| 1. We have audited the accompanying. financial statements of Orissa
Sponge Iron & Steel Limited ("the Company") which comprise the Balance
Sheet as at March 31, 201 5, the Statement of Profit and Loss and the
Cash Flow Statement for the year then ended and a summary of the sign
financial year ending exploratory information
MANAGEMENTS Responsibility FOR THE FINANCIAL STATEMENTS
2. The Company's Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 ('The Act") with
respect to the preparation and presentation of these financial
statements on a going concern basis that give a true and fair view of
the financial position, financial performance and cash flows of the
Company in accordance with the accounting principles generally accepted
in India, including the Accounting Standards specified under Section
133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,
2014. This responsibility also include maintenance of adequate
accounting records in accordance with the provisions of the Act for
safeguarding the assets of the Company and for preventing and detecting
frauds and other irregularities; selection and application of
appropriate accounting policies and making judgment and estimates that
are reasonable and prudent; and design, Implementation and maintenance
of adequate Internal financial controls, that operate effectively for
ensuring the accuracy and completeness of the accounting records,
relevant to the preparation and presentation of the financial
statements that give a true and fair view and are free from material
misstatement, whether due to fraud or error.
AUDITORS' RESPONSIBILITY
3. Our responsibility is to express an opinion on these financial
statements based on our audit.
4. We have taken into account the provisions of the Act, the
accounting and auditing standards and matters which are required to be
included in the audit report under the provisions of the Act and the
Rules made there under.
5. We conducted our audit In accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with the ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free from materials misstatements.
G. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial controls relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances but not for the purpose of expressing
an opinion on whether the Company has In place on adequate Internal
financial control system over financial reporting and operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the company's directors, as well as
evaluating the overall presentation of the financial statements.
7. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide the basis for our audit opinion on the
financial statements.
OPINION
8. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid financial statements give
the information required by the Act in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India, if the state of affairs aft the Company as
at 31st March, 201 5 and its loss and its cash flows for the year ended
on the date.
EMPHASIS OF MATTER
9. Without qualifying our opinion we draw attention on the following:
(a) The Company has suspended the production in June 2012; incurred a
net loss of Rs, 8,013.13 lacs during the year ended 31st March, 201S
and the accumulated losses as of that date amount to Rs, 3S.072.70
lacs, the Company's net worth has become negative: the current
liabilities exceeded Its current assets by Rs 33,734.02 lacs; the
company defaulted in repayment of term loan and cash credit facilities
and SBF, B01 and PNB have taken possession of all the assets at the
plant under Section 13(4) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
(SARFAESI); These conditions indicate the existence of material
uncertainly that may cause significant doubt about the company to
continue as a going concern.
(b) Referring to Note No. 12(1} of Notes on Accounts to the financial
Statement wherein the company has considered deferred tax assets of Rs,
12730.82 lacs including Rs. 1676.54 lacs for the current year on the
assumption that the Company will be able to earn sufficient profit in
future In future years to recoup the carry forward of losses, when,
Iron ore will be available from captive mines. We cannot comment on the
certainty of the future profits.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
10. As required by the Companies (Auditor's Report) Order 201 S issued
by the Central Government of India in terms of sub-section 143(11) of
the Act (here in under referred to as the "order"), and on the basis of
such checks of the books and records of the Company as we considered
appropriate and according to the information and explanations given to
us, we give in the Annexure a statement on the matters specified in
paragraph 3 and 4 of the order.
11. As required by Section 143(3) of the Act, we report that;
a) We how sought and obtained all the Information and explanations,
which to the best of our knowledge and belief were necessary for the
purposes of our audit.
b) 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,
c) The Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account
d) In our opinion, the aforesaid financial statement comply with the
Accounting Standards specified under Section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the
directors as on 31 March, 201S, taken on the record by the Board of
Directors, none of the directors is disqualified as on 31 March, 2015
from being appointed as a director In terms of Section 16M2) of the
Act.
f) With respect to the other matters to be included in the Auditors
Report in accordance with Rule 11 of the Companies (Audit and Auditors)
Rules 201 4, in our opinion and to the best of our knowledge and belief
and according to the information and explanations given to us ;
(I) The Company has disclosed the impact, If any, of pending
litigations as on 31st March 201S on Its financial positions in Its
financial statements as referred to in Mote 30(A) of the Motes on
Accounts to the Financial Statements.
(H) The Company did not have any long term contracts including
derivative contract for which there were any material foreseeable
losses.
(iil) There were no amounts, which were required to be transferred
during the year to the Investor Education and Protection Fund by the
Company.
ANNEXURE TO THE AUDITORS' REPORT
Referred to in paragraph 10 of the Independent Auditors' Report of even
date to the members of Orissa Sponge Iron & Steel Limited ("the
Company"') on the financial statements as of and for the year ended
31st March, 2015. We report that:
1. (a) The Company is maintaining proper records showing full
particulars, including quantitative details and situation of its fixed
assets.
(b) The Company has a regular programme of physical verification of its
fixed assets, by which a II 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.
2. (a) The inventory of the Company has been physically verified by
the management during the year. In our opinion the frequency of such
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 the 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. The Company has not granted any loans secured or unsecured to
companies, firms or other parties covered In the register maintained
under Section 189 of the Companies Act 2013. Therefore the provisions
of Clause (3) (iii) (a) and (b) of the said Order are not applicable to
the Company.
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. The Company has not accepted any deposits from the Public within
the meaning of Section 73 to 76 of the Act or any other relevant
provisions of the Act and Rules framed there under.
6. We have broadly reviewed the books of accounts maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of Cost Records under Section 148 (1) of the Companies Act,
2013 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.
7. (a) According to the information and explanations given to us and
except Central Sales Tax, Orissa Sales Tax and Entry Tax liability
totaling Rs, 30.91 lakhs, and Provident Fund dues to the extent of Rs,
199.54 lacs no undisputed dues payable in respect of Provident Fund,
Employees State Insurance, Income Tax, Wealth Tax. Sales Tax, Service
Tax, Customs Duty, Excise Duty, Value Added Tax and other material
statutory dues were outstanding at the year end. for a period of more
than six months from the date they became payable.
(b) There are no disputed dues which have remained unpaid as on 311
March. 2015 on account of Income Tax, value added tax, duty of exudes
of customs, sales tax. wealth tax, service tax. cess except as follows:
Name Due Amount
(Rs, in lacs) Period to which the
amount relates Forum where Dispute
is pending
Income Tax 3.27 2006-07 Petition u/s 154
before Assessing
Authority
Income Tax 1.00 2009-10 Appeal u /s. 246
before Commissioner
of Income Tax
(Appeals),
Bhubaneswar
Central
Excise 96.08 2005-06
to 2010-11 Commissioner of
Appeals Central
Excis
Control Excise 59.25 2004-05 to
2007-06 Additional
Commissioner Central
Excise
Qri5sa Sales
Tax & VAT 817.44 1985-86 to
2006-07 Various Authorities
Central
Excise Tax 2495,87 1985-86 to
2006-07 Various Authorities
(c) Based on the information and explanation obtained, the company has
no liability or requirement to transfer any amount to the Investor
Education and Protection Fund in accordance with the relevant
provisions of the Act and the Rules framed there under.
3. The Company has accumulated loss at the end of the financial year
which has eroded the entire net worth. It has incurred cash loss in the
current financial year and the year immediately preceding the current
financial year.
9. The Company has defaulted in repayment of dues to Its bankers and
financial institutions as on 31st March, 2015 as detailed below: -
Term Loan
from Banks Details Rs. in lakhs Default has Rs. in Lakhs
Name of Bonk Amount of Amount of
Default Started since Default
as on
31.03.2015 as on
31.03.2014
State Bank
of India
(5BT) Principal 3635.00 January-11 3635.00
Interest 3380.31 April-11 2417.60
Punjab
National
Bank (PNB) Principal 1672.77 October-11 760.30
Interest 1138.51 Aggust-11 939.20
Bank of
India
(BOI)-WCTL Principal 94.45 April-13 12.00
Interest 47.73 November-12 23.46
Term Loan
from Other
Parties:
Indian
Renewable
Energy Principal 2989.67 June-11 1968.32
Development
Agency Interest 3231.17 June-11 2036.03
Limited
(IREDA)
Edelweiss
Asset
Recons
truction Principal 1323.00 March-11 1323.00
Company
Limited
(EARC) Interes 1425.05 April-11 846.17
Cash Credit
from Banks :
State Bank
of India 6814.82 April 2011 6714.13
Bank of
India 552.85 March 2013 552.85
Cash
Credit
from Other
Parties
Edelweiss
Asset
Recons
truction 855.91 July-2011
Term Loan from Banks Default Has
Name of Bank Started since
State Bank January-11
of India
(5BT)
Punjab April-11
National
Bank (PNB)
Bank of October -11
India
(BOI)-WCTL
Term Loan
from Other
Parties:
Indian August-11
Renewable
Energy
Development
Agency
April-13
Limited
(IREDA)
Edelweiss March-11
Asset
Recons
truction
Company April-11
Limited
(EARC)
Cash Credit
from Banks :
State Bank April-2011
of India
Bank of
India March-2013
Cash
Credit
from Other
Parties
Edelweiss July -2011
Asset
Recons
truction
Company Limited SBI, BOl, PUB and EARC have is sued notice under
Section 13(2) of the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 for recall of
their outstanding dues.
10. According to the information and explanations given to us, the
Company has given guarantee for loans taken by an associate company
from banks or financial institutions, terms and conditions whereof are
not prejudicial to the interest of the Company.
11. In our opinion and according to the information and explanations
given to us, the term loans taken by the Company have been applied for
the purpose for which it was raised.
12. During the course of our examination of the books of records of
the Company, carried out in accordance with the generally accepted
auditing practice 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 any such case by the management
For L N. More & Company
Chartered Accountants
FRN 307042E
L N. More
Place: Bhubaneswar Partner
Dated: 29th August, 2015 Membership No. 011485 |