We have audited the accompanying standalone financial
statements of M/s.Steel Exchange India Limited ("the
Company"), which comprise the Balance Sheet as at March
31, 2025, the Statement of Profit and Loss (including Other
Comprehensive Income), the Statement of Changes in Equity
and the Statement of Cash Flows for the year ended on that
date, and a summary of significant accounting policies and
other explanatory information (hereinafter referred to as "the
standalone financial statements").
In our opinion and to the best of our information and according
to the explanations given to us, the aforesaid standalone
financial statements give the information required by the
Companies Act, 2013 ("the Act") in the manner so required
and give a true and fair view in conformity with the Indian
Accounting Standards prescribed under section 133 of the Act
read with the Companies (Indian Accounting Standards) Rules,
2015, as amended, ("Ind AS") and other accounting principles
generally accepted in India, of the state of affairs of the
Company as at March 31, 2025, the profit and total
comprehensive income, changes in equity and its cash flows
for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on
Auditing (SAs) specified under section 143(10) of the Act. 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 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 is sufficient and
appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
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. We have determined the matters described
below to be the key audit matters to be communicated in our
report.
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S.No
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Key Audit matter
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1.
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Capitalization of Fixed Assets - ^92.09 Crores
During the year ended 31 March 2025, the Company capitalized property, plant and equipment (PPE) amounting to
92.09 crores, primarily in connection with the commissioning of a new rolling mill plant designed to produce new
8mm and 10mm steel product lines, along with significant additions to the power plant and concast (continuous
casting) machinery.
The capitalization of such large-scale industrial assets requires management to exercise significant judgement in:
• Determining the correct classification between capital and revenue expenditure,
• Assessing the date of readiness for intended use (capitalization timing),
• Allocating directly attributable costs including trial runs, duties, installation, and overheads,
• Ensuring compliance with Ind AS 16 - Property, Plant and Equipment.
Due to the materiality of the amounts involved and the judgement required in applying the capitalization criteria,
this has been considered a key audit matter.
Our audit procedures included, among others:
1. Understanding and evaluating internal controls over capital expenditure, procurement, and capitalization
processes.
2. Obtaining a detailed schedule of capitalized assets and verifying the nature, quantum, and source documents
(invoices, contracts, and GRNs) relating to the rolling mill, concast and power plant.
3. Examining the date of capitalization to assess management's determination of the asset being ready for its
intended use, supported by commissioning certificates and trial run reports.
4. Verifying the basis of allocation of directly attributable costs such as project overheads, pre-operative expenses,
and employee costs during the construction period.
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S.No
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Key Audit matter
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2.
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5. Reviewing compliance with Ind AS 16, especially regarding the treatment of trial run revenue/expenses and the
capitalization of borrowing costs where applicable.
6. Evaluating the adequacy of disclosures in the financial statements relating to the nature and extent of capital
expenditure.
Assessment of Pending Litigations
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The Company is subject to various legal and regulatory proceedings, including tax and commercial disputes, which
are pending at different stages of adjudication before appropriate forums. As disclosed in Note 3.28 to the financial
statements, these matters involve significant amounts, and their outcomes are subject to interpretation of complex
legal issues and judicial discretion.
The determination of the status and financial impact of such matters involves significant management judgement,
including:
• Assessment of the current position of the case and likelihood of outcome,
• Reliance on advice from internal and external legal advisors,
• Continuous monitoring of legal proceedings,
• Evaluation of potential financial exposure, and
• Disclosure of contingent liabilities where considered necessary.
Given the materiality and complexity of these cases, and the level of judgement involved in their assessment and
disclosure, this area has been identified as a key audit matter.
Our audit procedures included, among others:
1. Obtained and reviewed a summary of pending legal matters and discussed the status and potential impact of
significant cases with management and in-house legal counsel.
2. Where deemed necessary, obtained written representations from the Company.
3. Evaluated management's process of monitoring litigation, including risk classification and the appropriateness
of disclosures made.
4. Reviewed the financial statement note disclosures in relation to legal matters to assess whether they are
complete and adequately describe the nature and potential financial impact of these cases.
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Information Other than the Standalone Financial Statements
and Auditor's Report Thereon
The Company's Board of Directors are responsible for the
preparation of the other information. The other information
comprises the information included in the Management
Discussion and Analysis, Board's Report including Annexures
to Board's Report, Business Responsibility Report, Corporate
Governance and Shareholder's Information, but does not
include the standalone financial statements and our auditor's
report thereon.
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
and, in doing so, consider whether the other information is
materially inconsistent with the standalone financial
statements or our knowledge obtained during the course of
our audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in
this regard.
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
with respect to the preparation of these standalone 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 accordance
with the Ind AS and other accounting principles generally
accepted in India including The Indian Accounting Standard
specified under sec.133 of the act. This responsibility also
includes maintenance of adequate accounting records in
accordance with the provisions of the Act for safeguarding
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.
In preparing the standalone 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.
The Board of Directors are 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 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 financial statements.
As part of an audit in accordance with SAs, 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, m isrepresentations, or the override of internal
control.
• 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 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 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 financial statements, including the
disclosures, and whether the standalone financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Materiality is the magnitude of misstatements in the
standalone financial statements that, individually or in
aggregate, makes it probable that the economic decisions of
a reasonably knowledgeable user of the financial statements
may be influenced. We consider quantitative materiality and
qualitative factors in (i) planning the scope of our audit work
and in evaluating the results of our work; and (ii) to evaluate
the effect of any identified misstatements 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 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 standalone 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
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
relevant books of account.
d. In our opinion, the aforesaid standalone 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 31st , 2025 taken on
record by the Board of Directors, none of the
directors is disqualified as on March 31, 2025 from
being appointed as a director in terms of Section 164
(2) of the Act.
f. With respect to the adequacy of the internal financial
controls over financial reporting of the Company and
the operating effectiveness of such controls, refer to
our separate Report in "Annexure A". Our report
expresses an unmodified opinion on the adequacy
and operating effectiveness of the Company's
internal financial controls over financial reporting.
g. With respect to the other matters to be included in
the Auditor's Report in accordance with the
requirements of section 197(16) of the Act, as
amended :In our opinion and to the best of our
information and according 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.
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 :
i. The Company has disclosed the impact of
pending litigations on its financial position in its
standalone financial statements. (Refer Note:
3.28).
ii. The Company did not have any long-term
contracts including derivative contracts for
which there were any material foreseeable
losses.
iii. There were no amounts which were 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
(which are material either individually or in the
aggregate) 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 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 (which
are material either individually or in the
aggregate) have been received by the Company
from any person or entity, including 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;
(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), as provided under (a) and (b) above,
contain any material misstatement.
v. 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.
2. As required by the Companies (Auditor's Report) Order,
2020 ("the Order") issued by the Central Government 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.
For Pavuluri &Co.
Chartered Accountants
Firm Reg. No:012194S
UDIN : 25203300BMLHOU2590
(CA P A RAMAIAH)
PARTNER
M.No:20330
Place :Hyderabad
Date : 19.05.2025
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