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Orissa Sponge Iron & Steel Ltd.

BSE: 504864 Sector: Metals & Mining
NSE: N.A. ISIN Code: INE228D01013
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Mkt Cap.(Rs cr) 654
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OPEN 219.40
CLOSE 230.90
52-Week high 219.40
52-Week low 0.00
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) - Director Report

Company director report

Your Directors submit the following report on Financial Results for the year ended 31stMarch. 2015:

Financial Results: For the year ended 31st March 2015 For the year ended 31st March 2014
(Rs. in lacs) (Rs. in lacs)
Turnover 259.42 83.76
Profit / (Loss) before depreciation (8748.89) (6.68S.S2)
Depreciation (net of revaluation adjustment) 940.76 228.92
Profit / (Loss) before tax (9689.65) (6.914.44)
Provision for Deferred Tax - Assets 1676.54 2.785.19
Profit / (Loss) after tax (8013.11) (4.129.25)
Surplus /(Deficit) brought forward from previous year (27886.70) (23.757.45)
Adjustment relating to expired Fixed Assets (172.90) -
Surplus /(Deficit) carried forward to Statement of Profit and Loss (36072.71) (27886.70)

State of Affairs

The Company suspended production in June 2012 due to unviable cost economics andcontinuing losses. The loss for the financial year 2014-15 amount to 7 9689.65 lacs. Inthe present scenario resumption of plant operations and viability of the Company islargely dependent on availability of raw material from captive sources.

The net worth of the Company has been fully eroded as on 31st March 2015 under theapplicable provisions of the Sick Industrial Companies (Special Provisions) Act 1985(SICA). The Company shall take measures to file the application for registration as sickunit in terms of the provisions of SICA to the Board for Industrial and FinancialReconstruction (BIFR) within the stipulated time.

State Bank of India on behalf of itself. Bank of India and Punjab National Bank haveissued Possession Notice dated 24.04.2015 under Section 13(4) of the Securitization andReconstruction of Financial Assets and Enforcement of Security Interest Act. 2002(SARFAESI) in respect of the properties described in the notice. Indian Renewable EnergyDevelopment Agency Limited (IREDA) has also issued notice under Section 13(2) of SARFAESI.In addition State Bank of India and Edelweiss Asset Reconstruction Company Limited hasalso filed application under Section 19(1) of the Recovery of Debts due to Banks andFinancial Institutions Act. 1993 before the Debt Recovery Tribunal (DRT).

The Company has made representation before all the lenders explaining the reasons forthe current state of affairs and the action plan for revival of the Company in the nearfuture. The Company is hopeful of receiving favourable response from the lenders for acomprehensive debt restructuring and working capital facility in view of the iron oremines allotted to the Company which on commencement of mining operations has the potentialto turnaround the Company into a profitable unit in the near future.

The Project and Engineering Division earned revenue of Rs. 175.37 lacs from sale oftechnology during the year.

Dividend and Reserves

Your Directors regret their inability to recommend any dividend for the year in view oflosses.

The balance in Reserves and Surplus (Net) stands at Rs. 204.38 lacs as on 31st March2015. For the year under review there is no proposal to transfer any amount to Reserves inview of losses.

Future Outlook

The Company was allotted Iron Ore Mines by the Central Government and the StateGovernment of Odisha. The Company has received all approvals and clearances includingStage I Clearance from the Ministry of Environment and Forest and Compliance Certificateunder the Scheduled Tribes and Other Traditional Dwellers (Recognition of Forest RightsAct) 2006 and are presently awaiting Stage II Clearance on receipt of which leaseagreements could be executed for commencement of mining operations.

Availability of iron ore from captive mines will permit production at higher capacityand significantly improve profitability of the Company. Changes in Capital Structure -Issue of Preference Shares

The Company issued and allotted 10% Cumulative Non Convertible Redeemable PreferenceShares amounting to Rs. 20 crores on private placement during the year. These Shares areredeemable on the expiry of 12 years from the date of allotment.

Transfer of Unclaimed Dividend to Investor Education & Protection Fund

The Company does not have any unclaimed dividend for transfer to Investor Education& Protection Fund.


The Company has not accepted deposit within the meaning defined under the CompaniesAct. 2013.

Project & Engineering Division

The activities of the Project & Engineering Division has been closed with effectfrom 1st September 2015.

Subsidiary Company

Bamra Iron & Steel Company (India) Ltd. has been struck off from the Register ofCompanies as per the Order issued by the Registrar of Companies Odisha. Consequently theCompany has no subsidiary on the reporting date.

Directors and Key Managerial Personnel

(1) Independent Directors

At the Annual General Meeting of the Company held on 26th September. 2014. the membersof the Company appointed Mr. S. K. Khetan (DIN 01297082). Mr. B. K. Sarkar (DIN 00670952)and Mr. A. K. Mukherjee (DIN 00047844) as Independent Directors for a term of 5 years fromthe date of appointment. As per the terms of appointment the Independent Directors shallnot retire by rotation.

(2) Nominee Directors

The nomination of Mr. G. Mathivathanan (DIN 01203901) as Chairman & Director on theBoard of the Company was withdrawn by IPICOL on 26.12.2014. IPICOL also withdrew thenomination of Mr. P. C. Mohanty (DIN 05211242) as Director on the Board on 06.04.2015.

Mr. S. K. Kar (DIN 07220972) was nominated by IPICOL and appointed as AdditionalDirector at the Board Meeting held on 29.08.2015 on the recommendation of the Nominationand Remuneration Committee. Having been appointed as Additional Director he vacates hisoffice at the ensuing Annual General Meeting. Proposal for his re appointment has beenreceived from a member and accordingly the Resolution for re appointment of Mr. S. K. Karas Director is being placed before the ensuing Annual General Meeting for approval.

Ms. Sonia Jabbar (DIN 01222834) was nominated by Torsteel Research Foundation in India(TRFI) as Additional Director at the Board Meeting held on 29.08.2015 on therecommendation of the Nomination and Remuneration Committee. Having been appointed asAdditional Director she vacates her office at the ensuing Annual General Meeting. Proposalfor her re appointment has been received from a member and accordingly the Resolution forre-appointment of Ms. Sonia Jabbar as Woman Director is being placed before the ensuingAnnual General Meeting for approval. The nomination of Mr. S. H. Gupta as Director waswithdrawn by TRFI on 01.04.2015 due to operation of Section 167(1 )(b) of the CompaniesAct 2013

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as laid down in Section 149(6) ofthe Companies Act 2013 and Clause 49 of the Listing Agreement.

(3) Retirement by Rotation

There is no Director liable to retire by rotation at the ensuing Annual GeneralMeeting.

(4) Key Managerial Personnel

Mr. S. Ramakrishnan retired as CFO & Company Secretary on 31.01.2015. Mr. MunirMohanty. Wholetime Director was given additional responsibility of CFO at the meeting heldon 13.02.2015.


(1) Meeting of the Board of Directors

During the financial year ended 31st March 2015. four meetings were held the detailsof which are given in the Corporate Governance Report. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013.

(2) Meeting of the Independent Directors

In terms of Schedule IV of the Companies Act 2013 and revised Clause 49 of the ListingAgreement a meeting of the Independent Directors was held on 9th February 2015 whereinthe performance of the non independent Directors including the Chairman and the Board as awhole was reviewed. The Independent Directors also assessed the quality quantity andtimeliness of flow of information between the Company management and the Board ofDirectors of the Company.

Corporate Governance

(1) Directors' Responsibility Statement

Pursuant to Section 134(3)(c) and 134(5) of the Companies Act. 2013. the Directorshereby confirm that:

a) In the preparation of the annual accounts for the year ended 31st March 2015. theapplicable accounting standards have been followed along with proper explanation relatingto material departures from the standards.

b) Accounting policies were selected are applied consistently. Judgements and estimatesthat are reasonable and prudent are made so as to give a true and fair view of the stateof affairs of the Company as at 31st March 2015 and of the Loss of the Company for theyear ended on that date.

c) Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of this

Act for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities.

d) The Accounts for the financial year ended 31 st March 2015 have been prepared on a'going concern' basis.

e) The laid down internal financial controls to be followed by the Company are adequateand are operating effectively.

f) Proper system devised by the Company to ensure compliance with the provisions of allapplicable laws were adequate and are operating effectively.

(2) Management Discussion and Analysis

Management Discussion and Analysis for the year under review as stipulated under Clause49 of the Listing Agreement with the Stock Exchanges is presented in a separate sectionforming part of this Report.

(3) Corporate Governance Report

The Report on Corporate Governance as stipulated in Clause 49 of the Listing Agreementwith the Stock Exchanges is presented in a separate section and forms part of this report.

A Certificate from M/s. A. K. Labh & Co.. Practicing Company Secretaries confirmingcompliance with the conditions of Corporate Governance as stipulated under the aforesaidclause 49 is attached to the Report on Corporate Governance.

(4) CEO & CFO Certification

As required under Clause 49 of the Listing Agreement the CEO & CFO certificationhas been submitted to the Board and a copy thereof is contained elsewhere in this AnnualReport.

(5) Board Evaluation

The manner in which the Board evaluates its own performance and also the performance ofthe Committee and individual Directors are dealt in detail in the Report on CorporateGovernance forming part of this Report.

Related Parties

None of the transaction with related parties is in the nature of contract orarrangement but in the nature of discharge of obligation by the concerned related parties.All such transactions including loans guarantee or investment wherever application aredisclosed in para 36 of the Notes on Accounts and forms part of this Report.

There are no materially significant related party transaction made by the Company withPromoters. Directors. Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large.

Committees of the Board

(1) Audit Committee

The composition and terms of reference of the Audit Committee have been furnished inthe Corporate Governance Report forming part of this Report. There has been no instancewhere the Board has not accepted the recommendation of the Audit Committee.

(2) Nomination and Remuneration Committee

The composition and terms of reference of the Nomination and Remuneration Committeehave been furnished in the Corporate Governance Report forming part of this Report.

(3) Stakeholders Relationship Committee

The composition and terms of reference of the Stakeholders Relationship Committee havebeen furnished in the Corporate Governance Report forming part of this Report.

(4) Ethics Committee

The composition and terms of reference of the Ethics Committee have been furnished inthe Corporate Governance Report forming part of this Report.

(5) Risk Management Committee

The composition and terms of reference of the Risk Management Committee have beenfurnished in the Corporate Governance Report forming part of this Report.

Policies and Codes

(1) Remuneration Policy

The Policy of the Company on appointment and remuneration of Directors. Key ManagerialPersonnel and Senior Management Personnel including criteria for determiningqualification positive attributes independence of a Director and other matters providedin Section 178(3) of the Companies Act. 2013. is dealt in detail in the Report onCorporate Governance.

(2) Whistle Blowers Policy

The Company has formed a Whistle Blower Policy/Vigil Mechanism as required underSection 177 of the Companies Act 2013 and Clause 49 of the Listing Agreement. A Vigil(Whistle Blower) Mechanism provides a channel to the Directors and Employees to reporttheir concerns about unethical behaviour actual or suspected fraud or violation of thecode of conduct/business ethics that provides for adequate safeguards againstvictimization of the director(s) and employee(s) who avail of the mechanism. Nodirector/employee have been denied access to the Chairman of the Audit Committee. The saidPolicy may be referred to at the Company's Website.

(3) Risk Management Policy

The process of identification and evaluation of various risks inherent in the businessenvironment and the operations of the Company and initiation of appropriate measures forprevention and/or mitigation of the same are dealt with by the concerned operational headsunder the overall supervision of the Managing Director of the Company. The Risk ManagementCommittee periodically reviews the adequacy and efficacy of the overall risk managementsystem.

(4) Policy on prevention of Sexual Harassment

The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Woman at the Workplace (Prevention Prohibition &Redressal) Act 2013 covering all employees of the Company. Internal Complaints Committeehas been set up for the purpose. No complaint was received during the year. The AuditCommittee periodically reviews the adequacy of the system on prevention of sexualharassment.

(5) Policy on Corporate Social Responsibility

The provisions of Section 135 of the Companies Act. 2013 is not applicable to theCompany. However the internal CSR Policy encompasses the Company's philosophy for givingback to the society as a corporate citizen. CSR activities in the Company are carriedthrough OSIL TRFI Community Services Trust.

(6) Policy on determining Material Subsidiaries

As the Company has no subsidiary the requirement of Clause 49(V) of the amendedListing Agreement is not applicable to the Company.

(7) Policy on Materiality of and Dealing with Related Party Transactions

As required under Clause 49(VIII) of the amended Listing Agreement the Company hasformulated a Policy on Materiality of and Dealing with Related Party Transaction and thesame has been put up on the Company's Website.

(8) Code of Conduct

Code of conduct for Prevention of Insider Trading and Code of Corporate DisclosurePractices for prevention of Insider Trading

In compliance with the provisions of SEBI (Prohibition of Insider Trading).Regulations. 1992 as amended from time to time the Company has in place a comprehensivecode of conduct for its Directors and Senior Management Officers which lays downguidelines and procedures to be followed and disclosures to be made while dealing withshares of the Company so as to preserve the confidentiality and prevent misuse ofunpublished price sensitive information by Directors and specified employees of theCompany. This policy also provides for periodical disclosures from designated employees aswell as pre clearance of transactions by such persons so that they may not use theirposition or knowledge of the Company to gain personal benefit or to provide benefit to anythird party.

Corporate Social Responsibility

Your Company provided financial assistance of Rs. 0.20 lakhs to Green Field Schoollocated in Palaspnga. Dist. Keonjhar. Odisha for Children education and Rs. 0.56 lakhs toOSIL TRFI Community Services Trust for Community Developments. Your Company regrets itsinability to provide the desired support for CSR activities due to financial lossessuffered by the Company.


Your Company continues to follow the Quality Management System for Production andsupply of Sponge Iron and Steel Billets and possesses Certificate of Registration of ISO9001:2008 from British Certification Inc. Your Company is proud of maintaining the cleanenvironment in the vicinity of the Plant and your Company's Environmental ManagementSystem applicable to production and supply of Sponge Iron and Steel Billets has beencertified under ISO 14001:2004 by British Certification Inc. The occupational Health andSafety Management System of your Company has also been certified by the same Agency andyour Company complies with the requirements of OHSAS 18001:2007.

Listing Fees

The annual listing fees could not be paid to the Stock Exchanges where the Company'sshares are listed due to financial constraints. Your Company's application to NationalStock Exchange (NSE) for listing and Calcutta Stock Exchanges for de-listing is pendingbefore the respective Exchanges.

Reconciliation of Share Capital

In compliance of the directions of Securities and Exchange Board of India (SEBI)Reconciliation of Share Capital is being carried out quarterly by a Practising CompanySecretary. The findings of the Reconciliation of Share Capital were satisfactory.

Conservation of energy technology absorption foreign exchange earning and outgo

Since the plant operations are closed from June 2012. no figures are available forconservation of energy technology absorption etc. as required under the provisions of theAct read with Rule 8(3) of the Companies (Accounts) Rules 2014. The relevant informationapplicable to the Company under these circumstances are given below:

(1) During the year the Company has purchased electricity 751200 (764880) units fromNESCO amounting to Rs. 55.71 lacs (Rs. 72.47 lacs)

(2) During the year the Company has earned foreign exchange of Rs. 132.40 lacs (Rs.71.06 lacs) by sale of technology.

Particulars of Employees

There were no employees drawing the requisite remuneration whose names are required tobe disclosed as required under Section 197 of the Companies Act 2013 read with Rule 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules. 2014.

Industrial Relations

Industrial relations have by and large remained cordial during the year.


(1) Statutory Auditors

The Statutory Auditors M/s L. N More & Co. Chartered Accountants Cuttackretires at the conclusion of the ensuing Annual General Meeting and have expressed theirunwillingness for reappointment as Auditors for the next financial year.

The Audit Committee and the Board has recommended the appointment of M/s. A. K.Bhardwaj & Company Chartered Accountants for approval of the shareholders at ensuingAnnual General Meeting. The Company has received confirmation from them to the effect thatthey satisfy the criteria provided in Section 139(1) of the Companies Act 2013 and theirappointment would be within the limits prescribed under Section 141 (3)(g) of theCompanies Act. 2013.

(2) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act. 2013 and the Companies(Appointment and Remunerations of Managerial Personnel) Rule. 2014 the Company hasappointed Ms. Disha Dugar. Practicing Company Secretary to conduct Secretarial Audit forthe financial year ended 31st March. 2015. The Report on Secretarial Audit is providedseparately and forms part of this Report.

(3) Cost Auditors

Pursuant to the provision of Section 148 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014 M/s. B. Ray & Associates Cost Accountants Kolkatawas re appointed as Cost Auditor of the Company for the year 2014-15 to conduct audit ofcost records maintained by the Company.

Auditors' Report

Explanation to the Statutory Auditors' Report and Secretarial Auditors' Report pursuantto Section 134(3)(f) of the Companies Act. 2013 is given in the Annexure I forming part ofthe Directors Report.

Extract of Annual Return

The extract of the Annual Return in Form MGT 9 is provided in the Annexure II and formspart of this Report.

Significant and Material Orders Passed by the Regulators/Courts/Tribunals

There are no significant material orders passed by the Regulators/Courts/Tribunalswhich would impact the going concern status of the Company and Its future operations.


Particulars of litigation against the Company are given in Para 30A of Notes onFinancial Statements.

Acknowledgement and Appreciation

The Directors acknowledge with gratitude the co-operation extended by Indian RenewableEnergy Development Agency Limited Edelweiss Asset Construction Company Limited. Banks.State Government. Local Administration Suppliers. Customers and Shareholders and solicittheir continued support. The Directors also wish to place on record their sincereappreciation of the dedicated services put in by the Company's workers staff andexecutives under difficult conditions.

For and on behalf of the Board
Munir Mohanty Director
Place: Kolkata Dr. P. K. Mohanty. Vice Chairman & Managing Director
Dated: 2nd January 2016


Explanation to the Auditors' Report and Secretarial Auditors' Report pursuant toSection 134(3)(f) of the Companies Act 2013 :

(1) Explanation to Statutory Auditor's Report

a) Reference to Annexure to the Audit Report vide Para 7(a) your Directors submit thatdue to shut down of plant operations since 2012 and in the absence of regular flow offunds fund situation has become critical. Consequently the undisputed liability onaccount of Central Sales Tax Orissa Sales Tax Entry Tax and Provident Fund dues couldnot be paid.

b) Reference to the Audit Report vide Para 9(a) and (b) your Directors submit that theNotes to Balance Sheet and Statement of Profit and Loss under the head CorporateInformation gives full details of the State of Affairs of the Company and thejustification for preparing the Accounts on the basis of going concern. For the samereasons deferred tax have been recognised in the Accounts as the Directors are of theopinion that on commencement of mining operations the profit generated would be goodenough to absorb the Deferred Tax.

c) There are no other qualifications or adverse remarks in the Auditors' Report whichrequire any clarification/explanation in the Directors Report. The Notes on Accountsforming part of the financial statements are self-explanatory and needs no furtherexplanation.

(2) Explanation to Secretarial Auditor's Report

a) Reference to the Audit Report vide Para A (i) your Director submit that incompliance of Section 149 of the Companies Act 2013 a women Director was subsequentlyappointed at the Board Meeting held on 29.08.2015.

b) Reference to the Audit Report vide Para A (ii) & Para 4 (b) A your Directorsubmit that the Company is in the process of appointing Company Secretary who will also bethe Compliance Officer and hope to fill up the vacancy very soon.

c) Reference to Para (ix) A Item D in the last page and the concluding Para videserial no I and II of the Audit Report your Directors submit that due to shut down ofplant operations since 201 2 and in the absence of regular flow of funds fund situationhas become critical. Consequently the undisputed liability on account of Central SalesTax Orissa Sales Tax Entry Tax Provident Fund dues Employee Pension Fund dues ListingFee to the Stock Exchange etc could not be paid.

d) Reference to the Audit Report vide Item A in the last page your Directors submitthat out of seven Directors on the Board three Directors are Independent Directors andtherefore only fractionally lower than 50%. It will be appropriate to mention here thatone Director nominated by IPICOL is a Government Nominee who always perform independentlyand take neutral position at the Board meeting and decide on issues based on merit.

e) Other than the above observations of the Auditors in their Report which have beenspecifically addressed no explanation is given on other observations as all of themcomprise of statement of facts.