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Orissa Sponge Iron & Steel Ltd.

BSE: 504864 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE228D01013
BSE LIVE 14:33 | 12 Sep Stock Is Not Traded.
NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 219.40
PREVIOUS CLOSE 230.90
VOLUME 10
52-Week high 219.40
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 654
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 219.40
CLOSE 230.90
VOLUME 10
52-Week high 219.40
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 654
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Orissa Sponge Iron & Steel Ltd. (ORISSASPONGE) - Auditors Report

Company auditors report

TO THE MEMBERS OF ORISSA SPONGE IRON & STEEL LIMITED REPORT ON THE FINANCIALSTATEMENTS

1. We have audited the accompanying financial statements of Orissa Sponge Iron &Steel Limited ("the Compony") which comprise the Balance Sheet as at March31.2015. the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

MANAGEMENT S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

2. The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act. 2013 ("The Act”) with respect to the preparationand presentation of these financial statements on a going concern basis that give a trueand fair view of the financial position financial performance and cash flows of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Accounting Standards specified under Section 133 of the Act. read with Rule7 of the Companies (Accounts) Rules. 2014. This responsibility also include maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies and makingjudgement and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that operate effectively for ensuringthe accuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error. AUDITORS' RESPONSIBILITY

3. Our responsibility is to express an opinion on these financial statements based onour audit.

4. We have taken into account the provisions of the Act. the accouting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made there under.

5. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with the ethicalrequirements and plan and perform the audit to obtain reasonable asurance about whetherthe financial statements are free from materials misstatements.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial controls relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances but not for the purpose of expressing an opinionon whether the Company has in place on adequate internal financial control system overfinancial reporting and operating effectiveness of such controls. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the company's directors as well as evaluating theoverall presentation of the financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide 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 explanationsgiven to us. the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2015 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 31 st March. 2015 and the accumulated losses as ofthat date amount to Rs. 36072.70 lacs the Company's net worth has become negative; thecurrent liabilities exceeded its current assets by Rs 33.734.02 lacs; the companydefaulted in repayment of term loan and cash credit facilities and SBI BOI and PNB havetaken possession of all the assets at the plant under Section 13(4) of the Securitizationand Reconstruction of Financial Assets and Enforement of Security Interest Act. 2002(SARFAESI); These conditions indicate the existence of material uncertainly that may causesignificant 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 whereinthe company has considered deferred tax assets of Rs. 12730.82 lacs including Rs. 1676.54lacs for the current year on the assumption that the Company will be able to earnsufficient profit in future in future years to recoup the carry forward of losses whenIron ore will be available from captive mines. We cannot comment on the certainty of thefuture profits.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

10. As required by the Companies (Auditor's Report) Order 2015 issued by the CentralGovernment of India in terms of sub-section 143(11) of the Act (here in under referred toas the "order") and on the basis of such checks of the books and records of theCompany as we considered appropriate and according to the information and explanationsgiven to us we give in the Annexure a statement on the matters specified in paragraph 3and 4 of the order.

11. As required by Section 143(3) of the Act. we report that:

a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany 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 Statementdealt with by this Report are in agreement with the books of account.

d) In our opinion the aforesaid financial statement comply with the AccountingStandards 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 31March. 2015. taken on the record by the Board of Directors none of the directors isdisqualified as on 31 March 2015 from being appointed as a director in terms of Section164(2) of the Act.

f) With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014. in our opinionand to the best of our knowledge and belief and according to the information andexplanations given to us :

(i) The Company has disclosed the impact if any of pending litigations as on 31stMarch 2015 on its financial positions in its financial statements as referred to in Note30(A) of the Notes on Accounts to the Financial Statements.

(ii) The Company did not have any long term contracts including derivative contract forwhich there were any material foreseeable losses.

(iii) There were no amounts which were required to be transferred during the year tothe Investor Education and Protection Fund by the Company.

For L. N. More & Company
Chartered Accountants
FRN 307042E
L. N. More
Place: Bhubaneswar Partner
Dated: 29th August 2015 Membership No. 011485

ANNEXURE TO THE AUDITORS' REPORT

Referred to in paragraph 10 of the Independent Auditors' Report of even date to themembers of Orissa Sponge Iron & Steel Limited ("the Company*) on the financialstatements as of and for the year ended 31st March 2015.

We report that:

1. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of its fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assetsby which all fixed assets are verified in a phased manner over a period of three years. Inour opinion this periodicity of physical verification is reasonable having regard to thesize of the Company and the nature of its assets. Accordingly certain fixed assets havebeen physically verified by the management during the current year and no materialdiscrepancies were noticed upon such verification.

2. (a) The inventory of the Company has been physically verified by the managementduring the year. In our opinion the frequency of such verification is reasonable.

(b) The procedures of physical verification of inventories followed by management arereasonable and adequate in relation to the size of the Company and the nature of thebusiness.

(c) On the basis of our examination of the records of inventory we are of the opinionthat the Company is maintaining proper records of inventory. The discrepancies noted onphysical 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 orother parties covered in the register maintained under Section 189 of the Cmpanies Act.2013. Therefore the provisions of Clause (3) (iii) (a) and (b) of the said Order are notapplicable to the Company.

4. In our opinion and according to the information and explanations given to us. thereis an adequate internal control system commensurate with the size of the Company andnature of its business with regard to purchases of inventory and fixed assets and withregard to sale of goods and services.

5. The Company has not accepted any deposits from the Public within the meaning ofSection 73 to 76 of the Act or any other relevant provisions of the Act and Rules framedthere under.

6. We have broadly reviewed the books of accounts maintained by the Company pursuant tothe rules made by the Central Government for the maintenance of Cost Records under Section148 (1) of the Companies Act. 2013 and are of the opinion that prima facie theprescribed accounts and records have been maintained. However we have not made a detailedexamination of such records.

7. (a) According to the information and explanations given to us and except CentralSales Tax Orissa Sales Tax and Entry Tax liability totaling Rs. 30.91 lakhs andProvident Fund dues to the extent of Rs. 199.54 lacs no undisputed dues payable in respectof Provident Fund Employees State Insurance IncomeTax Wealth Tax. Sales Tax ServiceTax Customs Duty Excise Duty. Value Added Tax and other material statutory dues wereoutstanding at the year end. for a period of more than six months from the date theybecome payable.

(b) There are no disputed dues which have remained unpaid as on 311 March. 2015 onaccount of Income Tax. value added tax. duty of excise of customs sales tax. wealth taxservice tax. cess except as follows:

Name Dues 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 Excise
Central Excise 59.25 2004 05 to 2007 08 Additional Commissioner Central Excise
Orissa 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 orrequirement to transfer any amount to the Investor Education and Protection Fund inaccordance with the relevant provisions of the Act and the Rules framed there under.

8. The Company has accumulated loss at the end of the financial year which has erodedthe entire net worth. It has incurred cash loss in the current financial year and the yearimmediately preceding the current financial year.

9. The Company has defaulted in repayment of dues to Its bankers and financialinstitutions as on 31st March. 2015 as detailed below: -

Term Loan from Banks Details Rs. in lakhs Rs. in Lakhs
Name of Bank Amount of Default as on 31.03.2015 Default has Started since Amount of Default as on 31.03.2014 Default has Started since
State Bank of India (SBI) Principal Interest 3635.00 3380.31 January-11 April-11 3635.00 2417.60 January-11 April-11
Punjab National Bank (PNB) Principal Interest 1672.77 1138.51 October-11 August-11 760.30 939.20 October-11 August-11
Bank of India (BOI)-WCTL Principal Interest 94.45 47.73 April-13 November-12 12.00 23.46 April-13 November-12
Term Loan from Other Parties:
Indian Renewable Energy Development Agency Limited (IREDA) Principal Interest 2989.67 3231.17 June-11 June-11 1968.32 2086.03 June-11 June-11
Edelweiss Asset Reconstruction Company Limited (EARC) Principal Interest 1323.00 1425.05 March-11 April-11 1323.00 846.17 March-11 April-11
Cash Credit from Banks:
State Bank of India 6814.82 April 2011 6714.13 April-2011
Bank of India 552.85 March-2013 552.85 March-2013
Cash Credit from Other Parties
Edelweis Asset Reconstruction Companv Limited 855.91 July-2011 855.91 July-2011

SBI. BOI. PNB and EARC have issued notice under Section 13(2) of the Securitization andReconstruction of Financial Assets and Enforcement of Security Interest Act. 2002 forrecall of their outstanding dues.

10. According to the information and explanations given to us. the Company has givenguarantee for loans taken by an asociate company from banks or financial institutionsterms 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. theterm 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 Companycarried out in accordance with the generally accepted auditing practice in India andaccording to the information and explanations given to us. we have neither come across anyinstance of material fraud on or by the Company noticed or reported during the year; norhave 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