share holding Auditors report
To the Members of Steel Authority of India Limited
| Comments | Managements Replies |
| Report on the Audit of Standalone Financial Statements | |
| Qualified opinion | |
| 1. We have audited the accompanying Standalone Financial Statements of STEEL AUTHORITY OF INDIA LIMITED (the Company), which comprise the Balance Sheet as at 31st March 2023, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement, the Statement of Changes in Equity for the year then ended, and notes to the standalone financial statements, including a summary of Significant Accounting Policies and other explanatory information (hereinafter referred to as ‘Standalone Financial Statements), in which are included the returns for the year ended on the date audited by the branch auditors of the Companys branches listed in Appendix 1. | |
| 2. In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the reports of the branch auditors as referred to in paragraph 19 below, except for the effects / possible effects of the matters described in the Basis for Qualified Opinion section of our report, the aforesaid standalone financial statements give the information required by the Companies Act 2013(‘theAct)inthemannersorequiredandgiveatrueandfairviewinconformitywith the Indian Accounting Standards (‘Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2023 and its profit (including other comprehensive income), its cash flows and the changes in equity for the year ended on that date. | |
| Basis for Qualified Opinion 3. As referred in note 47(2)(a)(i) to the accompanying standalone financial statements, the constitutional validity of the Entry Tax Act has been upheld by the Honble Supreme Court and the matters relating to levy of entry tax are now pending before regular benches of the Supreme Court / Jurisdictional High Courts / assigned authorities. PendingdecisionbytheotherCourts,themanagementisoftheviewthatnoadjustment is required in the accompanying standalone financial statements of the Company for the disputed entry tax demand in various states amounting to INR 1,184.81 crores as on 31st March 2023. However, in the absence of sufficient appropriate evidence to support the managements view, we are of the opinion that a provision for entry tax liability should be recognized in the standalone financial statements. | The Nine Judge Bench of the Supreme court, vide its order dated 11th November, 2016, upheld the Constitutional validity of the Entry tax legislations passed by the various States. However, the Bench directed that certain other matters raised by the Petitioner, such as discriminatory rates of entry tax amounting to Rs. 1092.28 crore on iron Ore and Coking Coal in Bhilai-Durg area @ 6% as compared to lower rate of 1% on Coking Coal and 3% on Iron ore in rest of the areas of Chhattisharh, tax amounting to Rs. 92.53 crore on goods entering into the local area of Jharkhand from other State etc. may be determined by regular benches hearing the matters. Accordingly, various matters raised by SAIL are pending with Supreme Court / Jurisdictional High Courts / assigned authorities. Pending decision by the Courts, the disputed Entry Tax liabilities of Rs. 1,184.81 crore have been treated by the Company as Contingent Liability. |
| 4. As referred in note 47(2)(b) to the accompanying standalone financial statements, current assets include advance of INR 587.72 crores paid under dispute to Damodar Valley Corporation against the bills raised for supply of power for period upto 31st March 2017. The matter is under litigation with Jharkhand State Electricity Regulatory Commission for finalisation of tari_, pending which, the management is of the view that the amount is fully recoverable and thus no adjustment is required in the accompanying standalone financial statements. However, in the absence of sufficient appropriate evidence to support the managements contention of recoverability of these balances, we are of the opinion that an allowance for possible non-recoverability of such advance should be created in the standalone financial statements. | The Companys view is that the cases are sub-judice and pending for adjudication before the various judicial authorities for a long time. Further, the civil appeal filed by DVC pertaining to tari_ of 2004-09 against the Order of the Appellate Tribunal for Electricity (APTEL), have been dismissed by the Honble Supreme Court of India vide its Orderdated3rdDecember,2018.Accordingly,StateElectricity Regulatory Commission (SERC) will finalise the retail tari_ as directed by APTEL, the financial implication of which can only be ascertained after the Tari_ fixation by SERC. DVC filed its Retail Tari_ Application in November, 2020 along with application for Annual Revenue Requirement before the Jharkhand State Electricity Regulatory Commission for the period 2006-07 to 2011-12 and also seeking adjustment of Revenue Gap/Surplus in the period of 2012-13 to 2014-15. The Company has also filed their objections on 28th December, 2020 to the aforesaid Application of DVC. The above disputed demands stated at (3) and (4), contested on valid and bona_de grounds, have been treated as contingent liabilities as it is not probable that present obligations exist as on 31st March, 2023. Therefore, there is no adverse impact on Profit for the year. |
| Comments | Managements Replies |
| 5. Impact of all the above qualifications on the Standalone Financial Statements for the year ended 31st March 2023 is as under: (Amounts in INR crore) As at 31st March 2023 Particulars Reported Balances after impact of all the balances qualifications which are quanti_ed Other equity 48,008.65 46,682.23 Deferred tax liability 5,747.17 5,301.06 Other current assets 2,959.90 2,372.18 Other current liabilities 3,533.01 4,717.82 The audit report on the standalone financial statements for the year ended 31st March 2022 was also modified in respect of above matters. | |
| 6. 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 Standalone 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 standalone 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 together with the audit evidence obtained by the branch auditors, in terms of their reports referred to in paragraph 19 of the Other Matter section below is sufficient and appropriate to provide a basis for our qualified opinion on the Standalone financial statements. | |
| Emphasis of matter | |
| 7. We draw your attention to the following matter: a. Note 49.2(a) to the accompanying Standalone Financial Statements, which describes that the revenue from operations include sales to Government agencies aggregating to INR 8,688.65 crores for the year ended 31st March 2023 (cumulative up to 31st March 2023 of INR 29,182.75 crores) which is recognized on the basis of provisional prices as per the terms of sales with such Government agencies. Our opinion is not modified in respect of this matter. | |
| Key Audit Matters | |
| 8. Key audit matters are those matters that, in our professional judgement, and based on the consideration of the reports of the branch auditors as referred to paragraph 19 below, 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. | |
| 9. In addition to the matters described in the Basis for Qualified Opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report. | |
| Sl. Key audit matter How our audit addressed the key | |
| No. audit matter | |
| 1. Provision and contingent liabilities Our audit procedures included, but relating to ongoing litigations were not limited to the following: The Company is subject to a number of legal, regulatory and tax cases for Obtained understanding of the process which final outcome cannot be easily of identification and measurement of predicted and which could potentially provisions and contingent liabilities result in significant liabilities. relating to ongoing litigations Managements disclosures with regards implemented by the Management, to provisions and contingent liabilities through various discussions held with relating to ongoing litigation are Companys legal and finance personnel. presented in Note No. 47.1 read with note 3.18 to the Companys Standalone Tested the design and operating Financial Statements. e_ectiveness of the controls put in The assessment of whether a liability place by the management in relation is recognised as a provision or to assessment of the outcome of the disclosed as a contingent liability in pending litigations. the standalone financial statements is inherently subjective and requires Inspected the summary of litigation significant management judgement matters and discussed key in determination of the cash outflows developments during the year with the from the business, interpretation Companys Legal and Finance personnel. of applicable laws and regulations, and careful examination of pending assessments at various levels of | |
| regulatory authorities. | |
| Comments | Managements Replies |
| Sl. Key audit matter How our audit addressed the key | |
| No. audit matter | |
| Since the amounts involved are Inspected and evaluated, where significant and due to the range of applicable, external legal and/ possible outcomes leading to high or regulatory advice sought by estimation uncertainty that requires the Company. Obtained direct significant management and auditor confirmations from the dealing lawyers judgement, this matter is considered for certain material ongoing litigations. to be a key audit matter for the current year audit. Discussed and challenged the managements assessment of the likelihood, magnitude and accounting of any liability that may arise in certain material cases. Accordingly, we reviewed the amount of provisions recognised and contingent liabilities disclosed in the standalone financial statements and exercised our professional judgment to assess appropriateness of such conclusions, involving experts as required. | |
| Evaluated the adequacy of disclosures made in the Companys standalone financial statements in accordance with the applicable accounting standards. | |
| 2. Property, plant and equipment and Our audit procedures included, but intangible assets (including capital were not limited to the following: work in progress) | |
| Obtained an understanding of the As at 31st March 2023 the Company has managements process of recording Property, Plant and Equipment (‘PPE), the transactions pertaining to capital Intangible Asset (‘IA) and Capital Work- expenditure incurred by the company in-Progress (‘CWIP) with carrying value and evaluated the accounting policies of INR 67,091.46 crores, INR 1,521.02 adopted by the company in accordance crores, INR 4,891.36 crores, respectively, with the requirements of Ind AS 16 and as disclosed in note 4, note 7 and note Ind AS 38 5 of the accompanying Standalone | |
| Financial Statements. Refer note 3.1 Tested the design and operating for the accounting policies adopted e_ectiveness of the controls put in by the Company for recognition and place by the management in relation to measurement of such non-current the above process. assets. | |
| Tested the amounts capitalized | |
| Determination of carrying values during the year, on a sample basis, by and their respective depreciation inspecting supporting documents and and amortisation amounts of PPE, evaluating whether assets capitalized IA and CWIP requires considerable satisfied the recognition criteria and management judgement. These were recognized accurately in the include the decisions to capitalise correct periods and with correct or expense costs, the annual asset amounts. | |
| life review, the timeliness of the capitalisation of assets and the use Reviewed the judgements made by of managements assumptions and management in determination of estimates for the determination and carrying values of the specified non- measurement of assets retired from current assets including the nature active use, in accordance with the of underlying costs capitalized, requirements of Ind AS 16 – Property, determination of realizable value of Plant and Equipment (‘Ind AS 16) and the assets retired from active use, the Ind AS 38 – Intangible Assets (‘Ind AS appropriateness of useful lives applied 38). in the calculation of depreciation as determined by technical assessment The carrying value of CWIP also by management and external technical includes balances pertaining to long- experts, where required, and evaluation term projects which requires careful of appropriateness of long standing examination of continuity and viability CWIP balances pertaining to long-term of such projects. | |
| projects Considering the significance of amounts involved in the context of Evaluated the appropriateness and the balance sheet of the Company and adequacy of the related disclosures in the level of judgements and estimates the standalone financial statements required, we consider this to be a key in accordance with the applicable audit matter in the current year audit. accounting standards. | |
| Comments | Managements Replies |
| 3 By-products inventory Our audit procedures included, but were not limited to the following: Refer to note 3.8 of summary of significant accounting policies and Obtained an understanding of the other explanatory information for processes and procedures, including accounting policy for valuation of by- controls relating to sub grade fines, products amounting to INR 4,989.64 iron and steel scrap embedded in BF crores as at 31st March 2023 and slag and LD slag and slime containing significant accounting judgements, iron ore fines (‘by-products). | |
| estimates and assumptions related – Evaluated the accounting policy thereto and the note 3.25.4 of the adopted by the Company for standalone financial statements. valuation of the by-product Inventories of by-products mainly inventory in accordance with consist of sub- grade fines, iron and the requirements of Ind AS 2, steel scrap embedded in BF slag and LD Inventory in conjunction with the slag and slime, and tailings containing EAC Opinions obtained by the iron ore fines, which are accumulated management. | |
| in stock piles. – In assessing managements Further, as explained in notes 49.10, assessment of the value of pursuant to the order of Ministry of by-products, we discussed in Mines, Government of India dated 16th detail with the management September 2019, certain by-products to understand the procedures were allowed to be sold and hence, adopted in ascertaining the were valued for the first time in the quantity and quality (including previous years. gradation) of the by- products considered for valuation. | |
| The management of the Company also sought the opinion of Expert Advisory – Managements estimate of the Committee of the ICAI (‘EAC Opinions) NRV was verified with reference in the previous year and current year to the average selling price (ASP) on recognition and measurement of published by the Indian Bureau of by-product inventories. Mines. We also obtained technical analysis report from external | |
| Valuation of such items requires experts sought by management management to exercise significant for determining the quantity of by- judgement in respect of use of products and the chemical analysis estimates for determination of the report used by the management quantity, quality and valuation rate of for arriving at the quality (including these items. gradation) of fines. | |
| Further, basis the expected future – Obtained managements saleability and plans for captive working of estimated future consumption of such by-product sales / consumption used for inventories, the management has classification of the by- product classified inventory expected to be inventory between current sold / consumed after 12 months from and noncurrent, and tested the the date of balance sheet, being the underlying assumptions basis our operating cycle of the Company, as understanding of the processing non-current inventory. and further approvals required for Owing to the insignificant movement sale of such inventory in addition in sales / consumption of such by- to evaluating managements products inventory, the materiality estimates on availability of of the carrying value thereof and the demand for such by-products. complexities discussed above, we have – Evaluated the appropriateness considered this area as a key audit and adequacy of the related matter in the current year audit. disclosures in the standalone Further, the managements assessment financial statements in accordance of classification and valuation of with the applicable accounting aforesaid inventory as described in standards. (Also refer to Para 1 note 49.10 is considered fundamental of sub-directions in Annexure-3 to the understanding of the users of the attached) standalone financial statements. | |
| Information other than the financial statements and auditors report thereon | |
| 10. The Companys Board of Directors are 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 do 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. | |
| Comments | Managements Replies |
| Responsibilities of Management and Those charged with Governance for the | |
| Standalone Financial Statements | |
| 11. The accompanying standalone financial statements have been approved by the Companys Board of Directors. The Companys Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to the preparation and presentation 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 Ind AS specified under section 133 of the Act and other accounting principles generally accepted in India. 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 standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error | |
| 12. In preparing the standalone financial statements, the Board of Directors are 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 the Board of Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so. | |
| 13. Those Board of Directors are also responsible for overseeing the Companys financial reporting process. | |
| Auditors responsibilities for the audit of the Standalone financial statements | |
| 14. 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 (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 Standalone Financial Statements. | |
| 15. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: | |
| • Identify and assess the risks of material misstatement of the standalone 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 standalone 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 the management; | |
| • Conclude on the appropriateness of Board of Directors 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 standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained upto 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 standalone Financial Statements including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation. | |
| Comments | Managements Replies |
| • Obtain sufficient appropriate audit evidence regarding the financial information/ financial statements of the Company and its branches to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit of financial information of the Company and such branches included in the standalone financial statements, of which we are the independent auditors. For the other branches included in the standalone financial statements, which have been audited by the branch auditors, such branch auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion. | |
| 16. 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 de_ciencies in internal control that we identify during our audit. | |
| 17. 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. | |
| 18. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone 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. | |
| Other Matters | |
| 19. We did not audit the annual financial statements / financial information of eleven branches / units / marketing regions included in the standalone financial statements, whose annual financial statements/ financial information reflects total assets and net assets of INR 61,014.55 crores and INR 37,066.54 crores respectively as at 31st March 2023 and total revenues of INR 39,777.42 crores, total net profit after tax of INR 452.98 crores, total comprehensive income of INR 281.71 crores and cash inflows (net) of INR 3.39 crores for the year then ended, as considered in the standalone financial statements. These financial statements / financial information have been audited by the branch auditors, whose reports have been furnished to us by the management, and our opinion on the standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of branches, and our report in terms of sub-section (3) of section 143 of the Act in so far as it relates to the aforesaid branches, is based solely on the report of such branch auditors. Our opinion on the above standalone financial statements and our report on other legal and regulatory requirements below, are not modified in respect of the above matters with respect to our reliance on the work done by and the reports of the branch auditors. | |
| Report on Other legal and Regulatory Requirements | |
| 20. Based on our audit and on the consideration of the reports of the branch auditors as referred to in paragraph 19 above, we report that the provisions of section 197 read with Schedule V to the Act are not applicable to the Company since the Company is a Government company as defined under section 2(45) of the Act. Accordingly, reporting under section 197(16) is not applicable. | |
| 21. As required by the Companies (Auditors Report) Order, 2020 (‘the Order), issued by the Central Government of India in terms of Section 143(11) of the Companies Act, 2013, we give in the Annexure 1, a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable. | |
| 22. Further to our comments in ‘Annexure 1, as required by section 143(3) of the Act, based on our audit, and on the consideration of the reports of the branch auditors as referred to in paragraph 19 above, we report, to the extent applicable, that: | |
| (a) We have sought and except for the matters described in the Basis for Qualified Opinion section, 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) Except for the effects / possible effects of the matters described in the Basis for Qualified Opinion section, 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 reports on the accounts of the branch offices of the Company audited under section 143(8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report; | |
| Comments | Managements Replies |
| (d) The standalone financial statements dealt with by this report are in agreement with the books of account and with the returns received from the branches not visited by us; | |
| (e) Except for the effects / possible effects of the matters described in the Basis for Qualified Opinion section, in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133 of the Act; | |
| (f) The provisions of section 164(2) of the Act are not applicable to the Company since the Company is a Government company as defined under section 2(45) of the Act; | |
| (g) The qualification relating to the maintenance of accounts and other matters connected therewith are as stated in the Basis for Qualified Opinion section; | |
| (h) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company as on 31st March 2023 and the operating effectiveness of such controls, refer to our separate report in ‘Annexure 2, wherein we have expressed a modified opinion; and | |
| (i) 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 and based on the consideration of the reports of the branch auditors as referred to in paragraph 19 above: | |
| i. Except for the effects of the matters described in paragraphs 3 and 4 of the Basis for Qualified Opinion section, the standalone financial statements disclose the impact of pending litigations on the standalone financial position of the Company as at 31st March 2023, as detailed in note 47 to the standalone financial statements; | |
| ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses at 31st March, 2023; | |
| 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 31st March 2023 except Rs. 1.00 crore pertaining to unclaimed matured deposits which was required to be deposited in the Investor Education and Protection Fund during the year ended 31st March 2018 and which has not been deposited till 31st March 2023; | The matured deposit has already been claimed by the successors/relatives of the individuals but is pending for submission of document of proof of legal heir by the claimants. Appropriate procedure is being followed for refunding the matured deposit to the legal heirs. |
| iv. (a) The management has represented that, to the best of its knowledge and belief, as disclosed in note 51.7 (a) to the standalone financial statements, no funds have been advanced or loaned or invested (either from borrowed funds or securities premium or any other sources or kind of funds) by the Company to or in any person(s) or entity(ies), including foreign entities (‘the intermediaries), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘the Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries; | |
| (b) The management has represented that, to the best of its knowledge and belief as disclosed in note 51.7 (b) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities (‘the Funding Parties), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (‘Ultimate Beneficiaries) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and | |
| (c) Based on such audit procedures performed as considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the management representations under sub-clauses (a) and (b) above contain any material misstatement. | |
| v. The interim/final dividends paid by the Company during the year ended 31st March 2023 in respect of such dividend declared for the previous year is in accordance with section 123 of the Act to the extent it applies to payment of dividend and as stated in notes 44 and 49.14 to the accompanying standalone financial statements, the Board of Directors of the Company have proposed final dividend for the year ended 31st March 2023 which is subject to the approval of the members at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of the Act to the extent it applies to declaration of dividend. | |
| Comments | Managements Replies |
| vi. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company w.e.f. April 1, 2023, and accordingly, reporting under Rule 11(g) of Companies (Audit and Auditors) Rules, 2014 is not applicable for the financial year ended March 31, 2023. | |
| 23. As required by section 143(5) of the Act, we given in ‘Annexure 3, a statement on the matters specified in the directions issued by the Comptroller and Auditor General of India in respect of the Company. |
Annexure 1 referred to in Paragraph 21 of the Independent Auditors Report of even date to the members of Steel Authority of India Limited on the standalone financial statements for the year ended 31st March 2023
| Comments | Managements Replies |
| In terms of the information and explanations sought by us and given by the Company and the books of account and records examined by us in the normal course of audit and based on the consideration of the reports of the branch auditors and, to the best of our knowledge and belief, we report that: | |
| (i) (a) (A) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment, right of use assets and investment property except in respect of certain lands where area and location needs to be updated in the fixed assets register. Further, the area in respect of these lands need to be reconciled with the records of the authorities in the respective States and wherein, as informed to us by the management, the delay is due to procedural matters involved | Necessary action is being taken to update location and extent of area in respective plants in fixed assets register. This is a continuous process. |
| (B) The Company has maintained proper records showing full particulars of intangible assets. | |
| (b) The Company has a regular programme of physical verification of its property, plant and equipment, right of use assets and investment property under which the assets are physically verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this programme, certain property, plant and equipment, right of use assets and investment property were verified during the year and no material discrepancies were noticed on such verification. However, there are certain land and buildings which are under encroachment/unauthorised occupation and hence, were not subjected to physical verification | Necessary action is being taken to evict the occupants from land and building under encroachment/unauthorized occupation. |
| (c) The title deeds of all the immovable properties (including investment properties) held by the Company (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) disclosed in note 4,4a and 48.1(B) to the standalone financial statements are held in the name of the Company, except for the following properties, for which the Companys management is in the process of getting the registration in the name of the Company: |
| Description of property | Gross carrying value (Rs. in Cr) | Held in name of | Whether promoter, director or their relative or employee | Period since held | Reason for not being held in name of company |
| Freehold land | 0.01 | Asian Refractories | No | 05-04-1963 | Rehabiliation on behalf of Deptt of Industries, Govt of Bihar. |
| Freehold land | 0.11 | Asam Silimnaite & Bharat Refractories Ltd. | No | 11-02-1976 & 30-04-1978 | NA |
| Freehold land | 0.13 | India Firebricks & Insulation Company Ltd. | No | 15-09-1960 | NA |
| Freehold land | 7.56 | No title deed executed for land acquired by Tamil Nadu State Government. In the "A" register of State Government land records, the entire private land acquired by State Government are in the name of Salem Steel Plant. | Not Applicable | Land acquired by Tamil Nadu State Government from 1972 to 1980 | Land was acquired by private land owners by Tamil Nadu State Government and land owned by State Government was also transferred to Salem Steel Plant. Title deed has not been executed for the Land acquired but land records of State Government, these land are registered in the name of Salem Steel Plant. |
| Freehold land | 10.29 | Various Parties | No | 1986-2008 | Mutation is pending, disputed. |
| Freehold Land | 0.09 | Various Parties | No | 1954-1974 | Mutation is pending, disputed. |
| Freehold Land | 126.24 | Jharkhand State Government | No | From 1960 | MOU signing formalities awaited between Jharkhand state Government and SAIL/Bokaro Steel Plant. |
| Freehold land | 0.96 | Government of West Bengal | No | Since 1963 | Pending Registration |
Comments |
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| Description of property | Gross carrying value (Rs. in Cr) | Held in name of | Whether promoter, director or their relative or employee | Period since held | Reason for not being held in name of company | Managements Replies |
| Freehold land | 0.13 | Triveni Structural Limited- Allahabad | No | 25-02-1970 | Pending Registration | |
| Freehold Land | 0.06 | Southern Railway | No | 31-03-1984 | Pending Registration | |
| Building | 0.28 | Ashok Sankat Bhatnagar (HUF) – Allahabad | No | 01-08-2019 | Pending Registration | |
| Kalwar Nagur Land | 15.07 | State of CG | No | 2005 | Transfer of title deed delayed by State Government and the same is under process. | |
| Leasehold Land | 0.10 | West Bengal State Government | No | 1956-57 | Pending receipt of "Record of Right" (ROR) from State Government. As informed matter taken up with the said Government. | |
| For properties where the Company is a lessee, the lease arrangements have been duly executed in favour of the Company except in following cases: | ||||||
| Description of property | Right of Use Asset Value | Location | Details of Lessor | Period since held | Reason for non- execution of lease agreement | |
| Leasehold Land | 0.20 | Ranchi | Mecon Ltd. | Since 1979- 80 | Held by Mecon Ltd. (As per Act No. 16 of 1978) | |
| Leasehold Land | 147.81 | Rourkela | Uttar Pradesh State Industrial Development Corporation (UPSIDC) | 01-02-2009 | Litigation with UPSIDC, U.P. | |
| Leasehold Land | 3.28 | Rourkela | Government of Odisha | 01-10-1959 | Absence of Lease agreement with Govt. of Odisha. | |
| Leasehold Land | 16.80 | Kolkata | Kolkata Port Trust | 07-05-2014 | Pending Registration | |
| Leasehold Land | 11.97 | Vishakhapatnam | Vizag Seaport Pvt Limited | 27-07-2004 | Pending Registration | |
| Leasehold Land | 0.91 | Jammu | Jammu & Kashmir Govt | 05-07-1968 | Pending Registration | |
| Leasehold Land | 0.67 | Kanpur | Kanpur Development Authority | 1986 | Pending Registration | |
| Leasehold Land | 23.04 | Kolkata | Kolkata Metropolitan Development Authority | 09-10-2009 | Pending Registration | |
| (d) The Company has not revalued its Property, Plant and Equipment (including Right of Use assets) or intangible assets during the year. | ||||||
| (e) No proceedings have been initiated or are pending against the Company for holding any benami Property under the Benami Transactions (Prohibition) Act, 1988 (as amended) and rules made thereunder. | ||||||
| (ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year, except for inventory lying with third parties. In our opinion, the coverage and procedure of such verification by the management is appropriate and no discrepancies of 10% or more in the aggregate for each class of inventory were noticed as compared to book records. In certain cases, the bulk inventories have been verified on the basis of visual surveys/estimates. For inventory lying with third parties at the year-end, written confirmations have been obtained by the management. | ||||||
| Comments | Managements Replies |
||||||
| (b) As disclosed in note 51.5 to the standalone financial statements, the Company has been sanctioned | |||||||
| a working capital limit in excess of INR 5 crore by banks based on the security of current assets. The | |||||||
| quarterly statements, in respect of the working capital limits have been filed by the Company with | |||||||
| such banks and such statements are not in agreement with the books of account of the Company | |||||||
| for the respective periods which were subject to audit/review, as summarized below: | |||||||
| (INR in Crores) | |||||||
| Name of Working the Bank/ capital financial limit institution sanc- tioned | Nature of current assets offered as security |
Quarter ended | Amount Amount Di_er- Remarks/ disclosed as per ences Reason, if as per books of any return accounts |
||||
| Consortium 10,000 of banks led by State Bank of India | Stock and trade receivables |
30th June 2022 |
31,657 35,959 (4,302) As informed to us by the |
||||
30th September 2022 |
35,024 33,800 1,224 management, the information | ||||||
31st December 2022 |
35,373 33,402 1,970 to the banks was provided based on | ||||||
31st March 2023 |
34,237 32,811 1,426 provisional numbers | ||||||
| (iii) The Company has not made any investment in, provided any guarantee or security or granted any loans or advances in the nature of loans, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or any other parties during the year. Accordingly, reporting under clause 3(iii) of the Order is not applicable to the Company. | |||||||
| (iv) In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of section 186 of the Act in respect of loans and investments made and guarantees and security provided by it, as applicable. Further, the Company has not entered into any transaction covered under section 185 of the act. | |||||||
| (v) In our opinion, and according to the information and explanations given to us, the Company has not accepted any deposits or there are no amount which have been deemed to be deposits within the meaning of sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, reporting under clause 3(v) of the Order is not applicable to the Company. | |||||||
| (vi) The Central Government has specified maintenance of cost records under sub-section (1) of section 148 of the Act in respect of the products of the Company. 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 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) In our opinion, and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities by the Company, though there have been slight delays 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. | |||||||
| (b) According to the information and explanations given to us, there are no statutory dues referred in sub-clause (a) which have not been deposited with the appropriate authorities on account of any dispute except for the following: | |||||||
(Rs. in crores)
| Name of the statute | Nature of dues | Gross Amount | Amount Period to Forum where disputes paid which the are pending amount relates | |
| Central Excise Act, | Excise duty | 5,863.49 | 50.82 1987-2019 Tribunal | |
| 1944 | 28.00 | 0.77 1988-2022 Commissioner (Appeal) | ||
| 3.24 | 1.19 1993-2018 Commissioner | |||
| 197.02 | - 1997-2012 High Court | |||
| 234.66 | 1.50 2000-16 Supreme Court | |||
| 1.56 | - 2001-04 Assistant Commissioner | |||
| CG Municipal Corporation Act, 1956 | Consolidated Tax | 0.72 | 0.72 2001-02 to High Court 2009-10, 2021-22 | |
| Chattisgarh (Adho- sanrachna Viaks avam Paryavaran) Upkar Adhiniyam, 2005 | Environment Cess | 212.96 | 212.96 2006-07 to High Court 2022-23 |
Comments |
Managements Replies | |||||
| Name of the statute | Nature of dues | Gross Amount | Amount paid | Period to which the amount relates | Forum where disputes are pending | |
| fChattisgarh Upkar (Sansodhan) Adhiniyam, 2004 | Consolidated Tax | 2.77 | 0.15 | 2001-02 to 2009-10, 2021-22 | High Court | |
| Energy Develop- ment Cess | 234.44 | - | Dec-2006 onwards | Supreme Court | ||
| Chhattisgarh Entry Tax Act, 1976 | Entry Tax | 3,752.91 201.74 | 2,304.08 48.50 | 1990 to 2016 2010-11, 2014-15, 2016-17 | High Court Additional Commissioner, Commercial Tax (Appeal) | |
| Custom Act, 1962 | Custom Duty |
1.65 | - | 2008 | High Court | |
| 9.52 | - | 2009 to 2021 | Tribunal | |||
| Employee Provident Fund Act, 1952 | Provident Fund |
2.03 | - | 01.04.1996 to 06.11.2019 | Tribunal | |
| 0.96 | - | 1979-98 | High Court | |||
| Employee State | Employee | 67.28 | - | 1990-2007 | Employee State | |
| Insurance Act, 1947 | State Insurance |
Insurance Court | ||||
| 0.19 | - | 2014-15 | High Court | |||
| Finance Act, 1994 | Service Tax |
19.66 | - | 2004-05 | High Court | |
| 127.16 | 1.51 | 2005-18 | Tribunal | |||
| 3.42 | 0.07 | 2012-22 | Commissioner (Appeal) | |||
| Forest (Conservation) Act, 1980 | NPV |
96.28 | 96.28 | 2017-18 | High Court | |
| Goods and Service Tax Act, 2017 | Goods and Service Tax |
29.45 | - | 2017 | High Court | |
| 110.00 | 53.07 | 1989-90, 1991-92 to 1993-94 | Appellate Authority | |||
| 15.13 | 0.14 | 2002-03 to June 2017 | Commissioner (Appeal) | |||
| 10.47 | 0.33 | 2008-09 to 2013 | Tribunal | |||
| 0.35 | - | 2018-19 | Commissioner | |||
| 0.04 | - | 2022-23 | Superintendent of GST & Central Excise | |||
| HP Entry Tax Act, 2010 | Entry Tax | 3.18 | 0.25 | 2010-11 | Deputy Excise and Taxation Commissioner, Appeals | |
| Income Tax Act, 1961 | Income Tax |
328.36 | - | 1988-2013 | High Court | |
| 786.66 | 38.83 | 2004-14 | ITAT | |||
| 3.15 | 0.22 | 2014-22 | CIT (A) | |||
| 467.68 | - | 2014-22 | Commissioner (Appeal) | |||
| Jharkhand Entry Tax | Entry Tax | 92.53 | - | 2001-18 | High Court | |
| Municipal Corporation Act, 1956 | Property Tax | 1,089.44 | - | 2015-22 | High Court | |
| Odisha Entry Tax Act, 1999 | Entry Tax |
232.38 | 112.33 | 2004-17 | Sales Tax Tribunal | |
| 1.00 | - | 2005-10 | Tribunal | |||
| 115.17 | 21.37 | 2005-14 | Additional Commissioner | |||
| Other Statutory dues | Forest Develop- ment Tax | 5.01 | - | 2010-11 | Supreme Court | |
| Octroi | 21.77 | - | 1990-2023 | High Court | ||
| Others | 25.07 | - | 1981-2015 | High Court/ Civil Court | ||
| Stamp duty | 2,320.40 | - | 1990-2023 | High Court | ||
| Transit Pass Chattisgarh Transit (Forest Produce) Rules, 2001 | 119.86 | 111.86 | 1990-2023 | High Court | ||
| Comments | Managements Replies |
| Name of the statute Nature of Gross Amount Amount Amount as per books dues Amount paid disclosed as of accounts per return | |
| Sales Tax Law Sales tax & VAT 17.72 1.30 1984-2016 Commissioner (Appeal) | |
| 701.80 60.39 1987-2017 Tribunal | |
| 32.30 3.36 1987-2020 Commissioner of Sales tax | |
| 346.40 16.10 1989-2016 High Court | |
| 3.09 - 1989-90 & Supreme Court | |
| 1991-92 | |
| 28.71 1.61 1993-2018 Joint Commissioner | |
| 3.64 2.46 1994-2018 Additional | |
| Commissioner (Appeals) | |
| 2.12 0.22 1997-2015 Additional Commissioner | |
| UP Entry Tax Act, 2010 Entry Tax 0.71 - 2008-14 High Court | |
| 10.31 0.13 2009-13 Tribunal | |
| 0.83 - 2013-14 Commissioner (Appeal) | |
| (viii) According to the information and explanations given to us, no transactions were surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (43 of 1961) which have not been previously recorded in the books of accounts. | |
| (ix) (a) According to the information and explanations given to us, the Company has not defaulted in repayment of its loans or borrowings or in the payment of interest thereon to any lender. | |
| (b) According to the information and explanations given to us, confirmations received from banks/ financial institution and other lenders and representation received from the management of the Company, and on the basis of our audit procedures, we report that the Company has not been declared a wilful defaulter by any bank or financial institution or government or any government authority. | |
| (c) In our opinion and according to the information and explanations given to us, money raised by way of term loans were applied for the purposes for which these were obtained. | |
| (d) In our opinion and according to the information and explanations given to us, and on an overall examination of the financial statements of the Company, funds raised by the Company on short term basis have not been utilised for long term purposes. | |
| (e) According to the information and explanations given to us and on an overall examination of the financial statements of the Company, the Company has not taken any funds from any entity or person on account of or to meet the obligations of its subsidiaries, associate or joint ventures. | |
| (f) According to the information and explanations given to us, the Company has not raised any loans during the year on the pledge of securities held in its subsidiaries, joint ventures or associate companies. | |
| (x) (a) The Company has not raised any money by way of initial public offer or further public offer (including debt instruments), during the year. Accordingly, reporting under clause 3(x)(a) of the Order is not applicable to the Company. | |
| (b) According to the information and explanations given to us, and on the basis of our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or (fully, partially, or optionally) convertible debentures during the year. Accordingly, reporting under clause 3(x)(b) of the Order is not applicable to the Company. | |
| (xi) (a) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company or no material fraud on the Company has been noticed or reported during the period covered by our audit. | |
| (b) According to the information and explanations given to us including the representation made to us by the management of the Company, no report under sub-section 12 of section 143 of the Act has been filed by the auditors in Form ADT-4 as prescribed under Rule 13 of Companies (Audit and Auditors) Rules, 2014, with the Central Government for the period covered by our audit. | |
| (c) The whistle blower complaints received by the Company during the year, as shared with us by the management have been considered by us while determining the nature, timing and extent of audit procedures. | |
| (xii) The Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it. Accordingly, reporting under clause 3(xii) of the Order is not applicable to the Company. | |
| (xiii) In our opinion and according to the information and explanations given to us, all transactions entered into by the Company with the related parties are in compliance with sections 177 and 188 of the Act, where applicable. Further, the details of such related party transactions have been disclosed in the standalone financial statements, as required under Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified in Companies (Indian Accounting Standards) Rules 2015 as prescribed under section 133 of the Act. | |
| (xiv) (a) In our opinion and according to the information and explanations given to us, the Company has an internal audit system as per the provisions of section 138 of the Act which is commensurate with the size and nature of its business except that the Company needs to strengthen the internal audit system in respect of enhanced documentation of the testing performed. (b) We have considered the reports issued by the Internal Auditors of the Company till date for the period under audit. | |
| (xv) According to the information and explanation given to us, the Company has not entered into any non- cash transactions with its directors or persons connected with its directors and accordingly, reporting under clause 3(xv) of the Order with respect to compliance with the provisions of section 192 of the Act 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, reporting under clauses 3(xvi)(a),(b),(c) and (d) of the Order is not applicable to the Company. | |
| (xvii) The Company has not incurred any cash losses in the current financial year as well as the immediately preceding financial year. | |
| (xviii) There has been no resignation of the statutory auditors during the year. Accordingly, reporting under clause 3(xviii) of the Order is not applicable to the Company. | |
| (xix) According to the information and explanations given to us and on the basis of the financial ratios, ageing and expected dates of realisation of financial assets and payment of financial liabilities, other information accompanying the standalone financial statements, our knowledge of the plans of the Board of Directors and management, and based on our examination of the evidence supporting the assumptions, nothing has come to our attention, which causes us to believe that any material uncertainty exists as on the date of the audit report indicating that Company is not 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. We, however, state that this is not an assurance as to the future viability of the company. We further state that our reporting is based on the facts up to the date of the audit report and we neither give any guarantee nor any assurance that all liabilities falling due within a period of one year from the balance sheet date, will get discharged by the company as and when they fall due | |
| (xx) (a) According to the information and explanations given to us there are no unspent amounts towards Corporate Social Responsibility pertaining to other than ongoing projects as at the end of the current financial year. Accordingly, reporting under clause 3(xx)(a) of the order is not applicable to the company. | |
| (b) According to the information and explanations given to us, the Company has transferred the remaining unspent amounts towards Corporate Social Responsibility (CSR) under sub-section (5) of section 135 of the Act, in respect of ongoing project, within a period of 30 days from the end of financial year to a special account in compliance with the provision of sub-section (6) of section 135 of the Act. | |
| (xxi) The reporting under clause 3(xxi) of the order is not applicable in respect of audit of standalone financial statements of the Company. Accordingly, no comment has been included in respect of said clause under this report. |
Annexure 2 to the Independent Auditors Report on Standalone Financial Statements of Steel Authority of India Limited for the year ended 31st March 2023
| Comments | Managements Replies |
| Independent auditors report on the internal financial controls with reference to the 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 Steel Authority of India Limited (‘the Company) as at and for the year ended 31st March 2023, 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 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 on Audit of Internal Financial Controls over Financial Reporting (‘the Guidance Note) issued by the Institute of Chartered Accountants of India (‘the 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 standalone financial statements, whether due to fraud or error. | |
| 5. We believe that the audit evidence we have obtained and the audit evidence obtained by the branch auditors in terms of their reports referred to in the Other matter paragraph below, is sufficient and appropriate to provide a basis for our qualified 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 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 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 standalone financial statements and such internal financial controls with reference to standalone financial statements were operating effectively as at March 31, 2023, 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. | |
| Comments | Managements Replies |
| Other matter | |
| 9. We did not audit the internal financial controls with reference to financial statements in so far as it relates to eleven branches / units / marketing regions whose financial statements / financial information reflect total assets and net assets of INR 61,014.55 crores and INR 37,066.54 crores respectively as at 31st March 2023 and total revenues of INR 39,777.42 crores, total net profit after tax of INR 452.98 crores, total comprehensive income of INR 281.71 crores and cash inflows (net) of INR 3.39 crores for the year then ended, as considered in the standalone financial statements. The internal financial controls with reference to financial statements in so far as it relates to such branches / units / marketing regions have been audited by branch auditors whose reports have been furnished to us by the management and our report on the adequacy and operating effectiveness of the internal financial controls with reference to financial statements for the Company under section 143(3)(i) of the Act in so far as it relates to such branches / units / marketing regions is based solely on the reports of the auditors of such branches. Our opinion is not modified in respect of this matter with respect to our reliance on the work done by and on the reports of the branch auditors. |
Annexure 3 to the Independent Auditors Report On Standalone Financial Statements of Steel Authority of India Limited for the year ended 31st March 2023
| Comments | Managements Replies | |
| On the directions issued by the Comptroller and Auditor General of India under section 143(5) of the Companies Act, 2013, based on the verification of records of the Company and information and explanations given to us and on consideration of the reports received from the branch auditors, we report that: | ||
| Directions under Section 143(5) of Companies Act, 2013 | ||
| S.No. | Questions | Auditors Comment |
| 1. | Whether the Company has a system in place to process all the accounting transactions through IT system? If yes, the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications, if any, may be stated. | The Company uses SAP software for processing accounting transactions at five integrated steel plants, Central Marketing Organisations and Head Office. In respect of other plants / units, the Company uses legacy software systems. Based on our audit and based on reports received from the branch auditors, wherever the accounting transactions are based on workings outside IT system, no instances of lack of integrity of accounts and no financial implications have been noted / reported |
| 2. | Whether there is any restructuring of an existing loan or cases of waiver/write-o_ of debts/loans/ interest etc., made by a lender to the Company due to the Companys inability to repay the loan? If yes, the financial impact may be stated | As per information and explanations given to us by the management, there was no restructuring of an existing loan or cases of waiver / write off of debts / loans / interest etc., made by a lender to the Company due to the Companys inability to repay the loan |
| 3. | Whether funds received / receivable for specific schemes from Central / State agencies were properly accounted for / utilised as per its terms and conditions? List the cases of deviation. | To the best of our information, checks applied by us during the course of our audit and based on reports received from the branch auditors, we are of the opinion that funds received / receivable for specific schemes from Central / State agencies were properly accounted for / utilised as per its terms and conditions. |
| Sub-Direction under section 143(5) of the Companies Act 2013 | ||
| 1. | Considering the slow movement and uncertainty in liquidation of the stock of sub-grade iron ore fines by the company during last three years from the old dump of sub- grade iron ore fines and absence of permission of the State Government of Jharkhand for sale of this _ne from the mines located in the state, following may be examined: | |
| i) | Whether valuation of such sub- grade iron ore fines is continued in the Balance Sheet of SAIL as on 31st March 2023. If yes, it may be stated whether the valuation is appropriate and reasonable in view of quantum of sale and demand as well as age of the stock of sub-grade iron ore fines lying at different captive mines of the Company. | Yes, valuation of such sub-grade iron ore fines is continued in the Balance Sheet of Steel Authority of India Limited as on 31st March 2023. As explained in note 49.10 of the standalone financial statements, based on the opinions taken by the Company from the Additional Solicitor General of India as well as the Expert Advisory Committee (EAC) of Institute of Chartered Accountants of India (ICAI), the Company recognized these inventories as by-product inventory as at 31st March 2020 and since, these inventories were generated over many years, hence, making it impracticable to ascertain the actual valuation, the Company assigned a valuation to such inventories basis average selling price of similar sub-grade fines over the last 36 months as declared by Indian Bureau of Mines (IBM), a Government of India organisation and as adjusted for royalty and other selling costs. Further, as explained in the note, while, on an overall basis during the current and the previous year, there has been insignificant movement in the volume of such inventories, there is significant market demand for sub-grade fines and the recent sales price trends are indicative of considerable margins over and above the carrying value of such inventories. As informed by the management in the process of getting permission for issuance of transit pass in Jharkhand, the company has approached the concerned authorities to make the necessary modification in the portal to facilitate generation |
| of transit pass for movement of goods. Further, considering the market volatility, steel market dynamics, possibility of future additions to steel and pellet making capacity in the country which may augment the demand of these materials, the carrying value of these inventories cant be adjusted for any unforeseeable changes in the future prices. Additionally, the management also has plans to set up a beneficiation and palettization plant in future that will consume significant volume of sub-grade fines annually. Moreover, in order to establish the usability of Dump Fines at Gua, fresh assessment of quality and quantity through a NABL accredited agency was carried out during 2021-22. The average quality of Dump Fines at Gua is confirming to 60-62% Fe Grade. The quality of the subgrade fines have not deteriorated with passage of time as mentioned above. Fines of such quality are in high demand across the steel industry. The managements assessment of classification and valuation of aforesaid inventory as described in note 49.10 is also considered fundamental to the understanding of the users of the standalone financial statements. Also refer to "Key audit matters" section of our main report. | ||
| ii) | Whether there was sale of sizeable quantity in comparison with the entire quantity valued to determine the realistic market rate? | There is insignificant movement of sub-grade iron ore fines during the year in comparison with the entire quantity valued. However, for the reasons mentioned in note 49.10, in view of the management, there is no adjustment required in the carrying value of these inventories at this stage. |
| 2 (i) | Whether uniform practice and reporting was followed by all the Joint Statutory Auditors like addressee of the Independent Auditors Report, Title of the Audit Report while issuing Independent Auditors Report on the audit of financial statements of steel plants/units of SAIL? | Uniform practice and reporting was followed by all the Joint Statutory Auditors like addressee of the Independent Auditors Report, Title of the Audit Report while issuing Independent Auditors Report on the audit of financial statements of steel plants / units of the Company in accordance with Revised Standard on Auditing 700, Forming an opinion and Reporting on Financial Statements (‘SA 700), except in respect of three units, being a) Corporate Office, b) Alloy Steels Plant and c) Central Marketing Organisation, for which the auditors have issued an audit report under ‘Standard on Auditing 800, Special Considerations - Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (‘SA 800). However, the level of assurance provided through all the audit reports issued by all the Joint Statutory auditors in respect of all the steel plants/ units is equal and uniform. |
| 2(ii) | Whether Basis of Preparation of Financial Statements of all | The Company follows uniform accounting policies for preparation of financial statements for all the steel plants/ units. |
| the steel plants/units of the Company was uniform? Whether | Approach of joint statutory auditors – Walker Chandiok & Co LLP | |
| preparation of unit accounts of three units (Corporate office, Alloy Steels Plant and Central Marketing Organisation of SAIL) out of 13 units of SAIL in accordance with Guidance note on Combined and Carved out Financial Statements was as per requirement and justified? | With regards to preparation of unit accounts of three units, being a) Corporate Office, b) Alloy Steels Plant and c) Central Marketing Organisation, the statutory joint auditor for such units, is of the view that the different steel plants / units of the Company, represent subsets of the reporting entity, SAIL, and thus, are covered by the definition of ‘Carve-out business as per paragraph 9 of the Guidance note on Combined and Carved out Financial Statements (‘the Guidance Note). The carve-out financial statements, as per the Guidance Note are identified to be special purpose financial statements (refer paragraph 8 of the Guidance Note) and is based on the adjustments made by the management for allocation of various elements of income and expenses to the respective units through the IT system used for maintaining accounts. Such special purpose financial statements are then aggregated to prepare the standalone financial statements of the company as a whole. The relevant guidance / definitions from the Guidance Note have been reproduced below for ease of reference– Paragraph 3: The combined/carve-out financial statements can include financial information pertaining to different entities, divisions, branches and/or an aggregation of similar assets, associated liabilities and operations in a specified geographic region or line of business pertaining to different entities. These financial statements can be prepared by aggregating financial statements of segments, separate entities or components of groups which may not necessarily have separate management and accounting records. | |
| Comments | Managements Replies | |
| Paragraph 8: Scope | ||
| This Guidance Note should not be construed to be applicable to the general purpose financial statements as the combined/ carve-out financial statements are prepared for specific purposes and, therefore, are ‘special purpose financial statements. | ||
| Paragraph 9: Definitions | ||
| Carve-out business: For the purpose of this Guidance Note and notwithstanding the definition of ‘business as contained in Ind AS 103, Business Combinations, the term ‘carve-out business refers to an identifiable set of assets and liabilities, pertaining to an economic activity carved out of the aggregate activities of an entity. A division, segment, or business activity of an entity may also signify a carve-out business. | ||
| Carve-out Financial Statements: Carve-out financial statements are the financial statements pertaining to a carve- out business. | ||
| However, it is pertinent to note that reporting under SA 800 also requires applying requirements of all other SAs including SA 700 (refer paragraphs 1, 3, 9, 10 and 11 of SA 800), and thus, in effect, other than taking into account special considerations in applying the requirements of other SAs, pursuant to the adoption of a special purpose financial reporting framework by the reporting entity, the level of assurance provided through all the audit reports issued by all the Joint Statutory auditors in respect of all the steel plants/ units as equal and uniform. | ||
| Approach of Joint Statutory auditors – Tej, Raj & Pal, S. Jaykishan and KASG & Co. | ||
| The appointment as statutory auditors was made under Section 139 of the Companies Act 2013 for the financial year 2022-23 vide letter dated 26th August 2022 in exercise of the powers conferred by Section 139 of the Companies Act 2013 ("Act"). We were appointed as statutory/ joint statutory/ Branch auditors of the Company as per Annexure – II for Consolidation of SAIL Accounts and respective units. As such, we are required to ensure compliance with the provisions of Section 143 of the Act. As per the provisions of Section 143(8) of the Act, "the branch auditor shall prepare a report on the accounts of the branch examined by him and send it to the auditor of the company who shall deal with it in his report in such manner as he considers necessary". | ||
| Accordingly, the auditors report of the respective units audited by the joint statutory auditors - Tej, Raj & Pal, S. Jaykishan and KASG & Co. and the units audited by the branch auditors was issued in compliance with SA 700. The financial statements of the respective units are prepared in accordance with general purpose framework. Examples of special purpose frameworks as provided in paragraph A1 of SA 800 are not applicable to the financial statements of the respective units. Reference may also be made to the publication on "Guidance note on Bank Audit" issued by ICAI wherein the illustrative format of report of the Branch Auditor of a bank is drafted in compliance with SA 700. Further, the joint statutory auditors - Tej, Raj & Pal, S. Jaykishan and KASG & Co. – are of the view that financial statements of the branch cannot be considered as "carve-out financial statements" in respect of a "carve-out business" referred to in the Guidance Note on Combined and Carved out Financial Statements. | ||
| The situations warranting the preparation of combined/ carve-out financial statements, as indicated in paragraph 13 of the Guidance Note, do not apply to the financial statements of the respective units. Paragraph 13 suggests that the carve-out financial statements are required pursuant to the specific requirements of the management in scenarios where a restructuring of a division is undertaken. | ||
| Paragraph-13 | ||
| Carve-out financial statements may be prepared for one or more divisions, segments, businesses, etc. of the same entity. Examples where carve-out financial statements may be required to be prepared are demerger, spin-o_, hiving off or any other related restructuring of a segment/ divisions/ business of the same entity or acquisition of a segment/ division/ business of another entity. | ||
| The purpose of the Guidance note is to provide guidance on procedure of preparation of the carve-out financial statements including basis of allocating transaction amounts and balances. In the case of the Company, separate books of accounts are maintained by each of the units and there is no question of carving out the financial statements. Each unit maintains its distinct set of books and records. Therefore, the concept of ‘carving out financial statements doesnt apply here. In other words, each unit operates and records its financial transactions independently, negating the need to separate or ‘carve-out its financial information from a larger, consolidated set of accounts. | ||
| Joint Statement of all Joint Statutory auditors – Walker Chandiok & Co LLP, Tej, Raj & Pal, S. Jaykishan and KASG & Co. | ||
| It is pertinent to note that while the approach appears to be different as above, the resultant financial information is the same for the units under the two approaches. Further, as mentioned above, even the level of assurance issued through the respective audit reports is the same under the two approaches. |
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- No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
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- Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
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