We have audited the attached Balance Sheet of Orissa Sponge Iron &
Steel Limited as at March 31, 2008, and the Profit and Loss Account and
the Cash Flow Statement 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 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 (Auditors 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 Profit and Loss Account 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, 2008, 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, 2008 from being appointed as a director
in terms of Section 274(1 )(g) of the Companies Act,1956.
3. We report that, in our opinion, the Company has not provided
(i) diminution in value of equity shares in a listed Company (Bilati
(Orissa) Ltd.) amounting to Rs.142 lacs.
(ii) Debts and Advances which are doubtful of recovery amounting to
Rs.171A lacs (Refer Note No.3 of Schedule 14B) Had the provision been
made for (i) and (ii) above loss for the year would have increased by
Rs.1856 lacs and assets would have decreased by the same amount.
k. Subject to 3 above, in our opinion and to the best of our
information and according to the explanations given to us.
a) The Balance Sheet and Profit and Loss Account 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, 2008.
(ii) In the case of the Profit and Loss Account, 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.
ANNEXURE TO THE AUDITORS REPORT
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 31st
March, 2008 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
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, internal audit system needs to be strengthened to
commensurate with the size and nature of its 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 made and 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 protection fund.
According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Employees
State Insurance, Income Tax, Sales Tax, Service Tax, Customs duty,
Excise duty, Cess and other material statutory dues were in arrears, as
at 31st March, 2008, for a period of more than six months from the date
they became payable except the following:
Nature of Dues Amount
(Rs. In Lacs)
Tax deducted on salaries 2.48
Tax deducted on contractors/others 0.78
Provident Fund (recovery of PF Loan) 6.11
Fringe Benefit Tax 14.09
However these have been paid subsequent to close of the year.
(b) According to the information and explanations given to us, there
are no dues of Income Tax, Sales Tax, Service tax, Customs duty, Excise
Duty and Cess which have not been deposited with the appropriate
authorities on account of dispute other than those mentioned as
Name of the statute Nature of dues
Income Tax Act, 1961 TDS interest
Central S,ales Tax Act, 1956 Non-collection
of declaration forms
Orissa Sales Tax Act, 1947 Enhanced assessment & Penalty
Central Excise Act, 1944 Disputed Central Excise demand
Amount (Rs. in lacs) Forum where Dispute is pending
1.39 CIT (Appeal), Bhubaneswar
895.41 Sales Tax Appellate Authorities
20.35 Commissioner of Appeals,
10. The Company has accumulated losses at the end of the financial
year which are less than fifty percent of its net worth. It has
incurred cash losses immediately preceding financial year and there is
no cash loss in the current 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 its
bankers and institutions excepting in case of Industrial Development
Bank of India (IDBI) and Indian Renewable Energy Development Agency
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 not given any guarantee for loans taken by others from
banks or financial institutions. Accordingly the provisions of clause
4(xv) of the Order are not applicable to the Company.
16. In our opinion and according to the information and explanations
given to us, the term loan taken by the Company have been applied for
the purpose for which it is 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. The Company has not issued any equity shares on preferential basis
during the year to any party and company covered in the Register
maintained under Section 301 of the Companies Act, 1956.
19. According to the information and explanations given to us, the
Company has not issued debentures during the year.
20. The Company has not raised any money by public issue during the
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India, and according to the information and
explanations given to us, we have neither come across any instance of
material fraud on or by the Company, noticed or reported during the
year, nor have we been informed of such case by the Management.
Place: Kolkata For L N More & Company
Date: 14th July, 2008 Chartered Accountants
(L. N. More)
Membership No. 011485