Mar 31, 2015
Report on the Financial Statements
We have audited the accompanying financial statements of BIHAR SPONGE
IRON LIMITED ("the Company"), which comprise the Balance Sheet as at
31st March, 2015, the Statement of Profit and Loss, the Cash Flow
Statement for the year then ended, and a summary of the significant
accounting policies and other explanatory information. Management's
Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) 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
of 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.
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 Section 143(10) 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 the disclosures in the financial statements. The
procedures selected depend on the auditor's 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 control system over the 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 qualified audit opinion on the
financial statements.
Basis for Qualified Opinion
The management has prepared the financial statements on the basis of
going concern perhaps based on the facts that the Modified Draft
Rehabilitation scheme has been submitted by the company on 03.12.2012
and the same is under the consideration BIFR. In our opinion the going
concern concept is likely to be appropriate only if the modified
rehabilitation scheme referred to above is approved by the BIFR with or
without modifications.
In the mean while following liabilities may or may not materialised
depending upon the final outcome of the dispute, have not been
provided:-
i. Non recognition of liability on account of currency fluctuations on
foreign currency loan and interest thereon (as required under
Accounting Standard - 11, Revised) amounting to Rs. 2,32,381 thousand
as provided in the BIFR Scheme dt. 29.07.2004 and also confirmed by
AAIFR/ Single Bench of Jharkhand High Court, Ranchi since the company
against the order of Single Bench of High Court, has filed Letters
Patent Appellate Jurisdiction (LPA) before the Divisional Bench of High
Court of Jharkhand, Ranchi (refer other note no. 3(II) appearing in
Annexure-1)
ii. Non recognition penalty of Rs. 21,528 thousands recovered by South
Eastern Coal Fields Ltd. On account of short lifting of coal quantity
in terms of Fuel Supply Agreement since the matter has been disputed by
the Company under writ petition filed before the Hon'ble High Court of
Chhattisgarh (refer other note no 5 of Annexure I)
iii. No provision has been made in the books of accounts in respect of
the undernoted items of expense in view of Shutdown of the Plant &
Suspension of operations since 10th August, 2013 as well as other
reasons contented by the company:-
a. Interest on unsecured loan taken from Promoters and other parties
from 10.08.2013 to 31.03.2015( amount unascertained) (refer note 10 (a)
of Annexure I).
b. Interest on Soft Loan taken from the Government of Jharkhand under
the Industrial Rehabilitation Scheme 2003 amounting to Rs. 81,331
thousands from 10.08.2013 to 31.03.2015 which is subject to
representation for waiver(refer note 10(b) of Annexure I) and approval
thereof by the lender.
c. Salaries, Wages, Allowances, Contribution to PF including interest
on overdue amount as well as employee benefit expenses w.e.f.
10.08.2013 to 31.03.2015, (amount unascertained) (refer note 10(c) of
Annexure I)
Taking into consideration non provision of likely liabilities mentioned
paragraph I, II and III(b) above.
a) Loss for the year would have been more by Rs. 3,35,240 thousand as
compared to the disclosed loss of Rs. 73,614 thousand.
b) Accumulated losses would have been Rs.26,55,564 thousand as compared
to disclosed losses of Rs. 23,20,324 thousand.
c) The above losses is however subject to ascertainment of liabilities
as mentioned in Para iii (a) and iii(c).
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effects of the matter
described in the Basis of Qualified Opinion paragraph above, 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:
a. in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2015;
b. in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and.
c. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
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 terms of
sub-section (11) of section 143 of the Companies Act 2013, we give in
the Annexure a statement on the matters specified in paragraphs 3 and 4
of the Order to the extent applicable to the company.
2. As required by section 143(3) of the Act, we report that:
a. We have sought & obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purpose of our audit;
b. Except for the effects of the matter described in the Basis for
Qualified Opinion Paragraph above, in our opinion, proper books of
account 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 Cash Flow
Statement dealt with by this Report are in agreement with the books of
account:
d. Except for the effects of the matter described in the Basis of
Qualified Opinion paragraph above, in our opinion, the aforesaid
financial statements comply with the Accounting Standards specified
under section 133 of the Act read with rule 7 of the Companies
(Accounts) Rules, 2014.
e. The matter described in the basis for Qualified Opinion paragraph
above, in our opinion, may have an adverse effect on the functioning of
the company.
f. On the basis of written representations received from the Directors
as on 31st March, 2015 taken on record by the Board of Directors, we
report that none of directors is disqualified as on 31st March, 2015
from being appointed as a director in terms of section 164(2) of the
Act.
g. The qualification relating to the maintenance of accounts and other
matters connected therewith are as stated in the Basis for Qualified
Opinion paragraph above.
h. With respect to the other matters to be included in the Auditor's
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 company has disclosed the possible impact of pending
litigations on its financial position in its financial statements
-Refer other notes III of Annexure I (1) (i) to (ix) to the financial
statements;
ii. The company did not have any long term contracts including
derivative contracts for which there were any material foreseeable
losses.
iii. There were no amounts which were required to be transferred to the
Investor Education and Protection Fund by the company.
Annexure referred to in paragraph 1 under the heading "Report on Other
Legal and Regulatory Requirements" of Independent Auditors' Report of
even date on the financial statements for the year ended March 31, 2015
i) Fixed Assets
a) The Company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets.
b) The Company has a programme of verifying all of the fixed assets
over a period of three years, which in our opinion is reasonable,
having regard to the size of the Company and nature of assets. Since
the plant is under shut down from the previous year, hence no physical
verification of Fixed Asset has been carried out by the management
during the year as such we are unable to comment on the discrepancies,
if any,between the physical balance and book balance and their
adjustment in the books of accounts at the year end.
ii) Inventories
a) The stock of finished goods, stores, spare parts and raw materials
have not been physically verified by the management at reasonable
intervals during the year since the plant has been under shut down and
operations suspended w.e.f. 10.08.2013.
b) The company has the procedures of physical verification of
inventories followed by the management which are reasonable and
adequate in relation to the size of the Company and nature of its
business, however no physical verification has been carried out during
the year ended 31.03.2015 in view of the fact stated at (ii) a) above.
c) The company has maintained proper records of inventory showing full
details regarding quantity of receipts, issues, balances and dates of
transactions. Since no physical verification of inventories were
carried out during the year hence the question of discrepancies, if
any, observed and their adjustment in the books of account does not
arise.
iii) Transactions with parties u/s 189 of the Companies Act, 2013
The company has not granted any loans secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 189 of the Act as such Para (a) & (b) of clause 3 (iii)
are not applicable.
iv) Internal Control
In our opinion and according to the information and explanations given
to us, there is an adequate internal control procedure commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory, fixed assets, and for sale of goods and
services. However, there is a need of strengthening internal control
with respect to obtaining of confirmation of balances from major
parties.
There are no continuing failures to correct matters in respect of lack
of adequacy of internal controls brought to the notice.
v) Deposits
The Company has not accepted any deposits from the public which are
covered under the directives issued by the Reserve Bank of India and
the provisions of section 73 to 76 or any other relevant provisions of
the Act and the rules framed thereunder.
vi) Cost Records
The maintenance of Cost Records has been specified by the Central
Government under sub section (1) of Section 148 of the Companies Act,
2013. Since there have been no operations during the Financial year
2014-15, no records have been made & maintained by the company.
vii) Statutory Dues
a) According to the books and records, examined by us and information
and explanations given to us, the company has not been regular in
depositing the undisputed Statutory dues with the appropriate
authorities including Provident Fund, Income Tax(TDS &TCS), Sales Tax,
Service Tax, Excise duty, Value Added Tax, Cess & other applicable
statutory dues during the year except that, the amount of excise duty
of earlier year has been deposited by the company during the financial
year along with interest.
The arrears on account of such statutory dues as at the end of the
financial year 31st March 2015 for a period of more than six month from
the date they become payable are Service Tax: Rs 2,348 thousand,
Provident fund: Rs 5,123 thousand: Family Pension Scheme: Rs. 703
thousand, Income Tax (TDS/TCS)Rs. 4054 thousand, Electricity Duty: 320
thousand and Cess Rs. 100 thousand.
b) The details of dues of sales tax, custom duty, excise duty, trade
tax and cess etc. which have not been deposited on account of dispute
are given hereunder:
Name of the Statute Forum where
Dispute pending
1. The Customs Act, 1962 CESTAT, Kolkata
2. JVAT Act, 2005 Jt. Commissioner of Commercial
Taxes (Appeals) Jamshedpur, who
has recommended case on 08.10.2013
to DCIT to verify and allow credit
for taxes, if any, paid earlier.
3. The Central Sales Tax
Act, 1956 Jt. Commissioner of Commercial
Taxes (Appeals).
4. JVAT Act, 2005 Disputed demand for JVAT for the
F.Y. 2010-11 u/s 70(5)(b) under appeal
before the Jt. Comm. of Commercial
Taxes (Appeals), Jsr. However stay
has been granted on 20.01.2012
(Amount paid on appeal Rs. 5.88 lacs)
Demand raised by DCCT, Jsr for tax
due and/penality imposed or interst
payable under JVAT Act, 2005 of the
F.Y. 2010-11 under dispute before
JCCT, Jsr (Amount paid on appeal
Rs. 15 lacs on 19.10.2012)
5. Finance Act, 1994 The Commissioner of Appeals
Central Excise & Service Tax, Ranchi
6. Income Tax Act, 1961 The Commissioner of Income Tax
(Appeals), JSR
Name of the Statute Nature of dues Period of Amount
Dispute Rs.
Thousand
1. The Customs Act, 1962 Custom Duty &
Demurrage 1981-92 10,427
Charges and interest
on imported Stores &
spare parts 1994-95 5,032
2. JVAT Act, 2005 Tax on non-submission
of JVAT Forms 2006-07 2,397
3. The Central Sales Tax
Act, 1956 Tax on non-submission
of 'C' Forms 2006-07 311
4. JVAT Act, 2005 Tax on JVAT 2010-11 5,879
Tax on JVAT 2010-11 24,786
5. Finance Act, 1994 Recovery of Irregular
Cenvat Credit, Cess 2009-10 123
availed and Penalty
thereon
6. Income Tax Act, 1961 Short deduction/ 2004-05 to 8,334
collection of Tax at 2008-09
Source with interest
and penalty
The above does not include the amount of assessed tax & penalty demand
for JVAT of Rs. 22,117 thousand, CST Rs. 73,645 thousand and
Electricity Duty of Rs.2,281 thousand for which the company is
contemplating to file appeals before the appropriate authorities (refer
note on contingent liabilities (Annexure I/ para III on the Basis of
Qualified Opinion of our report ).
c) The Company is not required to transfer any amount to the Investor
Education and Protection Fund in accordance with the relevant
provisions of the Companies Act 2013 and rules made thereunder.
viii) The accumulated losses of the company at the end of the financial
year March 31,2015 substantially exceeds its net worth and the company
was declared as Sick industrial undertaking in 1996. Further the
Company has incurred cash losses during the current financial year and
in the immediately preceding financial year
ix) The company has not defaulted in payment of dues to financial
institutions/Banks. There has been no debenture in the company.
x) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions during the year.
xi) The term loans taken by the Company have been applied for the
purpose for which they were obtained, however there has been no term
loans obtained during the year under audit.
xii) Based upon the audit procedures performed and on the basis of
information and explanations provided by the management, we report that
no fraud on or by the Company has been noticed or reported during the
year under audit.
For Thakur, VaidyanathAiyar& Co.
Chartered Accountants
[FRNo. 000038N]
M.P. Thakur
Place : New Delhi (Partner)
Dated :12th May, 2015 Membership No. 052473
Mar 31, 2014
We have audited the accompanying financial statements of BIHAR SPONGE
IRON LIMITED ("the Company"), which comprise the Balance Sheet as at
March 31, 2014, and the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory information.
Management''s Responsibility for the Financial Statements
Management is responsible for 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 Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act"). This responsibility includes
the design, implementation and maintenance of internal control 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing iss*ued by the Institute of Chartered
Accountants of India. 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 auditor''s 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 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 effectiveness of the entity''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, 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.
Basis for Qualified Opinion
The management has prepared the financial statements on the basis of
going concern perhaps based on the facts that the Modified Draft
Rehabilitation Scheme has been submitted by the company on 03.12.2012
and sill under the consideration BIFR. In our opinion the going concern
concept is likely to be appropriate only if the modified rehabilitation
scheme referred to above is approved by the BIFR with or without
modifications.
In the meanwhile following liabilities may or may not materialised
depending upon the final outcome of the dispute, have not been provided
:-
i. Non recognition of liability on account of currency fluctuations on
foreign currency loan and interest thereon (as required under
Accounting Standard - 11, Revised) amounting to Rs. 2754.09 lacs as
provided in the BIFR Scheme dt. 29.07.2004 and also confirmed by AAIFR/
Single Bench of Jharkhand High Court, Ranchi since the company against
the order of Single Bench of High court, has filed Letters Patent
Appellate Jurisdiction (LPA) before the Divisional Bench of High Court
of Jharkhand, Ranchi (Note No. 3(ii) appearing in Annexure I).
ii. Non recognition penalty of Rs. 215.28 lacs recovered by South
Eastern Coal Fields Ltd. on account of short lifting of coal quantity
in terms of Fuel Supply Agreement since the matter has been disputed by
the Company before the Chhattisgarh High Court (refer note no. 5 of
Annexure I).
iii. Non recognition of Rs. 171.79 lacs forfeited by CCL for additional
price under tapering linkage policy for which company has filed Writ
Petition(C) before the Jharkhand High Court (refer note no. 7 of
Annexure I)
iv. No provision has been made in the books of accounts in respect of
the undernoted items of expense in view of shutdown of the plant S
suspension of operations since 10* August 2013 as well as other reasons
contended by the company :-
a. Interest on unsecured loan from Promoters and other parties from
10.08.2013 to 31.03.2014 (amount unascertained) (refer note 8 (a) of
Annexure I).
b. Interest on Soft Loan taken from the Government of Jharkhand under
and Industrial Rehabilitation Scheme 2003 amounting to Rs. 305.26 lacs
from 10.08.2013 to 31.03.2014 which is subject to representations for
waiver (refer note 8 (b) of Annexure I).
c. Salaries, Wages, Allowances as well as employee benefit expenses
w.e.f.10.08.2013 to 31.03.2014, (amount unascertained) (refer note 8
(c) of Annexure I).
Taking into consideration non provision of likely liabilities mentioned
paragraph I, II, III and iv (a) above
a. Loss for the year would be more by Rs. 3446.42 lacs as compared to
the disclosed loss of Rs.1774.30 lacs.
b. Accumulated losses would be Rs.24644.34 lacs as compared to
disclosed losses of Rs. 21197.92.
c. The above losses is however subject to ascertainment of liabilities
mentioned in Para iv (a) and iv (c).
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, subject to the effects of the matter
described in the Basis of Qualified Opinion paragraph, 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:
a. in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
b. in the case of the Statement of Profit and Loss, of the loss for
the year ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Emphasis of Matter
We draw attention to note no. 9 of Annexure I to the financial
statements regarding managerial remuneration aggregating to Rs. 3.25
lakhs paid / provided for a whole time director of the company during
the year in respect of which Special Resolution at the General Meeting
and Central Government approval are yet to be obtained in accordance
with the requirements of Schedule XIII and other applicable provisions
of the Companies Act, 1956. Our opinion is not qualified in respect of
this matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued 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
to the extent applicable to the company.
2. As required by section 227(3) of the Act, we report that:
a. We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. 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;
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
account;
d. Except for the effects of the matter described in the basis of
Qualified Opinion paragraph, in our opinion, the Balance Sheet,
Statement of Profit and Loss and Cash Flow Statement comply with the
Accounting Standards referred to in sub section (3C) of section 211 of
the Companies Act, 1956;
e. On the basis of written representations received from the Director
(except one Director who is in the service of the Government of Bihar
and is the nominee of the BSIDC and on the board of the Company) other
than Government Nominee Director, as on March 31, 2014, and taken on
record by the Board of Directors, we report that none of the Directors
is disqualified as on March 31, 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 said Director of BSIDC, in the opinion of
the Board is stated to be covered by the exemption granted for the
Director u/s 274(1) (g) of the Companies Act, 1956.
f. Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
Annexure referred to in paragraph 1 under the heading "Report on Other
Legal and Regulatory Requirements" of Independent Auditors'' Report of
even date in the matters of Bihar Sponge Iron Limited ("the Company")
on the Financial Statements for the year ended March 31, 2014
0 Fixed Assets
a) The Company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets.
b) The Company has a programme of verifying all of the fixed assets
over a period of three years, which in our opinion is reasonable,
having regard to the size of the Company and nature of assets.
Discrepancies noticed on physical verification of the fixed assets
conducted during the year are not material and have been properly dealt
with in the books of account.
c) The Company has not disposed off substantial part of its fixed
assets during the year, which may have any impact on the going concern
nature of the Company.
ii) Inventories
a) The stock of finished goods, stores, spare parts and raw materials
have not been physically verified by the management at reasonable
intervals during the year /at the yearend since the plant has been
under shut down and operations suspended w.e.f. 10.08.2014.
b) The company has the procedures of physical verification of
inventories followed by the management are reasonable and adequate in
relation to the size of the Company and nature of its business, however
no physical verification has been carried out during the year ended
31.03.2014 in view of the fact stated at (ii) a) above.
c) The company has maintained proper records of inventory showing full
details regarding quantity of receipts, issues, balances and dates of
transactions. Since no physical verification of inventories were
carried out during the year hence the question of discrepancies, if
any, observed and their adjustment in the books of account does not
arise.
iii) Transactions with parties u/s 301 ofthe Companies Act, 1956
a) 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 Act. In view of (a) above, Para (b), (c) &
(d) of clause 4 (iii) are not applicable
b) The Company had taken unsecured loan amounting to Rs. 38.03 lakhs
during the year from companies, firms or other parties covered in the
register maintained under section 301 ofthe Companies Act 1956, however
the amount outstanding comes to Rs. 4204.10 lakhs from four parties
(including opening balance and net of repayment) as at 31.03.2014 (Rs.
4166.07 lacs from four parties including Opening balance as at
31.03.2013).
c) The rate of interest and other terms and conditions of such loans
taken by the company are not prima facie prejudicial to the interest of
the company.
d) Since there is no stipulation for the repayment ofthe principal
amount and interest due thereon, we are unable to offer any comment.
iv) Internal Control
In our opinion and according to the information and explanations given
to us, there is an adequate internal control procedure commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory, fixed assets, sale of goods and services.
However, there is a need of strengthening internal control with respect
to obtaining of confirmation of balances from major parties.
There are no continuing failures to correct matters in respect of lack
of adequacy of internal controls brought to the notice.
v) (a) In our opinion and according to the information and explanations
given to us, 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, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rs. five lacs in respect of any
party during the year have been made at prices which are reasonable
having regard to the prevailinq market price at the relevant time.
vi) Fixed Deposits
The Company has not accepted any deposits from the public which are
covered under the directives issued by the Reserve Bank of India and
the provisions of sections 58A and section 58AA or any other relevant
provisions ofthe Act and the rules framed thereunder.
vii) Internal Audit System
The Company has an adequate internal audit system commensurate with its
size and nature of its business.
viii) Cost Records
We have broadly reviewed the Cost Records maintained by the Company
pursuant to the Companies (Cost Accounting records) Rule 2011
prescribed by the Central Government under 209(1 )(d) of the Companies
Act 1956 and are of the opinion that prima facie the prescribed cost
records have been maintained We have, however, not made a detailed
examination ofthe cost records with a view to determine whether they
are accurate or complete. ix) Statutory Dues
a) According to the books and records, examined by us and information
and explanations given to us, except the Sales tax, VAT Electricity
duty and Cess etc company has not been regular in depositing the
undisputed statutory dues with the appropriate authorities including
Provident Fund Income Tax (TDS & TCSl'' Service Tax, Excise Duty and
other applicable statutory dues during the year under audit.
The arrears on account of such dues outstanding at the end ofthe
financial yearfor a period more than six months from the date they
become payable are Excise duty rs 84.48 lakhs service tax rs 14.85
lakhs provident fund rs 50.46 lakhs family pension fund rs 4.49 lakhs
income tax tds /tcs rs 23.08 lakhs electricity duty rs 3.20 lakhs cess
rs .01 lakhs.
b) The details of dues of sales tax, custom duty, excise duty, trade
tax and cess etc. which have not been deposited on account of dispute
are given hereunder:
Name of the Statute Forum where
Dispute pending
1. The Customs Act, 1962 CESTAT, Kolkata
2. The Customs Act, 1962 CESTAT, Kolkata
3. JVAT Act, 2005 Jt. Commissioner of Commercial
Taxes (Appeals) Jamshedpur, who has
recommended case on 08.10.2013 to
DCIT to verify and allow credit for
taxes, if any, paid earlier.
4. The Central Sales Tax Act Jt. Commissioner of Commercial
1956 Taxes (Appeals).
5. JVAT Act, 2005 Disputed demand for JVAT for the
F.Y. 2010-11 u/s 70(5)(b) under appeal
before the Jt. Comm. of Commercial Taxes
(Appeals), Jsr. However stay has been
granted on 20.01.2012 (Amount paid on
appeal Rs. 5.88 lacs) Demand raised
by DCCT, Jsr for tax due and/penality
imposed or interst payable under JVAT
Act, 2005 of the F.Y. 2010-11 under
dispute before JCCT, Jsr (Amount paid
on appeal Rs. 15 lacs on 19.10.2012)
6. Finance Act, 1994 The Commissioner of Appeals
Central Excise & Service Tax, Ranchi
7. Income Tax Act, 1961 The Commissioner of Income Tax
(Appeals), JSR
Name of the Statute Nature of dues Period of Amount
Dispute Rs. lacs
1. The Customs Act, 1962 Custom Duty on rate diff 1987-89 106.92
on account of
classification of items
on imported plant &
machinery
2. The Customs Act, 1962 Custom Duty & Demurrage 1991-92 104.27
Charges and interest on 1994-95 50.32
imported Stores & spare
parts
3. JVAT Act, 2005 Tax on non-submission of 2006-07 23.97
JAVT Forms
4. The Central Sales Tax Tax on non-submission of 2006-07 3.11
act 1956 C forms
5. JVAT Act, 2005 Tax on JVAT 2010-11 58.79
Tax on JVAT 2010-11 247.86
6. Finance Act, 1994 Recovery of Irregular
Cenvat Credit, Cess 2009-10 1.23
availed and Penalty
thereon
7. Income Tax Act, 1961 Short Deduction/
Collection of Tax at
Source 2004-05 83.34
with interest and penalty to
2008-09
x) The accumulated losses of the company at the end of the financial
year March 31,2014 substantially exceeds its net worth and the company
was declared as Sick industrial undertaking in 1996. Furtherthe Company
has incurred cash losses during the current financial year and in the
immediately preceding financial year.
xi) The company has not defaulted in payment of dues to financial
institutions/Banks. There has been no debenture in the company.
xii) 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, nidhi or mutual benefit
fund/society. Therefore, the provision of clause 4 (xiii) (a) to (d)
for the Companies (Auditor''s Report) Order 2003 are not applicable to
the Company.
xiv) The Company has not dealt or traded in shares, securities,
debentures, and other investments during the year and accordingly the
provisions of Companies (Auditor''s Report) order 2003 are not
applicable.
xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks orfinancial institutions during the year.
xvi) The term loans taken by the Company have been applied for the
purpose for which they were obtained, however there has been no term
loans obtained durinq the year under audit.
xvii) According to the information and explanation given to us and on
an overall examination of the balance sheet of the company as at the
end of the year, funds raised on short term basis has not been used for
long term investment.
xviii) The company has not made any preferential allotment of shares to
parties and companies covered in the register maintained under section
301 of the Companies Act during the year.
xix) The Company has not issued debentures hence the question of
pending creation of security does not arise.
xx) The company has not raised any money by public issue during the
year and hence disclosure for end use does not arise.
xxi) Based upon the audit procedures performed and on the basis of
information and explanations provided by the management, we report that
no fraud on or by the Company has been noticed or reported during the
year under audit.
For Thakur, Vaidyanath Aiyar & Co.
Chartered Accountants
FRN: 000038N
(M.P. Thakur)
Place: New Delhi Partner
Date : 29.05.2014 M No . 052473
Mar 31, 2013
Report on the Financial Statements
We have audited the accompanying financial statements of Bihar Sponge
Iron Limited ("the Company"), which comprise the Balance Sheet as at
March 31, 2013, and the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of significant
accounting policies and other explanatory
information.
Management''s Responsibility for the Financial Statements
Management is responsible for 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 Standards referred to in sub-section (3C) of section 211
of the Companies Act, 1956 ("the Act").
This responsibility includes the design, implementation and maintenance
of internal control 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements 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 requirements and plan and
perform the audit to obtain easonable 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 auditor''s 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 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.
An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of the accounting estimates made
by management, as well as evaluating the overall presentation of the
financial statements. We believe that the audit evidence we have
abtained is sufficient and appropriate to provide a basis for our audit
opinion.
Basis for Qualified Opinion
Attention is drawn to Note No. 3(a) appearing in Annexure I to the
financial statements regarding non recognition of liability on account
of currency fluctuations on foreign currency loan and interest thereon
(as required under Accounting Standard- 11, Revised) amounting to Rs.
2251.93 lacs as provided in the BIFR Scheme dt. 29.07.2004 and also
confirmed by AAIFR/ Single Bench of Jharkhand High Court, Ranch! since
the company against the order of Single Bench of High court, has filed
Letters Patent
Appellate Jurisdiction (LPA) before the Divisional Bench of High Court
of Jharkhand, Ranchi. Accordingly the net loss for the year and current
liabilities at the year end would have been increased and the
shareholder''s funds have been further reduced by Rs. 2251.93 lacs.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matter described
in the Basis of Qualified Opinion paragraph, 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:
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
b) in the case of the Statement of Profit and Loss, of the loss for the
year ended on that date; and
c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date. Emphasis of Matter
We draw attention to note no. 7 of Annexure I to the financial
statements regarding managerial remuneration aggregating to Rs. 4.81
lakhs paid to a whole time director of the company during the year in
respect of which Special Resolution at the general meeting and Central
Government approval are yet to be obtained in accordance with the
requirements of Schedule XIII and other applicable provisions of the
Companies Act, 1956. Our opinion is not qualified in respect of this
matter.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued 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.
2. As required by section 227(3) of the Act, we report that:
a) We have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b) 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;
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
account;
d) Except for the effects of the matter described in the basis of
Qualified Opinion paragraph, in our opinion, the Balance Sheet,
Statement of Profit and Loss and Cash Flow Statement comply with the
Accounting Standards referred to in sub section (3C) of section 211 of
the Companies Act, 1956;
e) On the basis of written representations received from the Director
(except one Director who is in the service of the Government of Bihar
and is the nominee of the BSIDC and on the board of the Company) other
than Government Nominee Director, as on March 31, 2013, and taken on
record by the Board of Directors, we report that none of the Directors
is disqualified as on March 31, 2013, from being appointed as a
Director in terms of clause (g) of sub-section (1) of section 274 of
the Companies Act, 1956. The said Director of BSIDC, in the opinion of
the Board is stated to be covered by the exemption granted for the
Director u/s 274(1) (g) of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
Annexure referred to in paragraph 1 under the heading "Report on Other
Legal and Regulatory Requirements" of even date
i) Fixed Assets
a) The Company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets.
b) The Company has a programme of verifying all of the fixed assets
over a period of three years, which in our opinion is reasonable,
having regard to the size of the Company and nature of assets.
Discrepancies noticed on physical verification of the fixed assets
conducted during the year are not material and have been properly dealt
with in the books of account.
c) The Company has not disposed off any substantial part of its fixed
assets during the year, which may have any impact on the going concern
nature of the Company.
ii) Inventories
a) The stock of finished goods, stores, spare parts and raw materials
have been physically verified by the management at reasonable intervals
during the year.
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and nature of its business.
c) The Company has maintained proper records of inventory showing full
details regarding quantity of receipts, issues, balances and dates of
transactions. The discrepancies, noticed on the aforesaid
verification, between the physical stocks and stocks as per the books
have been properly dealt with in the books of accounts.
iii) Transactions with parties u/s 301 of the Companies Act, 1956
a) 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 Act.
b),c)&d) In view of (a) above, Para (b), (c) & (d) of clause 4 (iii)
are not applicable.
e) The Company had taken unsecured loan amounting to Rs. 343.35 lacs
from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act 1956, however the
amount outstanding comes to Rs. 4166.08 lacs (including opening balance
and net of repayment) as at 31.03.2013.
f) The rate of interest and other terms and conditions of such loans
taken by the Company are not prima facie prejudicial to the interest of
the Company.
g) The payment of principal amount and interest of such loan are
regular wherever specified.
iv) Internal Control
In our opinion and according to the information and explanations given
to us, there is an adequate internal control procedure commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory, fixed assets, sale of goods and services.
However, there is a need of strengthening internal control with respect
to obtaining of confirmation of balances from major parties.
There are no continuing failures to correct matters in respect of lack
of adequacy of internal controls brought to the notice.
v) (a) In our opinion and according to the information and explanations
given to us, 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, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rs. Five Lacs in respect of any
party during the year have been made at prices which are reasonable
having regard to the prevailing market price at the relevant time.
vi) Fixed Deposits
The Company has not accepted any deposits from the public which are
covered under the directives issued by the Reserve Bank of India and
the provision of sections 58A and section 58AA or any other relevant
provisions of the Act and the rules framed there under.
vii) Internal Audit System
The Company has an adequate internal audit system commensurate with its
size and nature of its business.
viii) Cost Records
We have broadly reviewed the Cost Records maintained by the Company
pursuant to the Companies (Cost Accounting records) Rule 2011
prescribed by the Central Government under 209(1)(d) of the Companies
Act 1956 and are of the opinion that prima facie the prescribed cost
records have been maintained. We have, however, not made a detailed
examination of the cost records with a view to determine whether they
are accurate or complete.
ix) Statutory Dues
a) According to the books and records, examined by us and information
and explanations given to us, except the SalesTax, VAT, Electricity
Duty and Cess etc., Company has not been regular in depositing the
undisputed statutory dues with the appropriate authorities including
Provident Fund, Income Tax, Service tax, Excise Duty and other
applicable statutory dues during the year under audit.
The arrears on account of such dues outstanding at the end of the
financial year for a period more than six months from the date they
become payable are '' Rs. 2.72 lacs for Service Tax and Rs. 0.25 lacs
for Income Tax(TCS).
b) The details of dues of Sales Tax, Custom Duty, Excise Duty, Trade
Tax and Cess etc. which have not been deposited on account of dispute
are given hereunder:
Name of the
Statute Forum where
Dispute pending
1. The Customs Act, 1962 CESTAT, Kolkata
2. The Customs Act, 1962 CESTAT, Kolkata
3. JVAT Act, 2005 Jt. Commissioner of Commercial
Taxes (Appeals) Jamshedpur
4. The Central Sales Tax
Act, 1956 Jt. Commissioner of Commercial
Taxes (Appeals). JSR
5. JVAT Act, 2005 Disputed demand for JVAT for the
FY. 2010-11 u/s 70(5)(b) under appeal
before the Jt. Comm. of
Commercial Taxes (Appeals), Js
has been granted on 20.01.2012 (
Amount paid on appeal Rs. 5.88 lacs)
Demand raised by DCCT, Jsr for tax
due and/penality imposed or interst
payable under JVAT Act, 2005 of the
F.Y. 2010-11 under disputer before
(Amount paid on appeal Rs. 15 lacs
on 19.10.2012)
6. Finance Act, 1994 The Commissioner of Appeals
Central Excise & Service Tax, Ranchr
7. Income Tax Act, 1961 The Commissioner of Income Tax
(Appeals), JSR
Name Nature of dues Period of Amount
Dispute Rs. lacs
The Customs Act, 1962 Custom Duty on rate
diff. on 1987-89 106.92
account of
classification
of items on imported
plant & machinery
The Customs Act, 1962 Custom Duty & Demurrage 1991-92 104.27
Charges and interest on 1994-95 50.32
imported Stores &
spare parts
The Customs Act, 1962 Tax on non-submission
of JVAT Forms 2006-07 23.97
The Customs Act, 1962 Tax on non-submission
of ''C Forms 2006-07 3.11
The Customs Act, 1962 Tax on JVAT 2010-11 58.79
The Customs Act, 1962 Tax on JVAT 2010-11 247.86
Income Tax Act, 1961 Recovery of Irregular
Cenvat Credit, Cess 2009-10 1.23
availed and Penalty
thereon
Short Deduction/
Collection of Tax at
Source 2004-05
to 2008-09 83.34
with interest and
penalty
x) The Company has accumulated losses at the end of the financial year
31s" March 2013 that are more than the net worth of the company.
Further the Company has incurred cash losses during the current
financial year and in the immediately preceding financial year.
xi) The Company has not defaulted in payment of dues to financial
institutions/banks. There has been no debenture in the Company.
xii) 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, nidhi or mutual benefit
fund/society. Therefore, the provision of clause 4 (xiii) (a) to (d)
for the Companies (Auditor''s Report) Order 2003 are not applicable to
the Company.
xiv) The Company has not dealt or traded in shares, securities,
debentures, and other investments during the year.
xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions during the year.
xvi) The term loans taken by the Company have been applied for the
purpose for which they were obtained, however there has been no term
loans obtained during the year under audit.
xvii) According to the information and explanation given to us and on
an overall examination of the balance sheet of the Company as at the
end of the year, funds raised on short term basis has not been used for
long term investment.
xviii) The Company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under section
301 of the
Companies Act during the year.
xix) The Company has not issued debentures hence the question of
pending creation of security does not arise.
xx) The Company has not raised any money by public issue during the
year and hence disclosure for end use does not arise.
xxi) Based upon the audit procedures performed and on the basis of
information and explanations provided by the management, we report that
no fraud on or by the Company has been noticed or reported during the
year under audit.
For Thakur, Vaidyanath Aryar & Co.
Chartered Accountants
[FRNO.000038N]
Place : New Delhi M.P. Thakur
Dated : 28.05.2013 (Partner)
Membership No. : 052473
Mar 31, 2012
1. We have audited the attached Balance Sheet of BIHAR SPONGE IRON
LTD. as at 31st March, 2012 and the Statement of Profit and Loss 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 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 mis-statement. 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.
3. As required by the Companies (Auditor's Report) Order, 2003
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 Note no.3(a) appearing in the Annexure to
the financial statements regarding non recognition of liability on
account of currency fluctuations on foreign currency loan and interest
thereon amounting to Rs. 2142.17 lacs as provided in the BIFR scheme
dt. 29.07.2004 and also confirmed by AAIFR/Single Bench of Jharkhand
High Court, Ranchi since the company against the order of Single bench
of High court., has filed Letters Patent Appellate Jurisdiction (LPA)
before the higher bench of High Court of Jharkhand, Ranchi.
5. Further to our comments in Paragraph 3 &4 above, we report that:
(a) 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;
(b) In our opinion proper books of accounts as required by law have
been kept by the Company so far as appears from our examination of
those books;
(c) The Balance Sheet, Statement of Profit & Loss and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(d) In our opinion, the Balance Sheet, Statement of Profit and Loss and
Cash Flow Statement dealt with this report comply with Accounting
Standards referred to in sub-section (3C) of Section 211 of the
Companies Act, 1956.
(e) On the basis of written representations received from the Director
(except one Director who is in the service of the Government of Bihar
and is the nominee of the BSIDC and on the board of the company) other
than Government Nominee Director, 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. The said director of BSIDC, in the opinion of
the Board is stated to be covered by the exemption granted for the
Directors u/s274 (1) (g) of the Companies Act, 1956.
(f) In our opinion and to the best of our information and according to
explanations given to us, the said financial statements together with
notes thereon attached thereto give, in the prescribed manner, the
information required by the Act, and except the financial effect of the
matters referred to in paragraph 4 above on the understatement of Loss
for the year and the understatement of liabilities as at the year end
by Rs. 2142.17 lacs, give a true and fair view in the conformity with
the accounting principles generally accepted in India;
i.) in the case of Balance Sheet of the State of affairs of the Company
as at 31s1 March, 2012;
ii.) in the case of the Statement of Profit & Loss of the Loss for the
year ended on that date; and
iii.) in the case of the Cash Flow Statement of the Cash flow for the
year ended on that date.
The Annexure referred to in the main Auditor's Report of Bihar Sponge
Iron Limited for the Financial Year 2011-2012 of even date: i) Fixed
Assets
a) The Company has maintained proper records showing full particulars
including quantitative details and situation of its fixed as sets.
b) The Company has a programme of verifying all of the fixed assets
over a period of three years, which in our opinion is reasonable,
having regard to the size of the Company and nature of assets.
Discrepancies noticed on physical verification of the fixed assets
conducted during the year are not material and have been properly dealt
with in the books of account.
c) The Company has not disposed off any substantial part of its fixed
assets during the year, which may have any impact on the going concern
nature of the Company.
ii) Inventories
a) The stock of finished goods, stores, spare parts and raw materials
have been physically verified by the management at reasonable
intervals during the year.
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and nature of its business.
c) The company has maintained proper records of inventory showing full
details regarding quantity of receipts, issues, balances an d dates of
transactions. The discrepancies, noticed on the aforesaid
verification, between the physical stocks and stocks as per the books
have been properly dealt with in the books of accounts.
iii) Transactions with parties u/s 301 of the Companies Act, 1956
a) 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 Act.
b),c)&d) In view of (a) above, Para (b), (c) & (d) of clause 4 (iii)
are not applicable.
e) The company has taken unsecured loans from companies, firm & other
parties covered in the register maintained under section 301 of the Act
from four parties amounting Rs. 4081.08 lacs (including opening balance
& net of repayment) as at 31.03.2012.
f) The rate of interest and other terms and conditions of such loans
taken by the company are not prima facie prejudicial to the interest
ofthe company.
g) The payment of principal amount and interest of such loan are
regular.
iv) Internal Control
In our opinion and according to the information and explanations given
to us, there is an adequate internal control procedure commensurate
with the size of the Company and the nature of its business with regard
to purchase of inventory, fixed assets, sale of goods and services.
There are no continuing failures to correct matters in respect of lack
of adequacy of internal controls brought to the notice.
v) (a) In our opinion and according to the information and explanations
given to us, 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, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rs. five lacs in respect of any
party during the year have been made at prices which are reasonable
having regard to the prevailing market price at the relevant time.
vi) Fixed Deposits
The Company has not accepted any deposits from the public which are
covered under the directives issued by the Reserve Bank of India and
the provision of sections 58A and section 58AA or any other relevant
provisions of the Act and the rules framed there under.
vii) Internal Audit System
The Company has an adequate internal audit system commensurate with its
size and nature of its business.
viii) Cost Records
We have broadly reviewed the cost records maintained by the Company
pursuant to the Companies (Cost Accounting records) Rule 2011
prescribed by the Central Government under 209(1 )(d) of the Companies
Act 1956 and are of the opinion that prima facie the prescribed cost
records have been maintained. We have, however, not made a detailed
examination of the cost records with a view to determine whether they
are accurate or complete.
ix) Statutory Dues
a) According to the records, the Company has been regular in depositing
with appropriate authorities undisputed statutory dues including
provident fund, income tax, wealth tax, service tax, sales tax, VAT,
Entry tax, excise duty, cess and other applicable statutory dues except
that there has been some delay in payment of excise duty/service tax
/VAT/Sales Tax.
b) The details of dues of sales tax, custom duty, excise duty, trade
tax and cess etc. which have not been deposited on account of dispute
are given hereunder:
Name of the Forum where Nature of dues Period Amount
Statute Dispute pending of Rs./
Dispute lacs
1. The Customs CESTAT, Kolkata Custom Duty on rate 1987-89 106.92
Act, 1962 diff. on account of
classification of
items on imported
plant & Machinery
2. The Customs CESTAT, Kolkata Custom Duty & 1991-92 104.27
Demurrage Charges
and interest on 1994-95 50.32
imported Stores &
spare parts
3. JVAT Act, Jt. Commissioner Tax on Non-Submiss- 2006-07 23.97
2005 of Commercial of ion JVAT Forms
Taxes (Appeals)
Jamshedpur
Name of the Forum where Nature of dues Period Amount
Statute Dispute pending of Rs./
Dispute lacs
4. The Central Jt. Commissioner Tax on Non-Submiss- 2006-07 3.11
Sales Tax of Commercial ion 'C' Forms
Act, 1956 Taxes (Appeals)
5. JVAT Disputed demand Tax on JVAT 2010-11 78.71
for JVAT for the
11u/s 70(5)(b)
under appeal
before the Jt.
Comm, of Commer-
cial Taxes
(Appeals), Jsr.
However stay has
been granted on
20.01.2012
6. Finance Act, The Commissioner Recovery of 2009-10 123.00
1994 of Appeals Irregular Cenvat
Central Excise & Credit, Cess
Service Tax, availed and
RAnchi Penalty thereon 2010-11 199.00
7. Income Tax The Commissioner Short Deduction
Act, 1961 of Income Tax Collection of Tax 2004-05
(Appleals), JSR at Source with to 2008-09 83.34
Interest and
Penalty
Grand
Total 772.64
x) The company has accumulated losses at the end of the financial year
that are not less than fifty per cent of its net worth and the company
has incurred cash loss during the current financial year and in the
immediately preceding financial year.
xi) There are no continued defaults in repayment of dues to Financial
Institutions or Banks but for certain delays in repayment of principal
and interest due thereon on which compound interest has been paid.
xii) 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, nidhi or mutual benefit
fund/society. Therefore, the provisions of clause 4 (xiii) (a) to (d)
of the Companies (Auditor's Report)
Order 2003 are not applicable to the Company.
xiv) The Company has not dealt or traded in shares, securities,
debentures, and other investments during the year.
xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions during the year.
xvi) The term loans taken by the Company have been applied for the
purpose for which they were obtained, however there has been no term
loans obtained during the year under audit.
xvii) According to the information and explanation given to us and on
an overall examination of the balance sheet of the company as at the
end of the year, funds raised on short term basis has not been used for
long term investment.
xviii) The company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under section
301 of the Companies Act during the year.
xix) The Company has not issued debentures hence the question of
pending creation of security does not arise.
xx) The company has not raised any money by public issue during the
year and hence disclosure for end use does not arise.
xxi) Based upon the audit procedures performed and on the basis of
information and explanations provided by the management, we report that
no fraud on or by the Company has been noticed or reported during the
year under audit.
For Thakur, Vaidyanath Aiyar & Co.
Chartered Accountants
[FR NO.000038N]
Place : New Delhi M.P. Thakur
Dated : 22nd August, 2012 (Partner)
Membership No. : 052473
Mar 31, 2010
We have audited the attached Balance Sheet of BIHAR SPONGE IRON LTD as
at 31 st March, 2010 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 Companys
Management. Our responsibility is to express an 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 mis-statement. 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.
1. As required by the Companies (Auditors Report) Order, 2003 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.
2. Further to our comments in the said annexure referred in Paragraph
1 above, we report that:
(a) 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;
(b) In our opinion proper books of accounts as required by Law have
been kept by the Company so far as appear from our examination of the
books;
(c) The Balance Sheet, Profit & Loss Account and Cash Flow statement
dealt with by this report are in agreement with the books of account.
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash
Flow statement dealt with this reports comply with Accounting Standards
referred to in sub-section (3C) of Section 211 of the Companies Act,
1956.
(e) On the basis of written representations received from the Director
(except one Director who is in the service of the Government of Bihar
and is the nominee of the BSIDC and on the board of the Company) other
than Government Nominee Director, as on 31sl 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. The said Director of BSIDC, in the opinion of
the Board is stated to be covered by the exemption granted for the
Directors u/s 274 (1) (g) of the Companies Act, 1956.
(f) In our opinion and to the best of our information and according to
explanations given to us, the said accounts and read with significant
Accounting Policies and Notes thereon as referred to in Schedule -18,
give the information required by the Companies Act, 1956, in the manner
so required and give a true and fair view in conformity with accounting
principles generally accepted in India.
i.) in the case of Balance Sheet of the State of affairs of the Company
as at 31st March, 2010; ii.) in the case of the Profit & Loss Account
of the Loss for the year ended on that date; and iii.) in the case of
the Cash Flow Statement of the Cash flow for the year ended on that
date.
The Annexure referred to in the main Auditors Report of Bihar Sponge
Iron Limited of even date:
i) Fixed Assets
a) The Company has maintained proper records showing full particulars
including quantitative details and situation of its fixed assets.
b) The Company has a programme of verifying all of the fixed assets
over a period of three years, which in our opinion is reasonable,
having regard to the size of the Company and nature of assets.
Discrepancies noticed on physical verification of the fixed assets
conducted during the year are not material and have been properly dealt
with in the books of account.
c) The Company has not disposed off any substantial part of its fixed
assets during the year, which may have any impact on the going concern
nature of the Company.
ii) Inventories
a) The stock of finished goods, stores, spare parts and raw materials
have been physically verified by the management at reasonable intervals
during the year.
b) The procedures of physical verification of inventories followed by
the management are reasonable and adequate in relation to the size of
the Company and nature of its business.
c) The Company has maintained proper records of inventory showing full
details regarding quantity of receipts, issues, balances and dates of
transactions. The discrepancies, noticed on the aforesaid
verification, between the physical stocks and stocks as per the books
have been properly dealt with in the books of accounts.
iii) Transactions with parties u/s 301 of the Companies Act, 1956
a) 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 Act.
b),c) & d) In view of (a) above, Para (b), (c) & (d) of clause 4 (iii)
are not applicable.
e) The Company has not taken any loan secured or unsecured from
companies, firm or other parties except from a body corporate covered
in the register maintained under Section 301 of the Act.
f) The rate of interest and other terms and conditions of such loans
taken by the Company are not prima facie prejudicial to the interest of
the Company.
g) The payment of interest of such loan are regular, however the terms
of repayment of principal has not been specified.
iv) (a) & (b) According to the information and explanations given to
us, there have been no contracts or arrangements referred to in Section
301 of the Act during the year to be entered in the register required
to be maintained under that section. Accordingly commenting on
transactions made in pursuance of such contracts or arrangements does
not arise. v) Internal Control
In our opinion and according to the information and explanations given
to us, there is an adequate internal control procedure commensurate
with the size of the
Company and the nature of its business with regard to purchase of
inventory, fixed assets, sale of goods and services. However, the
internal control systems
need to be strengthened for obtaining of confirmation of balances from
suppliers and other parties.
There are no continuing failures to correct matters in respect of lack
of adequacy of internal controls brought to the notice. vi) Fixed
Deposits
The Company has not accepted any deposits from the public which are
covered under the directives issued by the Reserve Bank of India and
the
provision of sections 58A and section 58AA or any other relevant
provisions of the Act and the rules framed there under. vii) Internal
Audit System
The Company has an adequate internal audit system commensurate with its
size and nature of its business. viii) Cost Records
We are informed that the Central Government has not prescribed the
maintenance of cost records under section 209 (1) (d) of the Companies
Act, 1956. ix) Statutory Dues
a) According to the records, the Company has been regular in depositing
with appropriate authorities undisputed statutory dues including
provident fund, income tax, wealth tax, service tax, sales tax, VAT,
Entry tax, excise duty, cess and other applicable statutory dues except
that there has been delay in payment of excise duty/service tax and in
some cases for payment VAT/Sales Tax liabilities.
b) The details of dues of sales tax, custom duty, excise duty, trade
tax and cess etc. which have not been deposited on account of dispute
are given hereunder:
Name of the
Statute Forum where Nature of dues
Dispute pending
1. The Central Excise
Act, 1944 Jharkhand High Court,
Ranchi Excise
Duty on Freight on
Goods Transportation
2. The Customs
Act, 1962 CESTAT, Kolkata Custom Duty on rate
diff. on account of
classification of
items on imported
plant & Machinery
3. The Customs
Act, 1962 CESTAT, Kolkata Custom Duty & Demurrage
Charges and interest on
imported Stores & spare
parts
4. JVAT Act, 2005 Jt. Commissioner of
Commercial Tax on Non-Submission
of JVAT Forms
Taxes (Appeals)
Jamshedpur
5. The Central Sales
Tax Act, 1956 Jt. Commissioner of
Commercial Tax on Non-Submission
of C Forms
Taxes (Appeals)
Name of the Statute Period of Amount
Dispute Rs./lacs
1. The Central Excise Act, 1 944 16.12.97 373.06
to 31.03.98
2.The Customs Act, 1 962 1987-89 106.92
3.The Customs Act, 1962 1991-92 104.27
1994-95 50.32
4.JVAT Act, 2005 2006-07 23.97
5.The Central Sales Tax Act, 1956 2006-07 3.11
Grand Total 661.65
x) The Company has accumulated losses at the end of the financial year
that are not less than fifty per cent of its net worth and the Company
has incurred cash loss during the current financial year and in the
immediately preceding financial year.
xi) There are no continued defaults in repayments of dues to Financial
Institutions or Banks but for certain delays in repayments of Principal
&Interest due thereon on which compound interest has been paid.
xii) 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, nidhi or mutual benefit fund/
society. Therefore, the provisions of clause 4 (xiii) (a) to (d) of the
Companies (Auditors Report) Order 2003 are not applicable to the Company.
xiv) The Company has not dealt or traded in shares, securities,
debentures, and other investments during the year.
xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from banks
or financial institutions during the year.
xvi) The term loans taken by the Company have been applied for the
purpose for which they were obtained, however there has been no term
loans obtained during the year under audit.
xvii) According to the information and explanation given to us and on
an overall examination of the balance sheet of the company as at the
end of the year, funds raised on short term basis has not been used for
long term investment.
xviii) The Company has not made any preferential allotment of shares to
parties and companies covered in the Register maintained under Section
301 of the Companies Act, 1956 during the year.
xix) The Company has not issued debentures hence the question of
pending creation of security does not arise.
xx) The Company has not raised any money by public issue during
the year and hence disclosure for end use does not arise.
xxi) Based upon the audit procedures performed and on the basis of
information and explanations provided by the management, we report that
no fraud on or by the Company has been noticed or reported during the year
under audit.
For Thakur, Vaidyanath Aiyar & Co.
Chartered Accountants
[FRNO.000038N]
Place : New Delhi [M.P. Thakur]
Dated : 13th August, 2010 Partner
Membership No. : 052473
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