We have audited the attached Balance Sheet of BHUSHAN STEEL LIMITED
as on 31st March, 2011 and also the Profit & Loss Account and the
Cash Flow Statement pf the Company for the year ended on that date
annexed thereto. These financial statments are the responsibility
of the Company''s Management. Our responsibility is to express an
opinion on these finacial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
1. As required by the Companies (Auditors'' Report) Order, 2003, issued
by the Central Government of India in terms of Section 227 (4A) of the
Companies Act, 1956, we enclose in the Annexure, a statement on the
matters specified in paragraphs 4 and 5 of the said order.
2. Further to our comments in the Annexure referred to above we report
a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
b) In our opinion, proper books of account, as required by law have
been kept by the Company, so far as appears from our exa mi nation of
c) The Balance Sheet, the Profit & Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
d) In our opinion the accounts, the Balance Sheet, the Profit & Loss
Account and the Cash Flow Statement dealt with by the report comply
with the requirements of Accounting Standards referred to in sub
section (3C) of section 211 of the Companies Act, 1956;
e) On the basis of the written representations received from the
Directors as on 31 st March, 2011 and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31 st March, 2011 from being appointed as a Director in terms of
clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1
f) In our opinion, and to the best of our information and according to
the explanations given to us, the said accounts, give the information
required by the Companies Act, 1956, in the manner so required and
give a true and fair view in conformity with the accounting principles
generally accepted in India:
i) in the case of the Balance Sheet, of the state of affairs of the
company as at 31st March, 2011;
ii) in the case of the Profit and Loss Account, of the Profit of the
company for the year ended on that date; and
iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
ANNEXURE (Referred to in paragraph 1 of our report of even date)
i) In Respect of its Fixed Assets:
a) The company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
b) The Fixed Assets covering significant value were physically verified
during the year by the Management at such intervals which in our
opinion, provides for the physical verification of all the Fixed Assets
at reasonable interval having regard to the size of the Company and
nature of its business. According to the information and explanations
given to us by the Management, no material discrepancies have been
noticed on such verification.
c) No substantial part of fixed assets have been disposed off during
the year. ii) In Respect of its Inventory:
a) As per information & explanations given to us, the inventory of
finished goods, semi-finished goods and raw material at works were
during the year physically verified by the management. In respect of
Stores and Spare Parts and stock at yards in the custody of the third
party and stocks in transit were verified with the confirmation or
statement of account or correspondence of the third parties or
subsequent receipt of goods.
b) In our opinion and according to the information and explanations
given to us, the procedures of physical verification of inventories of
the Company followed by the Management are reasonable and adequate in
relation to the size of the Company and nature of its business.
c) In our opinion and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories, no material discrepancies were noticed on such physical
iii) In our opinion and according to information & explanations given
to us, the company has not taken/granted any loans, secured or
unsecured from /to companies, firms or other parties listed in the
register maintained under Section 301 of the Companies Act, 1956.
iv) In our opinion and according to the information and explanations
given to us, having regard to explanation that some of the items
purchased are of special nature and suitable alternative sources are
not readily available for obtaining comparable quotations there is an
adequate internal control system commensurate with the size of the
company and the nature of its business with regard to the purchase of
inventory, fixed assets and for the sale of goods and services. During
the course of our Audit we have not observed any continuing failure to
correct major weaknesses in such internal control system.
v) In respect of contracts or arrangements entered in the register
maintained in pursuance of Section 301 of Companies Act, 1956, to the
best of our knowledge and belief and according to the information and
explanations given to us.
a) The particular of contracts or arrangements referred to Section 301
that needed to be entered in the register maintained under the said
Section have been so entered.
b) Where each of such transaction is in excess of Rs.5 Lacs in respect of
any party, the transaction have been made at a price which are prima
facie reasonable having regard to the prevailing market prices at the
vi) To the best of our knowledge, the company has not accepted any
deposits covered under section 58A and 58AA or any other provisions of
the Companies Act, 1956.
vii) In our opinion, the Company has an adequate internal audit system
commensurate with its size and the nature of its business.
viii) To the best of our knowledge, the Central Government has
prescribed the maintenance of cost records under Section 209 (1) (d) of
the Companies Act, 1956, which have been maintained by the company and
these have been broadly reviewed by us and we are of the opinion that,
prima facie, the prescribed accounts and records have been made and
maintained. However, we have not, nor we are required, carried out any
detailed examination of such accounts and records.
ix) According to the information and explanations given to us, in
respect of statutory dues.
a) The Company has generally been regular in depositing undisputed dues
including Provident Fund, Investors'' Education and Protection Fund,
Employees'' State Insurance, Income Tax, Sales Tax/VAT, Wealth Tax,
Custom Duty, Excise Duty, Cess, Service Tax and any other statutory
dues applicable to it with the appropriate authorities.
b) There were no undisputed amounts payable in respect of Income Tax,
Wealth Tax, Service Tax, Excise Duty, Cess, and other Material
statutory dues in arrears as at 31st March, 2011 for a period of more
than six months from the date they become payable.
c) The disputed statutory dues aggregating Rs.23228.45 Lacs that have not
been deposited on account of disputed matters pending before
appropriate authorities are as under:
Name of the Nature of the Dues Amount
Statute [Rs. in Lacs)
The Central Differential Duty on material
Excise Act, 1944 to earthquake victims
Job work challan 0.50
Modvat on Welding Electrodes 0.40
Demand of Excise duty, refunded by 0.52
the authorities, on returned of
Imported Capital Goods
Modvat on Tank Fitted on Trailer for 2.16
Temporary storage used in emergency
Rejection of Cenvet credit on steel,
welding electrodes, sleepers, fuel
Rejection of Cenvet Credit on
HR Coils 353.06
used for manufacture of HR Sheets etc.
Duty Demanded without considering 257.10
credit and abatement of freight
Duty Demanded on account of Under 1259.80
Demand of Excise Duty on removal 391.76
of Zinc Dross and Ash
Rejection of Cenvat credit on 90.43
Service Tax Service Tax on import of service 653.69
Service Tax on Export of Goods by 52.33
CHA & others
Sales Tax Penalty on Trade Tax (Net of 0.75
Rs.0.38 Lacs paid under protest)
Entry Tax Entry Tax (Net of Rs.1 290 Lacs 5654.41
paid under protest)
Name of the Period to which Forum where dispute
Statue amount related is pending
Excise Act, 1944 F.Y. 2001-02 Commissioner CESTAT
Jan. 2002 High Court, Allahabad
Oct.2000 to High Court, Allahabad
April - May 1998 High Court, Allahabad
Sept.2003 High Court, Allahabad
Jan. 1999 Commissioner CESTAT
Aug, 2005 to CESTAT (Kolkatta]
July, 2009 & Commissioner(A]
Oct, 2003 to CESTAT
Mar, 2005 to Appeal under
Jan, 2010 preperation
July, 2001 to Commissioner(A]
Oct, 1996 to CESTAT
Dec, 2006 to CESTAT
F.Y. 2001-2002 & CESTAT
F.Y. 2007-2008 Commissioner(A]
Service Tax Dec, 2005 to CESTAT
Dec, 2004 to CESTAT
May, 2005 to CCE(A]
Sales Tax F.Y. 1993-1994 Tribunal Trade
Entry Tax Various year up to Supreme Court
31st March, 2011
x) The Company has no brought forward losses and has not incurred any
cash losses during the financial year covered by our Audit and in the
immediate preceding financial year.
xi) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
Financial Institutions or Banks or Debenture holders.
xii) On the basis of verification of accounts and records maintained by
the Company and to the best of our knowledge and belief, the Company
has not granted any loan and advance on the basis of security by way of
pledge of shares, debentures and other securities.
xiii) The Company is not a chit fund / nidhi / mutual benefit fund /
society. Therefore,the provision of clause 4(xiii) of the Companies
(Auditors'' Report) Order, 2003 is not applicable to the Company.
xiv) To the best of our knowledge and according to information given to
us, the Company is not a dealer or trader in securities. The Company
has invested in marketable securities and mutual funds. According to
the information and explanations given to us, proper records have been
maintained of the transactions and contracts, and timely entries have
been made therein. The investments in marketable securities and mutual
funds have been held by the Company in its own name.
xv) To the best of our knowledge and according to the information and
explanations given to us, the Company has not given any guarantee for
loans taken by others from Banks/ Financial Institutions.
xvi) To the best of our knowledge and according to the information and
explanations given to us, the term loans were applied for the purpose
for which the loans were obtained, other than temporary deployment
xvii) In our opinion and according to the information and explanations
given to us and on an overall examination of Balance Sheet, we report
that no funds raised on short term basis have not been used during the
year for long term investments.
xviii)According to the information and explanations given to us, the
Company has made preferential allotment of Preference Shares during the
year to parties and companies covered in the Register maintained under
section 301 of the Companies Act, 1956. In our opinion and according to
information and explanations given to us, the price, at which
Preference Shares have been issued, is not prejudicial to the interest
of the Company.
xix) To the best of our knowledge and according to the information and
explanations given to us, the Company has created securities/ charges
as on the date of our report, in respect of Secured Debentures issued
to the satisfaction of the Trustee of the Debentures.
xx) According to the information and explanations given to us, the
Company has not raised any money by Public Issue during the year.
xxi) Based upon the audit procedure performed and information and
explanations given by the Management, we report that no fraud on or by
the Company has been noticed or reported during the year.
For MEHRA GOEL & CO.
(Registration No. 000517N]
R. K. MEHRA
Place: New Delhi
Dated July 29, 2011