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Auditor Report of MSP Steel & Power Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of MSP Steel & Power Limited (the Company'), which comprises the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date and a summary of significant accounting policies and other explanatory information.

2. MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in sub-section 5 of Section 134 of the Companies Act, 2013 ('the Act') with respect to the preparation of these financial statements 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 includes 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, making judgments and estimates that are reasonable and prudent and design, implementation and maintenance of adequate internal financial controls, that were operating 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.

3. AUDITOR'S RESPONSIBILITY

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

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 thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under sub-section 10 of Section 143 of the Act. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' 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 control 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 an adequate internal financial controls system over financial reporting and the 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.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

4. OPINION

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, of the state of affairs of the Company as at 31st March, 2015, and its loss, and its cash flows for the year ended on that date.

5. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1 . As required by the Companies (Auditor's Report) Order, 2015 ('the Order'), issued by the Central Government of India in exercise of powers conferred by sub-section 11 of Section 143 of the Act, we enclose in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the order.

2. As required by sub-section 3 of Section 143 of the Act, we report that:

a) We have 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 accounts 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 31st March, 2015, and taken on record by the Board of Directors, none of the directors are disqualified as on 31st March, 2015, from being appointed as a director in terms of sub- section 2 of Section 164 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, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Companies has disclosed the impact of pending litigations on its financial position in its financial statements —Refer Note 35 to the financial statements;

ii. Provision has been made in the financial statements, as required under the applicable laws or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivatives contracts — Refer Note 46 to the financial statements;

iii. There is no required to be transferred to the Investor Education and Protection Fund by the Company.

The Annexure referred to in our report to the members of MSP Steel & Power Limited ('the Company*) for the year ended 31st March 2015. We report that:

(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us, all the fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. As informed, no material discrepancies have been noticed on such verification.

(ii) (a) As informed to us, a part of the inventory has been physically verified by the management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of such verification is reasonable.

(b) As per the information given to us, the procedures of physical verification of inventories followed by the management, in our opinion, are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. As explained to us, the discrepancies noticed on verification between the physical stocks and the book records were not material and the same have been properly dealt with in the books of account.

(iii) (a) The Company has granted loans to a party covered in the register maintained under section 189 of the Act. The maximum amount outstanding during the year was Rs. 288.83 lacs and the year end balance of loan given to such party was Rs. NIL.

(b) The principal amounts and interest are being received regularly as per stipulations.

(c) In respect of the aforesaid Loans, there is no overdue amount more than Rs. one lacs.

(iv) 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 with regard to purchase of inventories and fixed assets and sale of goods and services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weakness in internal control system.

(v) The Company has not accepted any deposits from the public in accordance with the provisions of Section 73 to 76 of the Act and the rules framed there under.

(vi) We have broadly reviewed the records maintained by the company pursuant to the rules prescribed by the Central Government for maintenance of cost records under sub-section 1 of Section 148 of the Act and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the records.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed statutory dues including Provident fund, Professional tax, Employees' state insurance, Income tax, Sales tax, Value added tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities.

According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues as aforesaid were outstanding, as at 31st March 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, there are no dues of sales tax, value added tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute, except:-

Name of the statute Nature of dues Year

Sales Tax including Non collection Central and Local of C Forms and 2004-2012 Sales Tax Acts(*) disallowance of VAT Credit

Excise Duty including Central Excise Act, interest and penalty, if 2004-2012 1944 applicable

Excise Duty including Central Excise Act, interest and penalty, if 2005-2012 1944 applicable

Income-tax Act, 1961 Disallowance of TDS 2004-2005

Name of the Statute Amount Forum where dispute is (Rs. in lacs) pending

Central and Local Sales 400.28 Appellate Authority upto Joint Tax Acts(*) Commissioner Level.

Central Excise Act, 1944 584.47 Appellate Authority upto Commissioner's level.

Central Excise Act, 1944 1,519.05 Customs, Excise and Service Tax Appellate Tribunal

Income-tax Act, 1961 0.55 Deputy/Assistant Commissioner of Income Tax

(*) Rs. 21.73 lacs deposited under protest against the dues.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, there is no amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, and Rules made thereunder.

(viii) The Company does not have accumulated losses at the end of the financial year. The Company has incurred cash loss of Rs. 9,815.48 lacs during the financial year covered by our audit and cash loss of Rs. NIL in the immediately preceding financial year.

(ix) As per our audit procedures and according to the information and explanations given to us, there is no continuing default in repayment of installments and interest dues to financial institutions and banks as on the balance sheet date.

(x) According to the information and explanations given to us, the Company has given guarantees aggregating Rs. 2,812.50 lacs for loan taken by a subsidiary from a Bank, the terms and conditions whereof, in our opinion, based on management representation, are not prima-facie prejudicial to the interest of the Company.

(xi) In our opinion and according to the information and explanations given to us, we report that the Term Loans taken by the company have been applied for the purpose for which they were raised.

(xii) According to the information and explanations given to us, no instances of material fraud on or by the Company has been noticed or reported during the course of our audit.

For Sunil Kumar Agrawal & Associates Firm Registration No: 323133E Chartered Accountants

CA Sunil Kumar Agrawal Partner Membership No: 057731

Date: 6th June, 2015 Place: Kolkata


Mar 31, 2014

1 Report on the financial statements We have audited the accompanying financial statements of MSP Steel & Power Limited (Rs.the CompanyRs.), which comprises the Balance Sheet as at 31st March, 2014, the Statement of profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information.

2 Management''s responsibility for the financial statements The Management is re- sponsible for the preparation of these financial state- ments that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956 (''the Act'') read with the Gen- eral Circular 15/2013 dated 13th September,2013 of the Ministry of Corporate Afairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and pre- sentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

3 Auditor''s responsibility Our responsibil- ity is to express an opinion on these financial state- ments based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by The Institute of Chartered Accountants of India. Those standards require that we comply with ethical require- ments and plan and perform the audit to obtain reason- able assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to ob- tain audit evidence about the amounts and disclosures in the financial statements. The procedures selected de- pend on the auditor''s judgment, including the assess- ment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the efectiveness of the entity''s internal control. An audit also includes evaluating the appropri- ateness of accounting policies used and reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have ob- tained is sufcient and appropriate to provide a basis for our audit opinion.

In our opinion and to the best of our informa- tion and according to the explanations given to us, the 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:

(i) In the case of the Balance Sheet, of the state of afairs of the Company as at 31st March,2014; (ii) In the case of the Statement of profit and Loss, of the profit for the year ended on that date, and (iii) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

5 report on other legal and regulatory requirements

(i) As required by the Companies (Auditors'' Re- port) Order 2003 (''the Order''), as amended, is- sued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Act, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the order.

(ii) As required by the Section 227(3) of the Act, we report that: a | We have obtained all informa- tion and explanations which to the best of our knowl- edge and belief were necessary for the purpose of our audit; b | In our opinion proper books of ac- counts as required by the law have been kept by the Company so far as appears from our examination of those books; c | The Balance Sheet, Statement of profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of ac- counts; d | In our opinion, the Balance Sheet, State- ment of profit and Loss and Cash Flow Statement com- ply with the Accounting Standards referred to in sub section (3C) of Section 211 of the Companies Act 1956 read with the General Circular 15/2013 dated 13th September,2013 of the Ministry of Corporate Afairs in respect of Section 133 of the Companies Act, 2013; and e | On the basis of written representations re- ceived from the directors as on the 31st March, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st March,2014,- from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act,1956;

The annexure referred to in our report to the members of msp steel & power limited (''the company'') for the year ended 31st march 2014

(i) a The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. b As explained to us, all the fixed assets have not been physically verifed by the management during the year but there is a regular programme of verifcation which, in our opinion, is reasonable keeping in mind the size of the Company and nature of its assets. As infor med, no material discrepan- cies were noticed on such verifcation. c There was no substantial disposal of fixed assets during the year. (ii) a) As informed to us, a part of the inventory has been physically verifed by the management during the year. In our opinion, the frequency of such verification is reasonable. b) As per the information given to us, the procedures of physical verifcation of inven- tories followed by the management, in our opinion, are reasonable and adequate in relation to the size of the Company and the nature of its business. c) The Company is maintaining proper records of inventory. As explained to us, the discrepancies noticed on veri- fcation between the physical stocks and the book re- cords were not material and the same have been prop- erly dealt with in the books of account. (iii) a) The Company has granted loans to a party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 1198.25 lacs and the year end balance of loans given to such parties was Rs. 288.83 lacs. b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions of loan as aforesaid are not prima facie prejudicial to the interest of the Company. c) The above loans are stated to be repayable on demand. As informed, the repayment of above loans, to the extended demanded from the bor- rowers, during the year had been received by the Com- pany and thus, there has been no default on the part of the borrower. The payment of interest with respect to such loans is stated to be regular. d) According to the information and explanations given to us, all loans given are repayable on demand and accordingly there is no overdue amount of loans granted to such parties. e) The Company has taken loans from nine parties (including interest free loan from seven par ties) covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs. 5,175.76 lacs and the year end balance of loans taken from such parties was Rs. 4,957.50 lacs. f) In our opinion and according to the information and explanations given to us, the rate of interest and other ter ms and conditions for such loan are prima facie not prejudicial to the interest of the Company. g) As informed, the loan taken and interest thereon (wherever applicable) is payable after one year, and thus, there has been no default on part of the Company in repayment of loan and interest. (iv) In our opinion and according to the infor ma- tion and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business for the purchase of inventory, fixed assets and with regard to sale of goods. During the course of our audit, we have neither observed nor have been in- formed of any major weaknesses in the said internal control system.

(v) a) According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956 have been so entered. b) In our opinion and according to the infor ma- tion and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under Section 301 of the Compa- nies Act, 1956 and exceeding the value of rupees five lacs in respect of any party during the period under audit, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. (vi) No deposits within the meaning of Section 58A, 58AA or any other relevant provisions of the Compa- nies Act, 1956 and the rules framed there under have been accepted by the Company.

(vii) The Company has an internal audit system commensurate with the size and nature of the Company.

(viii) As informed to us, the Company has made and maintained cost records as prescribed by the Central Government under Section 209(1) (d) of the Act. We have not made a detailed examination of such records. However, we have broadly reviewed the records main- tained and are of the opinion, that prima facie, the pre- scribed accounts and records have been maintained.

(ix) a) According to the records of the Company examined by us, in our opinion, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, em- ployees'' state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

According to the information and explanations given to us, no undisputed amounts payable in respect of statutory dues as aforesaid were outstanding, as at 31st March 2014 for a period of more than six months from the date they became payable, except entry tax for Rs. 254.83 lacs. b | According to the information and explanations given to us, there are no dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute, except:

Name of the nature of year amount forum where statute dues (Rs. in dispute is lacs) pending

Central Sales Tax Non-collection o 2004 – 08 119.75 Appellate, Deputy Act, 1956 (*) C Forms Commissioner, Commercial Tax

West Bengal Disallowance of 2007 – 08 10.39 Joint Commis- Value Added VAT credit sioner of Sales Tax Tax, 2003 Kolkata

Central Excise Removal of 2006 – 08 38.79 Additional Act, 1944 finished goods Commissione without of Excise payment of duty

Central Excise Removal of 2005 – 09 105.23 CESTAT Act, 1944 fnished goods without payment of duty

Central Excise Sale of Electricity 2005 – 09 131.90 CESTAT Act, 1944 without payment of duty

Central Excise Sale of Electricity 2010 – 11 79.84 Additional Act, 1944 without payment Commissioner of duty of Excise

Central Excise Disputed 2005 – 12 1,220.15 CESTAT Act, 1944 disallowances of cenvat credit and service tax

Central Excise Disputed 2007 – 08 1.08 Additional Act, 1944 disallowances of Commissioner cenvat credit and of Excise service tax

Central Excise Sale of iron ore 2009 – 10 31.89 CESTAT Act, 1944 and fnes without payment of duty

Central Excise Sale of iron ore 2004 – 11 278.71 Additional Act, 1944 and fnes without Commissioner payment of duty of Excise

Central Excise Sale of iron ore 2008 – 12 3.38 CCE(A) Act, 1944 and fnes without payment of duty

Income-tax Act,Disallowance of 2004 – 05 0.55 Deputy/ 1961 TDS Assistant Commissione of Income Tax

(*) Rs. 21.73 lacs deposited under protest against the dues.

(x) The Company does not have accumulated losses at the end of the financial year. The Company has not incurred any cash losses during the financial year cov- ered by our audit and in the immediately preceding financial year.

(xi) As per our audit procedures and according to the information and explanations given to us, based on the documents and records produced to us, as on 31st March,2014,there is no continuing default in re- payment of installments and interest dues to financial institutions and banks.

(xii) According to the information and explanations given to us and based on the documents and records produced 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. (xiii) The Company is not a chit fund or a nidhi/ mutual benefit fund/society.

(xiv) In our opinion and according to the informa- tion and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments.

(xv) According to the information and explanations given to us, the Company has given guarantees aggre- gating Rs. 4,879.42 lacs for loan taken by a subsidiary from a Bank and onward guarantee given by a Joint Venture Company to Ministry of Coal, the terms and conditions whereof, in our opinion, based on manage- ment representation, are not prima-facie prejudicial to the interest of the Company.

(xvi) According to the infor mation and explanations given to us, in our opinion, the term loans raised were utilized for the purposes for which they were obtained. (xvii) According to the information and explana- tions given to us and on an overall examination of the Balance Sheet of the Company, we repor t that no funds raised on short-term basis have been used for long- term investment.

(xviii) The Company has made allotment of pref- erence shares for Rs. 12,000.00 lacs during the year to companies covered in the Register maintained under Section 301 of the Act. In our opinion and according to the infor mation and explanations given to us, the price at which such shares have been issued is prima-facie, not prejudicial to the interest of the Company.

(xix) The Company has not issued any debentures during the period under audit.

(xx) The Company has not raised any money by pub- lic issue during the period under audit. (xxi) According to the information and explana- tions given to us, no material fraud on or by the Com- pany has been noticed or reported during the year.

For sunil kumar agrawal & associates Chartered Accountants Firm Registration No. - 323133E

ca sunil kumar agrawal Partner Membership No: 057731

place: Kolkata date: 30th May, 2014


Mar 31, 2012

1. We have audited the attached Balance Sheet of MSP Steel & Power Limited ('the Company') as at 31st March, 2012 and also the Statement of Profit & Loss and the Cash Flow Statement 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 an opinion on these financial statements based on our audit.

2. 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 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 (Auditor's Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Attention is drawn to the tax treatment regarding gain of Rs. 3,025 lacs arisen on settlement of commodity transactions in the earlier year, settled otherwise than through actual delivery, which was in the nature of speculative income. However based on a legal opinion obtained, the same had been treated as income from normal business by the Company. Consequently, we are unable to comment on the income tax impact of these transactions in the financial statements.

In respect of above matter, audit report for the year ended 31st March, 2011 was similarly modified.

5. Further to our comments in the Annexure referred to 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;

iii. The Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv. Except for the matter stated in para 4 above, in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. On the basis of the written representations received from the Directors, as on 31st March, 2012, and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2012 from being appointed as a Director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

vi. Except for the possible effects of our observation in para 4 above, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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 :

a) in the case of Balance Sheet, of the state of affairs of the Company as at 31st March, 2012;

b) in the case of Statement of Profit & Loss, of the profit for the year ended on that date; and

c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification in a phased manner to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and as informed, no material discrepancies were noticed on physical verification.

(iii) (a) The Company has granted loans to two companies covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 957.14 lacs and the year-end balance of loans granted to such parties was Rs. 259.51 lacs.

(b) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loans are not prima facie prejudicial to the interest of the Company.

(c) The above loans are stated to be repayable on demand. As informed, the repayment of above loans, to the extent demanded from the borrowers, during the year had been received by the Company and thus, there has been no default on the part of the borrower. The payment of interest with respect to such loans is stated to have been regular.

(d) In view of the above loans being repayable by the parties on demand, there is no overdue amount of loans granted to such parties.

(e) The Company had taken loan from a company covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 25.30 lacs and the year-end balance of loans taken from such company was Rs. 25.30 lacs.

(f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loan is not prima facie prejudicial to the interest of the Company.

(g) As informed, the loan taken and interest thereon is payable after one year, and thus, there has been no default on the part of the company in repayment of loan and interest.

(iv) 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 the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas.

(v) (a) 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 Companies Act, 1956 that need to be entered in the register maintained under that section, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lacs during the year have been entered into at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the purview of Section 58A and 58AA of the Companies Act, 1956 and the rules framed thereunder.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records in respect of the company's products under section 209(1) (d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been maintained.

(ix) (a) The Company has been generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, service tax, customs duty, excise duty, cess and other statutory dues with the appropriate authorities though there has been slight delay in some cases. During the year, there was no dues payable by the Company in respect of wealth tax.

(b) According to the information and explanations given to us, the Company did not have any undisputed dues in respect of provident fund, investor education and protection fund, employees' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the yearend for a period of more than six months from the date they became payable except as follows:

Name of the statute Nature of the dues Amount (Rs. in lacs)

Entry Tax Act Entry tax on 319.10 (Chhattisgarh), 1976 purchase of materials

Name of the Statute Period to which the Due Date Date of Payment amount relates

Entry Tax Act April'09-August'11 At the end Not Yet Paid (Chhattisgarh), of respective 1976 subsequent month

(c) According to the records of the Company, dues outstanding in respect of income tax, sales tax, wealth-tax, service tax, custom duty, excise duty, cess etc. which has not been deposited on account of any dispute are as follows :

Name of Statute Nature of Dues Amount Period to which Forum where dispute is (Rs.in lacs) amount relates pending

Central Sales Tax Act, 1956 Non Collection of 'C' Forms 105.57 2004-08 Appellate, Deputy Commissioner, Commercial Tax

West Bengal Value Added Dis allowance of VAT credit 10.39 2007-08 Joint Commissioner of Tax Act, 2003 Sales tax, Kolkata

Central Excise Act, 1944 Disputed dis allowances of 776.32 2003-11 CESTAT, New Delhi CENVAT credit

Central Excise Act, 1944 Disputed dis allowances of 1,872.86 2006-08 Additional CENVAT credit 2010-12 Commissioner central excise & customs

Central Excise Act, 1944 Removal of Finished Goods 87.22 2005-09 CESTAT, New Delhi without payment of duty

Central Excise Act, 1944 Removal of Finished Goods 38.79 2006-08 Additional without payment of duty Commissioner central excise & customs

Central Excise Act, 1944 Sale of iron ore & coal fines 31.89 2009-10 CESTAT, New Delhi without payment of duty

Central Excise Act, 1944 Sale of iron ore & coal fines 15.88 2004-07 Commissioner Appeals without payment of duty central excise & customs

Central Excise Act, 1944 Sale of iron ore & coal fines 278.71 2004-11 Additional without payment of duty Commissioner central excise & customs

Central Excise Act, 1944 Sale of Electricity without 131.90 2005-09 CESTAT, New Delhi payment of duty

Central Excise Act, 1944 Sale of Electricity without 79.84 2010-11 Additional payment of duty Commissioner central excise & customs

Service Tax under Finance Disputed dis allowances of 5.28 2005-06 Additional Act, 1994 input service tax credit Commissioner, Service Tax

Income tax Act, 1961 Tax on disputed 121.90 2004-11 Assistant Commissioner dis allowances Income Tax

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions or banks. The Company did not have any outstanding debentures during the year.

(xii) According to the information and explanations given to us and based on the documents and records produced 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.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) According to the information and explanations given to us, the Company has given guarantee of Rs. 8160.75 lacs for loan taken by a subsidiary from a bank and onward guarantee given by a joint venture company to Ministry of Coal, the terms and conditions whereof, in our opinion, based on the management representation, are not prima-facie prejudicial to the interest of the Company.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that short term funds amounting to Rs. 11,276.41 lacs consisting of project creditors Rs. 5,061.98, unsecured loans Rs. 3,945.42 and other short term borrowings Rs. 2,269.01 have been used towards acquisition of fixed assets and long term investment.

(xviii) The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For .R. BATLIBOI & CO.

Firm Registration number: 301003E

Chartered Accountants

per Sanjoy K Gupta

Place: Kolkata Partner

Date: 29th May, 2012 Membership No.:54968


Mar 31, 2010

1. We have audited the attached Balance Sheet of MSP Steel & Power Limited (the Company) as at 31st March, 2010 and also the Profit and Loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. 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 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 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. As more fully discussed in note 15 to Schedule 22 to the financial statements, the Company is in the process of updating its fixed assets records and reconciling the book balances with the assets physically found. Pending the completion of above process, we are unable to comment on the adjustments to the carrying value of fixed assets arising out of the discrepancies, if any.

5. Further to our comments in the Annexure referred to 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;

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. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (30 of section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on 31st March, 2010, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. Subject to the matter contained in para 4 above the effect of which is currently not ascertainable, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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;

a) in the case of balance sheet, of the state of affairs of the Company as at 31st March, 2010;

b) in the case of profit and loss account, of the profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date. Annexure to the Auditors Report (Referred to in Our report of even date to the members of MSP Steel & Power Limited as at and for the year ended 31st March, 2010)

(i) (a) The Company is in the process of updating the records showing full particulars, including quantitative details and situation of fixed assets.

(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification in a phased manner to cover all tjie items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. However, pending updating of the records as noted above, discrepancies if any, between the physical and book balances of fixed assets is not presently ascertainable.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory except for records in relation to movement of stocks of spill-over iron ore fines and also in relation to records for bifurcation between imported and indigenous coal. As at 31st March, 2010. inventories of these items have been determined based on the physical verification conducted by the management. As informed, no material discrepancies were noticed on physical verification.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of clauses 4(iii)(b) to (d) of the Order are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Therefore, the provisions of clauses 4(iii)(f) and (g) of the Order are not applicable.

(iv) 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 for the sale of goods and services. However, the overall internal

control system in relation to purchase of fixed assets needs to be strengthened to make it commensurate with the size of the Company and nature of its business. In our opinion, there is no continuing failure to correct major weakness in the internal control system.

(v) (a) 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 that need to be entered in the register maintained under section 301, have been so entered. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding the value of Rupees five lacs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) As informed, the Company has not accepted any deposits from the public.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records in respect of the companys products under section 209(l)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been maintained.

(ix) (a) The Company has been generally regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other statutory dues with the appropriate authorities though there has been slight delay in some cases. The provisions relating to employees state insurance are not applicable to the Company.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441 A of the Companies Act,1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same.

(b) According to the information and explanations given to us, undisputed dues in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues which were outstanding, at the year end for a period of more than six months from the date they became payable are as follows :

Name of the statute Nature of the dues Amount

(Rs. in lacs)

Entry Tax Act Entry tax on 102.76

(Chhattisgarh), 1976 purchase of materials

Name of the statute Period to which Due Date Date of Entry Tax Act (Chhattisgarh), 1976 the amount relates Payment

April09-AugustO9 At the end of respective Not Yet

subsequent month Paid

(c) According to the records of the Company, the dues outstanding in respect of income tax, sales tax, wealth-tax, service tax, custom duty, excise duty, cess etc. on account of any dispute are as follows:

Name of the statute Nature of the dues Amount

(Rs. in lacs)

Central Sales Tax Non Collection of 20.02

Act, 1956 "C" Form

Central Excise Disputed Duty on

Act, 1944 Finished Goods 58.76

Central Excise Removal of finished goods 78.61

Act, 1944 without payment of duty

Central Excise Sale of Iron Ore & Coal fines 255.59

Act, 1944 without payment of duty

Income Tax Tax on disputed disallowances 13.20

- Act, 1961

Name of the statute Period to which Forum where

the amount relates dispute is pending

Central Sales Tax 2004-05 and Appellate Dy. Commissioner,

Act,1956 2005-06 Commercial Tax

Central Excise

Act, 1944 2005-07 CESAT, New Delhi

Central Excise 2008-09 Commissioner,

Act, 1944 Central Excise & Customs

Central Excise 2004-09 Commissioner,

Act, 1944 Central Excise & Customs

Income Tax 2005-06 Commissioner of Income Tax

Act,1961 (Appeal)

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions or banks. There are no dues to debenture holders.

(xii) According to the information and explanations given to us and based on the documents and records produced, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4(xiii) of the Order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xvii) 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 fund raised on short-term basis have been used for long term investment.

(xviii)The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S.R. Batliboi & Co.

Firm Registration Number: 301003E

Chartered Accountants



per R. K. Agrawal

Place: Kolkata Partner

Date : 29th May, 2010 Membership No. 16667

 
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