Scan Steels Ltd Directors Report.

To the Members of Scan Steels Limited Report on the Financial Statements

Opinion

We have audited the accompanying standalone financial statements of Scan Steels Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2020, the Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information (herein after referred to as "the Standalone Financial Statements").

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 and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the 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 March 31,2020, its profit, total comprehensive income, changes in equity and its cash flows for the year 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 Companies Act, 2013. 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 together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Companies Act, 2013 and the Rules there under, 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

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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.

Sl.No. Key audit Matter Auditors Response
1. Accuracy of recognition, measurement, presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contract with Customers" (New Revenue Accounting Standard). Principal Audit Procedures
We assessed the Companys process to identify the impact of adoption of the new revenue accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
• Evaluated the design of internal controls relating to implementation of the new revenue accounting standard.
• Selected a sample of continuing and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation, reperformance and inspection of evidence in respect of operation of these controls.
• Tested the relevant information technology systems access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard.
• Selected a sample of continuing and new contracts and performed the following procedures:
The application of the new revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognized over a period. Additionally, new revenue accounting standard contains disclosures which involve collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date. • Read, analysised and identified the distinct performance obligations in these contracts.
• Compared these performance obligations with that identified and recorded by the Company.
Refer Notes 1.5 and 17 to the Financial Statements. • Considered the terms of the contracts to determine the transaction parties including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration.
• Sample in respect of revenue recorded for time and material contracts were tested using a combination of approved time sheets including customer acceptances, subsequent invoicing and historical trend of collections and disputes.
• In respect of samples relating to fixed price contract progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and budgeting systems. We also tested the access and change management controls relating to these systems.
• Sample of revenues disaggregated by type and service offering was tested with the performance obligations specified in the underlying contracts.
• Performance analytical procedures for reasonableness of revenues disclosed by type and service offerings.
• We reviewed the collation of information and the logic of the report generated from the budgeting system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.
• The standard is applied retrospectively and the cumulative effect of applying this standard is recognised. The adoption of Ind AS 115 did not have any significant impact for the company.
3. Evaluation of uncertain tax positions Principal Audit Procedures
The company has material uncertain tax positions including matters under dispute which involves significant judgement to determing the possible outcome of these disputes. Obtained details of completed tax assessments and demands for the year ended March 31, 2020 from management. We involved our internal experts to challenge the managements underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating managements position on these uncertain tax positions. Additionally, we considered the effect of new information in
Refer Note 25 to the Financial Statements. respect of uncertain tax positions as at April 1,2019 to evaluate whether any change was required to managements position on these uncertainties.

Information Other than the Financial Statements and Auditors Report Thereon The Companys Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis of Boards Report including Annexures to boards Report, Business Responsibility Report, Corporate Governance and Shareholders Information, but does not include the financial statements and our auditors report thereon.

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 information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Managements Responsibility for the Financial Statements

The Companys 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 financial statements that give a true and fair view of the financial position, financial performance, (changes in equity) 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. 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 material 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. Those 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 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.

Other Matter

Without qualifying our opinion, we draw attention to:

i. Note-38 to the financial statements which describes on steps taken by the company for transition to Ind AS Compliances.

ii. Note-39 to the financial statements which describes the impact of expected credit loss on trade receivables.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure-A a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books [and proper returns adequate for the purposes of our audit have been received from the branches not visited by us.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement 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 Rule 7 of the Companies (Accounts) Rules, 2014.

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

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure B".

g) With respect to the other matters to be included in the 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:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 25 to the financial statements; [or the Company does not have any pending litigations which would impact its financial position

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

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

For SRB & Associates
Chartered Accountants
F.Regd. No-310009E
K. P. Swain
30th June, 2020 Partner
Bhubaneswar M. No:306323

Annexure-A to the Independent Auditors Report

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

The Annexure referred to in our Independent Auditors Report to the members of Scan Steels Limited (the Company) on the Ind AS financial statements for the year ended March 31,2020, we report that:

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

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

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

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

• Land of 24.820 Acres occupied, by the company situated in Village-Kudithini, Bellary, Karnataka, on long term lease basis.

• Land of 7.95 Acres occupied, by the company situated in Village-Raiberna and Laing, Sundergarh, Odisha ,which is in the name of one of the relative of Key Managerial Personnel, on long term lease basis.

• Land area of Acres 5.000 occupied, by the company situated in Village-Laing, Sundergarh, Odisha, on long term lease basis.

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

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

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

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

(v) In our opinion and according to the information and explanations given to us, the Company has not accepted deposits from the public and hence Chapter-VI (section 73 to 76) of the Act not applicable.

(vi) We have broadly reviewed the books of account maintained by the Company pursuant to the rules prescribed by the Central Government for maintenance of cost records under sub-section (1) of section 148 of the Act, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(vii](a] According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including provident fund, employees state insurance, income-tax, sales tax, duty of customs, duty of excise, goods and services tax, cess and other material statutory dues have been generally regularly deposited during the year by the Company with the appropriate authorities.

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

STATEMENT OF DISPUTED DUES

SI No. Name of the Statute Period Nature of Dues Amount (Rs ‘Lakhs) Forum where dispute is pending
1 Orissa Sales Tax Act 2001-2002 OST 0.63 Sales Tax Tribunal, Cuttack
2 Entry Tax Act 2001-2002 ENTRY TAX 0.09 Sales Tax Tribunal, Cuttack
3 Orissa Sales Tax Act 2002-2003 OST 11.00 Assistant Commissioner of Commercial Tax, RKL
4 Orissa Sales Tax Act 2004-2005 OST 3.66 OST Tribunal, Cuttack
5 Entry Tax Act 2004-2005 ENTRY TAX 3.45 OST Tribunal, Cuttack
6 Entry Tax Act 2005-2006 ENTRY TAX 16.79 High Court of Odisha, Cuttack
7 Central Sales Tax Act 2005-2006 CST 2.11 High Court of Odisha, Cuttack
8 OVAT , Act 2006-2007 OVAT 14.38 Odisha Sales Tax Tribunal, Cuttack
9 Central Sales Tax Act 2006-2007 CST 153.29 High Court of Odisha, Cuttack
10 Entry Tax Act 2006-2007 ENTRY TAX 30.73 High Court of Odisha, Cuttack
11 OVAT, Act 2007-08 & 2008-09 OVAT 1.10 Additional CST Northern Zone
12 Entry Tax Act 2007-08 & 2008-09 ENTRY TAX 0.67 Additional CST Northern Zone
13 Central Sales Tax Act 2007-08 & 2008-09 CST 0.93 Additional CST Northern Zone
14 Central Sales Tax Act 01.08.2008 to 28.02.2011 CST 3.18 Additional CST Northern Zone
15 OVAT, Act 01.04.2009 to 31.03.2011 OVAT 1.98 Additional CST Northern Zone
16 Entry Tax Act 01.04.2009 to 31.03.2011 ENTRY TAX 4.55 Additional CST Northern Zone
17 OVAT, Act 01.08.2008 to 28.02.2011 OVAT 1499.34 OST Tribunal, Cuttack / Stay Revision Commissioner
18 Entry Tax Act 01.08.2008 to 28.02.2011 ENTRY TAX 315.77 OST Tribunal, Cuttack / Stay Revision Commissioner
19 Entry Tax Act 01.04.2012 to 31.03.2014 ENTRY TAX 21.05 Commissioner Cuttack, Revision
20 Central Sales Tax Act 01.04.2012 to 31.03.2014 CST 5.38 Commissioner Cuttack, Revision
21 Central Sales Tax Act 01.04.2014 to 30.09.2015 CST 1.54 DCCT, Rourkela
22 Central Sales Tax Act 01.04.2016 to 31.03.2017 CST 0.25 DCCT, Rourkela
23 Custom Act 1962 2012 & 2013 Custom Duty 111.58 Customs, Excise& Service Tax Appellate Tribunal, Bangalore
24 Income Tax act AY 2012-13 Income Tax 184.75 The Commissioner of Income Tax(appeals) Sambalpur
25 OVAT, Act 01.04.2015 to 31.03.2016 OVAT 2.20 Assistant Commissionaire of Taxes, Rourkela
26 OVAT, Act 01.04.2016 to 31.06.2017 OVAT 1.03 Assistant Commissionaire of Taxes, Rourkela
27 SEBI, Act 01.04.2014 & 30.09.2015 SEBI 18.80 Securities Appellate Tribunal Mumbai
Total 2,410.23

(viii) The company has not defaulted in repayment of any loans or borrowings from financial institution, bank, Government or due to debenture holders.

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

(x) According to the information and explanations given to us, no fraud by the Company or on by its officers or employees has been noticed or reported during the course of our audit.

(xi) According to the information and explanations given to us, managerial remuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act.

(xii) In our opinion and according to the information and explanations given to us, the Company is not a Nidhi Company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with section 177 and 188 of the Companies Act, 2013 and the details of such transactions have been disclosed in the Ind AS financial statements of the Company as required by the applicable accounting standards.

(xiv) Based upon audit procedures performed and the information and explanations given by the management the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year, hence the clause (xiv) of the paragraph 3 of the Order is not applicable.

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

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

For SRB & Associates
Chartered Accountants
F.Regd. No-310009E
K. P. Swain
30th June, 2020 Partner
Bhubaneswar M. No:306323

Annexure -B to the Independent Auditors Report

(Referred to in paragraph 2 (f) under ‘Report on Other Legal and Regulatory Requirements section of our report of even date)

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

We have audited the internal financial controls over financial reporting of Scan Steels Limited ("the Company") as of March 31, 2020 in conjunction with our audit of the Ind AS 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 (‘ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to 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 Note") and the

Standards on Auditing, (the ‘Standards) issued by ICAI and deemed to 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 Ind-AS financial statements, whether due to fraud or error.

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

Meaning of Internal Financial Controls over Financial Reporting

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

Inherent Limitations of Internal Financial Controls over Financial Reporting

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

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 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 on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For SRB & Associates
Chartered Accountants
F.Regd. No-310009E
K. P. Swain
30th June, 2020 Partner
Bhubaneswar M. No:306323