We have audited the accompanying Financial Statements of IMEC Services Limited (“the Company”), which
comprise the Balance Sheet as at March 31,2025 , the Statement of Profit and Loss (including Other Com¬
prehensive Income), the Statement of Changes in Equity and the Statement of Cash Flows for the year end¬
ed on that date and Notes to the Financial Statements, including a summary of the significant accounting
policies and other explanatory information (hereinafter referred to as “the Financial Statements”).
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid
Financial Statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so
required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under
section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended,
(“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company
as at March 31, 2025 , the profit and total comprehensive income, changes in equity and its cash flows for
the year ended on that date.
Basis of Opinion
We conducted our audit of the Financial Statements in accordance with the Standards on Auditing (SAs)
specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further
described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Char¬
tered Accountants of India (ICAI) together with the independence requirements that are relevant to our au¬
dit of the Financial Statements under the provisions of the Act and the Rules made thereunder, and we
have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code
of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our au¬
dit of the Financial Statements of the current period. These matters were addressed in the context of our
audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. We have determined the matters described below to be the key audit
matters to be communicated in our report:
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Sr
No.
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Key Audit Matter
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1
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Assessment of Contingent Liability and Related Disclosures
[Refer to Note B (iii) to the Financial Statements- “Use of Estimates, Judgments and Assumptions
- Provisions and contingent liabilities”, Note 21 to the Financial Statements - “Contingent Liabili¬
ties and Commitments”]
As at March 31, 2025, the Group has exposures towards litigations relating to various matters as
set out in the aforesaid Notes.
Significant management judgment is required to assess such matters to determine the probability
of occurrence of material outflow of economic resources and whether a provision should be recog¬
nized, or a disclosure should be made. The management judgment is also supported with legal ad¬
vice in certain cases as considered appropriate.
As the ultimate outcome of the matters are uncertain and the positions taken by the management
are based on the application of their best judgment, related legal advice including those relating to
interpretation of laws/regulations, it is considered to be a Key Audit Matter.
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Auditor’s Response
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Principle Audit Procedures
Our audit procedures included the following:
We understood, assessed and tested the design and operating effectiveness of key controls sur¬
rounding contingent liability relating to the relevant laws and regulations;
We performed our assessment on a test basis on the underlying calculations supporting the con¬
tingent liabilities made in the Financial Statements;
We evaluated management's assessments by understanding precedents set in similar cases and
assessed the reliability of the management's past estimates/judgments;
We evaluated management's assessment around those matters that are not disclosed or not
considered as contingent liability, as the probability of material outflow is considered to be remote
by the management;
We assessed the adequacy of the Company's disclosures.
Based on the above work performed, management's assessment in respect of disclosures relating
to contingent liabilities in the Financial Statements is considered to be reasonable.
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Key Audit Matter
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2
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Recognition of Business Auxiliary Services Income under Sub-Agreements
The Company derived a substantial portion of its revenue through Business Auxiliary Services
earned for facilitating the import of steel from Nippon Steel Trading Corporation, Japan, into India.
These services are rendered under a sub-agreement between IMEC Services Limited (the “Com¬
pany”) and Euroasia Holdings Private Limited (“Euroasia”), which, in turn, operates under a princi¬
pal agreement with AMNS Khopoli Limited.
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Business Auxiliary Services income is recognized only upon receipt of confirmation from Euroasia
Holdings Private Limited (“Euroasia”), that the consignments have been delivered to Arcelormittal
Nippon Steel India Limited and that the service obligations under the principal agreement have
been duly fulfilled. Consequently, even when goods physically arrive in India, revenue is deferred
until such confirmation is obtained. This results in significant estimation uncertainty and manage¬
ment judgment in determining the appropriate timing of revenue recognition, in accordance with Ind
AS 115 Revenue from Contracts with Customers.
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During our audit, we observed that all Bills of Lading for steel consignments from Japan were dated
on or before FY 23-24. However, of the total Business Auxiliary Services income of ?27.50 crores
recognized for the year ended 31 March 2025, a substantial amount of ?20.74 crores was recorded
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in the month of March 2025, based on confirmations received from Euroasia Holdings Private Lim¬
ited (“Euroasia”) during that period. The clustering of revenue recognition in a single month, despite
earlier physical arrival of goods, highlights the significance of management's judgment and reliance
on third-party confirmations.
This area was considered to be of most significance in our audit due to the materiality of the reve¬
nue involved, the complexities related to assessing satisfaction of performance obligations, and the
inherent risk of misstatement relating to revenue cut-off and timing. Accordingly, we determined the
recognition of Business Auxiliary Services income under sub-agreements to be a key audit matter.
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Auditor’s Response
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Our audit procedures included and were not limited to the following:
We obtained an understanding of the Company's revenue recognition policy and assessed its
compliance with Ind AS 115 - Revenue from Contracts with Customers, especially relating to per¬
formance obligations and timing of revenue recognition.
We obtained and inspected third-party confirmations received from for a sample of transactions,
to verify that they were dated and issued during March 2025 and supported the timing of revenue
recognition.
We performed cut-off procedures to verify that no revenue relating to undelivered or unconfirmed
consignments was prematurely recognized.
We assessed the adequacy of disclosures made in the financial statements in relation to the
revenue recognition policy and estimation involved.
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Emphasis of Matter
We draw attention to the following Emphasis of matters:
The Company has received demand notice from Customs/DGFT for non-fulfillment of export obligations
under 5 Advance Licenses issued in 2010 and to pay the export obligations amounting to Rs. 116.85 Lacs.
As per the reply received from the Company Management, the Duty Discharge Certificate was received for 4
Advance Licenses amounting to Rs. 55.27 Lakhs. For 1 License amounting to Rs 61.58 Lakhs, the Company
has already assigned and transferred all its assets and liabilities/obligations, including but not limited to duty
free import raw materials to RSAL Steel Private Limited (a subsidiary of the Company / RSPL) through the
Slump Sale Agreement dated 30.03.2011. During the year Honorable NCLT passed the order in respect of
RSPL and did not specifically mention cessation of liability pertaining to above. The Company has also filed
Interim Application in NCLT, Mumbai in CP No. 2985 of 2018 in respect of the said liability regarding export
obligations along with the one more advance license for which company has not fulfilled its obligation, which
is pending before the NCLT. On 13.08.2025the Adjudicating Authority in IA No. 3925 of 2022 has rejected
the application. Aggrieved by the said order the Company has filed application regarding the same to
NCLAT. NCLAT observed that on the account of the customs dues, Applicant/Appellant has filed the applica¬
tion before the Adjudicating Authority. From the facts which have been noticed above, it is clear that Appel¬
lant is pursuing remedy under the Customs Act and the liability with regard to customs duty has not yet been
finalized. NCLAT only observe that the Adjudicating Authority after having taken the view that Adjudicating
Authority has no jurisdiction to enter into the issue regarding determination of the liability of the custom duty,
should have been closed the application at this stage and no further observation on merit was required.
NCLAT clarified that it is for the Customs Authority to consider and decide the matter without being influ¬
enced by the impugned order passed by the Adjudicating Authority. Subject to above observation, NCLAT
dismissed the appeal by passing the order on 28.02.2025 and for the above matter we have disclosed the
amount involved of Rs. 61.58 lakh as Contingent liabilities in notes to financial statements.
2. The Company is engaged in legal matter against the SBI in MP High Court Indore Bench having reference
no. WP 26681/2021 for the matter relating to Declaration of willful defaulter in which liability of Rs. 78 lakh
arises but the company has not made any provision regarding the same due to such case pending with the
MP High court as per latest order issued on 05.05.2025.
Our opinion is not qualified in respect of above said matters.
Management’s Responsibilities for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with re¬
spect to the preparation of these Financial Statements that give a true and fair view of the financial position,
financial performance, total comprehensive income, changes in equity and cash flows of the Company in ac¬
cordance with the Ind AS 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 safe¬
guarding the assets of the Company and for preventing and detecting frauds and other irregularities; selec¬
tion and application of appropriate accounting policies; making judgments and estimates that are reasonable
and prudent; and design, implementation and maintenance of adequate internal financial controls, that were
operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the
preparation and presentation of the Financial Statements that give a true and fair view and are free from ma¬
terial misstatement, whether due to fraud or error.
In preparing the Financial Statements, management is responsible for assessing the Company's ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Company or to cease opera¬
tions, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conduct¬
ed in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these Financial Statements.
i. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
ii. Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suffi¬
cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement re¬
sulting 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.
iii. Obtain an understanding of internal financial controls 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 ex¬
pressing our opinion on whether the Company has adequate internal financial controls with reference to Fi¬
nancial Statements in place and the operating effectiveness of such controls.
iv. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by the management.
v. Conclude on the appropriateness of management's 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 Company's ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Fi¬
nancial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the Company to cease to continue as a going concern
vi. Evaluate the overall presentation, structure and content of the Financial Statements, including the disclo¬
sures, and whether the Financial Statements represent the underlying transactions and events in a manner
that achieves fair presentation
Materiality is the magnitude of misstatements in the Financial Statements that, individually or in aggregate,
makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial State¬
ments may be influenced. We consider quantitative materiality and qualitative factors (i) in planning the scope
of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified mis¬
statements in the Financial Statements.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal controls
with reference to financial statements that we identify during our audit.
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
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the Financial Statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor's 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 ex¬
pected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act, based on our audit we report that:
(a) We have sought and obtained all the information and explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of account as required by law have been kept by the Company so far as it
appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and Loss including Other Comprehensive Income, Statement of
Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the rel¬
evant books of account.
(d) In our opinion, the aforesaid Financial Statements comply with the Ind AS specified under Section 133 of
the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on March 31, 2025 taken on
record by the Board of Directors, none of the directors is disqualified as on March 31,2025 from being ap-
pointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and
the operating effectiveness of such controls, refer to our separate Report in “Annexure A”. Our report ex¬
presses an unmodified opinion on the adequacy and operating effectiveness of the Company's internal fi¬
nancial controls over financial reporting.
(g) With respect to the other matters to be included in the Auditor's Report in accordance with the require¬
ments of section 197(16) of the Act, as amended, In our opinion and to the best of our information and ac¬
cording to the explanations given to us, the remuneration paid by the Company to its directors during the
year is in accordance with the provisions of section 197 of the Act. The company has paid only sitting fees
to its directors.
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the
Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information
and according to the explanations given to us:
1. The Company has disclosed the impact of pending litigation on its financial position in its Financial State¬
ments.
II. The Company has made provision, as required under the applicable law or accounting standards, for
material foreseeable losses, if any, on long-term contracts including derivative contracts.
iii. There has been no amount, which is required to be transferred, to the Investor Education and
Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order, 2020 (“the Order”) issued by the Central Govern¬
ment in terms of Section 143(11) of the Act, we give in “Annexure B” a statement on the matters specified
in paragraphs 3 and 4 of the Order, to the extent applicable.
For SCAN & Co.
Chartered Accountants
(Firm R e g. No. 113954W)
Place: Indore CA C h etan Kh a n d e Iwa l
Date: 30/05/2025 ____
M. No.408113
UDIN:25408113BMKNZU9749
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