Company also has unabsorbed depreciation amounting to 2,352.23 crores and brought forward business losses amounting to 115.04 crores. Our procedures in relation to assessment of MAT credit recognised as at reporting date included, but were not limited to, the following:
The recognition of a deferred tax asset in the form of MAT credit is based on managements estimate of taxable and accounting profits in future, which are underpinned by the Companys price assumptions and business plans, and tax adjustments required to be made in the taxable profit computations, as per the provisions of Income Tax Act, 1961 (IT Act). Estimating recoverability of MAT credit also requires significant judgments, including the timing of reversals of unabsorbed depreciation. Considering the materiality of the amounts involved and inherent subjectivity requiring significant judgment involved in the determination of utilization of MAT credit through estimation of future taxable profits, this area was considered to be of most significance to the audit and determined to be a key audit matter. • Obtained and updated our understanding of the managements process of computation of future accounting and taxable profits of the Company, and expected utilization of available MAT credit within specified time period as per provisions of the IT Act.
• Evaluated the design of and tested the operating effectiveness of controls around the preparation of underlying business plans, future taxable profit computation, and assessment of recognition of MAT credit at year end.
• Reconciled the business results projections to the future business plans approved by the Companys board of directors;
• Challenged the managements assessment of underlying assumptions used for the business results projections including expected capacity expansion and utilisation, implied growth rates and expected prices considering evidence available to support these assumptions and our understanding of the business;
• Tested the growth rates used in the forecast by comparing them to past trends and to economic and industry forecasts, including the impact of COVID-19 pandemic, where appropriate;
• Performed independent sensitivity analysis in respect of the key assumptions such as growth rates to ensure there was sufficient headroom with respect to the estimation uncertainty impact of such assumptions on the timing of reversal of unabsorbed depreciation and utilisation of MAT credit;
• Tested the computations of future taxable profits, including testing of the adjustments made in such computations with respect to tax-allowed and tax-disallowed items, other tax rebates and deductions available to the Company, and tested the computation of MAT liability in such future years, in accordance with the provisions of the IT Act.
• Evaluated the historical accuracy of the estimates made in the prior periods with respect to business projections and aforesaid tax computations.
• Tested the mathematical accuracy of managements projections and tax computations.
• Based on aforesaid computations, assessed the appropriateness of managements estimate of likelihood of utilization of MAT credit within the time period specified and in accordance with the provisions of the IT Act.
• Engaged the internal tax experts to assess the accuracy of MAT credit recognized in the financial statements.
• Evaluated the appropriateness and adequacy of the disclosures related to MAT credit in the financial statements in accordance with the applicable accounting standards.

We have determined that there are no other key audit matters to communicate in our report.

Information other than the Financial Statements and Auditors Report thereon

6. 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 standalone financial statements and our auditors report thereon. The Annual Report is expected to be made available to us after the date of this auditors report.

Our opinion on the standalone financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

7. The accompanying standalone financial statements have been approved by the Companys Board of Directors. 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 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 Ind AS 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 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.

8. 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.

9. Those Board of Directors is also responsible for overseeing the Companys financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements

10. 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 Standards on Auditing 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 be expected to influence the economic decisions of users taken on the basis of these financial statements.

11. As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism 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 internal control;

• Obtain an understanding of internal control 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 with reference to financial statements 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;

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, 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.

12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

13. 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.

14. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

15. As required by section 197(16) of the Act, based on our audit, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule V to the Act.

16. As required by the Companies (Auditors Report) Order, 2016 (‘the Order) issued by the Central Government of India in terms of section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

17. Further to our comments in Annexure I, as required by section 143(3) of the Act, based on our audit, 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 purpose of our audit of the accompanying standalone financial statements;

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 standalone financial statements dealt with by this report are in agreement with the books of account; d) in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act;

e) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2020 from being appointed as a director in terms of section 164(2) of the Act;

f) we have also audited the internal financial controls with reference to financial statements of the Company as on 31 March 2020 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 31 March 2020 as per Annexure II expressed unmodified opinion; and

g) 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

i. the Company, as detailed in note 36 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2020;

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2020;

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2020; and

iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016, which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.

Annexure I to the Independent Auditors Report of even date to the members of Jindal Stainless Limited, on the standalone financial statements for the year ended 31 March 2020

Annexure I

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

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

(b) All fixed assets have not been physically verified by the management during the year, however, there is a regular program of verification once in three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are included under the head ‘Property, plant and equipment) are held in the name of the Company.

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit and stocks lying with third parties. For stocks lying with third parties at the year-end, written confirmations have been obtained by the management. No material discrepancies were noticed on the aforesaid verification.

(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion, the Company has complied with the provisions of Section 186 in respect of investments, guarantees and loans. Further, in our opinion, the Company has not entered into any transaction covered under Section 185 of the Act in respect of loans, guarantees and security.

(v) In our opinion, the Company has complied with the directives issued by the Reserve Bank of India, the provisions of Sections 73 to 76 and other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended) as applicable, with regard to the deposits accepted. According to the information and explanations given to us, 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, in this regard.

(vi) We have broadly reviewed the books of account maintained by 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 Act in respect of Companys products and services 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 cost records with a view to determine whether they are accurate or complete.

(vii) (a) Undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, goods and service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been a slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2020

(b) The dues outstanding in respect of income-tax, sales-tax, service-tax, duty of customs, duty of excise, entry tax and value added tax on account of any dispute, are as follows:

Statement of Disputed Dues

Name of Statute Nature of dues Amount (crores) Amount paid under protest (crores) Period to which the amount relates Forum where dispute is pending
The Central Sales Tax Act, 1956 Central Sales Tax 2.35 0.47 Financial Year 2013-14 and 2014-15 Additional Commissioner of Commercial Taxes
The Central Sales Tax Act, 1956 Central Sales Tax 0.43 0.09 October 2015 to March 2016 Additional Commissioner of Commercial Taxes
The Central Sales Tax Act, 1956 Central Sales Tax 1.64 0.16 April 2016 to June 2017 Additional Commissioner of Commercial Taxes
The Odisha Value Added Tax Act, 2004 Value Added Tax 22.92 - Financial Year 2013-14 and 2014-15 The Honble High Court, Odisha
The Orissa Entry Tax Act, 1999 Entry Tax 97.43 15.45 1 October 2006 to 30 September 2010 The Honble High Court, Odisha
The Orissa Entry Tax Act, 1999 Entry Tax 57.18 20.96 Financial Year 2013-14 and 2014-15 The Honble High Court, Odisha
The Orissa Entry Tax Act, 1999 Entry Tax 78.24 53.26 01 Oct 2010 to 31 March 2013 and 01 April 2015 to 31 March 2017 The Honble High Court, Odisha
The Orissa Entry Tax Act, 1999 Entry Tax 0.10 0.10 April 2006 to September 2006 Additional Commissioner of Commercial Tax
The Customs Tariff Act, 1975 Customs Duty 7.97 0.60 Financial Year 2012-13 Customs Excise and Service Tax Appellate Tribunal
The Customs Act, 1962 Customs Duty 1.70 0.13 Financial Year 2014-15 Customs Excise and Service Tax Appellate Tribunal
The Customs Act, 1962 Customs Duty 0.90 0.84 Financial Year 2014-15 and 2015-16 Commissioner of Customs
The Central Excise Act, 1944 Central Excise Duty 1.30 1.30 Financial Year 2006-07, 2007- 08 and 2008-09 Customs Excise and Service Tax Appellate Tribunal
The Central Excise Act, 1944 Central Excise Duty 0.50 0.05 September 2006 to August 2011 Customs Excise and Service Tax Appellate Tribunal
The Central Excise Act, 1944 Central Excise Duty 0.26 0.02 June 2007 to December 2007 Commissioner (appeal) of CGST, Central Excise & Customs
The Central Excise Act, 1944 Central Excise Duty 0.30 0.03 May 2008 to March 2009 Customs Excise and Service Tax Appellate Tribunal
The Central Excise Act, 1944 Central Excise Duty 0.22 0.02 Financial Year 2012-13 to 2013-14 Commissioner (appeal) of Central GST, Central Excise & Customs
The Central Excise Act, 1944 Central Excise Duty 0.19 0.01 Financial Year 2014-15 Commissioner (appeal) of Central GST, Central Excise & Customs

Annexure I to the Independent Auditors Report of even date to the members of Jindal Stainless Limited, on the standalone financial statements for the year ended 31 March 2020

Name of Statute Nature of dues Amount (crores) Amount paid under protest (crores) Period to which the amount relates Forum where dispute is pending
The Central Excise Act, 1944 Central Excise Duty 0.22 - April 2014 to June 2017 Assistant Commissioner of Central GST and Central Excise
The Central Excise Act, 1944 Central Excise Duty 3.25 - January 2013 to January 2014 Commissioner of Central GST and Central Excise
The Central Excise Act, 1944 Central Excise Duty 0.08 - April 2011 to October 2016 Commissioner (Appeal) of Central Excise & Service Tax
The Central Excise Act, 1944 Central Excise Duty 0.10 - Financial Year 2012-13 and 2013-14 Commissioner (Appeal) of Central Excise & Service Tax
The Central Excise Act, 1944 Central Excise Duty 0.05 - May 2008 to March 2013 Commissioner (Appeal) of Central Excise & Service Tax
The Central Excise Act, 1944 Central Excise Duty 0.02 0.02 Financial Year 2013-14 Customs Excise and Service Tax Appellate Tribunal
Income-tax Act, 1961 Income tax 0.97 - Assessment Year 2003-04 Honble High Court of Delhi
Income-tax Act, 1961 Income tax 3.01 - Assessment Year 2004-05 Honble High Court of Delhi
Income-tax Act, 1961 Income tax 7.26 - Assessment Year 2005-06 Honble High Court of Delhi
Income-tax Act, 1961 Income tax 0.10 - Assessment Year 2006-07 Assessing Officer
Income-tax Act, 1961 Income tax 8.69 - Assessment Year 2006-07 Honble High Court of Delhi
Income-tax Act, 1961 Income Tax 3.59 - Assessment Year 2007-08 Honble High Court of Delhi
Income-tax Act, 1961 Income tax 0.83 - Assessment Year 2007-08 Assessing Officer
Income-tax Act, 1961 Income tax 2.08 - Assessment Year 2007-08 Income tax Appellate Tribunal
Income-tax Act, 1961 Income tax 4.47 - Assessment Year 2008-09 Honble High Court of Delhi
Income-tax Act, 1961 Income tax 3.32 - Assessment Year 2009-10 Income tax Appellate Tribunal
Income-tax Act, 1961 Income tax 0.52 - Assessment Year 2010-11 Income tax Appellate Tribunal
Income-tax Act, 1961 Income tax 0.21 - Assessment Year 2010-11 Commissioner of Income Tax (Appeals)
Income-tax Act, 1961 Income tax 19.47 - Assessment Year 2011-12 Income tax Appellate Tribunal
Income-tax Act, 1961 Income tax 18.20 - Assessment Year 2012-13 Income tax Appellate Tribunal
Income-tax Act, 1961 Income tax 14.34 - Assessment Year 2013-14 Income tax Appellate Tribunal
Name of Statute Nature of dues Amount (crores) Amount paid under protest (crores) Period to which the amount relates Forum where dispute is pending
Income-tax Act, 1961 Income tax 12.99 - Assessment Year 2014-15 Income tax Appellate Tribunal
Income-tax Act, 1961 Income tax 0.12 - Assessment Year 2015-16 Commissioner of Income Tax (Appeals)
Income-tax Act, 1961 Income tax 0.14 - Assessment Year 2016-17 Commissioner of Income Tax (Appeals)

(viii) The Company has not defaulted in repayment of loans or borrowings to any financial institution or a bank or any dues to debenture-holders during the year. The Company has no loans or borrowings payable to government during the year.

(ix) In our opinion, the Company has applied moneys raised by way of term loans for the purposes for which these were raised.

The Company did not raise moneys by way of initial public offer/ further public offer (including debt instruments) during year.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable Ind AS.

(xiv) During the year, the Company has made preferential allotment of shares. In respect of the same, in our opinion, the Company has complied with the requirement of Section 42 of the Act and the Rules framed thereunder. Further, in our opinion, the amounts so raised have been used for the purposes for which the funds were raised. During the year, the

Company did not make preferential allotment or private placement of fully/partly convertible debentures.

(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

Annexure II to the Independent Auditors Report of even date to the members of Jindal Stainless Limited on the standalone financial statements for the year ended 31 March 2020

Annexure II

Independent Auditors Report on the internal financial controls with reference to the standalone financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act)

1. In conjunction with our audit of the standalone financial statements of Jindal Stainless Limited (‘the Company) as at and for the year ended 31 March 2020, we have audited the internal financial controls with reference to financial statements of the Company as at that date.

Responsibilities of Management and Those Charged with Governance for Internal Financial Controls

2. The Companys Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal controls 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 (‘the Guidance Note) 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 the Companys business, including adherence to the 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 Act.

Auditors Responsibility for the Audit of the Internal Financial Controls with Reference to Financial Statements

3. Our responsibility is to express an opinion on the Companys internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the ICAI prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls with reference to financial statements, and the Guidance Note issued by the ICAI. 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 with reference to financial statements were established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements includes obtaining an understanding of such internal financial controls, 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 judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

5. 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 with reference to financial statements.

Meaning of Internal Financial Controls with Reference to Financial Statements

6. A companys internal financial controls with reference to financial statements 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 controls with reference to financial statements include 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 companys assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with Reference to Financial Statements

7. Because of the inherent limitations of internal financial controls with reference to financial statements, 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 with reference to financial statements to future periods are subject to the risk that the internal financial controls with reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material respects, adequate internal financial controls with reference to financial statements and such controls were operating effectively as at 31 March 2020, 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 issued by the ICAI.

For Walker Chandiok & Co LLP
Chartered Accountants
Firms Registration No.: 001076N/N500013
Siddharth Talwar
Partner
Membership No.: 512752
UDIN: 20512752AAAACJ6386
Place: Faridabad
Date: 06 June 2020