STEEL TUBES OF INDIA LIMITED
ANNUAL REPORT 2007-2008
The Members of
Steel Tubes of India Limited
We have audited the attached Balance Sheet of Steel Tubes of India Limited
as at 31st March 2008 and also the Profit and Loss Account and the Cash
Flow Statement of the Company for the year ended on that date annexed
thereto. These financial statements are the responsibility of the Company's
management. Our responsibility is to express as opinion on these financial
statements based on our audit.
We conducted our audit in accordance with 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 management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
We report that:
1. As required by the Companies (Auditor's Report) Order, 2003 issued by
the Central Government in terms of Section 227(4A) of the Companies Act,
1956, we annexure a Statement on date matters specified in pararaphs 4 & 5
of the said Order.
2. Attention is drawn to the following:
Note No. 3(a) regarding declaration of Company as sick under section
3(1)(O) of SICA and preparation of financial statements on going concern
basis and Note No. 4 regarding disposal of manufacturing assets by SASF,
however the accounts are continued to be prepared on going concern basis.
3. Further to our Committee in the Annexure referred to in paragraph 1
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 purposes of our audit;
ii) 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 those books;
arid proper returns adequate for the purposes of our audit have been
received from the offices not visited by us;
iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
iv) The Company has defaulted in repayment offered deposits for more than
three years. Written representation has been received from directors of the
Company regarding disqualification under clause (g) of sub section (1) a
section 274 of the Companies Act, 1956 as on 31st March 2008.
v) In our opinion audit to the best of our information and according to the
explanations given to us, the said accounts read together with the
Accounting Policies 'and Notes thereon in Schedule 20 and subject to, (a)
Note No. 6 regarding non implication of financial' liability in various
courts pending against the company (b) Note No. 7 regarding non provision
of interest amounting to Rs. 317.26 lacs on unsecured loans resulting into
understatement of loss and corresponding liability to the tune of Rs.317.26
lacs. (c) Note No. 8 regarding non adherence of repayment schedule with few
parties, liability, if any, unascertained. (d) Note No. 9 regarding default
in repayment ofpublic deposits (e) Note no. 11 regarding non remittance of
balance due for transfer to Investor Education, and Protection Fund (f)
Note No. 12 regarding balances of Loans & Advances, Sundry Creditors,
Deposits and Other Loans being subject to reconciliation and confirmation,
(g) Note No. 13(a) regarding non provision of interest and penalty, if any
on delay of payment of statutory due, amount not ascertainable (h) Note No.
13 (b) regarding deferred sales tax duefor repayment (i) Note No. 15
regarding non provision for diminutionin alut investments in Global Stone
India Ltd in spite of perosion of entire networth and (j) Note No. 19
regarding non provision respect of impairment of Solar Power Plant in
accordance with AS -28, give the information required by Companies Act,
1956, in the manner so required and give true and fair view in conformity
with the accounting principles generally accepteding lndia.
a) In the case of the Balance Sheet, of the state of affairs of the Company
as at 31st March, 2008; and
b)In the case of the Profit and Loss Account, of the loss for the year
ended on that date.
c) In the case of cash flows statement, of the cash flows for the year
ended on that date.
For Rastogi Narain & Co.
Place: New Delhi (SANJAY RASTOGI)
Date : 2nd September, 2008 Partner
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in paragraph I of our report of even date to the menber of
Steel Tubes of a India Limited for the year ended 31st March, 2008)
1. a) The Company is maintaining proper records showing full particulars
including quantitative details and situation of fixed assets, except in
respect of certain assets.
b) The fixed assets have been physically verified by the management
according to a phased programme designed to cover all the items over a
period of three years, which in our opinion, is reasonable having regard to
the sire of the Company and the nature of its assets.
The Solar Power Plant of the company, continues to remain installed at the
erstwhile factory premises of the company and accordingly its
physical existence becomes doubtful (Refer Note 19 of Schedule 20)
c) During the year, the company has disposed of substantial part of fired
assets affecting its going concern basis.
2. During the year company has not carried out any production activities
and there has been no inventory and accordingly, paragraph (ii) (a), (b) &
(c) of the order are not applicable
3. a) The Company has not granted any loans, secured or unsecured, to
Companies, firms or other panics covered in the register maintained under
Section301 of the Companies Act, 1956.
b) The Company has not taken any loans, secured or unsecured, front
Companies, funrs or other parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
Accordingly, paragraph (iii)(b), (iiic), (iii)(d), (iii)(f) and (iii)(g) of
the Order are not applicable.
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 the nature of its business, for the purchase of
inventory and fixed assets and for processing Activities. Further, on the
basis of our examination of the books and records of the Company, carried
out in accordance with the generally accepted auditing practices in India,
we have neither come across nor have been informed of any continuing
failure to correct major weaknesses in the aforesaid internal control
5. a) Based on the audit procedures applied by us and according to the
information and explanations provided by the management, we are of the
opinion that the particulars of contracts or arrangements referred to in
section 301 of the Act have been entered in the register required to be
maintained under that section.
b) In our opinion and according to the information and explanations given
to us, there are no transactions made in pursuance of such contracts or
arrangements entered in the register maintained under Section 301 of the
Companies Act, 1956.
6. During the year the Company has not accepted any deposits front the
Public within the meaning of section 58A, 58AA of any other relevant
provisions of the .Act and the rules framed thereunder. However, in respect
of deposits accepted during earlier years, the Company has not maintained
the liquid assets as prescribed by rule 3A(1) and further penal interest on
overdue period in care of public deposit amounting to Rs. 166.75 lacs
matured, but remaining unpaid has also not been provided /paid as
prescribed by rule 8A of the Companies (Acceptance of deposits) Rules,
1975, (Refer Note No.9 of Schedule 10).
According to information and explanations given to us no orders under the
aforesaid section have been passed by Company Law Board or National Company
Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.
7. During the current year no activities have been carried on by the
company and therefore the internal audit was also not carried on.
8. As per the information and explanations given to us the maintenance of
cost records has been prescribed by the Central Government under section
209(1)(d) of the Companies Act, 1956. The application to exempt the Company
from the requirement of maintaining cost records and cost audit for the
financial year 2002-03 and 2003-04, since the Company has changed its
activities from manufacturing to processing on behalf of other party, has
been rejected by the Department of Company Affairs on the ground that the
party for which the goods are processed has not been ordered for audit of
cost records. However, no such application has been filed by the Company
for the financial year 2004-05, 2005-06, 2006-07 and 2007-08. The Company
is stated to be in the process of submitting representation before the
Department of Company affairs.
9. a) According to the records of the Company examined by us, in our
opinion, the Company is not regular in depositing the undisputed statutory
dues including provident fund, investor education and protection fund,
employees' state insurance, income-tax, sales tax, wealth tax, service tax,
custom duty, excise duty, cess and other material statutory dues as
applicable with the appropriate authorities in India. The amount of
statutory dues outstanding and payable for a period exceeding six months as
on the last day of financial year concerned arc mentioned in Note No. 13 of
b) According to the records of the Company, the dues of Income tax /sales
tax/ wealth tax/service tax/custom duty/excise duty/cess, which have not
been deposited on account of disputes and the forum where the dispute is
pending are as given below:
Name of the statute Nature of the Amount Forum where dispute
Dues (Rs. in is pending
Central Excise Act, Excise duty 60.00 DGFT New Delhi
Central Excise Act, Excise duty 31.63 Central Excise & Service
1944 Tax Appellate Tribunal
Central Excise Act, Excise Duty 1.14 Commissioner Central
1944 Excise (Appeals)
Entry tax Act, 1976 Entry Tax 89.64 Board of Revemte, M.P.
M.P. Commercial Tax Salse Tax 110.06 M.P. High Court / Act,
- 1994 Supreme Court.
CFS Cases Sales Tax 555.16 M.P. High Court /Supreme
10. In our opinion, the accumulated losses of the Company are more than
fifty percent of its net worth. The Company has incurred cash losses during
the financial year covered by our audit and in the immediately preceding
11. Based on our audit procedures and on the information & explanations
giver by the Management we are of the opinion that the default in repayment
of principal dues to financial institution/Banks by the Company has been
cleared in view of repayment/settlement of loans through disposal of fixed
12. Based on our examination of the records and the information and
explanations given to us, the Company has not granted any loans and/or
advances on the basis of security by way of pledge of shares, debentures
and other securities.
13. The provisions of any special statute applicable to chit fund nidhi /
mutual benefit fund/societies are not applicable to Company.
14. In our opinion, the Company is not a dealer or trader in shares,
securities, debentures and other investments.
15. According to the information and explanations given to us, the Company
has not given guarantee for loans taken by others from banks and financial
16. The Company has not obtained any term loans during the current 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 by
18. The Company has not made any preferential allotment of shares to plans
and Companies covered in the register maintained under Section 301 of the
Act during the year.
19. No Debentures have been issued by the Company during the year.
20. The Company has not raised any money by public issues during the year.
21. During the course of our examination of the books and records of use
Company, carried out in accordance with generally accepted auditing
practices in India, we have neither come across any instance of fraud on or
by the Company, noticed or reported during the year, nor have we been
informed of such cases by the management.
For Rastogi Narain & Co.
Place: New Delhi (SANJAY RASTOGI)
Date : 2nd September, 2008 Partner
M. No.: 86962