We have audited the accompanying Standalone Financial Statements of Kalyani Steels Limited ("the Company"),
which comprise the Balance Sheet as at March 31, 2026, the Statement of Profit and Loss, including the statement
of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year
then ended and notes to the Standalone Financial Statements, including a summary of material accounting policies
and other explanatory information. These financial statements include the Company's proportionate share of a
Joint Operation.
In our opinion and to the best of our information and according to the explanations given to us and based on the
consideration of report of the other auditor on financial statements of the Joint Operation, the aforesaid financial
statements give the information required by the Companies Act, 2013, as amended ("the Act") in the manner so
required and give a true and fair view in conformity with accounting principles generally accepted in India, of the
state of affairs of the Company as at March 31, 2026, its profit including other comprehensive income, its cash flows
and changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with the Standards on Auditing
(SAs), as 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 financial
statements under the provisions of the Act and the Rules made thereunder and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit
evidence we have obtained along with the consideration of the report of the other auditor referred to in the "Other
Matters" paragraph is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Financial
Statements.
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 for the financial year ended March 31, 2026. These matters were addressed in the
context of our audit of the Standalone Financial Statements as a whole and in forming our opinion thereon, 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
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 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 Financial
Statements.
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Sr. No.
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Key Audit Matter
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How our Audit addressed the Key Audit Matter
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1.
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Accounting of joint operation
As explained in Note 2.A.3, the Company's
composite steel manufacturing facility
at Ginigera is under a strategic alliance
arrangement with a joint venture partner. The
facility is managed by Hospet Steels Limited.
The alliance confers Kalyani Steels Limited
(KSL) and Mukand Limited (ML) with rights to
assets, obligations for liabilities, sharing of
expenses / loss in the proportion of product
sharing ratio (viz. 41.38% by KSL and 58.62%
by ML). Thus, KSL and ML have right to the
assets and obligations for the liabilities of this
arrangement.
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As part of our audit procedures :
• We have obtained the said strategic alliance
agreement and read the terms and conditions
mentioned therein.
• Assessed the management's judgement of
concluding the arrangement as joint operation as
per the principles laid down under Ind As 111.
• We have tested the controls and procedures
established by the management relating to
accounting of joint venture.
• Read report of the auditors of the joint operation.
Further, obtained confirmation from auditors
of the joint operation on specific procedures
performed and outcome thereof in respect of
material accounting matters, significant events
and unusual transactions.
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Sr. No.
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Key Audit Matter
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How our Audit addressed the Key Audit Matter
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2.
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The strategic alliance is a joint arrangement in
the nature of joint operation and accordingly,
the Company has recognized its share of
expenses, assets and liabilities from joint
operation in its separate financial statements.
Due to the nature and complexities involved in
accounting of strategic alliance arrangement as
joint operation, this is a key audit matter.
Valuation of inventory
(Refer to Note 9 to the Standalone Financial
Statements - "Inventories")
The finished good's inventory is valued at
cost or net realizable value whichever is lower.
Costs include direct materials and labour and
a proportion of manufacturing overheads
based on normal operating capacity but
does not include borrowing costs. Cost of
work-in-progress and finished goods are
determined on a weighted average basis.
The Company's composite steel manufacturing
involves processes such as Mini Blast Furnace
(MBF), Steel Melting Shop (SMS) and Rolling
Mill Shop (RMS). Production is carried out
continuously, by way of the simultaneous,
standardized and sequential process. The
output of a process is the input of another. The
production from the last process is transferred
to finished stock. Both direct and indirect costs
are charged to the processes. Production
results in joint and by-products. Losses, both
normal and abnormal losses, occur at different
stages of production, which are also taken into
consideration while calculating the unit cost.
Considering the calculation of process cost
at each stage, accounting of joint product
and by-product, normal / abnormal losses
and allocation of overheads, the valuation of
inventory is regarded as a key audit matter.
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The accounting for joint operation requires the
Company to recognize only its share of expenses
from the joint operation, therefore we have verified
if the amount charged to ML (joint venture partner)
are as per the terms and conditions of strategic
alliance arrangement and have been offset against
the respective expense line items. Similarly, the
expenses incurred by the ML (joint venture partner)
and charged to the Company have been reclassified
to the respective expense line items based on the
nature of such expense.
As a part of our audit procedures over valuation
of inventory, we have performed the following
procedures :
• assessed the design and performed tests of the
design and operating effectiveness of the key
controls over inventory valuation.
• obtained understanding of production process at
each stage.
• obtained and tested on sample basis the process
cost of each production process.
• verified the calculations, accounting of joint and
by-product and allocation basis of overhead as
per costing principles.
• tested the assumptions such as allocation
percentages of fixed and variable overheads and
yield rate at each production stage with source
data.
• Further, we have tested on sample basis, net
realizable value of finished goods based on
subsequent sale value.
• We have also checked the aging report for
identification of non-moving / slow moving
finished goods on a sample basis.
• Analytical review of production quantity and cost
of finished goods.
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Information Other than the Standalone Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for other information. The other information comprises the
information included in the Annual Report, 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 such 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, and based on the work done / audit report of the other auditor, 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.
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company's Management and Board of Directors are responsible for the matters stated in Section 134(5) of the
Act with respect to the preparation of these 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,
as amended. 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 ability of each
Company 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 of the Company and its joint operation are also responsible for overseeing the respective
financial reporting processes.
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 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 an adequate internal financial control
with reference to 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 or its Joint Operation 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.
• Obtain sufficient appropriate audit evidence regarding the financial information of the Company and its
Joint Operation to express an opinion on the Standalone Financial Statements. For the joint operation
included in the Standalone Financial Statements, which have been audited by the other auditor, such other
auditor remains responsible for the direction, supervision and performance of the audits carried out by
them. We remain solely responsible for our audit opinion. Our responsibilities in this regard are further
described in the section titled "Other Matters" in this audit report.
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 for the financial year ended March 31, 2026
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.
Other Matter
We did not audit the financial information of joint operation included in the Standalone Financial Statements on
proportionate basis whose financial statements reflect total revenue of ? Nil, total comprehensive income / loss
of ? Nil for the year ended March 31, 2026 and Company's share of expenditure of ? 1,083.42 Million. The joint
operation has total assets of ? 383.95 Million as on March 31, 2026 and net cash inflow of ? 5.9 Million for the year
ended March 31, 2026.
The financial statements of this joint operation have been audited by the other auditor whose report has been
furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of this joint
operation, is based solely on the report of such other auditor.
Our opinion is not modified in respect of the above matters.
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 in terms of Section 143(11) of the Act, we give in "Annexure A" a statement on the matters
specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, based on our audit and on the consideration of report of the
other auditor on financial statements of a joint operation that was audited by the other auditor, as noted
in the "Other Matters" paragraph, we report to the extent applicable 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 h (vi) below
on reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014;
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 Accounting Standards
specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules,
2015, as amended;
e) On the basis of the written representations received from the Directors as on March 31, 2026 taken
on record by the Board of Directors and the report of other auditor of the Joint Operation, none of the
Directors are disqualified as on March 31, 2026 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 with reference to these Standalone
Financial Statements of the company and it's joint operation and the operating effectiveness of such
controls, refer to our separate Report in "Annexure B" to this report;
g) In our opinion, the managerial remuneration for the year ended March 31, 2026 has been paid /
provided by the Company to its Directors in accordance with the provisions of Section 197 read with
Schedule V to the Act. As per the report of the auditor of the Joint Operation, the remuneration paid
/ provided by the Company to its Directors during the year is in accordance with the provisions of
Section 197 read with Schedule V to 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 and based on the consideration of the
report of the other auditor on financial statements of a joint operation, as noted in the "Other Matters"
paragraph :
i. The Company has disclosed the impact of pending litigations on its financial position in its
Standalone Financial Statements - Refer Note 36 to the Standalone 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. With respect to clause (e) of Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as
amended :
a. As represented to us by the management, to the best of its knowledge and belief, as disclosed
in Note 54 of 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. As represented to us by the management, to the best of its knowledge and belief, as disclosed
in Note 54 of the Standalone Financial Statements, no funds have been received by the
company from any persons or entities, 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.
c. Based on the audit procedures that have been considered reasonable and appropriate in
the circumstances, nothing has come to our attention 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. The final dividend declared in respect of the previous year has been paid by the Company during
the year, in accordance with Section 123 of the Act to the extent it applies to payment of dividend.
As stated in Note 14(iv) to the Standalone Financial Statements, the Board of Directors of the
Company have proposed final dividend for the year which is subject to the approval of the
members at the ensuing Annual General Meeting. The proposed dividend is in accordance with
Section 123 of the Act to the extent applicable.
vi. Based on our examination, which included test checks, the Company have used accounting
software for maintaining its books of account for the year ended March 31, 2026, 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, except that, the audit trail was not enabled
at the database level. In respect of payroll, which is managed by third party, the SOC I Type II
report has reported that, audit trail of application for financially relevant parameters are enabled
at application level and at underlying database level.
Except as mentioned in above para, based on our examination which included test checks, the
audit trail has been preserved by the Company as per the statutory requirements for record
retention.
For Kirtane & Pandit LLP
Chartered Accountants
Firm Registration No.105215W/W100057
Suhrud Lele
Partner
Membership No.121162
UDIN : 26121162ORSAWX9471
Pune
May 8, 2026
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