Tata Sponge Iron

1.  We have audited the attached balance sheet of Tata Sponge Iron
 Limited as at 31st March, 2009, the profit and loss account of the
 company for the year ended on that date and the cash flow statement for
 the year ended on that date, both 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.
 
 2.  We conducted our audit in accordance with the auditingstandards
 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.
 
 3.  As required by the Companfes (Auditors Report) Order, 2003, 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, to the extent applicable.
 
 4.  Further to our comments in the Annexure referred to in paragraph 3
 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 audit;
 
 (ii) in our opinion, proper books of account as required by law have
 been kept by the company so far as it appears from our examination of
 those books;
 
 (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) in our opinion, the balance sheet, profit and loss account and
 cash flow statement dealt with by this report are in compliance with
 the accounting standards referred to in sub-section (3C) of Section 211
 of the Companies Act, 1956;
 
 (v) 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:
 
 (a) in the case of the balance sheet, of the state of affairs of the
 company as at 31st March, 2009;
 
 (b) in the case of the profit and loss account, of the profit of the
 company for the year ended on that date;
 
 (c) in the case of the cash flow statement, of the cash flows for the
 year ended on that date.
 
 5.  On the basis of written representations received from the directors
 as on 31st March, 2009 and taken on record by the Board of Directors,
 none of the directors is disqualified as on 31st March, 2009 from being
 appointed as a director in terms of clause (g) of sub-section (1) of
 Section 274 of the Companies Act, 1956.
 
 ANNEXURE TO THE AUDITORS REPORT
 
 (Referred to in paragraph 3 of our report of even date)
 
 The nature of the Companys business/activities during the year ended
 31st March, 2009 was such that the paragraphs 4(vi), (xii), (xiii),
 (xiv), (xv) and (xix) of the Companies (Auditors Report) Order, 2003
 are not applicable.
 
 (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 were physically verified during the year by the
 management in accordance with a program of verification, which, in our
 opinion, provides for physical verification of all the fixed assets at
 regular intervals. According to the information and explanations given
 to us, no material discrepancies were noticed on such verification.
 
 (c) The fixed assets disposed off during the year, in our opinion, do
 not constitute a substantial part of the fixed assets of the company
 and such disposal has, in our opinion, not affected the going concern
 status of the company.
 
 (ii) In respect of its inventories:
 
 (a) As explained to us, inventories were physically verified during the
 year by the management at reasonable intervals.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of physical verification of inventories
 followed by the management are 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 noticed on verification between the
 physical stocks and the book records were not material.
 
 (iii) (a) The company has not granted any loans, secured or unsecured,
 to companies, firms or other parties listed in the Register maintained
 under section 301 of the Companies Act, 1956. As the company has not
 granted any loans, secured or unsecured, to parties listed in register
 maintained under section 301 of the Companies Act, 1956, paragraphs
 (iii)(b), (c) and (d) of the Order, are not applicable.
 
 (b) The company has not taken any loans, secured or unsecured, from
 companies, firms or other parties listed in the Register maintained
 under section 301 of the Companies Act, 1956. As the company has not
 taken any loans, secured or unsecured, from parties listed in the
 Register maintained under section 301 of the Companies Act, 1956,
 paragraphs (iii)(f) and (g) of the Order, are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, having regard to the explanation that some of the items
 purchased are of special nature and suitable alternative sources do not
 exist for obtaining comparable quotations, 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 we have not observed any continuing
 failure to correct major weaknesses in the internal control system.
 
 (v) In respect of contracts or arrangements entered in the register
 maintained in pursuance of section 301 of the Companies Act, 1956, to
 the best of our knowledge and belief and according to the information
 and explanations given to us:
 
 (a) The particulars of contracts or arrangements referred to in section
 301 that need to be entered into the register maintained under the said
 section have been so entered.
 
 (b) In our opinion, having regard to the explanation that some of the
 items purchased are of special nature and suitable alternate sources do
 not exist for obtaining comparable quotations, the transactions
 exceeding the value of rupees five lakhs in respect of any party during
 the year have been made at prices which are prima facie reasonable,
 having regard to the prevailing market prices at the relevant time
 where such market prices are available.
 
 (vi) In our opinion, the company has an internal audit system
 commensurate with the size and the nature of its business.
 
 (vii) To the best of our knowledge and according to the information
 given to us, the Central Government has not prescribed the maintenance
 of cost records under clause (d) of sub section (1) of section 209 of
 the Companies Act, 1956 for any product of the company.
 
 (viii) In respect of statutory dues:
 
 (a) According to the information and explanations given to us, the
 company has been regular in depositing with the appropriate authorities
 undisputed statutory dues, including provident fund, investor education
 and protection fund, income tax, sales-tax, wealth tax, service tax,
 custom duty, excise duty, cess and any other statutory dues applicable
 to it except for sales tax as referred in note 5(b) of Schedule M. We
 are informed that the provisions of the Employees State Insurance Act,
 1948 are not applicable to the company.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident fund, investor
 education and protection fund, income tax, sales-tax, wealth tax,
 service tax, custom duty, excise duty and cess were in arrears as at
 31st March, 2009 for a period of more than six months from the date
 they became payable except for sales tax of Rs. 82.40 lacs which is
 outstanding for more than six months.
 
 (c) According to the information and explanations given to us, details
 of dues of income tax, sales tax, service tax, customs duty, wealth
 tax, excise duty and cess which have not been deposited as at 31st
 March, 2009 on account of any dispute are given below:
 
 Name of Statute                   Nature of dues
 
 Central Sales Tax                 Central Sales Tax
 Act 1956
 Orissa Sales Tax Act              Sales Tax
 Orissa Entry Tax Act              Entry Tax
 Orissa Value Added                Value Added Tax
 Tax Act, 2004
 Income tax Act, 1961              Income tax
 
 Amount          Period to which the             Forum where dispute
 (Rs. Lacs)         amount relates                    is pending
 
 6.74         1987-88,1992-93,                  Orissa Sales Tax
              1993-94,1994-95,                  Tribunal
               1997-98
 66.71         2005-06                          Joint Commissioner
                                                of Sales Tax
 4.85         1987-88,1992-93,                  Orissa Sales Tax Tribunal
              2000-01
 5.60         1989-90,1990-91                   Commercial Tax Officer
 102.62         2005-06                         Assistant Commissioner
                                                of Commercial Taxes
 7.13         2005-06                           Commissioner of
                                                Commercial Taxes
 347.68       2005-06                           Commissioner of
                                                 Income tax (Appeals)
 
 (ix) The company does not have accumulated losses as at 31st March,
 2009 and has not incurred cash losses during the financial year covered
 by our audit or the immediately preceding financial year.
 
 (x) In our opinion and according to the information and explanations
 given to us, the company has not defaulted in the repayment of dues to
 banks.
 
 (xi) To the best of our knowledge and belief and according to the
 information and explanations given to us, in our opinion, term loans
 availed by the company were prima facie applied by the company during
 the year for the purposes for which the loans were obtained other than
 temporary deployment pending application.
 
 (xii) According to the information and explanations given to us and on
 an overall examination of the balance sheet of the company, in our
 opinion, funds raised on short term basis have not been used for long
 term investment.
 
 (xiii) 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.
 
 (xiv) The company has not raised any money by public issue.
 
 (xv) According to the information and explanations given to us, no
 fraud on or by the company was noticed or reported during the year.
 
 
 
                                       For Deloitte Haskins & Sells
                                              Chartered Accountants
                                              Abhijit Bandyopadhyay
                                                            Partner
                                              Membership No.: 54785
 
 22nd April, 2009
 Kolkata