To The Members of Lloyds Steels Industries Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Lloyds SteelsIndustries Limited ("the Company") which comprise the Balance Sheet as at March31 2019 the Statement of Profit and Loss (including Other Comprehensive Income) theStatement of Changes in Equity and the Statement of Cash Flows for the year ended on thatdate and a summary of the significant accounting policies and other explanatoryinformation.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion on the financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
1. Evaluation of Contingent Liabilities
Claims against the company not acknowledged as debts are disclosed in the financialstatements. The existence of the payments against these claims requires managementjudgment to ensure disclosure of most appropriate values of contingent liabilities. (ReferNote 18 to the Financial Statements)
Our audit procedures include among others assessing the appropriateness of themanagement's judgment in estimating the value of claims against the company notacknowledged as debts as given in the note 18.
2. Accuracy of recognition measurement presentation and disclosures of revenuesand other related balances in view of adoption of Ind AS 115 "Revenue from Contractswith Customers" (new revenue accounting standard)
The application of the new revenue accounting standard involves certain key judgementsrelating to identification of distinct performance obligations determination oftransaction price of the identified performance obligations the appropriateness of thebasis used to measure revenue recognized over a period. Additionally new revenueaccounting standard contains disclosures which involves collation of information inrespect of disaggregated revenue and periods over which the remaining performanceobligations will be satisfied subsequent to the balance sheet date.
(Refer to Notes 2.18 to the Financial Statements)
We assessed the entities process to identify the impact of adoption of the new revenueaccounting standard. Our audit approach consisted testing of the design and operatingeffectiveness of the internal controls and substantive testing as follows:
1. Evaluated the design of internal controls relating to implementation of the newrevenue accounting standard.
2. Selected a sample of continuing and new contracts and tested the operatingeffectiveness of the internal control relating to identification of the distinctperformance obligations and determination of transaction price. We carried out acombination of procedures involving enquiry and observation re-performance and inspectionof evidence in respect of operation of these controls.
3. Tested the relevant information technology systems' access and change managementcontrols relating to contracts and related information used in recording and disclosingrevenue in accordance with the new revenue accounting standard.
4. Selected a sample of continuing and new contracts and performed the followingprocedures :
Read analyzed and identified the distinct performance obligations in thesecontracts.
Compared these performance obligations with that identified and recorded by thecompany.
Samples in respect of revenue recorded for time and material contracts weretested using a combination of approved time sheets including customer acceptancessubsequent invoicing and historical trend of collections and disputes.
In respect of samples relating to fixed-price contracts progress towardssatisfaction of performance obligation used to compute recorded revenue was verified withactual and estimated efforts from the time recording and budgeting systems. We also testedthe access and c h a n g e management controls relating to these systems.
Sample of revenues disaggregated by type and service offerings was tested withthe performance obligations specified in the underlying contracts.
Performed analytical procedures for reasonableness of revenues disclosed by typeand service offerings.
We reviewed the collation of information and the logic of the report generatedfrom the budgeting system used to prepare the disclosure relating to the periods overwhich the remaining performance obligations will be satisfied subsequent to the balancesheet date.
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexure to Board's Report CorporateGovernance Reportbut does not include the financial statements and our auditors' reportthereon. Our opinion on the financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in thecourse of audit or otherwise appears to be materially misstated.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance changes in equityand cash flows of the Company in accordance with the Ind-AS and other accountingprinciples generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors are responsible for overseeing the Company's financial reportingprocess.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate the effect of any identified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure A' a statement on thematters specified in paragraphs 3 and 4 of the Order.
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 bestof 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 theCompany so far as it appears from our examination of those books;
c) The Company has no branch office and hence the company is not required to conductaudit under section 143 (8) of the Act;
d) The Balance Sheet the Statement of Profit and Loss(including Other ComprehensiveIncome) the Cash flow statement and the Statement of Changes in Equity dealt with bythis Report are in agreement with the books of account;
e) In our opinion the aforesaid standalone Ind-AS financial statements comply with theIndian Accounting Standards (Ind-AS) prescribed under Section 133 of the Act read withthe Companies (Accounts) Rules 2014;
f) On the basis of the written representations received from the directors none of thedirectors is disqualified as on 31st March 2019 from being appointed as a director interms of Section 164(2) of the Act.
g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure B'. Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's Internal Financial Controls overfinancial Reporting; and
h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i) The Company has disclosed the impact of pending claims on its financial position asper the Notes to the Financial Statement. Refer Note18 to the financial statements.
ii) The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii) The Company is not required to transfer any amount to the Investor Education andProtection Fund by the Company.
For Todarwal & Todarwal LLP
Chartered Accountants ICAI
Reg. No. : 111009W/W100231
Sunil Todarwal Partner
M. No. : 032512
Dated : 26th April 2019
Place : Mumbai
ANNEXURE - A TO INDEPENDENT AUDITOR'S REPORT
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of LloydsSteels Industries Limited ("the Company") as of 31 March 2019 in conjunctionwith our audit of the financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial reporting was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assuranceregardingthereliabilityoffinancialreportingandthepreparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. A company'sinternal financial control over financial reporting includes those policies and proceduresthat (1) pertain to the maintenance of records reflect the transactions and dispositionsof the assets of the company; (2) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles and that receipts and expenditures of the companyare being made only in accordance with authorizations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2019 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For Todarwal & Todarwal LLP
ICAI Reg. No. : 111009W/W100231
Partner M. No. : 032512
Dated : 26th April 2019
Place : Mumbai
ANNEXURE B TO THE INDEPENDENT AUDITOR'S REPORT
REPORT ON THE FINANCIAL STATEMENTS OF LLOYDS STEELS INDUSTRIES LIMITED AS ON 31ST MARCH2019.
1 (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed Assets.
(b) As per the information and explanation given to us fixed assets are physicallyverified by the management according to a phased programme designed to cover all thelocations which in our opinion is reasonable having regard to the size of the company andthe nature of its assets. Pursuant to the programme the management during the yearphysically verified the fixed assets at certain locations and no material discrepancieswere noticed on such verification.
(c) According to the information and explanation given to us the title deed ofimmovable properties are held in the name of the company except in the case of one landparcel the reason for which is given in "Note no. 5 Property plant andequipment" of the financials.
2. As per the information provided to us Inventory has been physically verified by themanagement during the year and no material discrepancies were noticed.
3. (a) According to information and explanation given to us the Company has notgranted unsecured loans to companies firms Limited Liability Partnerships or otherparties covered in the register maintained under Section 189 of the Act.
In view of the above provisions of clause 3(iii) (b) and (c) are not applicable to thecompany.
4. In our opinion and according to information and explanation given to us the companyhas in respect of loans investments guarantees and security provisions complied withsection 185 and 186 of the Companies Act 2013.
5. According to the information and explanation given to us the company has notaccepted any deposits whether the directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Companies Act2013. Hence the provisions of clause 3(v) are not applicable to the company.
6. Pursuant to the rules made by the Central Government the maintenance of CostRecords has been prescribed u/s. 148(1) of the Companies Act 2013. We are of the viewthat prima facie the prescribed accounts and records have been maintained. We have nothowever made a detailed examination of the records with a view to determine whether theyare accurate or complete.
7. (a) According to the books and records as produced and examined by us in accordancewith generally accepted auditing practices in India and also management representationsundisputed Statutory Dues in respect of Provident Fund Employees' State Insurance IncomeTax Custom Duty Cess Goods & Service Tax and other statutory dues ifanyapplicable to it has been regularly deposited with the appropriate authorities.
(b) According to the information and explanation given to us and the record producedbefore us there is no disputed amount payable in case of Income Tax Sales Tax WealthTax Service Tax Custom Duty Excise Duty Value Added Tax Goods & Service Tax orCess.
8. According to the information and explanation given to us and based on the recordsproduced before us the company has not defaulted in repayments of loans.
9. According to the information and explanation given to us and the record producedbefore us the company has not raised moneys by way of initial public offer or furtherpublic offer (including debt instruments). The Company has not taken any term loan duringthe year.
10. During the course of our examination of the books of account carried in accordancewith the generally accepted auditing standards in India we have neither come across anyinstance of fraud on or by the Company either noticed or reported during the year norhave we been informed of such case by the Management.
11. According to the information and explanation given to us and the books of accountsverified by us the Managerial remuneration has been paid or provided in accordance withthe requisite approvals mandated by the provisions of section 197 read with Schedule V tothe Companies Act.
12. The Company is not a Nidhi Company hence the provision of clause 3(xii) are notapplicable to the company.
13. According to the information and explanation given to us there are no transactionswith the related parties.
14. According to information and explanation given to us the Company during the yearhas not made any preferential allotment or private placement of shares or fully or partlyconvertible debentures hence the provision of clause 3(xiv) are not applicable to thecompany.
15. According to the information and explanation given to us and the books of accountsverified by us the company has not entered into any non-cash transactions with directorsor persons connected with him.
16. The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
For Todarwal & Todarwal LLP
Chartered Accountants ICAI
Reg. No. : 111009W/W100231
Partner M. No. : 032512
Dated : 26th April 2019
Place : Mumbai