41st ANNUAL REPORT BURN STANDARD COMPANY LIMITED
41st ANNUAL REPORT 2016 - 2017
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Comments of the Comptroller 90 and Auditor General of India BOARD OF DIRECTORS (As on 01-04-2017)
SHRI MD. ASAD ALAM Chairman and Managing Director
SHRI NILOTPAL DEY Director (Finance)
SHRI ANIRUDH KUMAR Government Director
SMT ABHILASHA JHA MISRA Government Director
SHRI SHYAMAL GHOSH Nominee Director
SHRI PRAVEEN KUMAR Non-Official part-time Director
PROF. BHARATENDU NATH SRIVASTAVA Non-Official part-time Director
CIN : U51909WB1976GOI030797
2 - ANNUAL REPORT - 2016-2017 CHAIRMAN'S ADDRESS
AT THE 41st ANNUAL GENERAL MEETING OF THE COMPANY
Dear Shareholders,
On behalf of the Burn Standard Co Ltd Board of Directors, I have pleasure in presenting the 41st Annual Report on the affairs of the Company along with the audited accounts for the year ending 31.03.2017.
The notice of the meeting together with Directors' Report and Audited Annual accounts for the nancial year ending 31.03.2017 has already been circulated.
2. PHYSICAL AND FINANCIAL PERFORMANCE
2.1 During the year ended 31.03.2017 the Company achieved total Revenue of Rs.195.38 Crores. In previous year 2015-16 the gure was Rs.138.13 Crores. Total revenue showed an increase of 41% over last year.
2.2 The Company incurred gross loss of Rs.11.02 Crores during the year under report as against the gross loss of Rs.16.58 Crores incurred during the year 2015-16. The Net loss of the Company was Rs.33.51 Crores for the nancial year 2016-17 in comparison to a Net loss of Rs. 28.38 Crores during the nancial year 2015-16.
2.3 The Company produced 545 Nos. wagons during the year against 318 Nos. wagons in the previous year.
2.4 The Company produced liquid metal of 5970 MT and supply 1912 bogies, 2994 Coupler and 903 Draft Gear in the nancial year 2016-17 as compared to production of 4964 MT of Molten Metal, 1558 bogies, 1977 Coupler and 485 Draft Gear.
2.5 The Company registered high turnover in the Current year, but lower net prot. This is due to substantial reduction in price of wagons, . hike in costs of inputs, acute shortage of Working Capital resulting into payment of interest of Rs.10.61 Crore during 2016-17 for interest payment. Due to shortage of working capital, production could not be augmented to utilize the capacity available at our Works.
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3. PROSPECTIVE GROWTH
3.1 Due to reduced margin in wagon production, the Company took the challenge of repair of wagons for East Central Railways at Mughalsarai, beside the regular repair of wagons
undertaken at Company's Howrah Works and Burnpur Works. During the year ended 31.03.2017 total 4042 wagons repaired as compared to 2305 wagons repairing done during 2015-16.
3.2 The Company will get sufcient number of Wagon orders for rehabilitation / repair of various types of Railway Wagons to execute the order either in participating in the tender or obtaining order from Indian Railways on nomination basis.
3.3 To revive the Company, diversication in other area such as Marine application, providing logistic support to SAIL with regard to locomotive maintenance, yard and wagon maintenance.
4. RESEARCH & DEVELOPMENT
The Company has already got approval to fabricate Steel structure bridge. The Company has also taken the initiative to arrange manufacturing of medium and small ship including house boat for fabrication. Company is striving to develop Draft gear for BD-71 specication as import substitute.
5. ACKNOWLEDGMENT
I express my sincere thanks to the different Ministries of Government of India specially, that of Railways, Heavy Industries & Public Enterprises, Steel, Finance, various Departments of Government of India/State Governments, Braithwaite & Company and other peer PSUs for their valued support and look forward to continued support in future. I thank all my colleagues on the Board
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for their resolute support and consistent encouragement. I would also place on record my appreciation to the employees for their commitment in the progress of the Company. I also thank the Bankers, Auditors, Lenders, Suppliers and Customers for extending support to the Company throughout the year, the categories of employees and all Trade Unions of all the Units for their contribution during the year and expect that they would continue their sustained efforts for improving the performance of the Company in the coming days.
Kolkata ( MD. ASAD ALAM )
Dated : October 24 , 2017 CHAIRMAN & MANAGING DIRECTOR
ANNUAL REPORT - 2016-2017 - 5 DIRECTORS' REPORT
Gentlemen,
The Directors have the pleasure in presenting the 41st Annual Report along with the Audited Accounts for the year ended 31.03.2017.
1.0 OVERALL PERFORMANCE:
1.1 During the year ended 31.03.2017, the Company achieved Total Revenue of Rs.195.38 crores. In previous year (2015-16) the gure was Rs.138.13 crores.
1.2 The Company incurred Operating Loss or Gross Loss of Rs. 11.02 crores during the year under report which is much lower than the Gross Loss of Rs.16.58 crores incurred during the previous year (2015-16).
1.3 During the year under report, the Company produced 545 wagons as against 318 wagons in the previous year (2016-17),1912 Bogies as against 1716 Bogies in the previous year(2015-16)
2. STATE OF COMPANY AFFAIRS / OPERATING RESULTS u/s 134(3)(i) & (j):
During the year 2016-17, the Company registered Net Loss of Rs.33.51 lakh against Net Loss of Rs. 28.37crores for the previous year 2015-16.
The salient features of Operating Results for the year 2016-17 vis-à-vis previous year 2015-16 are tabulated below:
(Rupees in Crores)
Particulars 2016-17 2015-16
Sales / Total revenue 195.38 138.13
Gross Margin / (loss) (11.02) (16.58)
Cash Prot / (loss) (without GOI interest, (31.13) (25.85) Depreciation & EOI)
Net Prot / Loss [excluding Tax & (33.51) (28.37) Extra-ordinary item]
Since the Company is incurring loss there is no transfer to reserve.
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3. FINANCIAL& CAPITAL STRUCTURE :
The capital structure of the Company as on 31.03.2016 vis-à-vis 31.03.2017 is as follows:
Particulars 2016-17 2015-16
Authorised Capital 185.00 185.00
Issued and subscribed capital 184.63 184.63
Reserve & Surplus (including Revaluation Reserve) 142.60 176.11
Non-current Liabilities 75.13 78.99
TOTAL 402.36 439.73
REPRESENTED BY
Fixed Assets 470.63 472.92
Long term loan and advances 0.63 0.0063
Other Non Current Assets 0.00 0.00
Net Current Assets (Working Capital) -68.28 -33.19
TOTAL 402.36 439.73
4. RECENT GROWTH AND PROSPECTIVE GROWTH :
In nancial terms the turnover was up by 41%.The Company incurred Operating Loss of Rs. 11.02 crores during the year under report as against the Operating Loss of Rs 16.58 Crores incurred during 2015-16. Various steps have already been taken by the management, duly supported by Ministry of Railways, for turning around the nance of the company.
5. SECURED ORDER POSITION:
The order available for execution is 2037 VU wagons of Rs. 25062.95 Lakh and Rs 1934.98 Lakh for Railway components i.e. total order available for execution of
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Rs 26997.93 Lakh in 2016-17 against Rs 26907.93 Lakh VU wagons and Rs 4360 Lakh for Railway component in corresponding year 2015-16.
Export:
At present there is no export order.
6. RESEARCH & DEVELOPMENT:
Burn Standard stands for quality. The workforce has been motivated in such a way which can produce only the quality products. Every section of the shops and each stage of production are always under strict vigilance of the quality control supervisors. As a result, Burn Standard can produce any product within its manufacturing range conrming to global specications to the entire satisfaction of the customers.
Burn Standard has already developed Light Weight Low Height 25 Ton Axle Load Bogie (LWLH 25) for Broad Gauge Wagon which is rst time in India by a wagon manufacturer.
Burn Standard is also in the process of manufacturing BOXNS Wagon tted with 25T Axle Load Bogie against prevailing 22.9 Ton Axle Load Bogie. A prototype has been manufactured and passed by RDSO for bulk production.
Development of 71-BD Draft Gear which is an import substitute is also in the process and is likely to be developed shortly.
7. PERSONNEL & INDUSTRIAL RELATIONS:
7.1 During the year 2016-17, the strength of permanent employees as on 31.03.2017 was 525 as against 610 as on 31.03.2016. The reduction in manpower has been effected due to natural separation like superannuation, death etc as also by restricting recruitment.
7.2 Pursuant to Company's policy of continuous skill development including enrichment of professional knowledge vis-à-vis strength of employee having been reduced considerably, only selected employees of different Units and Head Ofce at different levels were nominated for different Seminars / Training Programmes / Workshops organized both In-house and Out-house during the year under review.
7.3 The Company provided both statutory and non-statutory welfare facilities to the employees of different Units within its nancial limitations.
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7.4 Overall industrial relation in the Company was satisfactory.
8. MOU PERFORMANCE :
Based on nancial performance and achievement of other parameters laid down, your company is likely to be rated fair as per the Memorandum of Understanding (MoU), signed by the Company with the Government of India for the Financial Year 2017-18.
9. IMPLEMENTATION OF OFFICIAL LANGUAGE :
During the year 2016-17, the Company pursued the policies of Government of India on implementation of Ofcial Language. Steps were taken for ensuring compliance of the Ofcial Language Policy. A Workshop on “Noting & Drafting in implementation of Ofcial Language in Ofce” was organised on 28.03.2017 at Head Ofce in which employees participated spontaneously and effectively.
10. AUDITORS :
Your Company appointed the following auditing rms for carrying out various audit functions of your Company for the nancial year 2016-17:
a) Statutory Auditor : Kay & Kay Associates
b) Cost Auditor : Bandyopadhyaya Bhaumik & Co
c) Internal Auditors : Sarkar Gurumurthy & Associates and George Read & Company
d) Secretarial Auditors : Subhasis Bosu & Company.
11. REPORT OF THE STATUTORY AUDITORS AND COMMENTS OF COMPTROLLER AND AUDITOR GENERAL OF INDIAON THE ACCOUNTS FOR 2016-17 u/s 134(3)(f)
11.1 The Comptroller and Auditor General of India appointed Kay & Kay Associates, Chartered Accountants, as the Statutory Auditors of the Company for 2016- 17.
11.2 The reports of the Statutory Auditors on the Accounts of the Company for 2016-17
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are annexed to this Report. Auditors' comments in their Report are self- explanatoryand have been suitably explained in the Notes on Accounts. The explanation given by the Board to the observation is enclosed here in Annexure II (page 22).
12 SUBSIDIARY COMPANIES, JV AND ASSOCIATE U/S 134(3)(q) AND RULE 8(1) OF COMPANY ACCOUNTS RULES :
Two erstwhile Subsidiaries of the Company viz, Bharat Brakes & Valves Ltd. (BBVL) and Reyrolle Burn Ltd. (RBL) were ordered to be wound up on 17.06.2003 and 22.07.2003 respectively, by the Hon'ble High Court at Calcutta.
Subsequently, as per directives of the Hon'ble High Court, the Ofcial Liquidator has taken charge of BBVL and RBL on 31.07.2003 and 24.09.2003 / 10.10.2003 respectively. Statements of Affairs of both the Companies were submitted to the Ofcial Liquidator.
The Company has made a total claim of Rs 12.93 crores against RBL on 21.12.2005 before the Ofcial Liquidator and also submitted the required documents from time to time. For RBL Limited, the Ofcial Liquidator has admitted the Company's claims, except that of investment of shares, as evident from the afdavit led by the Ofcial Liquidator. However, from the communication received from the Ofce of Ofcial Liquidator, it was clear that there is no surplus available after payment of a part of Secured Creditors from the total sale proceeds of assets of the Company.
After adjudication, the claims of the Company and its erstwhile Holding Company have been distinctly identied. Now the effect of settlement of claims in the matter of BBVL has been accepted by the Ofcial Liquidator admitting as preferential claim of Rs 2,74,00,000/- and ordinary claim of Rs 3,80,36000/-.The company has received the total sum of Rs 6,54,36000/- on 10.07.2014 against its claim.
Burn Standard Co. Ltd and Steel Authority of India Ltd. has entered into a 50:50 joint venture for manufacture of wagon components and set up a company under the name of SAIL BENGAL ALLOY CASTING PVT. LIMITED at the leasehold land in Jellingham, West Bengal. The Joint Venture Company was incorporated on 12.02.13.Pursuant to CRZ survey report from Institute of Environmental Studies and Wetland Management (IESWM), Kolkata more than 50% of the land are falling under “No Development Zone” for the category of Industry i.e. Steel Foundry for the
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proposed WCMF. Subsequently the existing 12 acres vacant land of BSCL adjacent to Burnpur factory has been found suitable as per letter dated 12.06.2016 of RITES Ltd.
Both BSCL and SAIL Board had approved relocation of the factory site of JV company from Jellingham to Burnpur. Matter has been referred to MoR for approval.
Annexure VIII (page 22).
13. RESTRUCTURING/REVIVAL OF THE COMPANY:
The nancial restructuring Scheme of the Company on being accepted and forwarded by Ministry of Railways to Department of Public Enterprises was taken up by NITI Aayog on 19.07.2016 and examined. Finally, NITI Aayog directed Railway Board for submission of fresh Revival Proposal without involving any nancial support from the Govt. of India. Member Rolling Stock has communicated to NITI Aayog that it is planned to revive and sustain the Company through its own resources (Sale of Land Assets) with no infusion of Government fund.
Accordingly, fresh nancial restructuring Proposal has been prepared of Rs.300 Crores (approx.) taking into account sale of land and all the pending dues as well ensuring operational strategy and on being approved in the Company's last 197th Board meeting held on 27.09.2016 the said Proposal was submitted to the Railway Board with a copy to OA(UBI) and Hon'ble BIFR Bench in compliance to Hon'ble BIFR Bench's Order dated 27.07.2016 .
The Corporate Insolvency Resolution Process (CIRP), has been initiated u/s 10 of the Insolvency & Bankruptcy Code (IBC), 2016 before the NCLT, Kolkata Bench, Kolkata. Shri Partha Kamal Sen, Insolvency Professional has been appointed as IRP as per the Hon'ble NCLT's order dated 31-05-2017. Pursuant to section 17 of the IBC, 2016, the power of the Board of Directors have been suspended and vested upon IRP/RP till completion of CIRP.
14. SMALL SCALE AND ANCILLARY INDUSTRY / MSME:
Numbers of SSI units were associated with the Howrah Unit and numbers of MSME units were associated with the Burnpur Unit. Regular purchase enquiries were issued to the seancillary and SSI units. Generally, small cast iron castings, safety equipments, uniforms, cotton & jute consumables, non-ferrous castings, bolts, nuts,
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electrodes, fasteners and paints were procured from these SSI units. The supply performance of SSI and ancillary units were by and large satisfactory. Assistance was given to these units as and when required to overcome their difculties by rendering technical guidelines, by supplying of jigs & xtures, raw materials and transport facilities.
15. BOARD OF DIRECTORS u/s 134(3)(q) :
During the year 2016-17,Ministry of Railways, Govt. of India has appointed Shri Md Asad Alam as CMD in place of Shri Dayanidhi Marandi w.e.f. 20.08.2016 and Shri Nilotpal Dey as D(F) w.e.f. 17.3.2017. Shri A M Singh , D(E) was repatriated to Railway Board on 31.03.2016. During the year under review, 5 meetings (28.6.2016, 27.9.2016, 24.11.2016, 20.12.2016 & 17.03.2017) of the Board of Directors were held to transact the business of the Company.
AUDIT COMMITTEE u/s 177(8):
During the year under report, the Audit Committee of the Board met 5 times on 28.6.2016, 27.9.2016, 24.11.2016. & 20.12.2016,17.03.2017 for consideration of nal Accounts, Internal Audit Reports of previous quarters, appointment of Internal Auditors and for nancial policy decisions.
16. BOARD EVALUATION U/S 134(3)(P) : The Board's annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees is not applicable to Government Company.
17. DECLARATION BY AN INDEPENDENT DIRECTOR(S) U/S 134(3)(C) : As required by section 134(3)(c) of Co Act 2013, a declaration u/s 149(7) by an Independent Director(s) that he/they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 is not required to be given in Director's Report, since section 149(6)(a) and section 149(6)(c) not applicable to Govt Company.
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18. COMPANY'S POLICY ON APPOINTMENT AND REMUNERATION U/S 134(3)(e) READ WITH SECTION 178(3) AND 178(4) :
Government Company is exempted from such disclosure vide section462 of Co Act 2013. Companies senior management's remuneration is as per laid down rules of PSU.
19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS U/S 134(3)(g) :
a) Details of Loans:
SL. Date of Details Amount Purpose Time Date Date of Rate Security No. making of for which period of BR SR of loan Borrower the loan is to for (if reqd) Interest be utilized which by the it is recipient given NIL
b) Details of Investments :
SL Date of Details of Amount Purpose for Date of BR Date Expected No investment Investee which the of SR rate of proceeds (if return from reqd) investment is proposed to be utilized by the recipient
1 31.3.2015. SAIL 100,000/- SAIL Approved by the BENGA L BENG AL Board of SAIL ALLOY ALLOY BENGAL ALLOY CASTINGS CASTINGS CASTINGS PVT PVT PVT LTD LTD on 31.5.14. LTD
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c) Details of Guarantee / Security Provided:
During the year under review, your Company has not given any loan, provided any security or guarantee which requires disclosure in terms of Section 186 of the Companies Act, 2013.
20. RELATED PARTY TRANSACTIONS U/S 134(3) ( h) :
The details of transactions entered into with the Related Parties are enclosed as Annexure III. (page 22)
21. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY U/S 134(3) ( h ) :
No material changes and commitments have occurred affecting the nancial position of the Company between the end of the nancial year of the Company to which the nancial statements relate and the date of the report.
22. RISK MANAGEMENT POLICY U/S 134(3)(n) :
In terms of the requirement of the Companies Act 2013, the Company is working out comprehensive Risk Management Policy including identication therein of elements of risks which in the opinion of the Board may threaten the existence of the Company. A comprehensive risk management policy will be adopted shortly.
Head of the Departments are responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Management.
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a. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS u/s 134(3)(q) :
During the year under review, no signicant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations.
b. INTERNAL FINANCIAL CONTROLS u/s 134(3)(q) :
The Company has in place an established internal control system designed to ensure proper recording of nancial and operational information and compliance of various internal control and other regulatory and statutory compliances. Internal Financial Control which require that the directors review the adequacy of internal controls and compliance control, nancial and operational risks, risk assessment and management systems and related party transaction, have been complied with.
The Company continues to engage Sarkar Gurumurthy & Associates for Burnpur and George Read & Co. for Kolkata and Howrah as its Internal Auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efciency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors ndings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efciency in operations.
c. DEPOSITS U/S 134(3)(q) :
The Company has not taken any deposit during the year.
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23. DIRECTORS RESPONSIBILITY STATEMENT u/s 134(3)(c) read with section 134(5):
Pursuant to the section 134(3)(c) of the Companies Act, 2013, your Directors conrm that:-
(i) In the preparation of the annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departure;
(ii) They had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the nancial year 2016- 17 and of the Prot & loss Account of the Company for the said period;
(iii) They had taken proper and sufcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) The annual Accounts have been prepared on a “Going Concern Basis”.
(v) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Audit Committee was comprised of ve members: Shri Md. Asad Alam, Chairman & Managing Director and Chairman of the Committee; Shri Praveen Kumar, Independent Director, Shri Shyamal Ghosh, Nominee Director, Shri B N Srivastava, Independent Director and Smt. Abhilasha Jha Misra, Part time Govt Director.
24. VIGILANCE :
The Vigilance Department of the Company continued to function effectively. Regular inspections were conducted from preventive vigilances point of view. Surprise checks were also conducted frequently during the year under review covering ofcers/ofcials at various levels to achieve desired results.
As in the previous years, the Company observed ''Vigilance Awareness week''
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during 31/10/2016 to 5/11/2016, where eminent speakers shared expert knowledge on preventive measures to be followed for eradication of corruption.
25. CORPORATE SOCIAL RESPONSIBILITY u/s 134(3)(o) :
During the year 2016-17, the Company has taken initiatives to discharge its social responsibilities in the vicinity of Burnpur and Howrah Units. The Company spent a total amount of Rs. 120,000 towards donation to School and different welfare activities for the common people residing adjacent to our Works.
Annexure VII (page 22)
26. CORPORATE GOVERNANCE :
In compliance with DPE Guidelines, Company has taken steps for a sound Corporate Governance system. The company followed the DPE Guidelines as per manual. For the year 2016-17, Company has complied with almost all the points covered by theDPE Guidelines, meant for a sick PSU.
Ministry of Railways has appointed– two part time Govt director on the Board of Burn Standard Company Limited .
There is no 'Related Party' transaction of Senior Managers except disbursement of their remuneration. Directors Remuneration has been mentioned in the Annual Accounts. Company has followed Indian GAAP in its accounting and also mentioned compliance with AS-17 (Segment Reporting), AS - 18 (Related Party Information), AS-21 (Effect of change in Foreign Exchange rates), AS-23 (Accounting for investment in Associates) and AS-27 (Joint Ventures).
27. PARTICULARS OF EMPLOYEES :
During the year under report, none of the employees of the Company received remuneration exceeding the ceiling limit as prescribed under Section 197(14) of the Companies Act, 2013 read with the Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. For the list of top 10 employees in terms of Remuneration drawn, see Annexure IX (page 22).
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28. DISCLOSURE IN DIRECTORS REPORT ABOUT RECEIPT OF COMMISSION BY MD/WTD FROM A COMPANY AND ALSO REMUNERATION / COMMISSION FROM ANY HOLDING COMPANY OR SUBSIDIARY COMPANY U/S 197(14) :
This provision is not applicable to the Government Company.
29. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNING AND OUTGO :
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134 of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, are given in the Annexure – I (page 22) to this report.
30. COMPLIANCE REPORT UNDER COMPANIES (COST ACCOUNTING RECORDS) RULES, 2011 :
Pursuant to Order No. GSR No. 429(E) dt. 30.6.2011 read with provisions of The Companies (Cost Accounting Record) Rules, 2011 as issued by the Cost Audit branch of the Ministry of Corporate Affairs, your Company u/s 148 of Co Act 2013 has appointed Bandopadhyaya Bhaumik & Co., Cost Accountants to conduct the audit of cost records of your company for the nancial year for 2016-17.
The work in this regard is underway and the report will be submitted to the Central Government within the time limit prescribed by the Ministry of Corporate Affairs.
The remuneration proposed to be paid to them requires ratication of the shareholders of the Company. In view of this, your ratication for payment of remuneration to Cost Auditors is being sought at the ensuing Annual General Meeting.
31. IMPLEMENTATION OF RTI ACT, 2005 :
Since inception of the act, the Company has complied with all its provisions. The Company has posted a separate section on RTI Act, 2005 on its website and made different ofcials appointed as Public Information Ofcers, CPIO and Appellate Authority. Till date all the information sought has been replied back to the respective
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applicants. In compliance with Government directives, the company submits quarterly Returns on the disposal of RTI cases to DPE through Ministry of Railways.
32. SECRETARIAL AUDIT REPORT U/S 204(3) :
In terms of Section 204 of the Act and Rules made thereunder, M/s. Subhasis Bosu & Co., Practicing Company Secretary has been appointed Secretarial Auditor of the Company. The report of the Secretarial Auditors is enclosed as Annexure IV (Page 22) to this report. The report is self-explanatory and comments to that is also mentioned there.
33. VIGIL MECHANISM U/S 177(10) :
In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism Policy for directors and employees, to report genuine concerns has been established and uploaded in the company's website at www.burnstandard.com.
The Vigil mechanism provides a channel to the employees to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the codes of conduct or policy. The mechanism provides for adequate safeguards against victimization of employees and also provide for direct access to the director nominated to play the role of Audit Committee in appropriate or exceptional cases. The Policy covers reporting of malpractices, events which have taken place or suspected to have taken place, misuse or abuse of authority, fraud or suspected fraud, manipulations, negligence causing danger to public health and safety, misappropriation of monies, assets and other matters or activity on account of which the interest of the Company is affected by whistle blowers.
34. EXTRACT OF ANNUAL RETURN u/s 134(3)(a) read with section 92(3) :
As required pursuant to section 92(3) of the Companies Act,2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report at Annexure V (page - 22).
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35. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 :
In order to prevent sexual harassment of women at work place a new act The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notied on 9th December, 2013. Under the said Act every company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any women employee.
Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment.
36. CHANGE IN NATURE OF BUSINESS U/S 134(3)(q) :
The Co had explored the idea of being a facilitator for implementing monorail for the city of Kolkata (apart from other places) and also diversied into shipping business. This is part of object clause of MOA.
37. ACKNOWLEDGEMENT :
The Directors extend their sincere thanks to the various Ministries of the Government of India, particularly Ministry of Railways, Ministry / Department of Heavy Industries and Public Enterprises, Ministry of Non-Conventional Energy Sources, Ministry of Power, Ministry of Petroleum, Ministry of Company Affairs, Ministry of Finance, Ministry of Science & Technology, Department of Bio- Technology and Ministry of Steel for their excellent co-operation and assistance round the year. Thanks are also being conveyed to various Departments of the Governments of West Bengal and Tamil Nadu for their continuous co-operation and assistance in running different works of the Company. The Directors also acknowledge with gratitude and appreciation, assistance received from the Comptroller and Auditor General of India, Principal Director of Railway production Units and Metro Railway, Kolkata, Kay & Kay Associates., Chartered Accountants, Statutory Auditors and Board for Industrial and Financial Reconstruction as well as valued customers like NTPC besides different zones of Indian Railways, who have reposed immense faith and dependence on the Company's quality products. Thanks
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are also due to United Bank of India, who have extended valuable nancial support and assistance throughout the year to steer the operations of the Company under trying circumstances and for acting as the Operating Agency of BIFR and their continued support during NCLT. The Directors acknowledge the dedication and commitment of all categories of employees to the growth of the Company and all Trade Unions of all the Units for their contribution during the year and expect that they would continue their sustained efforts for improving the performance of the Company in the coming days.
For and on behalf of the Resolution Professional/ Board of Directors,
Place : Kolkata ( Md. Asad Alam)
Dated : October 24, 2017 Chairman and Managing Director
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ANNEXURE INDE X
Annexure Content
i Conserva on of energy (point no. 29) page …. 23
ii Reply to auditors (point no. 11) page …. 30 iii AOC 2 – Related p arty transac ons dis closure (point no. 20) page …. 33 iv MR‐3 secretarial audit report (point no . 32) page .… 34
v Annual return extracts in MGT9 (point no. 34) page .… 38
vi Annua l report on corporate social responsibility (point no. 25) page …. 47
vii Statement of par culars of employees pursuant to the companies (appointment and remunera on of managerial personnel) rules, 2014 (point no. 27) page .… 47
viii Statement pursuant to sec on 212 (8) of the compan ies act, 1956 rela ng to subsidiary company (point no. 12) page …. 47 ix Companies (Appointment and Remunera on of Managerial Personnel) Amendment Rules 2016 (point no. 27) page .… 47
22 - ANNUAL REPORT - 2016-2017 DIRECTORS' REPORT Contd.... Annexure - I Annexure to Directors’ Report Additional information pursuant to Section 217(1)(e) of the Companies Act,1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules,1988
A. CONSERVATION OF ENERGY
HOWRAH WORKS (HW) i) Measures taken To augment energy saving the following action were taken. A) In General :- 1) Initially, we used rectier type of Plasma Cutting Machine, but now a days we have switched to Inverter based Plasma Cutting Machine whose power factor and KVA Rating is much better than previous one. 2) For Lock Bolting Machine – M/s. Alcoa Pvt. Ltd. have xed the power supply line at 400 V of primary transformer, but our Company's line voltage is approx 430-440V. So we have changed the input power supply connection from 400V to 440V tap line of Transformer. Hence the power factor has improved and the Company gets positive result in power consumption. 3) For Graphite Electrode (Required for melting of molten metal) previous consumption was 7.5 Kg/Ton of liquid metal. But it has now improved and present consumption is 5.5 Kg/Ton of liquid metal. 4) Almost fresh sand was purchased in dry condition which is approximately 5000 tones in the year of 2016-17. This has generated fuel saving in Sand Dryer by 35-40 KL : this is a considerable saving towards Fuel in the year 2016-17. 5) Shop Floors lightings are gradually getting changed to 150 W and 250 W Metal Halide Lamps from 400 Watt HPMV Lamps. We are also in the process of replacing all Sodium Vapour Lamps into above. Approximately 70% of the lighting system (newly) has been completed. This is done for saving energy. 6) Pneumatic Air Pipe Lines are being checked regularly and valves are replaced / closed to avoid leakage of Air Pressure. 7) We have installed Liquid Oxygen Plant at our Foundry Division. During oxygen lancing, melting time has been reduced - as a result, electricity consumption is less than the earlier process and a considerable amount of electricity bill has been reduced.
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B) Maintenance division: - 1) Earlier for the purpose of supply of ltered water in wagon division, 2 pumps out of 3 submersible pumps were operated continuously. Presently, since August, 2017 only 1 submersible pump is running from 7Pm to 7Am., 12hrs/day; we saved pump running cost. Monetary savings:- 10 Kw x 12 hrs. x 30 = 3600 kwh / month 3600 Kwh x Rs.7.5 = Rs.27,000 Per month For 8 months = Rs.27,000 x 8 = Rs.2,16,000 2) Major breakdown of Atlas Copco air compressor in 2017 was repaired by our engineer without support from service team of Atlas Copco. During the period 6 breakdown occurred in two air compressor. Monetary savings :- Atlas Copco visit cost Rs.16000 + 18% GST = Rs.18880 6 Times monetary saving: Rs.18880 x 6 = Rs.113280 3) We also developed alternative source/vendor for spares, which are much more cost effecient & spare life increases compared to Atlas Copco. 4) For supply of 2000 CFM pneumatic pressure to wagon division, Bogie & Coupler shop atleast 3 old 1000 CFM water cooled Compressor was required (Those compressors are 30 to 35 years old as well as inefcinet). Since March 2017, we have operated 2 nos 1000 CFM Atlas copco compressor to meet the requirement. Monetary savings :- Cost of water cooled compressors: Power = 285 Kw per compressor. For 1 hr cost of 3 nos Compressor : 285 x 1 x Rs. 7.5 x 3 nos = Rs. 6412.5 Cost of Atlas Copco compressor:- Power = 160 Kw per compressor For 1Hr Cost of 2 nos. compressor : 160 Kw x 1 x Rs. 7.5 x 2 nos. = Rs. 2400 Therefore different of monetary savings in 1 Hr = Rs. 6412.50 – Rs. 2400 = Rs.4012.5 per Hr Approx we are saving pneumatic pressure of 6 Hrs/day. Then per day running cost savings: Rs. 4012.50 x 6 hrs. = Rs. 24075 C) Foundry Division :- a) Reduction of Melting power consumption by – (1) Reduction in heat cycle time using Oxygen assisted melting technique in place of conventional melting practice.
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(2) Improved melting practice to take advantage of Exothermic Reaction between Carbon & Oxygen( min 25 point Carbon Boil) (3) Reduction in Tapping temperature of Liquid steel by min 30°C by using Insulated Ceramic Board lined ladle in place of Refectory Brick lined Ladle. These efforts have yielded Reduction in Melting Power Consumption by app. 14.5% in FY 2016-17 over FY 2015-16. Refer following Chart for this. Sr. KWH / Financial year Total power(KHH) Total Liquid metal (MT) No Ton LM 1 2014 -2015 3396465 4887 695 2 2015 - 2016 3550501 4964 715.25 3 2016 - 2017 3469530 5670 611.91
This has yielded savings of 103.34 KWH/Ton (14.5%) of Liquid metal power consumption reduction. Hence total melting power saving in 2016-2017 = 103.34*5670= 585938 KWH This Reduction is equivalent to Rs 52,73,440 (assuming average cost of power Rs.9/KWH).
b) For reduction in fuel consumption following steps were taken - 1) More Compact charge in Heat treatment Furnace by selecting proper charge mix, 2) Small castings like Back stop, Yoke pin support plate, Lock, Follower etc to use as ller load. 3) Plan heat treatment to use the Heat Treatment furnace continuously. 4) Reduce use of 30T Furnace. Since it is single Bogie Furnace. With the above, 26 litre/Ton of Casting Heat treatment is achieved in Year 2016-17 over year 2015-16. In terms of Value, the above reduction is = 1, 19860 litre = Rs. 40, 26,097(Cost of F. oil assumed at Rs. 33/Litre).
Savings of natural Resource Silica Sand, the most basic raw material for casting production is mined from different quarries across the country. In Steel Foundry the major source for this is Allahabad. To reduce sand consumption in place of 100% fresh sand ,a mix of 20% return Sand & 80% fresh Sand was introduced in foundry. In this matter refer to the following table.
Sr. Fresh sand Production Consumption /Ton Year No. Consumption (MT) (MT) Casting (MT) 1 20152015 - 1616 4566 3580 1.27 2 20162016 - 1177 4697 4149 1.13
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This has resulted in reduction in fresh sand consumption in year 2016-17 by 580MT (4149 T Pr*.14) over Year 2015-16. This has reduced sand cost by Rs 20, 59,000 In Year 2016-17. ii) Additional investments and proposals, if any, being implemented for reduction of consumption of energy. a) We have developed Prototype of BOXNS wagon and 25T Axle Load LWLH Bogie and we have also got the clearance of Prototype BOXNS wagon and 25T Axle Load Bogie from RDSO Lucknow. We have also been permitted from RDSO/LKO & RDSO/I&L/KOL for series production of 25T Axle Load Bogie. b) Revamping and re-commissioning of IMF 15 T / hour capacity Moulding Line has been done, for which BSCL,Howrah Works is able to make resin Sand Mould of various sizes. This job has been taken up for development of new generation high axle load bogie from 25T axle load and above. iii) Impact of measures (a) and (b) above, for reduction of energy consumption and consequent impact on the cost of production of goods. This can be measured only after completion of all the work regarding Energy Conservation. However, Pneumatic Pressure at the points of end-use has been increased, which indicates the result of change of valves and stoppage of leakages. iv) Total energy consumption and energy consumption per Unit of production as per Form A of the Annexure. Form-A, is enclosed herewith. BURNPUR WORKS (BW) (i) BW is consuming electrical energy at power factor level as follows:
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(ii) BW is also saving electrical energy by 2% in the area of shop lighting, ofce lighting and street lightings in respect of previous utilization.
(iii) BW is also continuing to save electrical energy by using of MMAW and MIG/CO2 welding machine in wagon manufacturing and repairing process.
HOWRAH WORKS (HW)
STATEMENT OF ENERGY CONSUMPTION & CONSERVATION DURING 2016-17
Month Chargeable Unit
Max demand in KW (Rs.)
April - 16 May - 16 June - 16 July - 16 August - 16 September - 16 October - 16 November - 16 December - 16 January - 17 February - 17 March - 17 Total 2,073,438.45
B) TECHNOLOGY ABSORPTION Research and development (R&D) 1) In steel melting, Ferro Chromium addition which is an essential part of Ferro alloy for Gr.E steel for Coupler production is totally eliminated by using Off-cuts of S.S wagon (internal generation) . This has become possible by improvising Melting technique using internal R & D. This has reduced production cost of Gr.E liquid metal by Rs2600/Ton of liquid metal & reduced Coupler manufacturing cost by Rs4000/Ton of casting or app Rs 1700/set of Coupler.
2) Reduction in casting rejection by 1.48% is achieved in foundry by putting continued R & D effort viz (1) introduction of Software based methoding for castings (2)
ANNUAL REPORT - 2016-2017 - 27 DIRECTORS' REPORT Contd.... Introduction of SQC (3) on Job training . Refer the table below. Sr no Year Production (MT) Rejection (%) Rejection tonnage(MT) 1 2015-16 3580 4.53 162.37 2 2016-17 4149 3.05 126.7 It can be inferred that Production has increased by 569 T & gross rejection tonnage is reduced by 35.67 T. On the basis of impute cost, gross reduction is Rs.14,26,800/- (Impute cost inclusive labour - Scrap value taken at Rs.40,000.00 / Ton of casting. 3) Indigenous development Draft Gear to RDSO Specication WD-71-BD-15 is at nal stage. Initial documents for this has already been submitted to RDSO;LKO.
C. EXPENDITURE OF R & D I Capital ii) Recurring Nil iii) Total iv) Total R&D expenditure as a percentage of total turnover..
D) TECHNOLOGY ABSORPTION, ADOPTION & INNOVATION : i) Efforts in brief made towards technology absorption, adaptation and innovation. ii) Benets derived as a result of the above efforts e.g. product development, cost reduction, new product development, import substitution etc. a) Tup Hammer Test bed capacity increased from 600T to 800T to enable testing of Draft gear to WD-71-Bd-15 STR. Test report submitted to RDSO;LKO. b) `Break system of all Foundry Cranes are changed from Electromagnetic Break to Thruster Control. This has reduced signicantly Crane down time & reduced Break component Spare cost by Rs 2, 00, 00 /Annum. c) 2 way buttery valves used in 15 TPH IMF make Continuous resin sand mixer for Sand transportation is developed locally.This is used to be imported from IMF,Italy earlier) . This has betted HP moulding and Sand transportation also. This has reduced Spare cost by Rs.1.5 lac/annum. iii) In case of imported technology (imported during the last 5 years reckoned from the beginning of the nancial year), the following information may be furnished a) No Technology was imported since last ve (5) years. (E) FOREIGN EXCHANGE(Rs. in lakhs) 2015-16 2016-17 a) Total Foreign Exchange Earned -- -- b) Total Foreign Exchange out go -- -- Net Earnings/ (Outgo) -- -- Encl: FORM - A Place: Kolkata Dated :24.10.2017
28 - ANNUAL REPORT - 2016-2017 DIRECTORS' REPORT Contd.... Form - A STATEMENT OF ENERGY CONSUMPTION
Previous Year (2015 - 16) Current Year (2016 - 17) A Power and Fuel HW BW Total HW BW Total Consumption 1. Electricity Purchased Unit 8794728 2740250 11534978 8985756 2704750 11690506 (KWH) Total Amount (Rs. 871.51 219.14 1090.65 918.73 215.70 1134.43 in lakhs) Rate/Unit 9.91 8 18.91 10.22 7.97 18.19 (Rs./KW H) 2. Coal a) Quantity (Tonnes) 16.07 5 21.07 14.88 6.17 21.05 b) Total cost (Rs. in 2.99 0.59 3.58 4.21 0.58 4.79 lakhs)
c) Average Rate 18606.10 11855 30461.1 28299.40 9393 37692.4 (Rs. per tonne) 3. Furnace Oil a) Quantity (K.Ltrs.) 440 440 739.2 739.2 b) Total Amount (Rs. 138.65 138.65 212.94 212.94 in lakhs) Average Rate c) 31511.36 (Rs./KL) 31511.36 28807.25 28807.25 Quantitative details: 2016-17
(No.) (No.)
ANNUAL REPORT - 2016-2017 - 29 DIRECTORS' REPORT Contd.... Annexure-II
Assertion of Auditor Management Views
I . Emphasis of matters
a) Note No.1.3 in which assertions Principle of going concern has been made by the company regarding the adopted in preparation of Accounts. The preparation of accounts on a going company has submitted Financial concern basis although the net worth restructuring proposal to MOR for of the company is negative. approval which is still awaited.
At present the Ministry of Railways has given sufcient orders to the company for next 2 years. The work is of perennial nature and the company hopes to secure similar orders in future. So the company envisages itself as a going concern entity.
b) Schedule 2 A (Para 8.3) of the There is no ready market for the stock of Signicant Accounting Policies on materials, stores and spares of wagon the valuation of stock of materials, and foundry components. As a result stores and spares including loose compliance with the Accounting tools at cost exclusive of Cenvat Standard -2 which states that inventory element instead of 'at lower of cost or shall be valued at lower of cost or net net realizable values' as per realizable value cannot be adhered to. Accounting Standard – 2
c) N o t e N o . 2 . 2 r e g a r d i n g n o n Most of the assets including building and identication of impaired assets and plant and machinery are very old and are provision for the same. at the end of their economic life. Necessary depreciation have been provided in the books and further impairment is not perceived by the company.
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d) Note No. 2.11 in the Fixed Assets The lease deeds in respect of all schedule regarding non-disclosure leasehold land are not available with the of values in case Leasehold lands company as the lease agreements are separately. The land areas of the very old. In certain cases like Howrah said leasehold properties were not Works, Jellingham on expiry of lease supported by proper deeds. long back ,the possession of leasehold Leases have expired in case of land in question are rested with the Howrah and Pandi Mines. Lease company followed by regular payment deed in case of Raniganj and of monthly rent. Mindnapur were unavailable for audit. As such amortization/lease rent were not disclosed properly. e) Note No. 3.1 on revaluation of land The revaluation reserve on land has assets on the basis of resolution of been made on the basis of average of the company's Board by averaging valuation by three approved valuers. the valuation done by three The valuation was done during 2009- approved valuers. We are unable 10. Considering that period of 5 years to offer any comment on the have elapsed the current valuation is appropriateness of the procedure expected to be much on the higher side. resulting in the appreciation of the value of freehold land by Rs. 43479.91 lakhs. f) Note no. 4 on the pending Noted for compliance conrmation of balances of sundry Debtors, Loans & A d v a n c e s , Deposits , Other Current Assets and Sundry Creditors have been taken at Book value
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II. Basis of qualied opinion a) Note No. 2A(2.17)(ii) regarding non Necessary correspondence with the conformation/ non provision of bank respective banks is being done by the balances amounting to Rs.12.09 company at frequent intervals. lakhs and xed deposits of Rs.1.04 lakhs. b) Note No.2B(8.6) regarding non The Sheet piles at Jellingham was provision for shortage on imported attempted for disposal under the sheet piles of 965.22 MT at direction of BIFR Order . The value of Jellingham at an average purchase sheet piles based on bids received by price estimated at Rs.50.98 lakhs. the company against E–auction by MSTC in the year 2011 was Rs 43,631.20 per tonne which is much higher than the book value per tonne. They were not disposed off as the price obtained was lower than reserve price and anticipated complications on customs duty liability if disposed in India. Since new offered price is much more than book value and total value is more than book value , no provision for storage has been made by the company.
c) Note No.2B(8.16) regarding non The company shall provide for the provision of Rs.100 lakhs for actual amount as determined in the year Municipal Tax of Raniganj Works. of payment. This is a old case of outstanding tax for more than 15 years.
d) Note No.2A(2.16)(i) regarding xed The Company has led money suit in deposit with United Bank of India Kolkata High Court for recovery of xed having principal of Rs.204.29 lakhs deposit amounting to Rs. 204.29 Lakh adjusted by the Bank against dues of against collateral adjustment of the the Company.No provision has been same by United Bank of India. Hence no made for the principal and interest of provision is required at this stage. Rs.237.42 lakhs in this account.
32 - ANNUAL REPORT - 2016-2017 DIRECTORS' REPORT Contd.... Annexure - III FORM NO. AOC -2 (Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section (1) of section 188 of the Companies Act, 2013 including certain arms length transaction under third proviso thereto. 1. Details of contracts or arrangements or transactions not at Arm's length basis.
2. Details of contracts or arrangements or transactions at Arm's length basis.
Form shall be signed by the people who have signed the Board's Report.
ANNUAL REPORT - 2016-2017 - 33 DIRECTORS' REPORT Contd.... IV. Secretarial Audit Report
SECRETARIAL AUDIT REPORT (MR-3) FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2017
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To, The Members, BURN STANDARD CO. LTD. CIN:U51909WB1976GOI030797 22B, RAJA SANTOSH ROAD, KOLKATA-700027
We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by BURN STANDARD CO. LTD. (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.
Based on our verication of the books, papers, minute books, forms and returns led and other records maintained by the company and also the information provided by the Company, its ofcers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that in our opinion, the Company has, during the audit period covering the nancial year ended on 31st March, 2017, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:
We have examined the books, papers, minute books, forms and returns led and other
34 - ANNUAL REPORT - 2016-2017 DIRECTORS' REPORT Contd.... records maintained by (“the Company”) for the nancial year ended on 31st March, 2017 according to the provisions of:
(i) The Companies Act, 2013 (the Act) and the rules made there under;
We further report that the company has complied with other laws as specically applicable to the company, as certied by the management of the company.
We have also examined the compliance with the applicable clauses of the Secretarial Standards SS-1 & SS-2 as specied by the Institute of Company Secretaries of India as per the requirement of section 118(10) of the Companies Act;
During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above.
We further report that;
The Board of Directors of the company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. . Adequate notice is given to all directors of scheduled board meetings, audit committee meetings, agendas and detailed notes on agendas were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarications on the agenda items before the meeting and for meaningful participation at the meeting.
We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with other applicable laws, rules, regulations and guidelines.
We further report that during the audit period, the Company had not taken any major decisions by the members in pursuance to section 180 of the Companies Act, 2013, having a bearing on the Company's affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred to above.
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Further it appears that the Corporate Insolvency Resolution Process (CIRP), has been initiated u/s 10 of the Insolvency & Bankruptcy Code (IBC), 2016 before the NCLT, Kolkata Bench, Kolkata w.e.f 27-05-2017. Shri Partha Kamal Sen, Insolvency Professional has been appointed as IRP as per the Hon'ble NCLT's order dated 31-05-2017. Pursuant to section 17 of the IBC, 2016, the power of the Board of Directors have been suspended and vested upon IRP/RP till completion of CIRP.
For Subhasis Bosu& Co. Company Secretaries
CS Subhasis Bosu Proprietor FCS No.:7277, C P No. : 11469 Place: Kolkata
Date: 24th October, 2017
This report is to be read with our letter of even date which is annexed as' Annexure A' and forms an integral part of this report.
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'Annexure A'
To, The Members BURN STANDARD CO. LTD. CIN:U51909WB1976GOI030797 22B, RAJA SANTOSH ROAD, KOLKATA-700027
Our report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit.
2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verication was done on test basis to ensure that correct facts are reected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion.
3. We have not veried the correctness and appropriateness of nancial records and Books of Accounts of the company.
4. Wherever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of the management. Our examination was limited to the verication of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to future viability of the Company nor of the efcacy or effectiveness with which the management has conducted the affairs of the Company.
CS Subhasis Bosu Place: Kolkata For Subhasis Bosu & Co. Company Secretaries Date : 24th October, 2017 FCS No.:7277, C P No.:11469
ANNUAL REPORT - 2016-2017 - 37 DIRECTORS' REPORT Contd.... Annexure V
FORM NO. MGT 9 EXTRACT OF ANNUAL RETURN
As on nancial year ended on 31.03.2017
Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Company (Management & Administration) Rules, 2014.
I. REGISTRATION & OTHER DETAILS:
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (All the business activities contributing 10 % or more of the total turnover of the company shall be stated)
Wagon Repair 52 %
Wagon 30 %
3 13 %
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III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES
2(6)
IV. SHARE HOLDING PATTERN (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF TOTAL EQUITY)
Category-wise Share Holding
18,46,321 18,46,321 18,46,321 18,46,321
18,46,324 18,46,324 18,46,324 18,46,324
ANNUAL REPORT - 2016-2017 - 39 DIRECTORS' REPORT Contd....
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18,46,324 18,46,324 18,46,324 18,46,324
B) Shareholding of Promoter-
ANNUAL REPORT - 2016-2017 - 41 DIRECTORS' REPORT Contd....
C) Change in Promoters' Shareholding (please specify, if there is no change)
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D) Shareholding Pattern of top ten Shareholders: (Other than Directors, Promoters and Holders of GDRs and ADRs):
SN For Each of the Top 10 Shareholding at the Cumula ve Shareholder s b eginning Shareholding during of the year the year
No. of % of tota l No. of % of total shares shares of sha res shares of the the company company
At the beginning of the year 18,46,324 100% 18,46,324 100% Date wise Increase / Decrease in Promoters Shareholding during the year specifying the reasons for increase 0 0 0 0 /decrease (e.g. allo tment / transfer / bonus/ sweat equity etc.): At the end of the year 18,46,324 100% 18,46,324 100%
E) Shareholding of Di rectors and Key Managerial Personnel:
SN Shareholding of each Directors and each Shareholding at the Cumula ve
Key Managerial Personnel beginning of the Shareholding during year the year
No. of % of total No. of % of total shares shares of shares shares of the the company company
At the beginning of the year 2 0.001% 3 0.001%
Date wise Increase / Decrease in
Promoters Shareho lding during the year specifying the reasons for increase
/decrease (e.g. allotment / transfer / bonus/ sweat equity etc.):
At the end of the year 2 0.001% 3 0.001%
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F) INDEBTEDNESS -Indebtedness of the Company including interest outstanding / accrued but not due for payment.
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XI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL-
A.Remuneration to Managing Director, Whole-time Directors and/or Manager:
SN. Par culars of Remunera on Name of MD/WTD/ Mana ger Total Am ount
CM D C MD D(F) ‐ M A Alam D. M arandi N. Dey
20 Aug 2016‐ April 1, March March 2017 2016‐ 2017 ‐
August 20, March 20 17 2017
1 Gross salary (a) Salary as per provisions 12,60,465 743,433 138,754 21,42,652 contained in sec on 17(1) of the Income‐tax Act, 1961
(b) Value of perquisit es u/s 17(2) 0 34,212 0 34,212 Income‐tax Act, 1961
(c) Profits in lieu of sa lary under sec on 17(3) Income‐ tax Act, 1961
2 Stock Op on
3 Sweat Equity
4 Co mmission ‐ as % of profit
‐ others, specify…
5 Others, p lease specify
Total (A) 12,60,465 777,645 138,754 21,76,864
Ceiling as per the Act
ANNUAL REPORT - 2016-2017 - 45 DIRECTORS' REPORT Contd....
B. Remuneration to other directors
. 27,000 . 22,000 . 22,000 . 71,000
. 27,000 . 22,000 . 22,000 . 71,000
. 27,000 . 22,000 . 22,000 . 71,000
. 27,000 . 22,000 . 22,000 . 71,000
C. REMUNERATION TO KEY MANAGERIAL PERSONNEL OTHER THAN MD/MANAGER/WTD
SN Par culars of Remunera on Key Managerial Personnel CEO CS CFO Total 1 Gross salar y
(a) Salary as per provisio ns contained in 637,911 ‐ 637,911 sec on 17(1) of the Income‐tax Act, 1961 (b) Value of perquisites u/s 17(2) Income‐ ‐ 618 618 tax Act, 1961 (c) Profits in lieu of salar y under sec on 17(3) Incom e‐tax Act, 1961 2 Stock Op o n
3 Sweat Equity
4 Commission ‐ as % of profit other s, specify… 5 Others, please specify Total ‐ 638,529 ‐ 638,529
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XII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Type Sec on of the Brie f Details of Penalty Authority Appeal m ade, Companies Act Descrip on / Punishment/ [RD / NCLT/ if any (give Compounding COURT] De tails) fees imposed A. COMPANY Penalty NA
Punishment
Compounding
B. DIRECTORS
Penalty NA
Punishment
Compounding C. OTH ER OFFICERS IN DEFAULT Penalty NA Punishment Compounding
Annexure VI CSR POLICY
Since the Co is a sick co. and as such none of the provisions of section 135(1) is applicable to the company; there is no need to form a CSR committee.
Annexure - VII
Statement of Particulars of employees pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Sl. N a m e Designa on/ Remunera on Qualifica on Experience Age in Date of Last No. Nature of Received [Rs.] in years years commencement employment Du es of emp loyment held 1 2 3 4 5 6 7 8 9
See page 48
Annexure – VIII Statement Pursuant To Section 212(8) Of The Companies Act, 1956 Relating To Subsidiary Company The company does not have a subsidiary Company.
ANNUAL REPORT - 2016-2017 - 47 THE TOP TEN EMPLOYEES
48 - ANNUAL REPORT - 2016-2017 AUDITORS' REPORT
INDEPENDENT AUDITOR'S REPORT to the members of BURN STANDARD COMPANY LIMITED
Report on Financial Statements
We have audited the accompanying nancial statements of Burn Standard Company Limited ('the company') which comprise the Balance Sheet as at March 31, 2017, the statement of Prot & Loss, the Cash Flow statement and a summary of the signicant accounting policies and notes to the nancial statements for the year then ended
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 nancial statement that give a true and fair view of the nancial position, nancial performance and cash ows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specied under Section 133 of the Act, read with Rule 7 of the Companies (Account) Rules, 2014. This responsibility also includes maintenance of adequate accounting records for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgements and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal nancial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the nancial statements that give a true and fair view and are free from material mis-statement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these nancial 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.
ANNUAL REPORT - 2016-2017 - 49 AUDITORS' REPORT Contd....
We have conducted our audit in accordance with the Standards on Auditing specied under Section 143(10) of the Act. Those Standards required that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free from material mis-statement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the nancial statements. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation of the nancial 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 nancial control system over nancial 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 nancial statements.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our qualied audit opinion on the nancial statements.
Emphasis of Matters
We draw attention to the following matters in the Notes on Accounts in Schedule 2B to the nancial statements :
(a) Note No. 1.3 in which assertions made by the company regarding the preparation of accounts on a going concern basis although the net worth of the company is negative.
(b) Schedule 2A (Para 8.3) of the Signicant Accounting Policies on the valuation of stock of materials, stores and spares including loose tools at cost exclusive of Cenvat element instead of 'at lower of cost or net realizable values' as per Accounting Standard – 2.
(c) Note No. 2.2 regarding non identication of impaired assets and provision for the same.
50 - ANNUAL REPORT - 2016-2017 AUDITORS' REPORT Contd....
(d) Note No. 2.11 in the Fixed Assets schedule regarding non-disclosure of values in case of Leasehold lands separately. The land areas of the said leasehold properties were not supported by proper deeds. Leases have expired in case of Howrah and Pandi Mines. Lease deed in case of Raniganj and Midnapur were unavailable for audit. As such amortization / lease rent were not disclosed properly.
(e) Note No. 3.1 on revaluation of land assets on the basis of resolution of the company's Board by averaging the valuation done by three approved valuers resulting in the appreciation of the value of freehold land by Rs. 43479.91 lakhs.
(f) Note No. 4 on the pending conrmation of balances of Sundry Debtors, Loans & Advances, Deposits, Other Current Assets and Sundry Creditors have been taken at book value.
(g) The company has not maintained Subsidiary Ledgers in respect of Loans and Advances given and for EMD / Security Deposit receipts.
The above matters do not form part of our qualied opinion.
Basis for Qualied Opinion
(a) Note No. 2A(2.17)(ii) regarding non conrmation / non provision of bank balances amounting to Rs. 12.09 lakhs and xed deposits of Rs. 1.04 lakhs.
(b) Note No. 2B(8.6) regarding non provision for shortage of imported sheet piles of 965.22 MT at Jellingham valued at Rs. 50.98 lakhs.
(c) Note No. 2B(8.16) regarding non provision of Rs. 100.00 lakhs for Municipal Tax of Raniganj Works.
(d) Note No. 2A(2.16)(i) regarding xed deposit with United Bank of India having principal of Rs. 204.29 lakhs being adjusted by the Bank against dues of the Company. No provision has been made for the principal and interest of Rs. 237.42 lakhs in this account.
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 for Qualied Opinion as specied in paragraphs above, the nancial statements subject to our aforesaid comments
ANNUAL REPORT - 2016-2017 - 51 AUDITORS' REPORT Contd.... in Para Nos. (a) to (d) whereby the loss for the year has been understated by Rs. 368.40 lakhs and corresponding over statement of net assets by Rs. 368.40 lakhs 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, 2017, and its loss and its cash ows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the (Auditors Report) Order, 2015 issued by the Central Government in terms of Sub-Section (ii) of Section 143 of the Act we give in the Annexure a statement on the matters specied in paragraph 3 and 4 of the Order.
2. As required by Section 143(3) of the Act, we report that :
(a) We have sought and obtained all the information and explanations which to the 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 Qualied Opinion paragraph above, 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 Prot and Loss and the 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 for Qualied Opinion paragraph above, in our opinion, the aforesaid nancial statements comply with the Accounting Standards specied under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualied as on 31st March, 2017 from being appointed as a director in terms of Section 164(2) of the Act. (f) In our opinion the company has adequate internal nancial controls over nancial reporting of the company.
52 - ANNUAL REPORT - 2016-2017 AUDITORS' REPORT Contd....
(g) 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 Company has not ascertained the impact of pending litigations on its nancial position in its nancial statements,
(ii) The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses.
(iii) There is no such amount required to be transferred to the Investor Education and Protection Fund by the Company.
(iv) The Company has provided requisite disclosures in the nancial statements as regards its holding and dealings in Specied Bank Notes as dened in the Notication S.O. 3407(E) dated the 8th November, 2016 of the Ministry of Finance, during the period from 8th November 2016 to 30th December 2016. Based on audi6t procedures performed and the representations provided to us by the management we report that the disclosures are in accordance with the books of account maintained by the Company and as produced to us by the Management.
For KAY & KAY ASSOCIATES Chartered Accountants (FRN : 312108E)
Place : Kolkata ( SUBROTO DEY ) PARTNER Dated 24th October, 2017 Membership No. 054316
ANNUAL REPORT - 2016-2017 - 53 AUDITORS' REPORT Contd....
Annexure – A - to the Independent Auditor's Report
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”). We have audited the internal nancial controls over nancial reporting of Burn Standard Co Ltd (“The Company”) as of March 31, 2017 in conjunction with our audit of the nancial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls The Company's management is responsible for establishing and maintaining internal nancial controls based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal nancial controls that were operating effectively for ensuring the orderly and efcient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable nancial information as required under the Companies Act, 2013.
Auditor's Responsibility Our responsibility is to express an opinion on the Company's internal nancial controls over nancial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of the Companies Act,2013, to the extent applicable to an audit of internal nancial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal nancial controls over nancial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal nancial controls system over nancial reporting and their operating
54 - ANNUAL REPORT - 2016-2017 AUDITORS' REPORT Contd.... effectiveness. Our audit of internal nancial controls over nancial reporting included obtaining an understanding of internal nancial controls over nancial reporting, assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedure selected depends on the auditor's judgment, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our audit opinion on the Company's internal nancial controls system over nancial reporting.
Meaning of Internal Financial Controls over Financial Reporting A company's internal nancial control over nancial reporting is a process designed to provide reasonable assurance regarding the reliability of nancial reporting and the preparation of nancial statements for external purposes in accordance with generally accepted accounting principles.
A company's internal nancial control over nancial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail accurately and fairly reect the transactions and dispositions of the assets of the company : (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of nancial statements accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorization of management and directors of the company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, user disposition of the company's assets that could have a material effect on the nancial statements
Inherent Limitation of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal nancial controls over nancial reporting including the possibility of collusion or improper management override of controls, material mis-statements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal nancial controls over nancial reporting to future periods are subject to the risk that the internal nancial control over nancial reporting may become
ANNUAL REPORT - 2016-2017 - 55 AUDITORS' REPORT Contd.... inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion , to the best of our information and according to the explanations given to us, the Company has, in all material respects, an adequate internal nancial controls system over nancial reporting and such internal nancial controls over nancial reporting were operating effectively as at March 31, 2017, based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.
For KAY & KAY ASSOCIATES Chartered Accountants (FRN : 312108E)
Place : Kolkata ( SUBROTO DEY ) PARTNER Dated 24th October, 2017 Membership No. 054316
56 - ANNUAL REPORT - 2016-2017 AUDITORS' REPORT Contd....
ANNEXURE TO THE AUDITORS' REPORT
(This is the Annexure referred to in our Report of even date)
In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under :
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of xed assets.
(b) The xed assets of the Company have not been physically veried by the management at reasonable intervals. The system followed is therefore not reasonable having regard to the size of the Company and the nature of its assets.
(ii) (a) The inventories have been physically veried partially by and on behalf of management under perpetual inventory system except for closed Refractory units and Jellingham fabrication yard.
(b) In our opinion the system followed, records maintained for such physical verication and the frequency is not reasonable or transparent commensurate to the size and nature of the Company.
(c) No material discrepancies were pointed out by the management on such verication.
(iii) As the Company has not granted any loans, secured or unsecured to companies, rms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013 so clause 3(iii) of the Order is not applicable.
ANNUAL REPORT - 2016-2017 - 57 AUDITORS' REPORT Contd....
(iv) In our opinion and according to the information and explanations given to us, it appears that there are adequate internal control procedures commensurate with the size of the company and nature of its business with regard to purchase of xed assets and inventory and for the sale of goods and services. In our opinion there is no continuing failure to correct major weaknesses in internal control system.
(v) As the Company has not accepted deposits, so the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules framed there under, were not applicable. Hence, clause 3(v) of the Order is not applicable.
(vi) The clause relating to maintenance of cost records under Sub-section (1) of section 148 of the Companies Act, 2013 has been made applicable to the company and we have been provided the cost audit report for the year ended on March 31, 2016 which was taken on record while nalizing this audit.
(vii) (a) As per records produced before us, the company is generally regular in depositing undisputed statutory dues like Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-Tax, Sales Tax, Wealth Tax, Customs Duty, Excise Duty, Cess and Statutory dues to the extent applicable to it with the appropriate authorities and there were no arrears of such dues at the year end which have remained outstanding for a period of more than six months from the date they become payable except there were some arrears of statutory dues as at the last day of the nancial year due for a period of more than six months from the date they became payable viz. Sales tax dues Rs. 801.00 lakhs, sales tax loan from Govt. of WB Rs. 410.68 lakhs and interest on above Sales Tax Loan upto 31.03.2011 Rs. 395.27 lakhs and Service Tax dues of Rs 498.30 lakhs as on 31.03.2017
58 - ANNUAL REPORT - 2016-2017 AUDITORS' REPORT Contd....
(b) According to the information and explanations given to us, there are disputed dues of Income-Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty or Cess to the extent applicable to it are as follows :-
Name of the Nature of the Amount in Period to Forum where dispute is pending Statute Dues Rs. In lakhs which it relates
C E D Under appeal 5383.01 1991-92 Different appellate authorities onwards W.B. VAT Under appeal 10.69 1995-96, Dy. Commissioner of Comm. Taxes. and CST 176.70 2005-06, Commercial Taxes Appellate & Revisional Board. 190.36 2006-07, Addl. Commissioner of Commercial Taxes. 11.29 2007-08, Commercial Taxes Appellate & Revisional Board. 7.48 2008-09, Commercial Taxes Appellate & Revisional Board. 15.39 2009-10, Commercial Taxes Appellate & Revisional Board. 37.58 2010-11, Addl. Commissioner of Commercial Taxes. 312.09 2011-12, Commissioner of Commercial
Taxes.
407.22 2012-13 Appeal before the Commissioner of
Commercial Taxes.
4 23.48 2013-14 Appea l before the Commissioner of Commercial Taxes. 35.52 2014-15 Demand raised by Com missioner of Com mercial Taxes
( c) There is no such amount required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under so clause 3 (vii) of the Order is not applicable.
ANNUAL REPORT - 2016-2017 - 59 AUDITORS' REPORT Contd....
(viii) The Company have accumulated loss as at 31st March, 2017 to the tune of Rs.29219.34 lakhs. The Company has incurred cash losses in the nancial year under report, and also there are cash losses in the nancial year immediately preceding such nancial year.
(ix) The Company has not defaulted in repayment of dues to a nancial institution or bank or debenture holders . Hence clause 3 (ix) is not applicable.
(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 nancial institutions.
(xi) Since no term loans have been raised by the Company, clause 3 (xi) of the order is not applicable.
(xii) On the basis of our examination and according to the information and explanations given to us, no fraud, on or by the Company, has been noticed or reported during the year under audit.
For KAY & KAY ASSOCIATES Chartered Accountants (FRN : 312108E)
Place : Kolkata ( SUBROTO DEY ) PARTNER Dated 24th October, 2017 Membership No. 054316
60 - ANNUAL REPORT - 2016-2017 AUDITORS' REPORT Contd....
Annexure-C Directions under 143(5) of Companies Act, 2013
1 If the Company has been selected for disinvestment, a complete status report in terms of valuation of Assets Not Applicable (including intangible assets and land) and Liabilities (including Committed and General Reserves) may be examined including the mode and present stage of disinvestment process.
2 Whether there are any cases of waiver /write off of debts / loans / Not Applicable interest etc, if yes, the reason there for and the amount involved.
3 Whether proper records are As informed to us, neither any maintained for inventories lying with inventories are lying with third third parties & assets received as parties nor any assets received as gift from Government or Other gift from Government or other Authorities authorities.
4 A report on age-wise analysis of A detail list showing position as on pending legal/arbitration cases 31.03.2017 is enclosed in including the reasons of pendency Annexure and existence/ effectiveness of a m o n i t o r i n g m e c h a n i s m f o r expenditure on all legal cases (foreign and local) may be given)
For KAY & KAY ASSOCIATES Chartered Accountants (FRN : 312108E)
Place : Kolkata ( SUBROTO DEY ) PARTNER Dated 24th October, 2017 Membership No. 054316
ANNUAL REPORT - 2016-2017 - 61 AUDITORS' REPORT Contd....
ANNEXURE Detail list showing pending legal/arbitration cases as on 31.03.2017
Name of the Nature of the Amount in Period to Forum where dispute is pending Statute Dues Rs. In lakhs which it relates C E D Under appeal 5383.01 1991-92 Different appellate authorities onwards W.B. VAT Under appeal 10.69 1995-96, Dy. Commissioner of Comm. Taxes. and CST 176.70 2005-06, Commercial Taxes Appellate & Revisional Board. 190.36 2006-07, Addl. Commissioner of Commercial Taxes. 11.29 2007-08, Commercial Taxes Appellate & Revisional Board. 7.48 2008-09, Commercial Taxes Appellate & Revisional Board. 15.39 2009-10, Commercial Taxes Appellate & Revisional Board. 37.58 2010-11, Addl. Commissioner of Commercial Taxes. 312.09 2011-12, Commissioner of Commercial Taxes.
407.22 2012-13 Appeal before the Commissioner of Commercial Taxes.
423.48 2013-14 Appeal before the Commissioner of Commercial Taxes.
For KAY & KAY ASSOCIATES Chartered Accountants (FRN : 312108E)
Place : Kolkata ( SUBROTO DEY ) PARTNER Dated 24th October, 2017 Membership No. 054316
62 - ANNUAL REPORT - 2016-2017 TEN YEARS’ DIGEST (Rs. In lakhs)
ANNUAL REPORT - 2016-2017 - 63
FINANCIAL ACCOUNTS FOR THE YEAR 2016-17
ANNUAL REPORT - 2016-2017 - 65 ACCOUNTS-2016-17 Burn Standard Co. Ltd. Balance Sheet as at 31st March, 2017 (Rs. in Lacs) Notes(2A) As at 31.3.2017 As at 31.3.2016 Shareholder's Fund Share Capital 2.1 18463.25 18463.25 Reserves & Surplus 2.2 14260.57 32723.82 17611.87 36075.12 Share Money Pending Allotment 2.3 0.00 0.00 Non Current Liabilities Long Term Borrowings 2.4 3990.52 3990.52 Other Long Term Liabilities 2.5 1131.08 1131.08 Long Term Provisions 2.6 2391.44 7513.04 2777.29 7898.89 Current Liabilities Short Term Borrowings 2.7 6383.98 4400.71 Trade Payables 2.8 10101.69 8655.39 Other Current Liabilities 2.9 2989.24 607.46 Short Term Provisions 2.10 16.79 19491.70 28.23 13691.79 TOTAL 59728.56 57665.80 Fixed Assets Tangible Assets 2.11 46900.55 47115.74 Intangible Assets 0.00 0.00 Capital Work in Progress 162.85 47063.40 176.35 47292.09 Non Current Investment 2.12 1.00 1.00 Long Term Loans and Advances 2.13 0.63 0.63 Other Non Current Assets 0.00 0.00 Current Assets Inventories 2.14 5701.90 3839.98 Trade Receivables 2.15 1987.44 2083.95 Cash and Bank Balance 2.16 2238.08 2190.44 Short-Term Loans and Advances 2.17 2387.34 1679.22 Other Current Assets 2.18 348.77 12663.53 578.49 10372.08 TOTAL 59728.56 57665.80 Significant Accounting Policies 1A Notes on Financial Statement 2A - 2B Notes referred to above form an integral part of the Balance Sheet As per our Reports of even date.
As per our Reports of even date.
Date : 24/10/2017
66 - ANNUAL REPORT - 2016-2017 ACCOUNTS-2016-17 Contd.... Burn Standard Co. Ltd. Statement of Prot and Loss for the year ended 31st March 2017
18794.93
19538.23
1224.51
22889.53 (3351.30)
(3351.30)
(3351.30)
(29219.34) (29219.34)
Note: The Company applied for the initiation of the Corporate Insolvency Resolution Process (CIRP) u/s 10 of the Insolvency and Bankruptcy Code (IBC), 2016 before the National Company Law Tribunal (NCLT), Kolkata Bench, Kolkata. CP # - (IB) 244/KB/2017. The said process has been commenced from 27/05/2017 as per the provisions of the Code against them. The Hon'ble NCLT vide its Order, dated 31/05/2017 appointed Shri Partha Kamal Sen, Insolvency Professional, as the Interim Resolution Professional (IRP). Shri Sen constituted a Committee of Creditors (COC) for the affairs of the Company, as per Section 21 of IBC, 2016. Shri Sen assumed the role of Resolution Professional (RP) as per the resolution passed by the COC, in this regard. Persuant to Section 17 of IBC, 2016, the powers of the Board of Directors have been suspended and vested upon the IRP/RP till completion of the CIRP. As such, the Financial Statements of the Company for the FY 2016-2017 have been signed by Shri Sen, RP, in regards to IBC 2016, and as per the direction of NCLT, Kolkata Bench, Kolkata, dated 09/02/2017.
Date : 24/10/2017
ANNUAL REPORT - 2016-2017 - 67 ACCOUNTS-2016-17 Contd.... Burn Standard Co. Ltd. Cash Flow Statement For The Year Ended 31.03.20 1 7 (Rs. In lakhs) For the year ended For the year ended 31st March 2017 31st March 2016
A. CASH FLOW FROM OPERATING ACTIVITIES Net Profit/(Loss) before taxation & Extraordinary Adj. (3351.30) (2837.63) Adjustments for : Depreciation 238.87 252.32 Extra Ordinary / Exceptional Items 0.00 0.00 Interest Expenses 1042.68 543.58 Provisions 552.57 228.20 VRS Expenses (Amortised) 0.00 1834.12 0.00 1024.10 Operating Profit before working capital changes (1517.18) (1813.53) Adjustments for : Inventories (1861.92) (16.09) Sundry Debtors 96.51 (342.53) VRS Exgratia 0.00 0.00 Other Current Assets 229.72 (398.18) Loans & Advances (708.12) 20.14 Current Liabilities & Provisions 2878.22 634.41 2446.31 1709.65 Cash Flow before Extraordinary Activities Extraordinary Items & others 0.00 0.00 Tax Paid 0.00 0.00 0.00 0.00 Total (A) (882.77) (103.88) B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets [Including (CWIP)] 10.18 (222.23) Investments 0.00 0.00 Total (B) (10.18) (222.23) C CASH FLOW FROM FINANCING ACTIVITIES Increase / (Decrease) in Secured Loans 1983.27 (21.73) Increase/(Decrease) in Unsecured Loans 0.00 0.00 Increase in Share Capital 0.00 700.00 Interest paid (1042.68) (543.58) Total (C) 940.59 134.69 Net Inflow/(Outflow) (A+B+C) 47.64 (191.42) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 2190.44 2381.86 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 2238.08 2190.44 NET CASH INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 47.64 (191.42)
Cash in hand and transit 1.66 3.32 Balances with Scheduled Banks In Current Account 69.99 83.09 In Short Term Deposit Account 1961.09 1898.69 In Other Fixed Deposits 205.34 2236.42 205.34 2187.12
2238.08 2190.44
Note : 1) Cash & Cash equivalent include Fixed Deposit with UBI of Rs.204.29 lakhs which is not available for use by the company being subjudiced.
Date : 24/10/2017
68 - ANNUAL REPORT - 2016-2017 ACCOUNTS-2016-17 Contd....
NOTE 1A : SIGNIFICANT ACCOUNTING POLICIES
1. ACCOUNTING CONVENTION
1.1. The nancial statements have been prepared under historical cost convention, modied by revaluation of certain xed assets as and when undertaken. In accordance with the Generally Accepted Accounting Principle in India and comply with the applicable Accounting Standards and the relevant provisions of the Companies Act, 2013.
1.2. The Company generally follows Mercantile System of Accounting and recognizes signicant items of income and expenditure on Accrual Basis except as otherwise stated.
2. INCOME
2.1 Turnover against sale contracts is considered on the basis of actual dispatches against ex-works contract, on delivery to the common carrier unconditionally appropriated to the sale contract and against FOR destination contract on actual delivery/receipted challan.
2.2 Earnings against fabrication and erection activities (including those for manufactured products wherever applicable) are reckoned as per certicates of customers of matching percentage completion.
2.3 Amount of escalation due as per contract, 'balance bill' and 'other claims' etc. for which invoices could not be raised due to contractual provisions etc. are accounted for as 'Sales' and shown under 'Other Current Assets'.
2.4 Sales are inclusive of Freight and other Charges recoverable but exclusive of Excise Duty and Value added Tax.
2.5 Credit for scrap is taken when disposed of/identied and physically veried.
2.6 All claims like Escalation, Export Incentive and Insurance etc. are accounted for to 'Sales' on ascertaining their realizability.
3. EXPENSES
3.1 Expenses for after-sales-service during the guarantee period are considered in the accounts when incurred.
ANNUAL REPORT - 2016-2017 - 69 ACCOUNTS-2016-17 Contd....
3.2 Sub-contract and other direct expenses include jobs done/processed through sub- contractors, ancillaries and Sister Units.
3.3 Employees Remuneration include
a) Contribution to Provident Fund and Family Pension Fund on actual liability basis.
b) Gratuity and leave encashment benet on actuarial valuation basis.
3.4 Excise Duty is accounted for on goods cleared at the time of clearance of the goods from the factory and on nished goods in stock at the end of the year. Credit for CENVAT in respect of excisable goods is accounted for on receivable basis and adjusted against Excise Duty charges on availment basis.
3.5 Prepaid Expenses up to Rs. 5000/= are charged off to Revenue.
3.6 Prototypes developed or under development including experimental orders are carried as items of Inventory until sale, transfer of scrapping at cost.
4. INCOME AND EXPENSES RELATING TO PRIOR PERIOD
4.1 Income and Expenses more than Rs.5,000/= in each case pertaining to earlier years are shown under this head.
4.2 INTER-UNIT TRANSACTIONS
i) Inter-Unit transfers are valued at market price or prices agreed to by the Units.
ii) Transfers affected during the year are not set off and are shown as 'Consumption' and 'Sales'.
5. DEPRECIATION AND AMORTISATION
5.1 Fixed Assets are stated as cost less depreciation. The company has capitalized all costs relating to acquisition of xed assets or in case of internally completed items of xed assets as per installation certicate of the engineers. Depreciation on xed assets has been provided on the basis of the useful life of the assets as provided in schedule – II of the Companies Act, 2013.
70 - ANNUAL REPORT - 2016-2017 ACCOUNTS-2016-17 Contd....
5.2 Extra shift depreciation is calculated for the full year irrespective of number of days worked on double shift/triple shift. 5.3 As and when the xed assets are revalued, the difference between revalued value of xed assets and written down value is transferred to revaluation reserve. Revaluation reserve account is set off with annual depreciation, wherever applicable on that portion of the value which is written up.
6. CAPITAL EXPENDITURE
Fixed Assets are capitalized at cost exclusive of CENVAT element and inclusive of installation and related expenses. Addition of Assets against specic loan fund are capitalized exclusive of interest on the said loan up to the date of commissioning. Job done departmentally on Capital Account is taken to the credit of Prot and Loss Account. Advances paid for acquisition of Capital Assets are included in Capital Work- in-Progress.
7. INVESTMENTS Investments are intended to be held for long term and as such carried at cost except in the case of diminution, other than temporary, in the value of investment.
8. INVENTORY 8.1 Finished Goods: Finished Goods are valued at lower of cost (including leviable excise duty) or realizable value (including escalation).
8.2 Contract-in-progress/Work-in-Progress: a) All products at different stages of completion (including part deliveries) are valued at cost or net realizable price, whichever is lower. b) Prot/Loss is considered upto the stage of completion of contracts. Future loss on unexecuted portion, if any, is not provided for.
8.3 Raw Materials, Stores and Spares: a) Stock of materials, stores and spares including loose tools are valued at cost exclusive of CENVAT element. Issues are priced at weighted average rates.
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b) Stock of stores, raw materials, components and capital equipment in bonded warehouse are valued at cost plus estimated Customs Duty and other applicable charges but exclusive of interest on Customs Duty. 8.4 Non-moving stores and raw materials to the extent declared obsolete and disposed of are accounted for as 'Other Income'.
8.5 Non-moving stores, raw materials and loose tools are valued at 75% of book value in respect of items not moved over 3 years, at 50% for those over 4 years and 25% for those more than 5 years.
8.6 Free Supply items received from the customers are not considered in nancial accounts.
8.7 Materials issued to other Units/other subsidiaries/sub-contractors against loan or for further processing etc. are accounted for, reconciled and disclosed separately.
9. PROVISIONS
9.1 Sundry Debtors outstanding for more than ve years are fully provided for.
9.2 Provision against Loan, Advances and other Current Assets are made on the basis of non-realizability of the said assets. 9.3 Claims against the Company are recognized as and when established.
10. SET-OFF
10.1 Advances received from customers in respect of construction contracts are shown as a deduction from the amount of specic work-in-progress.
10.2 Advances received from customers to the extent linked are set off against corresponding debts.
10.3 Advances to suppliers are set off against corresponding liability.
11. FOREIGN CURRENCY TRANSACTIONS
11.1 Transactions in foreign exchange are accounted for at the exchange rate prevailing on the date of transactions.
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11.2 Current Assets and Current Liabilities i.e., items to be received or paid in foreign currency (other than those covered under forward contract) are converted at year end rates and any exchange difference arising on such transactions are dealt within the Prot and Loss Account.
12. SEGMENT REPORTING
The company has two manufacturing locations at Howrah and Burnpur and Project Division & Head Ofce at Head Ofce, Kolkata. Accordingly on geographical basis the segment reporting is made by the Company.
13. PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS.
Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outow of resources. Contingent Liabilities are not recognized but are disclosed in the notes on Accounts. Contingent Assets are neither recognized nor disclosed in the nancial statements.
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2A. Notes on Financial Statements for the year ended 31st March , 2017 (Rs. in Lacs) As at 31.3.2017 As at 31.3.2016
2.1 SHARE CAPITAL : Authorised 1850000.00 (1850000.00) Equity Shares of Rs. 1000/- each 18500.00 18500.00
Issued and Subscribed 1846325.00 (1846325.00) Equity Shares of Rs. 1000/- each Fully paid up 18463.25 18463.25 18463.25 18463.25
(i) Of the above issued and subscribed Equity Shares 88283 Shares were issued pursuant to contract for consideration otherwise than in Cash. (ii) All the Shares were held by BBUNL till April 2011 and thereafter by Ministry of Railways, Govt. of India & its Nominees. (iii) 20000 Equity shares amounting to Rs.200.00 lakhs has been allotted to MoR on 28.03.2015. (iv) 70000 Equity shares amounting to Rs.700.00 lakhs has been allotted to MoR on 30.03.2016.
2.2 RESERVES & SURPLUS Revaluation Reserve : As per last Balance Sheet 43479.91 43479.91 Profit and Loss Account Debit balance of Profit & Loss Account (29219.34) (29219.34) (25868.04) (25868.04) TOTAL 14260.57 17611.87
2.3 SHARE CAPITAL PENDING ALLOTMENT Share Deposits Pending Allotment 0.00 0.00
0.00 0.00
2.4 LONG TERM BORROWINGS (Unsecured) United Bank of India (Current Account)(Refer Note no.2B.2.1) 79.84 79.84 Interest free Loan from MOR 3500.00 3500.00 Sales Tax Loan from Govt of West Bengal 410.68 410.68 TOTAL 3990.52 3990.52
2.5 OTHER LONG TERM LIABILITIES : For Goods 342.47 342.47 For Expenses 358.23 358.23 For Liabilities 430.38 1131.08 430.38 1131.08 1131.08 1131.08
(Attention is drawn to point no.1.4 of Note 2B, wherein the 'Other Long Term Liabilities pertains to closed loss making refractory units (LRUs).
74 - ANNUAL REPORT - 2016-2017 ACCOUNTS-2016-17 Contd.... 2A. Notes on Financial Statements for the year ended 31st March , 2017 As at 31.3.2017 As at 31.3.2016 2.6 LONG TERM PROVISIONS Gratuity 2011.68 2306.84 Leave Encashment 349.54 440.23 Contingency 30.22 30.22 TOTAL 2391.44 2777.29 2.7 CURRENT LIABILITIES Cash Credit from UBI 4851.90 2958.19 Short term loan against FD with UBI 1532.08 6383.98 1442.52 4400.71 TOTAL 6383.98 4400.71 i)Total sanction by United Bank of India amounting to Rs.5000.00 lakhs , by way of cash credit and Rs.1350.00 lakh by way of Letter of Credit and Letter of Guarantee. Ii) Cash Credit and non fund limits is hypothecated on stores, book debts and other current assets. Additional security constitutes rst charge on entire xed assets of the company.iii) Further Collateral security by way of Govt. Guarantee of Rs.60.50 crores was provided till 31.03.2015. Company's request for renewal of Govt. Guarantee for the F Y 2015-16 has been submitted to Ministry of Railways pending receipt of the same. 2.8 TRADE PAYABLES (i)Micro , Small and Medium Enterprises 272.42 209.43 (ii) Others : For Goods 5878.29 5503. 45 For Expenses & Others 2219.15 2034.47 For Statutory Liabilities 1731.83 10101.69 908.04 8655.39 10101.69 8655.39 As required by Section 22 of the Micro, Small and Medium Enterprise development Act 2006, necessary interest for overdue amounts exceeding 45 days as on 31.03.2017 has been provided in the accounts. 2.9 OTHER CURRENT LIABILITIES Deposits from Contractors, and other parties 492.64 483.51 Advance against Orders 2496.60 123.95 TOTAL 2989.24 607.46
2.10 SHORT TERM PROVISIONS Bonus 6.79 18.23 LTC 10.00 10.00 TOTAL 16.79 28.23 2.12 NON CURRENT INVESTMENTS (A) INVESTMENT IN SAIL-BENGAL ALLOY CASTINGS PVT LTD 1.00 1.00 [10000 equity shares @ Rs.10/- each] 1.00 1.00 II)SBACPL: In view of the loss of Rs 108501.45/- suffered by the compnay during the financial year 2016-17 bringing its Accumulated Loss to Rs.367666.29 diminution in the value of investment amounting to Rs.183833.14 being 50% of share hloding in the Joint Venture company along with Steel Authority of India Ltd (SAIL) has not been provided in the books of BSCL. The management perceives that provision at this stage is not required as JV company has not yet commenced its commercial operation. 2.13 LONG TERM LOANS AND ADVANCES Advance and Loans to subsidiaries Loans 0.00 0.00 Less: Recovered 0.00 0.00 0.00 0.00 Advances 0.01 0.01 Less: Written off (0.00) 0.01 (0.00) 0.01 Balances with Customs/Port Trust 0.62 0.62 TOTAL 0.63 0.63
ANNUAL REPORT - 2016-2017 - 75 ACCOUNTS-2016-17 Contd.... 2A. Notes on Financial Statements for the year ended 31st March , 2017 1 2.1
76 - ANNUAL REPORT - 2016-2017 ACCOUNTS-2016-17 Contd.... 2A. Notes on Financial Statements for the year ended 31st March , 2017 (Rs. in Lacs) As at 31.3.2017 As at 31.3.2016
2.14 INVENTORIES Raw Materials 3343.76 2543.82 Less: Project Inventory (387.35) 2956.41 (387.35) 2156.47 Finished Goods 831.97 411.93 Work -in-Progress 2140.12 1126.83 Project Inventory (Sheet Piles atJelligham) 155.59 155.59 Consumable Stores and Spare parts 789.91 803.51 Project Inventory (Sheet Piles at Garden Reach) 231.76 231.76 7105.76 4886.09 Less: Provision for non-moving/obselete/Unusuable items 1403.86 1046.11 TOTAL 5701.90 3839.98 (i) Inventory items have been physically verified in all Operating Units departmentally under Perpetual Inventory System covering major portion of the Closing Stock. Discrepancies as detected were not material in nature and have been adjusted. (ii) Ref. Note 1A-8 Accounting Policy for basis of valuation of inventories. (iii)Provision for inventories of Rs.1403.86 lakhs includes Rs.259.06 lakhs against consumable stores & spare parts and balance of Rs.1080.27 lakhs is for Raw materials and Rs.64.53 lakhs for Finished goods. (iv) Work in progress includes Inventories with LRU’s amounting to Rs. 209.01 laks. 2.15 TRADE RECEIVABLES ( Unsecured ) Debts due over six months Considered Good 1536.64 1813.60 Considered Doubtful 3832.71 5369.35 3565.29 5378.89 Other Debts 450.80 270.35 Considered Good 5820.15 5649.24 Less: Provision for Doubtful Debts 3832.72 3565.29 TOTAL 1987.44 2083.95 2.16 CASH AND CASH EQUIVALENTS Cash in hand and transit 1.66 3.32 Balances with Schedule Banks In Current Accounts 69.99 83.09 In Short-Term Deposit Account with Bank 1961.09 1898.69 Fixed deposits with Banks 205.34 2236.42 205.34 2187.12 TOTAL 2238.08 2190.44 (i)Cash & Bank Balances include Fixed Deposit with United Bank of India, Calcutta Main Branch having principal amount of Rs.204.29 Lakhs. The said Fixed Deposit was unilaterally adjusted by the bank against their alleged pre-nationalization dues. After obtaining approval of Committee on Disputes (COD), the Company filed a money suit on 21.1.2011 in the Hon’ble Kolkata High Court against United Bank of India for recovery of the same along with accrued interest. (ii) Unconfirmed Bank Balances amounted to Rs.12.09 lakhs and fixed deposits Rs.1.04 lakhs. (iii)On the basis of BIFR directive Rs.107.71 lakhs has been pledged with UBI-Royal Exchange Branch under lien against sale value of a piece of land at Salem unit to be used for future rehabilitation included under short term deposit account with bank.
2.17 SHORT TERM LOANS AND ADVANCES
Deposits 258.59 237.07 Advance recoverable in cash or in kind for 2740.62 2148.42 value to be received ( Unsecured ) Less: Provision for Doubtful Advance 733.84 725.32 2006.78 1423.10 Income tax Deducted at source 121.97 19.05 2387.34 1679.22 TOTAL ANNUAL REPORT - 2016-2017 - 77 ACCOUNTS-2016-17 Contd....
2A. Notes on Financial Statements for the year ended 31st March , 2017 (Rs. in Lacs) As at 31.3.2017 As at 31.3.2016
2.18 OTHER CURRENT ASSETS Interest accrued on Short Term Deposit with banks 23.64 6.14 Escalation, residual billing and claim for extrawork 706.33 916.78 729.97 922.92 Less: Provision for Doubtful Debts 381.21 344.43 TOTAL 348.77 578.49
2.19 REVENUE FROM OPERATIONS( Net of Excise duty) Domestic 18799.31 11650.27 Export 0.00 18799.32 0.00 11650.27 Escalation Claims 121.07 45.23 Scrap Sales 343.30 369.59 Project Sales 15.30 4.49 19278.99 12069.58 Less: Excise Duty 484.06 100.55 TOTAL 18794.93 11969.03 Sales includes inter-unit sales from Howrah to Burnpur amounting to Rs.1337.66 lakhs and Rs.301.30 lakhs from Burnpur to Howrah.
2.20 OTHER INCOME Miscellaneous Income 607.63 1710.22 Interest on Short Term Deposits with Banks 135.67 134.47 TOTAL 743.30 1844.69
Miscellaneous Income of Rs 607.63 lakhs for the FY 2016-17 includes savings in steel amounting to Rs 442.50 lakhs of Burnpur Works
2.21 CONSUMPTION OF RAW MATERIALS Opening Stock 2543.82 2101.39 Add :Purchases 9763.21 6913.05 12307.03 9014.44 Less: Closing Stock 3343.76 2543.82 TOTAL 8963.27 6470.62
2.22 CHANGES IN INVENTORIES OF FINISHED GOODS WORK-IN-PROGRESS - (Increase)/Decrease Finished Goods : Opening Stock 411.93 647.46 Less:Closing Stock (831.97) (420.04) (411.93) 235.53 Work in Progress Opening Stock 1126.83 1184.57 Less:Closing Stock (2140.12) (1013.29) (1126.83) 57.74 TOTAL (1433.33) 293.27
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2A. Notes on Financial Statements for the year ended 31st March , 2017 (Rs. in Lacs) As at 31.3.2017 As at 31.3.2016 2.23 MANUFACTURING EXPENSES: Fabrication charges to Sub-contractors 1162.26 810.45 Transportation and Service Charges to Sub-contractors 4789.61 851.63 Design and Drawing Charges 3.50 1.95 Freight Inward 159.02 32.75 Processing Charges 406.16 418.05 Excise Duty 23.52 458.47 TOTAL 6544.07 2573.30
2.24 CONSUMPTION OF STORES, SPARE PARTS AND LOOSE TOOLS Opening Stock 803.51 837.62 Add : Purchases 988.68 1792.19 783.14 1620.76 Less: Closing Stock 789.97 803.51 1002.22 817.25 2.25 EMPLOYEE BENEFITS EXPENSE Salaries and Wages 1891.46 2114.29 Leave Encashment 111.98 130.13 Gratuity 378.62 350.63 Bonus 51.90 45.56 Contribution to PF & FPF 214.78 191.68 Deposit Linked Insurance 3.64 4.06 Contribution to ESI 2.74 2.95 Other Employee Benefits 291.60 275.60 TOTAL 2946.71 3114.90 (i) As per AS-15 (Revised) information are furnished in Note 2B 2.26 OPERATIONAL & ADMN. EXP. Repairs & Maintenance : Building 16.19 7.44 Plant & Machinery 63.54 67.18 Others 34.60 114.33 33.27 107.89 Administrative Expenses Rent 79.08 90.36 Rates & Taxes 194.17 137.35 Insurance 7.20 4.27 Printing and Stationary 12.97 10.07 Advertisement and Publicity 2.47 7.36 Payment to Statutory Auditors Payment to Auditors Statutory Audit Fees 1.24 1.08 Other Services & Out of Pocket Expenses 0.17 1.41 0.40 1.48 Payment to Auditors Internal Audit Fee 3.23 3.38 Travelling Expenses Directors 41.28 20.53 Others 9.78 51.06 9.62 30.15 Postage and Telegram 12.81 12.00 Motor Vehicle Expenses 16.82 15.38 Note 2.26 contd…
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2A. Notes on Financial Statements for the year ended 31st March , 2017 (Rs. in Lacs) As at 31.3.2017 As at 31.3.2016
Subscription and Donation 0.28 0.33 Training and Seminar Fees 0.25 1.39 Director's Fees 0.71 0.61 Hiring Charges 64.01 40.33 Freight Outward 71.25 32.91 Legal Expenses 8.33 6.93 Ship Building Expenses 0.00 0.26 Liquidated Damages 39.20 13.82 Filing Fees 0.77 0.69 Consultation & Retainership Fees 215.62 157.77 Security Service Charges 199.79 171.93 Entertainment Expenses 1.40 1.17 Tendering Charges 1.07 0.62 Board Meeting Expenses 1.36 0.55 Others 124.91 584.12 92.93 439.48 1224.51 941.93
2.27 FINANCE COSTS Bank Interest (Cash Credit) 473.60 364.98 Other Interest 569.08 178.60 Bank Charges 18.86 33.94 TOTAL 1061.54 577.52
2.28 DEPRECIATION AND AMORTISATION EXPENSE Depreciation (Note No. 2.11) 238.87 252.32 Amortisation of VRS Expenses 0.00 0.00 TOTAL 238.87 252.32
2.29 OTHER EXPENSES :(Debit)/Credit Provisions: Inventories & Expenses 357.75 100.87 Doubtful Debts 267.42 360.06 Doubtful Claims( other current assets) (117.90) (258.58) Doubtful Advance 45.30 25.85 [ A ] 552.57 228.20 Prior Period Adjustments ( Credit ) Sales,Raw materials,Employees' remuneration,Mfg. Exp. Etc 0.00 (14.45) [ B ] 0.00 (14.45)
Prior Period Adjustments -Debit Manufcturing expenses and other direct cost 402.14 135.11 Power and Fuel [ C ] 402.14 135.11 [A+B+C] 954.71 348.86
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[ Geographical Segments ]
NOTE 2.30: SEGMENT REPORTING (Rs.in Lacs) Engineering Units Consolidated Howrah Burnpur HO/Project Total
A Primary Segment Information : 1 Revenue - External Sales 8562.71 5435.09 4797.13 18794.93 - Internal Segment sales 0.00 0.00 0.00 0.00 Total Revenue 8562.71 5435.09 4797.13 18794.93
2 Segment Results - Profit/(Loss) before Interest, Taxation, other income (1413.03) (768.68) (1169.59) (3351.30) - Interest (Finance Expenses) (196.48) (242.13) (622.93) (1061.54) - Other revenue (Interest on Loans & Deposits, Income from current & long term investments, Profit/Loss on sale of Investment etc. 31.17 459.31 252.82 743.30 - Profit/(Loss) before Exceptional Items (1413.03) (768.68) (1169.59) (3351.30) Extra ordinary Items 0.00 0.00 0.00 0.00
3 Profit/(Loss) after taxation (1413.03) (768.68) (1169.59) (3351.30)
4 Segment Assets 8754.12 12643.74 38330.71 59728.56 Revaluation of Land Assets
5 -Segment Liabilities 7551.64 4888.46 14564.64 27004.74
6 Capital Expenditures 0.00 19.88 2.32 22.20
7 Segment Depreciation 153.75 56.30 28.02 238.87
B Secondary Segment Information With in India Outside India Segment Revenue 18794.93 0.00 Segment Expenditure -Travelling Expenditure 31.92 19.14
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NOTE 2B : NOTES ON ACCOUNTS
1.1 The Company became a sick company within the meaning of clause 'O' of sub section(1) of Section-3 of the Sick Industrial Companies (Special Provision) Act 1985 for which reference was made to the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of that Act in November 1994. BIFR sanctioned a Rehabilitation Scheme on 16.4.1999 based on operation of units at Howrah, Burnpur and Salem and Central Project Division of the Company. BIFR and AAIFR were wound up from 01.12.2016 under Gazette Notication No.3569 both dated 25.11.2016.
Pursuant to the said Gazette Notications the cases before those forums have been abated and fresh cases may be made before the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016 within one hundred eighty days under the The Eighth Schedule, Amendment to Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (1 of 2004).
Accordingly the Company applied before the NCLT, Kolkata Bench, Kolkata on 15/05/2017 u/s 10 of the Insolvency and Bankruptcy Code (IBC) 2016 to initiate Corporate Insolvency Resolution Process (CIRP) against them. The Company also led petition on the date for an order from the Hon'ble NCLT allowing all the moratorium u/s 14 of IBC 2016. The application of the Company was admitted under CP NBo.(IB) 244/KB/2017. The Hon'ble NCLT passed the order dated 31/05/2017 directing he initiation of CIRP, declared moratorium for the Company till the completion of CIRP and advised for the Public Announcement. In the said order the Adjudicating Authority NCLT appointed an Interim Resolution Professional (IRP) for the Company u/s16 of IBC 2016. As per the provisions of IBC 2016, the IRP has subsequently been appointed as the Resolution Professional (RP) for the Company. Pursuant to Section 17 of IBC 2016 the powers of the Board of Directors have been suspended and vested with the IRP/RP. The IRP has constituted a Committee of Creditors (CoC) for the affairs of the Company as per Section 21 of IBC 2016.
1.2 Govt. of India vide its letter No.8 (12)2009-PE III dated 6thAug2010 approved transfer of administrative control of the Company (other than Refractory unit at Salem) to Ministry of Railway (MoR), which was effected on and from 15.9.2010 and that of the Refractory Unit at Salem to Steel Authority of India Ltd under Ministry of Steel (MoS), was made effective on and from 16th Dec2011. Further based on receipt of sanctions for nancial restructuring from GOI for conversion of Government loans into equity with corresponding reduction of equity & accumulated losses and waiver of normal and
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penal interests have already been incorporated in the Accounts of 2010-11.
1.3 The accounts have been prepared on a “Going Concern Basis” based on the various measures undertaken by the GOI and the company for continuation of its business.
1.4 Other Long Term liabilities (Sch – 2.5) of Note 2A amounting to Rs. 1131.08 lakhs pertains Loss Making Refractory Units namely Raniganj Works, Gulfarbari Works, Jabalpur Works and Niwar Works which are closed since 31.12.2000
2. No Provision has been made in respect of:
2.1 Interest on credit balance of Rs.79.84 Lakhs (United Bank of India Current Account) pertains to pre-nationalization period for which provision in the accounts was not necessary as per terms of relevant Nationalization Act.
2.2 Details of impairment of Assets in closed & other units are in the process of identication and the loss if any will be assessed and provided for.
3. Fixed Assets:
3.1 Revaluation of Land Assets:
The Board in its meeting held on 19th Feb 2007 & 15th Dec 2010 approved valuation of Company's land assets. Three approved valuer were appointed and based on the average of the three valuations done by the valuer during the month of Dec 2009, the revaluation was given effect during the year 2010-11. The appreciation on account of revaluation of land assets amounting to Rs. 43479.91 lakhs has been credited to the Revaluation Reserve.
3.2. Stock of imported Sheet Piles worth Rs.387.35 Lakhs was being carried on as CWIP till FY 2011-12.The stock lying at Jellingham Site was 1980.78 MT valued at Rs. 155.59 lakhs and Garden Reach bonded warehouse was 2950.423 MT valued at Rs 231.76 lakhs. The stocks have been regrouped under inventories. The company has made a provision of Rs 231.76 lakhs in respect of material lying at bonded warehouse during the FY 2016-17.
4. Current Assets and Current Liabilities:
Pending conrmation from the parties, the balances in Sundry Debtors, Loans & Advances, in-operative Bank Balances, Deposits & Other Current Assets and Sundry Creditors have been taken at book balance. In the opinion of the Management, Current
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Assets, Loans and Advances are realizable in the ordinary course of business at least equal to the amount at which they are stated save and except for Loans and Advances lying outstanding for more than 10 years for which no details are available. Necessary provision has been made in the books.
5. Arrears of 1992 Pay Revision: Salary revision agreement of the ofcer of the company expired on 31.12.91. Administrative approval vide no. 3(17)/99 PF III dated 19.04.2000 has been issued by Dept. of Heavy Industry, Govt. of India, advising implementation of pay revision for ofcers from 1.1.2000 in accordance with the DPE Guideline dated 19.07.1995 on prospective basis with stipulation for payment of arrears on adequate internal generation of resource by the company. The Hon'ble Calcutta High Court opined in the judgment dt. 27.03.2003 that if any Revival / Joint Venture scheme is proposed, then the matter with regard to the pay revision of the petitioners is required to be considered while sanctioning any such new scheme. Further DHI vide its letter dt.06.08.2010 intimated that the resources for meeting the arrears of 1992 pay revision must have to be internally generated and must come from improved performance in productivity. Hence, the management is of the opinion that no provision for the pay revision estimated at Rs. 1934.00 lakhs is required at this stage.
6. Remuneration to Whole time Directors: 6.1 Remuneration paid (in Rs.) to Whole-time Directors (including Managing Director) during the year:
Salary & Name Designation Period Perquisites Allowance Chairman & Managing D. Marandi April 16 to Aug’16 743433.00 34212.00 Director
Chairman & Managing Md. Asad Alam Aug’16 to Mar’17 1260465.00 NIL D irector
Nilotpal Dey Director( Finance) Mar’17 to Mar’17 138754.00 NIL
In addition Whole time Directors are allowed to use Co.'s car for private use up to 1000 KM. per month on payment of Rs. 2000/- PM.
6.2 Balance due from Directors and Secretary as on 31st March, 2017 - Rs. Nil (Previous Year - Nil).
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7. Joint Venture: Burn Standard Co. Ltd and Steel Authority of India Ltd. has entered into a 50:50 joint venture for manufacture of wagon components and set up a company under the name of SAIL BENGAL ALLOY CASTING PVT. LIMITED at the leasehold land in Jellingham, West Bengal vide JV agreement dated 25.05.2012. The Joint Venture Company was incorporated on 12.02.13.Fund amounting to Rs. 7.00 crores from MoR has been received by BSCL during FY 2015-16. The capital contribution was not made till date due to relocation of the JV Company but the fund has been utilized for working capital requirement. So, however expenses paid by BSCL towards pre- incorporation and pre-operative expense amounted to Rs. 47.54 lakhs is shown under the head Advances in Schedule –2.17.
8. Contingent Liabilities not provided for in respect of : 8.1 Estimated amount of contracts remaining to be executed on Capital Account and not provided for – Rs. 535.17 Lakhs (Previous Year - Rs. 535.17 Lakhs). 8.2 Bank Guarantee outstanding – Rs.608.43 Lakhs (Previous Year - Rs536.19Lakhs). 8.3 Letter of Credit outstanding - Rs.0.00 Lakhs ( Previous Year - Rs. 55.55 Lakhs). 8.4 Cases related to Excise Duty Claims including penalty for Rs 5383.09Lakhs (PreviousYear-Rs.5383.09 Lakhs) i.e. For BW-Rs.1345.09 Lakhs ( Previous Year - Rs.1345.09 Lakhs), for HW-Rs.3938.00 Lakhs ( Previous Year-Rs.3938.00 Lakhs) & CPD Rs 100.00 Lakhs( Previous Year –Rs.100.00 Lakhs) are pending before different Appellate Authorities. 8.5 Sales Tax demand for Rs 1627.80 Lakhs (Previous Year - Rs. 1592.28 Lakhs) which have been contested and is pending with Appellate Authority. 8.6 Inventory includes 2946MT of BSCL sheet piles lying at Jellingham Fabrication Yard valued at Rs 155.59 lakh. However physical verication of inventory assessed the quantity of stock at 1980.78 MT. Hence there is a shortage of 965.22 MT. The proportionate value of the shortage works out to Rs 50.98 lakhs. No provision for such shortage has been made in the accounts. 8.7 Legal Suits against Company pending before different authorities – amount not ascertainable. 8.8 Claims against Company being disputed by the management have not been acknowledged as debt-amount unascertainable. 8.9 Arrear salary for Pay revision w.e.f. 1.1.1992 estimated at Rs 1934.00 Lakhs up to
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31-12-1999 on implementation of pay revision of ofcers are payable on company's improved operational performance and company having adequate internal cash generation to meet this liability. 8.10 Customs Duty Payable for Sheet Piles in case of domestic sales amounting to Rs. 301.69Lacs (Previous Year - Rs.301.69 Lakhs). 8.11 Demand of Property Tax amounting to Rs.147.58 lacs subsequently enhanced to Rs. 220.74 lacs in the year 2004-05 by the Municipal Corporation, Jabalpur (M.P.) against which Writ Petitions are pending before the Hon'ble Jabalpur High Court. 8.12 Proceedings initiated by Kolkata Port Trust before Ld Estate Ofcer for outstanding towards disputed rent and interest for leasehold land at Howrah Works and Jellingham demanded by Kolkata Port Trust under the Provisions of the Public Premises Eviction of Unauthorized Occupants Act, 1971 is pending. Initially, the rent was decided based on the lease agreement entered into between Kolkata Port Trust and Burn Standard Co Ltd. However, Kolkata Port Trust is demanding Schedule Rates with interest. Application for waiver of total interest amounting to Rs. 144.76 lakhs in respect of Jellinghum have been made to the concerned authorities and not provided for. 8.13 Payment of wage settlement of NW, JW and RW group of workers, matter sub- judicated before the Hon'ble High Court – amount not ascertainable. 8.14 Arrear rent for custom bonded warehouse at Garden Reach amounting to Rs. 290.00 lakhs since 16th Jan. 1990 being disputed before the Hon'ble High Court, Kolkata in respect of imported Sheet Piles. 8.15 Abnormal enhancement of Municipal Tax, and interest and penalty for Head Ofce thereon mentioning Rs.209.66 lakhs is disputed by the company and not provided for. 8.16 Municipal Tax liability of Raniganj Works amounting to Rs100.00 lakhs has not been provided for. 9. As per AS-18, the information on Related Party is given:- i) Key Management Personnel- 1. Sri Dayanidhi Marandi - Chairman & Managing Director upto 19 th August, 2016. 1. Sri Md. Asad Alam– Chairman & Managing Director w.e.f 20th August,2016 2. Sri Nilotpal Dey -Director (Finance) w.e.f 7th March, 2017 ii) Transaction with Related Parties- Remuneration paid to Directors - Refer note no 6.1 above. Sales made to Railways during the FY 2016-17 – Rs 17624.73 lakhs
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10. Turnover is disclosed net of Excise Duty in accordance with ASI 14 on “Disclosure of Revenue from sale transactions” issued by the ICAI.
11. As per AS-15 (Revised) following information are furnished below:- a) Disclosure of Employer expense for the year ended 31st March 2017
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D. Actuarial Assumption:-
The Principal Actuarial assumptions as at 1st April 2016 and 31st March 2017 are as follows:-
01/Apr/1 6 31/Mar/ 17 Discount Rate 7.50% 6.60 % Expected Return on Assets N/A N/A Salary Escalation 5.00% 5.00% Indian Indian
Assured Lives Assured Lives Mortality Rate Mortality Mortality (2006-08) (2006-08) (modied) Ul t. (modied) Ult. 01/Apr/1 6 31/Mar/1 7
Ages from 20 - 35 0.50% 0.50%
Ages from 25 - 30 0.30% 0.30%
Ages from 30 - 35 0.20% 0.20%
Ages from 35 - 50 0.10% 0.10%
Ages from 50 - 55 0.20% 0.20%
Ages from 55 - 60 0.30% 0.30%
11. Details of Specied Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 as provided in the Table below:-
Other denomination Particulars SBNs Total notes Closing cash in hand as on 08.11.2016 48,500.00 1,72,997.51 2,21,497 .51
(+) Permitted reciepts 23,500.00 7,417.00 30.917.0 0
(-) Permitted payments - 28,416.00 28,416.0 0
(-) Amount deposited in banks 72,000.00 44,230.04 1,16,230 .04
Closing cash in hand as on 30.12.2016 - 1,07,768.47 1,07,768 .47
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For the FY 2016-17 For the FY 2015-16 12. Payment to Auditors
-As Statutory Audit Fees ( Rs) 1,08,000.00 1,08,000.00 Tax Audit Fees ( Rs) 20,000.00 15,000.00 Out of Pocket Expenses ( Rs) 13,000.00 25,000.00
Internal Audit Fees ( Rs) 3.23,000.00 3.38,000.00
13. Deferred Tax has not been calculated due to continuous loss in the company.
14. Figures for previous year have been re-arranged and regrouped, wherever found necessary.
Date : 24/10/2017
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OFFICE OF THE PRINCIPAL DIRECTOR OF AUDIT Railway Production Units and Metro Railway NKG Building (5th Floor), 14, Strand Road Kolkata - 700 001.
No. RPU & MR/BSCL / 2017-18 / 1772 Dated: 03.10.2018
To
The Chairman & Managing Director, Burn Standard Company Limited, 22-B, Raja Santosh Road, Kolkata - 700 027
Sub: Comments of the Comptroller and Auditor General of India under Section 143(6) of the Companies Act, 2013 on the accounts of Burn Standard Company Limited for the year ended 31 March 2017.
Sir, Please find enclosed herewith the comments of the Comptroller and Auditor General of India under section 143(6) of the Companies Act, 2013 on the accounts of Burn Standard Company Limited for the year ended 31 March 2017.
Yours faithfully
(Satish Kumar Garg) Principal Director of Audit
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COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 2013 ON THE ACCOUNTS OF BURN STANDARD COMPANY LIMITED, KOLKATA FOR THE YEAR ENDED 31 MARCH 2017.
The preparation of nancial statements of BURN STANDARD COMPANY LIMITED, KOLKATA for the year ended 31 March 2017 in accordance with the nancial reporting framework prescribed under the Companies Act, 2013 is the responsibility of the management of the Company. The statutory auditor appointed by the Comptroller and Auditor General of India under section 139(5) of the Act is responsible for expressing opinion on the nancial statements under section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their audit report dated 24 October, 2017.
I, on the behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 143(6)(a) of the Act of the nancial statements of BURN STANDARD COMPANY LIMITED, KOLKATA for the year ended 31 March 2017. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of sum of the accounting records. Based on my supplementary audit, I would like to highlight the fallowing signicant matters under section 143(6)(b) of the Act which have come to my attention and which is my view are necessary for enabling a better understanding of the nancial statements and the related audit report:
A. Comments on Protability Prot & Loss Account - Expenditure - Cost of Materials Consumed (Note-2.21) : ` 8963.27 Lakh.
1) The above includes an amount of ` 5157.27 Lakh as cost of materials consumed (raw materials and stores & spares) in Howrah Works Unit as against the procurement of ` 5658.04 Lakh. From the Purchase Journal it was noticed in 66 cases against which purchases amounting to ` 133.39 Lakh were booked twice. This has resulted in over statement of purchases as well as Current Liability amounting to ` 133.39 Lakh with the over statement of Loss for the year.
B. Notes on Accounts 2) The fact that material (Z-Section) valued ` 7.16 Lakh was received as free supply item from Ministry of Railways for manufacturing of 300 BOSTHS Wagon has been sold to M/s. Jindal Rail Infrastructure Limited. The free supply material sold has not been intimated to the Ministry of Railways. This has not been disclosed in the notes to Accounts.
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C. Comments on Balance Sheet
Balance Sheet - Current Assets - Inventories (Note - 2.17) ` 2387.34 Lakh Deposited - ` 258.59 Lakh.
3) The above include ` 10.95 Lakh (Burnpur Unit - ` 1.46 Lakh & Howrah Unit - ` 9.49 Lakh) being earnest money deposit (EMD) made by the Company with different parties for participation in the tender but not claimed back after nalization of the tenders. As the amount was continuing without any claim / adjustment for more than eight years and also not supported by details, the possibility of recovery is remote. Non-provision for the same resulted in overstatement Short Term Loans and advances (deposits and under statement of loss by ` 10.95 Lakh.
Balance Sheet - Current Assets - Inventories (Note - 2.14) ` 5701.90 Lakh.
4) The above includes ` 200.18 Lakh being the cost of 61344.76 RM of steel found short during Physical Verication. Non-provition for the material found short resulted in overstatement of Closing Stock (Raw Material, Steel) and understatement of Loss for the year by ` 200.18 Lakh.
D. General
Weak Internal Control System 5. Howrah Unit maintains Stores Ledger (SL) for Raw Materials and Stores Spares (other than steel) in a computerized Inventory Management System (IMS). After receipt of materials into the stores and quality inspections, the particulars are recorded in the IMS and Goods Received Notes (GRN) are generated in IMS. The GRN Numbers are serially generated and the GRN Dates are the system dates which are captured automatically in the IMS. Similarly, materials issued on the basis of Shop Unit Requisition (SUR) from the concerned user departments are also serially generated and the date of issue of materials (SUR Date) recorded manually. In this regard, the following were observed ; i) Analysis of the SL for the last two years reveled that 201 GRNs and 1438 SURs were not found recorded in the SL for the year 2015-16. Similarly, 67 GRNs and 2923 SURs were also found not recorded in the SL for the year 2016-17. ii) 67 out of 3866 GRNs were not found in the SL of Howrah Unit for the year 2016-17 of which 36 GRNs were cancelled / deleted during the year. Further, out of 36 deleted in 8 cases purchases were taken into book of accounts and payments amounting to ` 2,31,867.41 was made. iii) In 15 out of remaining 31 GRNs, purchases were taken into the books of accounts while remaining 16 cases were not taken into accounts.
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iv) Financial Accounting System (FAS) of Howrah Unit, which was developed in-house, was not properly validated to accept correct GRN Dates. However, in 36 cases, the GRN Dates were absent and in 20 cases the GRN Dates were invalid dates. In respects of 222 cases GRN Dates were relating to previous years.
v) There was also double booking of purchases amounting to ` 43.16 Lakh during the year 2016-17.
Thus, there is a poor Internal Control System in the receipt and issue of materials, the accounting of the same into the Stores Ledger Payments against cancelled / deleted GRNs etc. Further, there was no periodical reconciliation between the Stores Ledger and the FAS system.
The Journal had several entries based on the vouchers which were neither supported with relevant evidences nor signed / approved by any of the ofcials of the Company. Therefore the genuineness of JV entries could not be examined by audit. The supporting documents like Purchase Order copy, Invoice copies and GRN copies are not attached with the payment vouchers.
For and behalf of the Comptroller & Auditor General of India
Satish Kumar Garg Principal Director of Audit Place : Kolkata Railway Production Units & Metro Railway Date : 03 October 2018 Kolkata
ANNUAL REPORT - 2016-2017 - 93 COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA FINAL COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143 (6) (B) OF THE COMPANIES ACT, 2013 ON THE ACCOUNTS OF BURN STANDARD COMPANY LIMITED, KOLKATA FOR THE YEAR ENDED 31ST MARCH 2017.
QUERY MANAGEMENT'S REPLY
A. Prot & Loss Account – Expenditure – Cost of Materials Consumed (Note 2.21): Rs. 8963.27 lakhs
1) The above includes an amount of Observation noted. Rs.5157.27 lakh as cost of Necessary adjustment shall be made materials consumed (raw materials in the Accounts during the nancial and Stores & Spares) in Howrah year 2017-18. Wo r k s U n i t a s a g a i n s t t h e procurement of Rs.5658.04 lakh. From the Purchase Journal it was noticed in 66 cases against which purchases amounting to Rs.133.39 lakh were booked twice. This has resulted in over statement of Purchases as well as Current Liability amounting to Rs.133.39 lakh with the overstatement of loss for the year. B. Notes on Accounts 2) The fact that material (Z-Section) Observation noted. valued Rs.7.16 lakh was received Z section supplied against BOSTHS as free supply item from Ministry of subsequently transferred to Railways for manufacturing of 300 BOBRNHSM1 order. However, in the BOXTHS Wagon has been sold to meantime design of wagon revised and M/s. Jindal Rail infrastructure instead of Z section, Cold Rolled HAT Limited. The free supply material section tted and the same was procured sold has not been intimated to the by BSCL directly in lieu of Z Section and Ministry of Railways. This has not the corresponding quantity of steel for Z been disclosed in the Notes to section was taken into account of BSCL. Accounts. Keeping in view the observation made by CAG, reconciliation is being done with
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the Railways for accounting of free supply items as per Railway stock and the balance quantity of free supply steel as per Railway Board contract will be returned back to the Railways.
C. Comments on Balance Sheet
Balance Sheet – Current Assets – Inventories (Note – 2.17) Rs.2387.34 lakhs Deposit – Rs.258.59 lakh. 3) The above include Rs.10.95 lakh Observation noted. Necessary (Burnpur Unit – Rs. 1.46 lakh & adjustment shall be made in the Howrah Unit – Rs.9.49 lakh) being Accounts during the nancial year Earnest Money Deposit (EMD) 2017-18. made by the Company with different parties for participation in the tender but not claimed back after nalisation of the tenders. As the amount was continuing without any claim / adjustment for more than eight years and also not supported by details, the possibility of recovery is remote. Non- provision for the same resulted in over statement of Short-Term Loans and advances (Deposits) and understatement of Loss by Rs.10.95 lakh. 4) The above includes Rs.200.18 lakh Observation noted. being the cost of 61344.76 RM of The Company had procured many steel found short during Physical quantities of steel for manufacturing verication. Non-provision for the of wagons against Private order also material found short resulted in as well as recently procured for heavy overstatement of Closing Stock repairing of wagons. (Raw Material, Steel) and under- statement of Loss for the year by Reconciliation of free supply steel Rs.200.18 lakh. with Railways is under process and free supply steels belonging to Railways will be returned to
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Railways. Adjustment in the Accounts, if required, shall be done in the Accounts for nancial year 2017-18.
D. General Weak Internal Control System 5) Howrah Unit maintains Stores During the course of CAG audit, the same Ledger (SL) for Raw Materials and was highlighted to the management of the Stores & Spares (other than steel) in Company and corrective action had been a computerized Inventory taken to ensure control over IMS Management System (IMS). After (Inventory Management system) at receipt of materials into the stores Howrah Works. and quality inspection, the particulars are recorded in the IMS and Goods Received Notes (GRN) Dates are the system dates which are captured automatically in the IMS. Similarly, materials issued on the basis of Shop Unit Requisition (SUR) from the concerned user departments are also serially generated and the date of issue of materials (SUR Date) recorded manually. In this regard the following were observed: i) Analysis of the SL for the last two years revealed that 201 GRNs and 1438 SURs were not found recorded in the SL for the year 2015-16. Similarly, 67 GRNs and 2923 SURs were also found not recorded in the SL for the year 2016-17.
ii) 67 out of 3866 GRNs were not found in the SL of Howrah unit for the year 2016-17 of which 36 GRNs were cancelled / deleted during the year. Further out of 36 deleted in 8 cases purchases were taken into books of accounts and
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QUERY MANAGEMENT'S REPLY
payments amounting to Rs.2,31,867.41 was made. iii) In 15 out of remaining 31 GRNs , purchases were taken into the books of accounts while remaining 16 cases were not taken into accounts. iv) Financial Accounting System (FAS) of Howrah Unit, which was developed in-house, was not properly validated to accept current GRN Dates. However, in 36 cases, the GRN dates were absent and in 20 cases the GRN dates were invalid dates. In respect of 222 cases GRN dates were relating to previous years. v) There was also double booking of purchases amounting to Rs.43.16 lakh during the year 2016-17.
ANNUAL REPORT - 2016-2017 - 97 22-B, Raja Santosh Road, Alipore Kolkata - 700 027