We have audited the attached Balance Sheet of Steel Tubes of India
Limited as at 31 st March 2009 and also the Profit and Loss Account and
the Cash Flow Statement of the Company for the year ended on that date
annexed thereto. 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 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 management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
We report that:
1. As required by the Companies (Auditors Report) Order, 2003 as
amended by Companies (Auditors Report) (Amendment) Order 2004
(together the Order) issued by the Central Government in terms of
Section 227(4A) of the Companies Act, 1956 (the Act), and on the
basis of such checks as were considered appropriate and according to
the information and explanations given to us we enclose in the annexure
hereto a Statement on the matters specified in paragraphs 4 and 5 of
the said Order.
2. Attention is drawn to the following:
Note No. 3 regarding declaration of Company as sick under section
3(l)(o) of SICA and preparation of financial statements on going
concern basis and
regarding disposal of manufacturing assets by SASF in the financial
year 2006-2007, however the accounts are continued to be prepared on
going concern basis
3 Further to our comments in the Annexure referred to in paragraph 1
above, we report that:
i) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
ii) 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
those books; and proper returns adequate for the purposes of our audit
have been received from the offices not visited by us;
iii)The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
iv) The Company has defaulted in repayment of fixed deposits for more
than three years. Written representation has been received from
directors of the Company regarding disqualification under clause (g) of
sub section (I) of section 2 74 of the Companies Act, 1956 as on 31st
v) In our opinion and to the best of our information and according to
the explanations given to us, the said accounts read together with the
Accounting Policies and Notes thereon in Schedule 18 and subject to,
(a) Note No. 4 regarding non implication of financial liability in
various courts pending against the company (bj Note No. 5 regarding non
provision of interest amounting to Rs. 315.79 lacs on unsecured loans
resulting into understatement of loss and corresponding liability to
the tune ofRs. 315.79 lacs, (c) Note No. 6 regarding non adherence
ofrepayment schedule with few parties, liability, if any,
unascertained. (d)NoteNo. 7 regarding default in repayment of public
deposits (e) Note no. 9 regarding non remittance of balance due for
transfer to Investor Education and Protection Fund (f) Note No 10
regarding balances of Loans & Advances, Sundry Creditors, Deposits and
Other Loans being subject to reconciliation and confirmation, (g) Note
No. 11 (a) regarding non provision of interest arid penalty, if any on
delay of payment of statutory due, amount not ascertainable, (h) Note
No. 11(b) regarding deferred sales tax due for repayment (i) Note No.
12 regarding non provision for diminution in value of investments in
Global Stone India Ltd in spite of erosion of entire net worth, and (j)
Note No. 16 regarding non provision in respect of impairment of Solar
Power Plant in accordance with AS -28, give the information required by
Companies Act, 1956, in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31 st March, 2009; and
b) In the case of the Profit and Loss Account, of the loss for the year
ended on that date.
c) In the case of cash flows statement, of the cash flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS REPORT
(Referred to in paragraph 1 of our report of even date to the members
of Steel Tubes of India Limited for the year ended 31st March, 2009)
1. a) The Company is maintaining proper records showing fall
particulars including quantitative details and situation of fixed
assets, except in respect of certain assets.
b) The fixed assets have been physically verified by the management
according to a phased programme designed to cover all the items over a
period of three years, which in our opinion, is reasonable having
regard to the size of the Company and the nature of its assets. The
Solar Power Plant of the company continues to remain installed at the
erstwhile factory premises of the company and accordingly its physical
existence becomes doubtful. (Refer Note 16 of Schedule 18)
c) During the year, the company has not disposed of substantial part of
fixed assets affecting its going concern basis.
2. During the year company has not carried out any production
activities and there has been no inventory and accordingly, paragraph
(ii) (a), (b) & (c) of the order are not applicable
3. 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 Companies Act, 1956. Accordingly, paragraph
(iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of the Order are
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 the nature of its business, for the
purchase of inventory and fixed assets and for processing Activities.
Further, on the basis of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, we have neither come across nor have been
informed of any continuing failure to correct major weaknesses in the
aforesaid internal control system.
5 a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that the particulars of contracts or arrangements referred to
in section 301 of the Act have been entered in the register required to
be maintained under that section.
b) In our opinion and according to the information and explanations
given to us, there are no transactions made in pursuance of such
contracts or arrangements entered in the register maintained under
Section301 of the Companies Act, 1956.
6. During the year the Company has not accepted any deposits from the
Public within the meaning of section 58 A, 58 AA or any other relevant
provisions of the Act and the rules framed thereunder. However, in
respect of deposits accepted during earlier years, the Company has not
maintained the liquid assets as prescribed by rule 3A(1) and further
penal interest on overdue period in case of public deposit amounting to
Rs. 155.66 lacs matured, but remaining unpaid has also not been
provided /paid as prescribed by rule SA of the Companies (Acceptance of
deposits) Rules, 1975. (Refer Note No. 7 of Schedule 18) According to
information and explanations given to us no orders under the aforesaid
section have been passed by Company Law Board or National Company Law
Tribunal or Reserve Bank of India or any Court or any other Tribunal.
7. During the current year no activities have been carried on by the
company and therefore the internal audit was also not carried on.
8. As per the information and explanations given to us the maintenance
of cost records has been prescribed by the Central Government under
section 209(l)(d) of the Companies Act, 1956. The application to exempt
the Company from the requirement of maintaining cost records and cost
audit for the financial year 2002-03 and 2003-04, since the Company has
changed its activities from manufacturing to processing on behalf of
other party, has been rejected by the Department of Company Affairs on
the ground that the party for which the goods are processed has not
been ordered for audit of cost records. However, no such application
has been filed by the Company for the financial year 2004-05, 2005-06,
2006-07,2007-08 and 2008-09 The Company is stated to be in the process
of submitting representation before the Department of Company affairs.
9. a) According to the records of the Company examined by us, in our
opinion, the Company is not regular in depositing the undisputed
statutory dues including provident fund, investor education and
protection fund, employees state insurance, income-tax, sales tax,
wealth tax, service tax, custom duty, excise duty, cess and other
material statutory dues as applicable with the appropriate authorities
in India. The amount of statutory dues outstanding and payable for a
period exceeding six months as on the last day of financial year
concerned are mentioned in Note No. 11 of Schedule 18.
b) According to the records of the Company, the dues of Income tax
/sales tax/ wealth tax/service tax/custom duty/excise duty/cess, which
have not been deposited on account of disputes and the forum where the
dispute is pending are as given below:
Name of the
Statute Nature of the Amount Forum where
Dues (Rs.in lacs) ispending
Act, 1994 Excise duty 60.00 DGFT, New Delhi
Act, 1944 Excise duty 31.63 Central Excise &
Act, 1944 Excise Duty 1.14 Commissioner Central
Entrytax Act, 1976 Entry Tax 89.64 Board of Revenue,
Tax Act, 1994 Sales Tax 110.06 M.P. High Court /
CFS Cases Sales Tax 555.16 M.P.Fjigh Court /
10. In our opinion, the accumulated losses of the Company are more
than fifty percent of its net worth. The Company has incurred cash
losses during the financial year covered by our audit and in the
immediately preceding financial year.
11. Based on our audit procedures and on the information &
explanations given by the Management, we are of the opinion that the
default in repayment of principal dues to financial institution/Banks
by the Company has been cleared in view of repayment/settlement of
loans through disposal of fixed assets.
12. Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and/or
advances on the basis of security by way of pledge of shares,
debentures and other securities.
13. The provisions of any special statute applicable to chit fund
nidhi/mutual benefit fund/societies are not applicable to Company.
14. In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
15. According to the information and explanations given to us, the
Company has not given guarantee for loans taken by others from banks
and financial institutions.
16. The Company has not obtained any term loans during the current
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 by the Company.
18. The Company has not made any preferential allotment of shares to
parties and Companies covered in the register maintained under Section
301 of the Act during the year.
19. No Debentures have been issued by the Company during the year.
20. The Company has not raised any money by public issues during the
21. During the course of our examination of the books and records of
the Company, carried out in accordance with generally accepted auditing
practices in India, we have neither come across any instance of fraud
on or by the Company, noticed or reported during the year, nor have we
been informed of such cases by the management.
For Rastogi Narain & Co.
Place : New Delhi Partner
Date : 2nd September, 2009 M. No.86962