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Orissa Industries Ltd.

BSE: 502260 Sector: Engineering
NSE: N.A. ISIN Code: N.A.
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Orissa Industries Ltd. (ORISSAINDS) - Auditors Report

Company auditors report

ORISSA INDUSTRTES LIMITED ANNUAL REPORT 2007-2008 AUDITORS' REPORT To The Members of Orissa Industries Limited, Lathikata, Sundargarh 1. We have audited the attached Balance Sheet of ORISSA INDUSTRIES LIMITED, P.O. Lathikata, Dist.: Sundargarh as at 31st March, 2008, the Profit & Loss Account and the Cash Flow Statement of the Company for the year ended on that date both annexed thereto. These financial statements are the responsibility of the Company's 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 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 misstatements. 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 Companies (Auditors' Report) Order, 2003 issued by the Central Government in terms of SubSection (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the Paragraphs 4 & 5 of the said Order. 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 purpose of our audit; ii. In our opinion, proper books of accounts 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 our audit have been received from the Depots and Offices not visited by us; iii. The Balance Sheet, Profit & 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 & Loss Account and Cash Flow Statement dealt with by this report comply with the mandatory Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956; v. On the basis of our review of the written representations received from the Directors and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of subsection (1) of Section 274 of the Companies Act, 1956; vi. 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 Schedules, significant accounting policies and notes thereto and subject to the following remark 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. Unpaid and unclaimed Dividend of Rs. 14.35 lakhs should have been transferred to 'Investor Education & Protection Fund' as per Provisions of Section 205C of the Companies Act, 1956. a. in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008. b. in the case of the Profit & Loss Account, of the LOSS for the year ended on that date and; c. in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. S.K. SARANGI CHARTERED ACCOUNTANT For H. NAIK & CO. CHARTERED ACCOUNTANTS Place: Kolkata Dated: 24.07.2008 ANNEXURE TO THE AUDITORS' REPORT Referred to in Paragraph 3 of our report of even date to the Members of Orissa Industries Limited on the accounts for the year ended 31st March, 2008. 1. In respect of Fixed Assets a. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets at Lathikata Unit. The Fixed Asset Register in respect of Barang Unit is still in process in preparation. b. The Fixed Assets have not been physically verified during the year, but as given to understand there is a regular programme of verification which in our opinion is reasonable having regard to the size of the Company and the nature of its Assets. The Company is in process of reconciliation of physical inventory of Fixed Assets with book records. c. In our opinion the disposal of Fixed Assets during the year does not affect the going conern/status of the Company. 2. In respect of its inventories: a. As explained to us, the inventories of finished goods, stores & spares, and raw materials are in process of verification by the Management except certain goods lying at different Depots and Ports. b. In our opinion and according to the information and explanations given to us, the procedures of verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business. c. The Company is maintaining proper records of inventories. Since the materials are in the process of verification, discrepancies if any found between the physical verification and book records, will be adjusted as explained to audit after completion of the physical verification. 3. In respect of loans secured or unsecured, granted or taken by the Company to/from Companies, Firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. a. The Company has taken loan from one party-Orind Exports Limited, amounting to Rs. 860.00 Lacs and has not given any loan secured or unsecured to Companies, Firms or other parties covered in register maintained under Section - 301 of the Companies Act, 1956. b. In our opinion and according to the information and explanations given to us, the rate of interest where applicable are not prima-facie prejudicial to the interest of the Company. c. The interest due to the above party is Rs. 55.90 Lacs (Previous Year Rs. 55.90 Lacs). The terms and conditions of loan taken do not contain any specific period to pay principal and interest. Due to paucity of funds and as the Company has gone to BIFR, the payment of principal and interest have been deferred. d. There is overdue amount in respect of loan taken by the Company, which will be repayable on demand and therefore, question of overdue amount does not arise. 4. In our opinion, and according to the information and explanations given to us, there is adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of stores, raw materials including components, plants and machinery, equipment and other assets and for sale of goods. During the course of our audit, we have not observed any major weakness in internal control. The balance of slow and non-moving stores as at the end of the year is valued at Rs. 21.77 Lacs (Previous Year Rs. 21.31 Lacs). 5. In respect of transactions covered under Section 301 of the Companies Act, 1956:- a. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements that needed to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. b. These transactions have been made at prices which are reasonable having regard to the prevailing market price at the relevant time. 6. The Company has not accepted any fixed deposits during the year. 7. The Internal Audit of the accounts of the Company has been audited by a Firm of Chartered Accountants. 8. The Central Government has not prescribed maintenance of Cost Records under clause (d) of Sub Section (1) of Section 209 of the Companies Act, 1956 for any of the products of the Company. 9. In respect of statutory dues: a. According to the records of the Company examined by us the followings are the undisputed statutory dues outstanding at the year end for a period of more than six months from the date they became payable Particulars Current Year Previous Year (Rs. In Lacs) (Rs. In Lacs) 1. Provident Fund 686.80 1181.19 2. E.S.I. 3.51 3.84 3. State & Central Sales Tax 440.86 424.10 4. Tax Deducted at Sources 48.75 43.66 5. ProfessionalTax 0.02 0.01 6. Service Tax 0.28 0.38 7. LIC Premium 29.86 34.82 8. Customs Duty 46.28 4628 (against materials at ports) TOTAL 1256.36 173428 b. The disputed statutory dues aggregating to Rs. 11380.23 Lacs (Previous Year Rs. 11838.46 Lacs) have not been deposited on account of matters pending before appropriate authorities are as under: Name of Nature of Forum where dispute Current Previous the Statute Dues pending Year Year (Rs. in Lacs) (Rs.in Lacs) 1. Pravdent Fund Penalty, Asst. Provident 19926 19926 Penal Fund Commissioner, Damage & Bhubaneswar Interest 2. State & Central Additional With different 141.70 14021 Sales Tax Demand Appellate Authorities 3. Excise Duty & Additional Pending with Asst 824.63 1305.40 cess Demand Commissioner of Central Excise and Commissioner (Appeals) of Central Excise and other Excise Authorities. 4. Income Incom Tax Tribunal 68.57 68.57 Tax and Commissioner of Income Tax, Cuttack 5. Taxe Deduded Additional lncome Tax Officer 63.39 - at Sources Demand (TDS), Rourkela 6. Customs Additional Before CEGAT & 9921.21 9971.770 Duty Demand Commissiner of Customs, Visakhapatnam and other places. 7. Sales Tax Interest D.I.C Bhubaneswar 161.47 15325 Loan TOTAL 11380.23 11838.46 (*) Rs. 839.79 Lacs (Previous Year 839.79 Lacs) on account of Custdms Duty provision made in the accounts against which Rs. 15.00 Iacs has been deposited with Hon'ble High Court, Cuttack. 10. The Company has accumulated loss of Rs. 14587.07 Lacs (Previous Year Rs. 12530.05 Lacs) at the end of the financial year which is more than 50% of its net worth and also incurred cash losses during the financial year and in the immediate preceding financial year are Rs. 2033.89 Lacs and Rs.1822.91 Lacs respectively. 11. According to the records of the Company, it has not defaulted in repayment of its dues to any Financial Institution or Bank during the year. 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 explanation given to us the Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, clause 4 (xiii) of the Companies (Auditors' Report) Order 2003 is not applicable to the Company. 14. The Company has not dealt with any transactions and contracts in respect of investment purchased and sold during the year. The investments made by the Company are held in its own name. 15. The Company has not given any guarantee for loans taken by others from banks or financial institutions except in case of loans taken by its staff members. 16. According to the information and explanations given to us, and the records examined by us, the Company has not obtained any term loan during the year. 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. 18. The Company has not made any preferential allotment of shares to parties or Companies covered in the register maintained under Section 301 of the Companies Act, 1956 during the year. 19. The Company has not issued any debentures during the year. So the question of security does not arise. 20. The Company has not raised any money by way of public issue during the year. 21. In our opinion and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year that causes the financial statements to be materially misstated. S.K. SARANGI CHARTERED ACCOUNTANT For H. NAIK & CO. CHARTERED ACCOUNTANTS Place: Kolkata Dated: 24.07.2008