Tata Steel LimitedReport on the Audit of the Standalone Financial Statements
Opinion
1. We have audited the accompanying standalone financial statements of Tata Steel Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2024, and 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 then ended, and notes to the standalone financial statements, including material accounting policy information and other explanatory information.
2. 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 accounting principles generally
accepted in India, of the state of affairs of the Company as at March 31, 2024, and total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.
Basis for Opinion
3. 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
4. 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.
|
Key audit matter
|
How our audit addressed the key audit matter
|
|
Business Combination under Common Control
|
Our audit procedures included the following:
|
|
Amalgamation of Tata Steel Long Products Limited (TSLP),
|
• We understood from the management, assessed and tested
|
|
Tata Steel Mining Limited (TSML), Tata Metaliks Limited
|
the design and operating effectiveness of the Company's
|
|
(TML), The Tinplate Company of India Limited (TCIL) and S&T
|
key controls over the accounting for business combinations.
|
|
Mining Company Limited (S&T)
|
• We traced the assets and liabilities as at April 1, 2022 and
|
|
[Refer to Note 2(d) to the standalone financial statements
|
results for the financial year ended March 31, 2023 of TSML,
|
|
"Business combination under common control" and Note 43
|
TSLP, S&T, TCIL and TML from the audited standalone Financial
|
|
to the standalone financial statements]
|
Statements / Information of the respective subsidiaries.
|
|
Pursuant to the National Company Law Tribunal (NCLT)
|
• We recomputed the value of fully paid-up equity shares
|
|
Orders received during the year, subsidiaries of the Company,
|
issued as the consideration with reference to the NCLT Orders.
|
|
viz., TSML, TSLP, S&T, TCIL and TML ("Transferor Companies") were merged with the Company. The Appointed Dates as per the Schemes of Amalgamation is April 1, 2022 for TSLP, S&T, TCIL and TML and April 1,2023 for TSML.
|
• We evaluated the Company's accounting of the business combinations in accordance with the pooling of interests method in Appendix C of Ind AS 103, Business Combinations
|
|
in accordance with the NCLT Orders.
|
|
The Company has accounted for the business combinations using the pooling of interests method in accordance with Appendix C of Ind AS 103, Business Combinations in
|
• We tested the management's computation of determining the amount recorded in the capital reserve.
|
|
accordance with the NCLT Orders. The carrying value of the
|
• We assessed the adequacy and appropriateness of the
|
|
assets and liabilities of the subsidiaries as at April 1, 2022
|
disclosures made in the standalone financial statements.
|
|
(being the beginning of the previous period presented), as appearing in the consolidated financial statements of the Company before the merger have been incorporated in the books with merger adjustments, as applicable.
|
Based on the above work performed, no significant exceptions were noted in the accounting for business combinations under common control in respect of the Amalgamation of TSLP, TSML, TML, TCIL and S&T.
|
|
The Company has allotted fully paid-up equity shares to the eligible shareholders of the erstwhile subsidiaries TSLP, TCIL and TML in accordance with the respective Schemes.
|
|
|
The Company has recognised capital reserve of ?791.47 crore in "Other Equity".
|
|
|
Considering the complex accounting involved, the aforesaid business combinations treatment in the standalone financial statements has been considered to be a key audit matter.
|
|
|
Key audit matter
|
How our audit addressed the key audit matter
|
|
Assessment of carrying value of investments in T Steel
|
Our audit procedures included the following:
|
|
Holdings Pte. Ltd. (TSH), a wholly owned subsidiary
|
• We obtained an understanding from the management,
|
|
and Neelachal Ispat Nigam Limited (NINL), a subsidiary
|
assessed and tested the design and operating effectiveness
|
|
company
|
of the Company's key controls over the impairment
|
|
[Refer to Note 2(c) to the standalone financial statements - "Use of estimates and critical accounting judgements -Impairment", Note 2(l) to the standalone financial statements
|
assessment of investments.
• We evaluated the appropriateness of the Company's
|
|
- "Investments in subsidiaries, associates and joint ventures",
|
accounting policy in respect of impairment assessment of
|
|
2(m)(I) to the standalone financial statements - "Financial
|
investments in subsidiaries.
|
|
Assets", Note 6 to the standalone financial statements
|
• We evaluated the Company's process regarding impairment
|
|
-"Investments" Note 6(iii) and 6(iv) to the standalone
|
assessment by involving auditor's valuation experts,
|
|
financial statements]
|
where considered necessary, to assist in assessing the
|
|
The Company's equity investment in its subsidiary T Steel
|
appropriateness of the impairment assessment models,
|
|
Holdings Pte. Ltd. (TSH) amounts to 143,815.17 crore (net of impairment).
|
underlying assumptions relating to discount rate, terminal value etc.
|
|
The above equity investment in TSH is carried at cost.
|
• We evaluated the cash flow forecasts by comparing them
|
|
to the budgets, as applicable, and our understanding of the
|
|
The Company's investment in 0.01% non-convertible, non-
|
internal and external factors.
|
|
cumulative redeemable preference shares (NCRPS) and equity investment in its subsidiary Neelachal Ispat Nigam
|
• We checked the mathematical accuracy of the impairment
|
|
Limited (NINL) amounts to 15,507.78 crore and 18,689.04
|
assessment models and agreed the relevant data with the
|
|
crore respectively.
|
latest budgets, actual past results and other supporting documents, as applicable.
|
|
The Company accounts for investment in NCRPS of NINL initially at fair value and subsequently at amortised cost.
|
• We assessed the sensitivity analysis and evaluated whether
|
|
Contractual cash flows from the NCRPS represent the
|
any reasonably foreseeable change in assumptions could
|
|
principal (14,560.54 crore) plus accrued interest (1947.24
|
lead to impairment.
|
|
crore) aggregating to 15,507.78 crore as on March 31,2024.
|
• We have discussed the key assumptions and sensitivities
|
|
The above equity investment in NINL is carried at cost.
|
with those charged with governance.
|
|
Where an indication of impairment exists, the carrying
|
• We evaluated the appropriateness of the disclosures made
|
|
value of investment is assessed for impairment and where
|
in the standalone financial statements.
|
|
applicable an impairment provision is recognised.
|
Based on the above procedures performed, no significant
|
|
The impairment assessment for such investments have been
|
exceptions were noted in the management's assessment
|
|
carried out by the management in accordance with Ind AS 36 and Ind AS 109, as applicable.
|
in relation to the carrying value of investments in aforesaid subsidiaries.
|
|
The key inputs and judgements involved in the impairment of unquoted investments include:
|
|
|
• Cash flows forecast/incremental cash flows including assumptions on capacity expansion
• Discount rates
• Terminal growth rate
• Economic and entity specific factors incorporated in the
|
|
|
impairment assessment models.
|
|
|
The accounting for above investments is a key audit matter as the determination of recoverable value for impairment assessment involves significant management judgement and estimates.
|
|
|
Key audit matter
|
How our audit addressed the key audit matter
|
|
Assessment of litigations and related disclosures of
|
Our audit procedures included the following:
|
|
contingent liabilities
|
• We understood from the management, assessed and tested
|
|
[Refer to Note 2(c) to the standalone financial statements
|
the design and operating effectiveness of the Company's key
|
|
- "Use of estimates and critical accounting judgements
|
controls surrounding assessment of litigations relating to the
|
|
- Provisions and contingent liabilities" Note 34(A) to the
|
relevant laws and regulations.
|
|
standalone financial statements "Contingencies" and Note
|
• We have reviewed the legal and other professional
|
|
35 to the standalone financial statements - "Other significant
|
expenses and enquired with the management for recent
|
|
litigations"]
|
developments and the status of the material litigations
|
|
As at March 31, 2024, the Company has exposures towards
|
which were reviewed.
|
|
litigations relating to various matters as set out in the
|
• We performed our assessment on a test basis on the
|
|
aforesaid Notes. Significant management judgement is
|
underlying calculations supporting the contingent liabilities/
|
|
required to assess such matters to determine the probability
|
other significant litigations disclosed in the standalone
|
|
of occurrence of material outflow of economic resources and whether a provision should be recognised or a disclosure
|
financial statements.
|
|
should be made. The management judgement is also
|
• We used auditor's experts/specialists to gain an
|
|
supported with legal advice in certain cases, as considered
|
understanding and to evaluate the disputed tax matters.
|
|
appropriate. As the ultimate outcome of the matters are
|
• We considered external legal opinions, where relevant,
|
|
uncertain and the positions taken by the management are
|
obtained by management.
|
|
based on the application of their best judgement, related
|
• We evaluated management's assessments by understanding
|
|
legal advice including those relating to interpretation of
|
precedents set in similar cases and assessed the reliability of
|
|
laws/regulations, it is considered as a key audit matter.
|
the management's past estimates/judgements.
• 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, no significant exceptions were noted in the assessment in respect of litigations and related disclosures relating to contingent liabilities/other significant litigations in the standalone financial statements.
|
Other Information
5. The Company's Board of Directors is responsible for the other information. The other information comprises Management Discussion and Analysis and Board's report (but does not include the standalone financial statements and our auditor's report thereon), which we obtained prior to the date of this auditor's report, and additional information excluding those referred above that would be included in the Integrated Report (titled as 'Tata Steel Integrated Report & Annual Accounts 2023-24'), which is expected to be made available to us after the date of our 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 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.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, 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.
When we read the additional information, as mentioned above, that would be included in the Integrated Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions as applicable under the relevant laws and regulations.
Responsibilities of management and those charged with governance for the Standalone Financial Statements
6. 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, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified 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 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.
7. 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 also responsible for overseeing the Company's financial reporting process.
Auditor's responsibilities for the Audit of the Standalone Financial Statements
8. 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.
9. As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional scepticism 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 control 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 with reference to standalone financial statements 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.
10. 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.
11. 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.
12. 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
13. 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, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
14. 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 paragraph 14(h) (vi) below on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014 (as amended).
(c) The Balance Sheet, the Statement of Profit and Loss (including other comprehensive income), the Statement of Changes in Equity and the Statement
of Cash Flows 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 Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2024, from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the maintenance of accounts and other matters connected therewith, reference is made to our remarks in paragraph 14(b) above on reporting under Section 143(3)(b) and paragraph 14(h)(vi) below on reporting under Rule 11(g) of the Rules.
(g) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A".
(h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Rules, 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 Notes 34(A) and 35 to the standalone financial statements;
ii. The Company did not have any longterm contracts including derivative contracts for which there were any material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended March 31, 2024.
iv. (a) The management has represented that, to
the best of its knowledge and belief, other than as disclosed in Notes 6(viii) and 7(v) to the standalone financial statements, 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(s) or entity(ies), including foreign entities ("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, as disclosed in the Notes 6(ix) and 7(vi) to the standalone financial statements, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("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 such audit procedures that we 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 (a) and (b) contain any material misstatement.
v. The dividend declared and paid during the year by the Company is in compliance with Section 123 of the Act.
vi. Based on our examination, which included test checks, the Company has used multiple accounting software for maintaining its books of account which have a feature of recording audit trail (edit log) facility and that has operated throughout the year for all relevant transactions recorded in accounting software, except for modifications, if any, made by certain users with specific access in five applications and for direct database changes for all the accounting software. During the course of performing our procedures, except for the aforesaid instances of audit trail not maintained where the question of our commenting on whether the audit trail has been tampered with does not arise, we did not notice any instance of audit trail feature being tampered with.
15. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.
For Price Waterhouse & Co Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
Subramanian Vivek
Partner
Membership Number 100332 UDIN: 24100332BKGFNL1709
Place: Mumbai Date: May 29, 2024
|