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Orissa Sponge Iron Directors Report, Orissa Sponge Reports by Directors
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Orissa Sponge Iron
BSE: 504864|ISIN: INE228D01013|SECTOR: Steel - Sponge Iron
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Directors Report Year End : Mar '14    « Mar 13
Dear Members,
 
 The Directors submit the following report on Financial Results for the
 year ended 31 st March, 201 4:
 
 Financial Results:                           For the year  For the year
                                                31st March, 31st March, 
                                                   2014        2013
                                               (Rs in lacs) (Rs in lacs)
 
 Turnover                                           83.76     3,808.73
 
 Profit / (Loss) before depreciation            (6,685.52)   (5,266.36)
 
 Depreciation (net of revaluation adjustment)      228.92     1,478.20
 
 Profit / (Loss) before tax                     (6,914.44)   (6,744.56)
 
 Provision for Deferred Tax - Assets             2,785.19     1,747.51
 
 Profit / (Loss) after tax                      (4,129.25)   (4,997.05)
 
 Surplus /(Deficit) brought forward from 
 previous year                                 (23,757.45)  (18,760.40)
 
 Surplus /(Deficit) carried forward to 
 Statement of Profit & Loss                    (27,886.70)  (23,757.45)
 
 Performance
 
 The plant was shut down for the whole year. Consequently during the
 year sponge iron production was Nil as compared to 12430 MT in the
 previous year. Billet production was Nil for both years. Power
 Generation during the year was Nil as compared to 11,950,647 KWH in the
 previous year. The Company generated total revenue of ? 84 lacs
 compared to ? 3,809 lacs in the previous year. The Company suffered
 loss for this year also amounting to ? 4,129 las as compared to ? 4,997
 lacs in the previous year.  Future Outlook
 
 Your Directors are pleased to report that after obtaining Forest
 Clearance for operating the Iron Ore Mines allotted to the Company from
 the Ministry of Environment and Forest (MOEF), your Company has taken
 steps for compliance of all conditions and requirements for
 commencement of mining operation at the earliest. Grama Sabha Meeting,
 which is requirement under the Forest Rights Act, 2006 was held on 20th
 July, 2014. Compliance of other conditions of Stage I Clearance is
 being attended on top priority. Availability of iron Ore from own mines
 will vastly improve production and profitability. Your Directors
 express their sincere gratitude to all concerned for bearing with the
 Company during the difficult time.
 
 Meanwhile your Company is trying to finalise conversion agreement with
 other steel producers for conversion of Iron Ore/Pellets into sponge
 iron at our plant which will help the Company to restart the plant
 operations. The recent measures taken by the concerned authorities to
 facilitate iron ore supply and restoration of coal linkage will improve
 the cost economics for plant operations.
 
 Subsidiary Company
 
 Bamra Iron & Steel Company (India) Ltd. is a wholly owned subsidiary of
 the Company. Since the said Company has not started its operations,
 consolidated financial statement has not been prepared.
 
 Dividend
 
 Your Directors regret their inability to recommend any dividend for the
 year in view of losses.  Preference Shares
 
 Inter Corporate Loan received by the Company amounting to ? 20 crores
 was converted into Advance received for issue of Preference Shares as
 on 31.03.2014. Subsequently 10% Cumulative Non Convertible Preference
 Shares of ? 10 each at par amounting to? 20 crores has been issued and
 allotted on private placement by adjusting the said Advance at the
 Board Meeting held on 14.08.2014.
 
 Project & Engineering Division
 
 The Project and Engineering (P&E) division is continuing its work of
 supplying process know-how and basic engineering to several existing
 sponge iron units as well as new units who call for such services. It
 has widened its network to include consultancy and supervisory services
 for renovation, up- gradation and re-commissioning of the mini steel
 plants with Sponge Iron, Power, Steel Melting Shop and Rolling Mills.
 It also takes up assignment for carrying out technical audit of
 Company''s plant health, process health, quality, safety, energy
 efficiency and environment protection on a regular basis and
 recommeding corrective measures. During the year under review, this
 division has taken up an assignment from a Russian Company for
 conversion of their Refractory Kiln to DRI Kiln. The contract, which
 also provides for process guarantee for DRI production is presently
 under implementation.
 
 Community Development
 
 In line with your Company''s philosophy, your Company continues to
 pursue a comprehensive programme of Community Development covering
 education, immunization, agricultural & horticultural extension, mother
 & child care etc. directly and also through OSIL TRFI Community
 Services Trust. However due to financial losses suffered by the Company
 not much support could be extended for such activities during the year.
 
 Quality
 
 Your Company continues to follow the Quality Management System for
 production and supply of Sponge Iron and Steel Billets and possesses
 Certificate of Registration of ISO 9001:2008 from British Certification
 Inc. Your Company is proud of maintaining the clean environment in the
 vicinity of the Plant and your Company''s Environmental Management
 System applicable to production and supply of Sponge Iron and Steel
 Billets has been certified under ISO 14001:2004 by British
 Certification Inc. The Occupational Health and Safety Management System
 of your Company has also been certified by the same Agency and your
 Company complies with the requirements of OHSAS 18001:2007.
 
 Listing Fees
 
 The annual listing fees have been paid to the Stock Exchanges where the
 Company''s shares are listed. Your Company''s application to National
 Stock Exchange (NSE) for listing and Calcutta Stock Exchange for 
 de-listing is pending before the respective Exchanges.
 
 Reconciliation of Share Capital
 
 In compliance of the directions of Securities and Exchange Board of
 India (SEBI), reconciliation of share capital is being carried out
 quarterly by a Practising Company Secretary. The findings of the 
 reconciliation of share capital were satisfactory.
 
 Directors
 
 Pursuant to Section 149,152 and other applicable provisions of the
 Companies Act, 2013 and Rules made there under, your Directors are
 seeking appointment of Mr. A. K. Mukherjee, Mr. S. K. Khetan and 
 Mr. B. K. Sarkar, as independent Directors for period of 5 years 
 from the date of the ensuing Annual General Meeting. The above 
 Directors meet the criteria for indepndence as provided in Section 
 149(6) of the Companies Act, 2013. Details of the proposal for 
 appointment of the above Independent Directors are mentioned in 
 the Notice of the 34th Annual General Meeting and the Explanatory 
 Statement under Section 102 of the Companies Act, 2013.
 
 Mr. P. C. Mohanty retires by rotation at the ensuing Annual General
 Meeting and being eligible offers himself for re appointment.
 
 Your Directors recommend the appointments/reappointment as mentioned
 above for approval of the Shareholders.
 
 Conservation of energy, technology absorption, foreign exchange earning
 and outgo
 
 The information required under Section 217 (1) (e) of the Companies
 Act, 1956 read with the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988 as amended are set out in 
 Annexure, which forms part of this Report.
 
 Particulars of Employees
 
 There were no employees drawing the requisite remuneration whose names
 are required to be disclosed as required under sub-section 2A of
 Section 217 of the Companies Act, 1956 read with the Companies 
 (Particulars of Employees) Rules, 1975 as amended from time to time.
 
 Industrial Relations
 
 Lock out declared at the plant on 14.10.2012 was lifted on 30.12.2013
 following amicable settlement with the Workers'' union on 27.12.2013.
 
 Directors'' Responsibility Statement
 
 In accordance with the provisions of sub-section 2AA of Section 217 of
 the Companies Act, 1956, your Directors state that:
 
 (a) In the preparation of the Annual Accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures.
 
 (b) Accounting policies selected are applied consistently. Judgments
 and estimates that are reasonable and prudent are made, so as to give a
 true and fair view of the state of affairs of the Company as at 31 st
 March, 2014 and of the loss of the Company for the year ended on that
 date.
 
 (c) Proper and sufficient care has been taken for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities.
 
 (d) The Accounts for the financial year ended 31st March, 2014 have
 been prepared on a ''going concern'' basis.  Auditors
 
 The Statutory Auditors, M/s L. N. More & Co., Chartered Accountants,
 Cuttack, will retire at the conclusion of the ensuing Annual General
 Meeting
 
 and being eligible offer themselves for re-appointment.
 
 The Audit Committee and the Board has recommended their re-appointment.
 The necessary Resolution is being placed before the shareholders for
 
 approval. The Company has received confirmation that their appointment
 will be within the limits prescribed under Section 224 (1B) of the
 Companies
 
 Act, 1956.
 
 Auditors'' Report
 
 Reference to Annexure to the Audit Report vide Para 9 (a), your
 Directors submit that due to shut down of plant operations for the last
 two years and
 
 the absence of regular flow of funds, fund situation has become
 critical. Consequently the undisputed liability on account of Central
 Sales Tax, Orissa
 
 Sales Tax and Entry Tax could not be paid due to fund constraints.
 
 There are no other qualifications or adverse remarks in the Auditor''s
 Report which require any clarification/explanation. The Notes on
 Accounts forming
 
 part of the financial statements are self-explanatory and needs no
 further explanation.
 
 Cost Auditors
 
 Pursuant to the provision of Section 233B of the Companies Act, 1956
 and The Companies (Cost Accounting Records) Rules, 2011, M/s. B. Ray &
 
 Associates, Cost Accountants, Kolkata has been re-appointed as Cost
 Auditor of the Company for the year 2014-15 to conduct audit of cost
 records maintained by the Company.
 
 Corporate Governance
 
 Pursuant to Clause 49 of the Listing Agreement with the Stock
 Exchanges, the following documents form part of the Annual Report:
 
 (a) Management Discussion and Analysis
 
 (b) Report on Corporate Governance along with Certificate for
 compliance of conditions of Corporate Governance
 
 (c) Managing Director''s declaration regarding compliance of code of
 conduct by Board Members and senior management personnel.
 Acknowledgement and Appreciation
 
 The Directors acknowledge with gratitude the co-operation extended by
 Indian Renewable Energy Development Agency Ltd. (IREDA), Banks, State
 Government, Suppliers, Customers and Shareholders and solicit their
 continued support. The Directors also wish to place on record their
 sincere appreciation of the dedicated services put in by the Company''s
 workers, staff and executives under difficult conditions.
 
                                        For and on behalf of the Board
                                           Munir Mohanty, Director
                                      Dr. P. K. Mohanty, Vice Chairman
                                           & Managing Director
 
 Place: Kolkata
 Dated: 14th August, 2014
Source : Dion Global Solutions Limited
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