We have audited the accompanying Standalone Financial Statements of National Aluminium Company Limited (“the Company”), which comprise the Standalone Balance Sheet as at 31st March, 2024, the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flow for the year then ended, and notes to the Financial Statements including a summary of the Material Accounting Policy Information 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 (Ind AS) 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 31st March, 2024, and its profit including other comprehensive income, changes in equity and its cash flows for the year then ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing (“the 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 (the “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 made there under, 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 audit opinion on the Standalone Financial Statements.
Emphasis of Matter
We draw attention to Note no. 29.3 regarding non-recognition of revenue from two wind power plants located in the state of Rajasthan since 01.04.2019 in view of no fresh Power Purchase Agreement having been signed.
Our opinion on the Standalone Financial Statements is not modified in respect of 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 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. The key audit matters that we have identified in the current year are as follows:
|
Key Audit Matter
|
Response of Auditors in dealing with the matters
|
|
1. Carrying value of Property, Plant and Equipment, Capital work-in-progress, Intangible assets and Intangible Assets under Development
|
|
Property, plant and equipment, capital work-in-progress, intangible assets and Intangible assets under development represent significant balances recorded
|
Our audit procedures included the following
|
|
in the statement of financial position.
|
» We evaluated the assumptions made by Management in the determination of carrying values and useful lives to ensure that these are consistent with the principles of Indian
|
|
The evaluation of the recoverable amount of these assets requires significant
|
Accounting Standards (Ind AS) 16 Property, Plant and Equipment and Ind AS 38
|
|
judgement in determining the key assumptions supporting the expected future
|
Intangible Assets.
|
|
cash flows of the business and the utilisation of the relevant assets including
|
» We assessed whether the carrying values and the useful lives were reasonable by
|
|
impairment provisions related to the assets.
|
challenging Management’s judgements through comparing the useful lives prescribed in
|
|
There are a number of areas where Management judgement impacts the
|
Schedule II to the Companies Act, 2013 and the useful lives of certain assets as per the
|
|
carrying value of property, plant and equipment, intangible assets and their
|
technical assessment of the Management.
|
|
respective depreciation profiles. These include the decision to capitalise or
|
» We compared the useful lives of each class of asset in the current year to the previous year
|
|
expense costs; the asset life review including the impact of changes in the
|
to determine whether there were any significant changes in the useful lives of assets, and
|
|
Company’s strategy; and the timeliness of capitalisation, determination or the
|
considered the reasonableness of changes based on our knowledge of the business and
|
|
measurement and recognition criteria for assets retired from active use.
|
the industry.
» We assessed whether indicators of impairment existed as at 31st March 2024 based on our knowledge of the business and the industry and wherever required the provision of impairment of assets/CWIP were reviewed.
» We tested the controls in place over the property, plant and equipment and intangible assets, evaluated the appropriateness of capitalisation policies, performed tests of details on costs capitalised and assessed the timeliness of capitalisation including decapitalisation of assets retired from active use and the application of the asset life.
» In performing these substantive procedures, we assessed the judgements made by Management including the nature of underlying costs capitalised; the appropriateness of asset lives applied in the calculation of depreciation and amortisation; and in assessing the need for accelerated depreciation/amortisation, if required, in the context of impairment.
|
|
Key Audit Matter
|
Response of Auditors in dealing with the matters
|
|
2. Valuation of employees’ defined benefit obligations and other long-term benefits
|
|
The Company has recognised long-term employee benefit liabilities and
|
Our audit procedures relating to the valuation of employees, defined benefit obligations and
|
|
defined benefit obligations (net of plan asset against funded gratuity
|
other long-term benefits included the following:
|
|
obligation).
The valuation of employee benefit obligations is dependent on market
|
» In testing the valuation, we have examined the reports of external actuarial specialists
|
|
conditions and assumptions made. The key audit matter specifically relates to
|
to review the key actuarial assumptions used, both financial and demographic, and
|
|
the following key assumptions like discount rate, inflation expectations and
|
considered the methodology utilised to derive these assumptions.
|
|
life expectancy assumptions. The setting of these assumptions is complex and requires the exercise of significant Management judgement with the support
|
» We evaluated the assumptions made by Management and the actuary to ensure that
|
|
of third-party actuary.
|
these are consistent with the principles of Ind AS 19 Employee Benefits.
|
|
» Furthermore, we have examined the sensitivity analysis on the key assumptions in valuing the defined benefit obligations.
3. Advances and deposits in respect of tax matters under litigation continuing as assets
|
|
The Financial Statements disclose other assets, which includes material
|
Our audit procedures relating to the advance and deposits in respect of tax matters under
|
|
recoverable claims of direct and indirect tax deposits (net of provision)
|
litigation continuing as assets included the following:
|
|
including VAT and Cenvat credits which are pending adjustment/adjudication. Significant judgement is required in assessing the nature of these exposures
|
» We obtained from Management the details of completed tax assessments and demands and appeal orders of the appellate authority.
|
|
and their accounting and disclosure requirements.
|
» We involved our internal experts to challenge the Management’s underlying assumptions
|
|
4. Valuation of deferred tax assets and liabilities
The Company has disclosed deferred tax assets/liabilities in the Financial
|
in estimating the tax liability and the possible outcome of the disputes.
» Our internal experts also considered legal precedence and other rulings in evaluating Management’s position on these uncertain tax positions.
» Additionally, we have considered opinions of legal and tax experts, wherever available, to review the nature of the amounts recoverable, the sustainability and the likelihood of recoverability upon final resolution.
Our audit procedures relating to the advance and deposits in respect of tax matters under
|
|
Statements.
|
litigation continuing as assets included the following:
|
|
The Company operates in activities which involves application of various
|
» Ascertained the completeness and accuracy of the deferred tax assets/liabilities and
|
|
provisions in income tax.
|
recognizing uncertain tax positions.
|
|
The assessment of the valuation of deferred tax assets/liabilities, resulting from
|
» We challenged and tested the Management’s assessment of the recoverability of the deferred tax assets, and the probability of future cash outflows in respect of deferred tax
|
|
temporary differences, and provisions for uncertain tax positions is significant
|
liabilities identified by the Company.
|
|
to our audit as the calculations are complex and depend on sensitive and judgemental assumptions. These include, amongst others, long-term future profitability and local fiscal regulations and developments.
» We also assessed the applicable local fiscal regulations and developments, in particular those related to changes in the statutory income tax rate and of the statutes of limitation, as these are key assumptions underlying the valuation of the deferred tax assets/ liabilities.
» We analysed the tax positions and evaluated the assumptions and methodologies used by the Company.
» In addition, we also focused on the adequacy of the Company’s disclosures as per Ind AS 12 Income Taxes on deferred tax assets/liabilities and assumptions used.
5. Ascertainment, disclosure and provisioning in respect of contingent liabilities
|
|
Refer to the Note No. 27 to the standalone financial statements.
|
Our audit procedures relating to the ascertainment, disclosure and provisioning in respect of
|
|
The Company has material uncertain tax matters, both direct and indirect, under dispute involving material aggregate demand which require significant
|
contingent liabilities included the following:
We obtained a detailed understanding and evaluated the design and implementation of controls
|
|
judgement to determine the possible outcome of these disputes.
|
that the Company has established in relation to disclosure and provisioning of contingent
|
|
Additionally, the Company has other on-going legal matters relating to various claims by the Government of Odisha or other agencies constituted by
|
liabilities in accordance to Ind AS 37 Provisions, Contingent Liability and Contingent Assets. Regarding direct and indirect tax contingent liabilities, we undertook following principal
|
|
the State Government and by contractors/suppliers which require application
|
audit procedures:
|
|
of Management judgement in order to determine the likely outcome.
|
» Assessment of the process and relevant controls implemented to identify tax litigations and pending administrative proceedings.
» Reviewing orders and other communication from tax and other regulatory authorities and management responses thereto.
» Discussion with the Management regarding the status of the most significant disputes and inspection of the key relevant documentation.
» Analysis of opinion received from tax experts where available.
» Review of the adequacy of the disclosures in the notes to the financial statements.
|
|
Key Audit Matter
|
|
Response of Auditors in dealing with the matters
|
| |
In assessing the potential exposures of the Company in respect of other contingent liabilities, we have:
|
| |
»
|
assessed the design and implementation of controls in relation to the monitoring of known exposures;
|
| |
»
|
referred Board and other meeting minutes to identify areas subject to Company’s consideration;
|
| |
»
|
consulted with the Company’s internal legal advisors in understanding on-going and potential legal matters impacting the Company;
|
| |
»
|
reviewed available legal opinions from experts; and
|
| |
»
|
reviewed the proposed accounting and disclosure of actual and potential legal liabilities.
|
Information Other than the Standalone Financial Statements and Auditors’ Report thereon
The Company’s Board of Directors is responsible for the other information. The other information comprises the information contained in the Company’s Annual Report but does not include the Standalone Financial Statements and our report thereon. These reports are 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 other information, which we will obtain after the date of Auditors’ Report and if we conclude that there is material misstatement therein, we are required to communicate the matter to those charged with governance.
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 Act with respect to the preparation of these Standalone 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 accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015. 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 alternatives but to do so.
The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
Auditors’ Responsibility for the Audit of 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 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 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, misrepresentations, 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 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 up to 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.
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 auditors’ report unless law or regulation precludes public disclosure about the matters 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
The Standalone Financial Statements of the Company for the year ended 31st March, 2023, were audited by the Joint Auditors of the Company one of whom was a predecessor audit firm, and they had expressed an unmodified opinion, vide their report dated 24th May, 2023.
Our opinion is not modified in respect of the above matter.
Report on Other Legal and Regulatory Requirements
1. 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 Act, and on the basis of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we give in Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. With respect to the other matters to be included in the Auditors’ Report in terms of the directions of the Comptroller and Auditor General of India (C&AG) under Section 143 (5) of the Act, and on the basis of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we give in Annexure ‘B, statement on the matters specified in the Directions of C&AG respectively.
3. 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 except for the matters stated in the paragraph 3(h)(vi) below, on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014;
(c) The Standalone Balance Sheet, the Standalone Statement of Profit and Loss including Other Comprehensive Income, the Standalone Statement of Changes in Equity and the Standalone Statement of Cash Flow dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid Standalone Financial Statements comply with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) In terms of notification no. G.S.R.463(E) dated 05 th June, 2015 issued by the Ministry of Corporate Affairs, Section 164(2) of the Act regarding the disqualification of directors is not applicable to the Company, since it is a Government Company;
(f) Our comments on the maintenance of accounts and other matters connected therewith are as stated in paragraph 3(b) above on reporting under Section 143(3)(b) of the Act and paragraph 3(h)(vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
(g) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, as required under Section 143(3)(i) of the Act, refer to our separate report in Annexure C;
(h) With respect to the other matters to be included in the Auditors’ Report in accordance with the requirements of Section 197(16) of the Act, as amended:
The provision of Section 197 read with Schedule V of the Act, relating to managerial remuneration is not applicable to the Company by virtue of Notification No. G.S.R. 463(E) dated 5 th June, 2015 issued by the Ministry of Corporate Affairs, Govt. of India; 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:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements - Refer Note 27 to the Standalone Financial Statements;
ii. The Company has made provision, as required under the applicable law or Indian Accounting Standards, for material foreseeable losses, if any, in respect of long-term contracts. As explained to us, there are no derivative contracts entered into by the Company;
iii. There has been no delay in transferring 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 (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; and
(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. As stated in Para 19.3 to the Standalone Financial Statements:
(a) The final dividend proposed in the previous year, declared and paid by the Company during the year is in accordance with Section 123 of the Act, as applicable; and
(b) The interim dividend declared and paid by the Company during the year and until the date of this report is in compliance with Section 123 of the Act; and
vi. Based on our examination which included test checks, the Company has used accounting software for maintaining its books of account, which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective software except for the instances mentioned below:
The Payroll software used by the Company for maintaining Payroll records did not have an audit trail feature enabled. Consequently, there was no audit trail maintained for transactions recorded within this particular software for the whole year.
Further, for the periods where audit trail (edit log) facility was enabled and operated throughout the year for the respective accounting software, we did not come across any instance of the audit trail feature being tampered with during the course of our audit.
As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 is applicable from 1st April, 2023, reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 on preservation of audit trail as per the statutory requirements for record retention is not applicable for the financial year ended 31st March, 2024.
For A.K. Sabat & Co. For P.A. & Associates
Chartered Accountants Chartered Accountants
FRN: 321012E FRN: 313085E
Sd/- Sd/-
(CA A.K. Sabat) (CA S.S. Poddar)
Partner Partner
Place: Bhubaneswar Membership No: 030310 Membership No: 051113
Date: 27th May, 2024 UDIN: 24030310BKFTEJ9956 UDIN: 24051113BKHJJQ5786
|