ACC

1.  We have audited the attached Balance Sheet of ACC Limited (‘the
 Company’) as at December 31, 2008 and also the Profit and Loss Account
 and the Cash Flow Statement for the year ended on that date annexed
 thereto. These financial statements are the responsibility of the
 Company’s management. Our responsibility is to express an opinion on
 these financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India.  Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements. An audit also includes
 assessing the accounting principles used and significant estimates made
 by management, as well as evaluating the overall financial statement
 presentation. We believe that our audit provides a reasonable basis for
 our opinion.
 
 3.  As required by the Companies (Auditor’s Report) Order, 2003 (as
 amended) (‘the Order’) issued by the Central Government of India in
 terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we
 enclose in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to above, we
 report that:
 
 a) we have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 b) in our opinion, proper books of account as required by law have been
 kept by the Company so far as appears from our examination of those
 books;
 
 c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account;
 
 d) in our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the Accounting
 Standards referred to in sub-section (3C) of Section 211 of the
 Companies Act, 1956.
 
 e) on the basis of the written representations received from the
 directors, as on December 31, 2008, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 December 31, 2008 from being appointed as a director in terms of clause
 (g) of sub-section (1) of Section 274 of the Companies Act, 1956.
 
 f) in our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India:
 
 i) in the case of the Balance Sheet, of the state of affairs of the
 Company as at December 31, 2008;
 
 ii) in the case of the Profit and Loss Account, of the profit for the
 year ended on that date; and
 
 iii) in the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.
 
 ANNEXURE TO THE AUDITORS’ REPORT
 
 (Referred to in paragraph 3 of our Report of even date) Re: ACC Limited
 (‘the Company’)
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 (b) A substantial portion of fixed assets has been physically verified
 by the management during the year and in our opinion the frequency of
 verification is reasonable having regard to the size of the Company and
 the nature of its assets. No material discrepancies were noticed on
 such verification.
 
 (c) Fixed assets disposed off during the year were not substantial.
 According to the information and explanations given to us, we are of
 the opinion that the disposal of fixed assets has not affected the
 going concern of the Company.
 
 (ii) (a) The management has conducted physical verification of
 inventory at reasonable intervals during the year.
 
 (b) The procedures of physical verification of inventory followed by
 the management are reasonable and adequate in relation to the size of
 the Company and the nature of its business.
 
 (c) In our opinion, the Company is maintaining proper records of
 inventory and no material discrepancies were noticed on physical
 verification.
 
 (iii) (a) As informed, the Company has not granted any loans, secured
 or unsecured to companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, sub-clause (b), (c) and (d) are not applicable.
 
 (e) As informed, the Company has not taken any loans, secured or
 unsecured from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Accordingly, sub-clause (f) and (g) are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there is an adequate internal control system commensurate
 with the size of the Company and the nature of its business, for the
 purchase of inventory and fixed assets and for the sale of goods and
 services.  During the course of our audit, no major weakness has been
 noticed in the internal control system in respect of these areas.
 
 (v) (a) According to the information and explanations provided by the
 management, there were no transactions during the year pursuant to the
 contracts or arrangements referred to in Section 301 of the Act.
 Accordingly, sub-clause (b) is not applicable.
 
 (vi) The Company has not accepted any deposits from the public to which
 the provisions of Section 58A, 58AA, or any other relevant provisions
 of the Companies Act, 1956 and the Companies (Acceptance of Deposit)
 Rules, 1975 apply.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) We have broadly reviewed the books of account maintained by the
 Company pursuant to the rules made by the Central Government for the
 maintenance of cost records under Section 209(1)(d) of the Companies
 Act, 1956, and are of the opinion that prima facie, the prescribed
 accounts and records have been made and maintained. We have not,
 however, made a detailed examination of the same.
 
 (ix) (a) According to the records of the Company, Provident Fund,
 Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth
 Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material
 statutory dues applicable to it have been generally regularly deposited
 during the year with appropriate authorities except at certain
 locations where we are informed that the Company has applied for
 exemption from the operation of the Employees’ State Insurance Act.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Provident Fund, Investor
 Education and Protection Fund, Employees’ State Insurance, Income Tax,
 Wealth Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty, Cess and
 other undisputed statutory dues were outstanding, at the year end, for
 a period of more than six months from the date they became payable.
 
 (c) According to the records of the Company, the dues outstanding of
 Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
 Duty and Cess on account of any dispute, are as follows:
 
                                                       (Rs. Crore)
 
 Name of                          Period to which
 Statute                       the amount relates
 (Nature of dues)
 
 Sales Tax                      1982-83 to 89-90
 (Tax / Penalty /               1990-91 to 99-00
 Interest)                       2000-01 to 2008
 Total
 Central Excise Act             1982-83 to 89-90
 (Tax / Penalty /               1990-91 to 99-00
 Interest)                       2000-01 to 2008
 Total
 Service Tax under               2004-05 to 2008
 Finance Act, 1994
 (Tax / Penalty /
 Interest)
 Total
 Cess on
 power
 generation                      2003-04 to 2008
 Total
 
            Forum where dispute is pending
 
 Commiss-      Appellate        High      Supreme            Total
 ionarate    authorities       Court       Court
              & Tribunal
 
  0.33             0.98         0.34         -                1.65
 17.00            36.77       179.54         -              233.31
 20.04            45.49       101.16       22.91            189.60
 37.37            83.24       281.04       22.91            424.56
   -                -            -           -                 -
  0.08             2.73         0.48         -                3.29
  8.21            12.13          -          5.16             25.50
  8.29            14.86         0.48        5.16             28.79
  3.84              -            -           -                3.84
  3.84              -            -           -                3.84
  6.36              -            -          7.40             13.76
  6.36              -            -          7.40             13.76
 
 (x) The Company has no accumulated losses at the end of the financial
 year and it has not incurred cash losses in the current and immediately
 preceding financial year.
 
 (xi) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 Company has not defaulted in repayment of dues to a financial
 institution, bank or debenture holders.
 
 (xii) Based on our examination of documents and records, we are of the
 opinion that the Company has not granted loans and advances on the
 basis of security by way of pledge of shares, debentures and other
 securities.
 
 (xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society.  Therefore, the provisions of clause
 (xiii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are
 not applicable to the Company.
 
 (xiv) In our opinion, the Company is not dealing in or trading in
 shares, securities, debentures and other investments. Accordingly, the
 provisions of clause (xiv) of the Companies (Auditor’s Report) Order,
 2003 (as amended) are not applicable to the Company.
 
 (xv) According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 (xvi) Based on information and explanations given to us by the
 management, term loans were applied for the purpose for which the loans
 were obtained.
 
 (xvii) According to the information and explanations given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that no funds raised on short term basis have been used for long-term
 investment.
 
 (xviii) The Company has not made any preferential allotment of shares
 to parties or companies covered in the register maintained under
 Section 301 of the Companies Act, 1956.
 
 (xix) During the period covered by our audit, the Company has issued
 2,000 privately placed non- convertible debentures of Rs. 1,000,000
 each in December 2008. The Company is in the process of creating a
 charge in respect of debentures issued.
 
 (xx) The Company has not raised any money by the way of public issue
 during the year. Therefore the provisions of clause (xx) of the Order
 are not applicable to the Company.
 
 (xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.
 
 For S.R. BATLIBOI & ASSOCIATES
 Chartered Accountants
 
 per Sudhir Soni
 Partner
 Membership No.: 41870
 
 Place: Mumbai
 Date : February 5, 2009