We have audited the Standalone Ind AS financial
statements of MSTC Limited ("the Company"), which
comprise the balance sheet as at 31st March 2025, and
the statement of Profit and Loss, including the statement
of Other Comprehensive Income, statement of cash
flows and statement of changes in equity for the year
then ended, and notes to the Ind AS financial statements,
including a summary of material accounting policies
and other explanatory information.
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid
Standalone Ind AS financial statements give the
information required by the Act in the manner so
required and give a true and fair view in conformity with
the Ind AS and the accounting principles generally
accepted in India, of the state of affairs of the Company
as at 31st March 2025, and profit, changes in equity and its
cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the
Standards on Auditing (SAs) specified under section
143(10) of the Companies Act, 2013. Our responsibilities
under those Standards are further described in the
Auditor's 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 together with the ethical
requirements that are relevant to our audit of the
standalone Ind AS financial statements under the
provisions of the Companies Act, 2013 and the Rules
thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements
and the Code of Ethics. We believe that the audit
evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Emphasis of Matter
We draw attention to the following:
• Management's outlook on the current status of
borrowings from Standard Chartered Bank (Refer
Note no. 18B (b) to the standalone financial
statements).
• In respect of the Transfer of 100 % shareholding in Ferro
Scrap Nigam Limited (FSNL) to Konoike Transport
Company Limited on 21st January, 2025. The Share
Purchase Agreement (SPA) was signed on 24th
October, 2024. Accordingly, FSNL ceased to be a
subsidiary of MSTC Limited (Refer Note no. 27A to the
standalone financial statements).
• Exceptional items: income/(expenses) include net
proceeds from disposal of Investment in wholly
owned subsidiary Ferro Scrap Nigam Limited (FSNL)
amounting to '30,169.19 lakhs and expenditure
towards payment and provision on account of very
old arbitration awards of 3,850.33 lakhs (USD 38.93
Lakhs and '481.98 Lakhs) (Refer Note no. 27A to the
standalone financial statements).
• The Company carried out the annual impairment
testing under Ind AS 36; the recoverable amount of
investment in Mahindra MSTC Recycling Private
Limited (MMRPL) was determined based on the fair
value derived using the Discounted Cash Flow (DCF)
method at 2,494.00 Lakhs compared to the carrying
amount of '3,500.00 Lakhs. Accordingly, an
impairment loss of '1,006.00 Lakhs has been
recognised in the Statement of Profit and Loss (Refer
Note no. 26A to the standalone financial statements).
Our opinion is not modified on the above matter.
Key Audit Matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
audit of the Standalone Ind AS financial statements of the
current period. These matters were addressed in the
context of our audit of the Standalone Ind AS financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters. These matters were addressed in the
context of our audit of the Standalone Ind AS financial
statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on
these matters. For each matter below, our description of
how our audit addressed the matter is provided in that
context.
We have determined the matters described below to be
the key audit matters to be communicated in our report.
We have fulfilled the responsibilities described in the
Auditor's responsibilities for the audit of the Standalone
Ind AS financial statements section of our report,
including in relation to these matters. Accordingly, our
audit included the performance of procedures designed
to respond to our assessment of the risks of material
misstatement of the Standalone Ind AS financial
statements. The results of our audit procedures,
including the procedures performed to address the
matters below, provide the basis for our audit opinion on
the accompanying Standalone Ind AS financial
statements.
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Key audit matters
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How our audit addressed the key audit matter
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I.
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Recoverability of Trade Receivables
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Trade Receivables-Gross is '75,147.21 lakhs (Net
'30,954.39 lakhs) with '44,192.82 lakhs being
considered as credit impaired for which a provision
for doubtful debts is held in the books.
In the event of reference of each case of debt with
impaired credit to NCLT and/or other forums for
adjudication, the Company is exposed to potential
risk of financial loss when the recoveries become
subjected to long processes of litigations and
eventually doubtful.
The recoverable amounts are estimated by
management based on their specific recoverability
assessment on individual debtor as well as
consideration and application of a provisioning
policy.
The disclosures related to Trade Receivables of the
Company are provided in Note 8 (8.1 to 8.6) of the
Standalone Financial Statements.
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While examining details of Receivables and transactions
during the year ended 31st March, 2025, we have observed
the nature of the Trade Receivables including those
Advance to Customers classified as such, the
sustainability and the likelihood of recoverability of
Receivables. In terms of and Accounting Policy all such
debts considered doubtful of recovery have been
provided for in the books as of 31st March, 2025. Since the
Company's obtaining of balance confirmation from
Parties is an ongoing process (as referred to in Note-38)
substantive audit procedures have been followed to
ensure accuracy of balances. We have assessed the
recoverability of the unsettled receivables on a sample
basis through our evaluation of management's
assessment with reference to the credit profile of the
customers and their historical payment pattern,
wherever applicable, along with the latest
correspondences with the customers, as available read
with Company's existing Risk Management Policy.
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II.
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IT Systems & Control
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Preparation and presentation of Standalone Ind AS
Financial Statements are dependent on the
Company's supporting software and hardware
controls involving risk management exercise for
maximum elimination of erroneous data. Thus,
quality of audit outcome and its authenticity are
dependent on the extent of IT controls and systems.
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We have planned, designed and carried out the desired
audit procedures and sample checks, which in our
opinion are adequate to provide reasonable assurance
on the adequacy of IT controls in place.
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III.
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Assessment of allowance for Bad and Doubtful Advances and Contingent Liabilities
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Assessment of allowance for Bad and Doubtful
Advances made during the year and Contingent
liabilities requires assessment of probable
outcomes and cash flows.
The identification and quantification require
estimation and judgement by the management. The
disclosure related to allowance for Bad and Doubtful
Advances during the year and Contingent liabilities
are provided in Note no. 27 and 30 (a) to the
accompanying Standalone Ind AS Financial
Statements.
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We have carried out the validation of information
provided by the management by performing the
following procedures:
o Evaluating reasonableness of the underlying
assumptions.
o Understanding the status of the litigations.
o Examining the relevant documents on available
records.
o Reviewing legal opinion/industry practices wherever
necessary.
o Verification of various disclosures made by the
management.
o Obtaining Management's Representation as per
guidelines of the ICAI.
o Company's Accounting Policy.
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Other Matter
With reference to Note no. 38, confirmation of balances
was not available in many cases of Trade and other
Receivables, Trade and other Payables, Loans and
Advances, Deposits made and received and the impact
of consequent adjustments required, if any, is not
ascertained.
Our opinion is not modified in respect of the above
matters.
Information Other than the Standalone Financial
Statements and Auditor's Report Thereon
• The Company's Board of Directors is responsible for
the other information. The other information
comprises the information included in the
management report but does not include the
Standalone Ind AS financial statements and our
auditor's report thereon.
• Our opinion on the Standalone Ind AS 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 Ind AS
financial statements, our responsibility is to read the
other information and, in doing so, consider whether
the other information is materially inconsistent with
the Standalone Ind AS financial statements, or our
knowledge obtained in the audit or otherwise
appears to be materially misstated. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we
are required to report that fact. We have nothing to
report in this regard.
Management's Responsibility for the Standalone
Financial Statements
The Company's Board of Directors is responsible for the
matters stated in section 134(5) of the Companies Act,
2013 ("the Act") with respect to the preparation of these
Standalone Ind AS financial statements that give a true
and fair view of the financial position, financial
performance including Other Comprehensive Income,
cash flows and changes in equity of the Company in
accordance with the Indian Accounting Standards (Ind
AS) prescribed under section 133 of the Act. This
responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of
the Act for safeguarding of the assets of the Company
and for preventing and detecting frauds and other
irregularities; selection and application of appropriate
accounting policies; making judgements and estimates
that are reasonable and prudent; and design,
implementation and maintenance of adequate internal
financial controls, that were operating effectively for
ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and
presentation of the financial statement that give a true
and fair view and are free from material misstatement,
whether due to fraud or error.
In preparing the Standalone Ind AS 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 operations, or has no
realistic alternative but to do so. Those Board of Directors
are also responsible for overseeing the Company's
financial reporting process.
Auditor's Responsibilities for the Audit of the
Standalone Financial Statements
Our objectives are to obtain reasonable assurance
about whether the Standalone Ind AS 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 conducted in accordance with
SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the
basis of these Standalone Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise
professional judgement and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement
of the Standalone Ind AS 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 Companies Act, 2013, we are also
responsible for expressing our opinion on whether the
Company has adequate internal financial controls
system in place and the operating effectiveness of
such controls.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting
estimates and related disclosures made by
management.
• Conclude on the appropriateness of 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 Standalone Ind AS
financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the
date of our auditor's 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 Ind AS financial
statements, including the disclosures, and
whether the financial statements represent the
underlying transactions and events in a manner that
achieves fair presentation.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings,
including any significant deficiencies in internal control
that we identify during our audit.
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
expected to outweigh the public interest benefits of such
communication.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditor's Report) Order,
2020 ("the Order"), issued by the Central Government of
India in terms of sub-section (11) of section 143 of the
Companies Act, 2013, we give in the "Annexure-A" a
statement on the matters specified in paragraphs 3 and
4 of the Order, to the extent applicable.
As required by Section 143(3) of the Act, we report that:
a) We have sought and obtained all the information and
explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit.
b) In our opinion, proper books of account as required by
law have been kept by the Company so far as it
appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit and Loss
including Other Comprehensive Income, Statement
of Changes in Equity and the Cash Flow Statement
dealt with by this Report are in agreement with the
books of account.
d) In our opinion, the aforesaid Standalone Ind AS
financial statements comply with the Accounting
Standards specified under Section 133 of the Act, read
with relevant rules of the Companies (Accounts)
Rules, 2014.
e) Notification no. G.S.R. 463 (e) dated 5th June, 2015
issued by Ministry of Corporate Affairs, Section 164 (2)
of the Companies Act, 2013 regarding disqualification
of the Director is not applicable to the Company, since
it is a Government Company.
f) With respect to the adequacy of the internal financial
controls with reference to these standalone Ind AS
financial statements of the Company and the
operating effectiveness of such controls, refer to our
separate Report in "Annexure B".
g) The Company being a Government Company,
provisions of Section 197 (16) of the Companies Act,
2013 regarding managerial remuneration are not
applicable to the Company as per notification no.
G.S.R. 463 (E) dated 5th June, 2015.
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, in our
opinion and to the best of our information and
according to the explanations given to us:
i) The Company has disclosed the impact of
pending litigations lying in the name of the
Company as on 31st March, 2025 on its financial
position in its standalone Ind AS financial
statements-Refer Note 30(a) to the Standalone
Ind AS Financial Statements.
ii) The Company did not have any long-term
contracts including derivative contracts for which
there were any material foreseeable losses.
iii) There has been no delay in transferring the
amounts required to be transferred, to the Investor
Education and Protection Fund by the Company.
iv) (a) The Management has represented that, to the
best of its knowledge and belief, no funds have
been advanced or loaned or invested (either
from borrowed funds or share premium or any
other sources or kind of funds) by the
Company to or in any other person or entity,
including a foreign entity ("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 ("Ultimate Beneficiaries") or provide
any guarantee, security or the like on behalf of
the Ultimate Beneficiaries;
(b) The Management has represented, that, to the
best of its knowledge and belief, no funds have
been received by the Company from any
person or entity, including a foreign entity
("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 the audit procedures that have been
considered reasonable and appropriate in
the circumstances, nothing has come to our
notice that has caused us to believe that the
representations under sub-clause (i) and (ii)
of Rule 11(e) of the Companies (Audit and
Auditors) Rules, 2014, as amended, as provided
under and (b) above, contain any material
mis-statement.
(d) The final dividend paid by the Company during
the year in respect of the same declared for
the previous year is in accordance with section
123 of the Act to the extent it applies to
payment of dividends. The interim dividend
declared and paid by the Company during the
year and until the date of this audit report is in
accordance with section 123 of the Act.
i) Based on our examination which included test
checks, the company has used an accounting
software for maintaining its books of account which
has a feature of recording audit trail (edit log) facility
and the same has operated throughout the year for
all relevant transactions recorded in the software.
Further, during the course of our audit we did not
come across any instance of audit trail feature being
tampered with. The audit trail has been preserved as
per the statutory requirements for record retention.
j) As required by Section 143 (5) of the Companies Act,
2013 the directions and sub-directions issued by the
Comptroller & Auditor General of India, we give our
comments on the Standalone Ind AS Financial
Statements in "Annexure-C" annexed herewith.
For S. Guha & Associates
Chartered Accountants
Firm's Registration No.- 322493E
Sd/-
Sourabh Mitra
Partner
Membership No.- 308743
UDIN: 25308743BMIDJJ3775
Place: New Delhi
Date: May 29, 2025
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