Steel Authority of India

We have audited the attached Balance Sheet of STEEL AUTHORITY OF INDIA
 LIMITED, as on 31st March 2009, the Profit & Loss Account and the Cash
 Flow Statement of the company for the year ended on that date annexed
 thereto, in which are incorporated the accounts of Plants, Units,
 Branches and other Offices audited by the Branch Auditors in accordance
 with the letter of appointment of Comptroller & Auditor General of
 India. These financial statements are the responsibility of the
 companys management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 We 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.
 
 As required by the Companies (Auditors Report) Order, 2003 as amended
 by the Companies (Auditors Report) (Amendment) Order, 2004
 (hereinafter referred to as the Order) issued by the 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
 paragraphs4 & 5 of the said Order.
 
 Further to our comments in the Annexure referred to above, we report
 that;
 
 1.  We have obtained all the information and explanations, which to the
 best of our knowledge and belief, were necessary for the purpose of our
 audit.
 
 2.  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 the
 books, and proper returns adequate for the purpose of our audit have
 been received from the plants/ units/ branches/other units not visited
 by us. The branch auditors reports have been forwarded to us and have
 been appropriately dealt with.
 
 3.  The Balance Sheet, the Profit & Loss Account and the Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account and the audited returns from the branches.
 
 4.  In our opinion, the Balance Sheet, the Profit & Loss Account and
 the Cash Flow Statement dealt with by this report comply with the
 accounting standards referred to in sub-section (3C) of Section211 of
 the Companies Act, 1956.
 
 5.  In terms of Government of India, Department of Company Affairs
 Notification No. GSR 829(E) dated 21st October, 2003, Government
 companies are exempt from the applicability of provisions of section
 274(1 )(g) of the Companies Act, 1956.
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the said accounts read with significant
 accounting policies and notes on accounts appearing in Schedule 3, 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 case of Balance Sheet, of the state of affairs of the Company as
 on 31st March 2009;
 
 ii) in case of Profit & Loss Account, of the Profit of the Company for
 the year ended on that date; and
 
 iii) in case of the Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 1.  a) The Company has maintained proper records showing in most cases,
 full particulars including quantitative details and situation of its
 fixed assets.
 
 b) The fixed assets of the Company have been physically verified by the
 management at reasonable intervals in a phased manner so as to
 generally cover all the assets once in three years. As informed to us,
 no material discrepancies have been noticed on such verification
 wherever reconciliation has been carried out. In few cases of fixed
 assets, verified but not reconciled, the discrepancies are yet to be
 ascertained.
 
 c) In our opinion and according to the information and explanations
 given to us, there is no substantial disposal of fixed assets during
 the year.
 
 2.  a) The inventories have been physically verified by the management
 with reasonable frequency during the year. In certain cases, the stocks
 have been verified on the basis of visual survey/estimates.
 
 b) In our opinion and according to the information and explanations
 given to us, the procedures for physical verification of inventories
 followed by the management are generally reasonable and adequate in
 relation to the size of the company and the 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
 inventory. The discrepancies between physical stocks and book records
 arising out of physical verification, which were not material for the
 Company as a whole, have been dealt with in the books of account.
 
 3.  According to information and explanations given to us:
 
 a) The Company has not granted any loans, secured or unsecured, to
 companies, firms, or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956.
 
 b) The Company has not taken any loans, secured or unsecured, from
 companies, firms, or other parties covered in the register maintained
 under Section 301 of the CompaniesAct, 1956.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business for the
 purchase of inventory and fixed assets and for the sale of goods and
 services. During the course of our audit, we have not observed any
 major failures in the internal control system.
 
 5.  a) According to the information and explanations given to us, we
 are of the opinion
 
 that 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 that section.  b) According to
 the information and explanations given to us, there are no transactions
 of purchase of goods and materials and sale of goods, materials and
 services made in pursuance of contracts or arrangements entered in the
 register maintained under Section 301 of the CompaniesAct 1956, and
 aggregating during the year to Rs.5,00,000 or more with any party.
 
 6.  The Company has not accepted any public deposits during the year.
 In respect of public deposits accepted in earlier years, there are no
 unmatured outstanding deposits.
 
 7.  In our opinion, the Companys internal audit system is generally
 commensurate with the size and nature of its business.
 
 8.  We have broadly reviewed the records maintained by the Company
 pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1 )(d) of the
 CompaniesAct, 1956, and are of the opinion that prima facie, the
 prescribed accounts and records have been made and maintained in
 respect of the applicable products. We have not, however, made a
 detailed examination of the records with a view to determine whether
 these are accurate and complete.
 
 9.  According to the information and explanations given to us in
 respect of statutory andotherdues:
 
 a) The Company has been generally regular in depositing undisputed
 statutory dues including Provident Fund, Investors Education and
 Protection Fund, Employees State Insurance, Income Tax, Sales Tax,
 Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other
 statutory dues, with appropriate authorities.
 
 b) According to the information and explanations given to us, there are
 no undisputed statutory dues outstanding for a period of more than six
 months from the date they became payable, as per books of accounts as
 at 31 March, 2009.
 
 c) According to the information and explanations given to us, there are
 disputed statutory dues which have not been deposited as given herein
 below:
 
 Physical verification of fixed assets and its reconciliation with the
 books is a continuous process.
 
 Statutes           Nature of Dues 
 
 Sales Tax             Demand by
                       Appellate
                       Authorities
 
 Central Excise        Excise duty
 Act, 1944
 
 Income Tax Act, 1961  TDS on perks
 Other Statutes        Other statutory dues
                       (including cess)
 
 
 
 Amount                       Forum where
 (Rs. In crore)            disputes are pending
 
 107.26                      High Courts
 322.89                      Sales Tax Tribunals
 595.38                      Sales Tax Departments
 1025.53
 842.76                      Supreme Court
 28.47                       High Courts
 581.04                      CESTAT
 210.77                      Department of Excise
 0.32                        Settlement Commission
 1663.36
 141.49                      High Courts
 7.62                        Supreme Court
 698.92                      High Courts
 7.67                        Lower Courts
 35.99                       Concerned Department
 750.20
 3580.58
 
 10.  There are no accumulated losses of the company as at the end of
 the year. The company has not incurred cash losses during the financial
 year covered by our audit and the immediately preceding financial year.
 
 11.  In our opinion and according to the information and explanations
 given to us, the company has not defaulted in repayment of dues to a
 financial institution or bank.
 
 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.  The company is not a chit fund or a Nidhi/mutual benefit
 fund/society. Therefore, the provisions of clause 4 (xiii) of the
 Order, are not applicable to the company.
 
 14.  The company is not dealing in or trading in shares, securities,
 debentures and other investments. Accordingly, the provisions of clause
 4(xiv) of the Order, are not applicable to the company.
 
 15.  According to the information and explanations given to us, the
 terms and conditions of the guarantees given by the company for loans
 taken by others from banks or financial institutions are not
 prima-facie prejudicial to the interest of the company.
 
 16.  To the best of our knowledge and belief, and according to the
 information and explanations given to us, the Company has not raised
 any term-loans during the year under audit. Hence, paragraph 4 (xvi) of
 the Order is not applicable.
 
 17.  According to the information and explanations given to us and on
 an overall examination of the balance sheet of the company, we report
 that no funds raised on short-term basis have been used for long-term
 investment of the company.
 
 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.
 
 19.  According to the information and explanations given to us and
 records examined by us, securities have been created in respect of
 secured bonds issued.
 
 20.  The company has not raised any money by public issue during the
 year.
 
 21.  To the best of our knowledge and belief and according to the
 information and explanations given to us, we report that no fraud on or
 by the company has been noticed or reported during the year.
 
 For Dass Maulik Mahendra  For Chaturvedi & Co.  For and on behalf of the
 
 K Agrawala & Co.       Chartered Accountants    Board of Directors
 Chartered Accountants
 
 Sd/-                           Sd/-                  sd/-
 (Mahendra K. Agrawala)    (S.C.Chaturvedi)       (S.K.  Roongta)
 Partner                      Partner             Chairman
 (M.No.51764)              (M. No. 12705)         Chairman
 
 For T.R. Chadha & Co.
 Chartered Accountants
                 Sd/-
         (AjeshTuli)
          Partner
        (M.No. 86424)
 
 Place : New Delhi                  Place : New Delhi
 Dated : 28th May, 2009             Dated: 30th July, 2009