We have audited the attached Balance Sheet of Orissa Sponge Iron &
Steel Limited as at March 31, 2012, and the Statement of Profit and
Loss and the Cash Flow Statement for the year ended on that date
annexed thereto. These financial statements are the responsibility of
the Company''s management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We have conducted our audit in accordance with the 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 (Auditor''s Report) Order, 2003,(the
Order) issued by the Central Government of India in terms of
Sub-section (4A) of Section 227 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
(a) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes 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 examination of
(c) The Balance Sheet and Statement of Profit and Loss and Cash Flow
Statement dealt with by this report are in agreement with the books of
(d) On the basis of written representations received from the directors
of the Company, as on March 31, 2012, and taken on the records by the
Board of Directors, we report that none of the director of the Company
is disqualified as on March 31, 2012 from being appointed as a Director
in terms of Section 274(1 )(g) of the Companies Act, 1956.
Orissa Sponge Iron & Steel Limited
3. In our opinion and to the best of our information and according to
the explanations given to us.
a) The Balance Sheet and Statement of Profit and Loss and Cash Flow
Statement dealt with by this report comply with the accounting
standards referred to in Sub-section (3C) of Section 211 of the Act to
the extent applicable.
b) The said accounts together with the Notes thereon 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 March 31, 2012.
(ii) In the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and
(iii) In the case of Cash Flow Statement, of the cash flows for the
year ended on that date.
With reference to the Annexure referred to in paragraph 1 of the
Auditors'' Report to the members of Orissa Sponge Iron & Steel Limited
(the Company) on the financial statements for the year ended 31 st
March, 2012 we report that:
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of its fixed
(b) The Company has a regular programme of physical verification of its
fixed assets, by which all fixed assets are verified in a phased manner
over a period of three years. In our opinion this periodicity of
physical verification is reasonable having regard to the size of the
Company and the nature of its assets. Accordingly, certain fixed assets
have been physically verified by the management during the current year
and no material discrepancies were noticed upon such verification.
(c) Fixed assets disposed off during the year were not substantial and
therefore do not affect the going concern assumption.
2. (a) The inventory of the Company has been '' physically verified by
the management during the year. In our opinion the frequency of such
physical verification is reasonable.
(b) The procedures of physical verification of inventories followed by
management are reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) On the basis of our examination of the records of inventory, we are
of the opinion that the Company is maintaining proper records of
inventory. The discrepancies noted on physical verification between the
physical stocks and the book records were not material.
3. According to the information and explanations given to us, the
Company has not granted or taken any loans, secured or unsecured,
to/from Companies, Firms or other parties in the register pursuant to
the Section 301 of the Companies Act, 1956.
4. In our opinion, and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and nature of its business with regard to
purchases of inventory and fixed assets and with regard to sale of
goods and services.
5. (a) In our opinion and according to the information and explanations
given to us, the particulars of contracts or arrangements referred to
in Section 301 of the Companies Act, 1956 have been entered in the
register required to be maintained under the section.
(b) In our opinion, and according to the information and explanations
given to us, the transactions made in pursuance of contracts and
arrangements referred to in (a) above and exceeding the value of Rs. 5
lacs with any party during the year have been made at prices which are
reasonable having regard to the prevailing market prices at the
6. The Company has not accepted any deposits under the provisions of
Section 58(A) and 58(AA) of the Act, and the Rules framed there under.
7. In our opinion the Company has an Internal Audit System commensurate
with the size and nature of the business.
8. We have broadly reviewed the books of accounts maintained by the
Company pursuant to the rules prescribed by the Central Government for
maintenance of cost records under Section 209(1 )(d) of the Companies
Act, 1956, and are of the opinion that prima facie, the prescribed
accounts and records have been maintained. However we have not made a
detailed examination of such records.
9. (a) According to the information and explanations given to us and on
the basis of our examination of the records of the Company, undisputed
statutory dues including Provident Fund, Employees'' State Insurance,
Income Tax, Sales Tax, Service tax, Customs duty, Excise duty, Cess and
other material statutory dues are generally deposited during the year
by the Company with the appropriate authorities. As explained to us,
the Company does not have any dues on account of investor education and
Orissa Sponge Iron & Steel Limited
(b) According to the information and explanations given to us, details
of dues of Income Tax, Sales Tax, Service tax, Customs duty, Excise
Duty and Cess which have not been deposited as at 31st March, 2012 on
account of any dispute are given below:
Name of the
statute Nature of dues Amount (Rs. in
lacs) Forum where
Dispute is pending
Act, 1961 Tax Demand under
appeal 3.27 Petition u/s 154
Year 2006-2007 Assessing Authority
Act, 1956 Non-collection
forms 2,534.89 Sales Tax
Act, 1947 Enhanced
Penalty 768.52 Sales Tax
Act, 1944 Disputed
demand 175.67 Commissioner of
10. The Company has accumulated losses at the end of the financial year
which are more than fifty percent of its net worth. It has incurred
cash losses in the current financial year and the year immediately
preceding financial year.
11. The Company has defaulted in repayment of dues to its bankers and
financial institutions as on 31st March, 2012 as detailed below : -
Bank / Financial Institution Amount of Default
(Rs. in lacs) Default since
a) State Bank of India 2,015.00 Principal January 2011
606.85 Interest April 2011
b) State Bank of Bikaner
& Jaipur 494.00 Principal March 2011
235.25 Interest April 2011
c) Punjab National Bank 152.06 Principal October 2011
199.94 Interest August 2011
d) Indian Renewable Energy
Development Agency Ltd.
(IREDA) 572.65 Principal June 2011
505.03 Interest June 2011
(e) State Bank of India 3,818.81 Excess of
outstanding April 2011
(f) State Bank of Bikaner
& Jaipur 656.26 Excess of
standing July 2011
12. According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debentures and other securities.
13. In our opinion and according to the information and explanations
given to us the Company is not a chit fund/nidhi/mutual benefit
fund/society. Accordingly, the provisions of clause 4(xiii) of the
Order are not applicable to the Company.
14. According to the information and explanations given to us, the
Company is not dealing in or trading in shares, securities, debentures
and other investments,. Accordingly, the provisions of paragraph 4(xiv)
of the Order are not applicable to the Company.
15. According to the information and explanations given to us, the
Company has given guarantee for loans taken by associated companies
from banks or financial institutions, terms and conditions whereof are
not prejudicial to the interest of the Company.
16. In our opinion and according to the information and explanations
given to us, the term loan taken by the Company during the year have
been applied for the purpose for which it was raised.
17. According to the information and explanations given to us and on an
overall examination of the Balance Sheet of the Company, we are of the
opinion that the funds raised during the year on short term basis have
not been used for long term investment.
18. According to the information and explanations given to us, the
Company has not made any preferential allotment of shares to Parties
and Companies covered in the Register maintained under Section 301 of
the Companies Act, 1956 during the year.
19. The Company has not raised any money by issue of shares during the
20. According to the information and explanations given to us, the
Company has not issued debentures during the year.
21. According to the information and explanations given to us and to
the best of our knowledge, no fraud on or by the Company was noticed
and reported during the year.
For L. N. More & Company
L. N. More
Place: Kolkata Partner
Dated: 4th August, 2012 Membership No. 011485