Adhunik Metaliks

1.  We have audited the attached Balance Sheet of Adhunik Metaliks
 Limited (the Company) as at March 31, 2009 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) 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:
 
 i) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purposes of our
 audit;
 
 ii) In our opinion, proper books of account as required by law have
 been kept by the Company so far as appears from our examination of such
 books;
 
 iii) The Balance Sheet, Profit & Loss account and Cash Flow Statement
 dealt with by this report are in agreement with the books of account as
 submitted to us;
 
 iv) In our opinion, the Balance Sheet, Profit and Loss account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in sub-section (3C) of section 211 of the
 Companies Act, 1956;
 
 v) On the basis of the written representations received from the
 directors, as on March 31, 2009, and taken on record by the Board of
 Directors, we report that none of the directors is disqualified as on
 
 March 31, 2009 from being appointed as a director in terms of clause
 (g) of sub-section (1) of section 274 of the Companies Act, 1956;
 
 vi) Without qualifying our opinion, we observe as under :
 
 a) Utilisation of Securities Premium Account towards meeting the net
 deferred tax liability arising during the year, pursuant to the order
 of the Hon’ble High Court of Kolkata vide its Dictated Order dated May
 7, 2007 (Refer Note 7(b) on Schedule 25).
 
 b) Attention is drawn to Note 23 on Schedule 25 relating to certain
 payments made / received to / from a related party, at the behest of an
 unrelated party for which the Company holds a lega opinion to the
 effect that such payments are not covered under Section 295 of the
 Companies Act, 1956.
 
 c) Reference is drawn to Note 24 on Schedule 25 regarding non-
 obtainment of prior approval as required from Centra Government of
 India under Section 297 of the Companies Act, 1956 for entering into
 transactions of purchase of goods with Private Limited Companies in
 which directors of the Company are interested
 
 5. In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view in conformity with the accounting principles
 generally accepted in India;
 
 a) in the case of the Balance Sheet, of the state of affairs of the
 Company as at March 31, 2009;
 
 b) in the case of the Profit and Loss Account, of the profit of the
 Company for the year ended on that date; and
 
 c) in the case of Cash Flow Statement, of the cash flows for the year
 ended on that date.  ^~*
 
 ANNEXURE TO AUDITORS’ REPORT
 
 (Referred to in our report of even date to the members of ADHUNIK
 METALIKS LIMITED as at and for the year ended March 31, 2009)
 
 i) a) The Company has maintained proper records showing full
 particulars, including quantitative details and situation of fixed
 assets.
 
 b) All the fixed assets have not been physically verified by the
 management during the year but there is a regular programme of
 verification which, in our opinion, is reasonable having regard to the
 size of the Company and the nature of its assets. As informed, no
 material discrepancies were noticed on such verification during the
 year.
 
 c) There was no substantial disposal of fixed assets during the year.
 
 ii) a) The management has conducted physical verification of inventory
 at reasonable intervals during the year. As regards material lying with
 outside parties, confirmation certificates have been obtained in most
 of the cases.
 
 b) The procedures of physical verification of inventory followed by the
 management are reasonable and adequate in relation to the size of the
 Company and the nature of its business.
 
 c) The Company is maintaining proper records of inventory and no
 material discrepancies were noticed on physical verification.
 
 iii) The Company has not given any loan, secured or unsecured, to
 companies, firms or other parties covered in the register maintained
 under Section 301 of the Companies Act, 1956. Therefore, the provisions
 of clauses (iii) (a) to (d) of the Companies (Auditor’s Report) Order,
 2003 (as amended) are not applicable.
 
 As informed to us, the Company has not taken any loan, secured or
 unsecured, from companies, firms or other parties covered in the
 register maintained under Section 301 of the Companies Act, 1956.
 Therefore, the provisions of clauses (iii) (e) to (g) of the Companies
 (Auditor’s Report) Order, 2003 (as amended) 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.
 During the course of our audit, no major weakness has been noticed in
 the internal control system in respect of these areas. The Company does
 not provide any service hence reporting under this clause is not
 applicable to the extent of service.
 
 v) a) According to the information and explanations provided by the
 management, we are of the opinion that the particulars of contracts or
 arrangements referred to in section 301 of the Act that need to be
 entered into the register maintained under section 301 have been so
 entered except contracts related to the purchase of goods aggregating
 to Rs.1614.67 lakhs from Private Limited Companies (Refer Note 24 on
 Schedule 25) in which the directors of the Company are interested.
 
 b) In our opinion and according to the information and explanations
 given to us, the transactions made in pursuance of such contracts or
 arrangements exceeding value of Rupees five lakhs have been entered
 into during the financial year at prices which are reasonable having
 regard to the prevailing market prices at the relevant time.
 
 vi) The Company has not accepted any deposits from the public.
 
 vii) The Company’s internal audit is conducted by an external firm of
 Chartered Accountants. The coverage of the Internal Audit is
 commensurate with the size and nature of the Company’s 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.
 
 ix) a) Undisputed statutory dues including provident fund, employees’
 state insurance, income-tax, sales-tax, wealth-tax, service tax,
 customs duty, excise duty, cess have been deposited with the
 appropriate authorities though in general there have been delays. As
 explained, there is no amount due for deposit to Investor Education &
 Protection Fund.
 
 b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of provident 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 except withholding tax amounting to
 Rs. 4.04 lakhs u/s 195 of the Income Tax Act, 1961 which is remaining
 unpaid since August 2008. As explained, there is no amount due for
 deposit to Investor Education & Protection Fund
 
 c) According to the records of the Company, there are no dues
 outstanding of income-tax, sales-tax, wealth-tax, service tax, customs
 duty, excise duty and cess on account of any dispute except as
 mentioned below :
 
 Name of the statute     Nature of dues       Amount      Period to which
                           (Rs. in lakhs)   the amount      dispute is 
                                             relates         pending
 
 Orissa Entry Tax Act    Entry tax on 
                         machinery &           5.46          2002-04
                         spares & Capital 
                          Goods
 
 Central Sales Tax       Demand against 
                      transfer of stock to   123.40          2003-04
 (Orissa) Rules 57       branches and 
                        consignment agents.
 
 Central Sales Tax       Disallowance of sale 
                         against Form-H       68.39          2004-07
 
 Orissa Value Added Tax  Dispute on account 
                         of disallowance     137.56          2005-07
                         of Input Tax credit
 Orissa Sales Tax        Dispute on gross 
                         turnover             12.22          2003-04
                         vis-a-vis taxable 
                         turnover
 Central Excise Act      Dispute on account 
                         of classification, 
                         excise               36.35          2003-05
                         duty on job work, 
                         transaction value for
                         stock transfer, short 
                         production booking
 Income Tax Act          Interest Charged under 
                         Section 234B and 234C 55.57         2005-06
                         of the Act because of 
                         demand raised due to
                         retrospective amendment 
                         in MAT provisions
 
 
 Name of the statute                     Forum where
                                       dispute is pending
 
 Orissa Entry Tax Act           Orissa Sales Tax Tribunal, Cuttack
 
 Central Sales Tax
 (Orissa) Rules 57              Orissa Sales Tax Tribunal, Cuttack
 
 Central Sales Tax              Orissa Sales Tax Tribunal, Cuttack,
 
 Orissa Value Added T           Deputy Commissioner of Sales Tax, Rourkela
 
 Orissa Sales Tax               Orissa Sales Tax Tribunal & High Court,
 
 Central Excise Act             Orissa, Cuttack
 Income Tax Act                 Orissa Sales Tax Tribunal, Cuttack, Deputy
 
 Commissioner of Sales Tax, Rourkela
 CESTAT (Kolkata), Additional Commissioner
 (Adjudication) Bhubaneswar, Commissioner
 (Appeal), Bhubaneswar
 Commissioner of Income Tax (Appeals)
 Kolkata
 
 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 the Company has not defaulted in
 repayment of dues to banks and debenture holders other than the
 devolvement of a Letter of Credit amounting to Rs. 4746 lakhs and
 period of default for the same was 64 days. There are no dues to the
 financial institutions.
 
 xii) According to the information and explanations given to us and
 based on the documents and records produced to us, the Company has not
 granted loans and advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 xiii) In our opinion, the Company is not a chit fund or a nidhi /
 mutual benefit fund / society. Therefore, the provisions of clause
 4(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 4(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 preferential allotment of shares during
 the year to parties and companies covered in the register maintained
 under section 301 of the Act
 
 xix) The Company has 81,54,000 non-transferable fully convertible
 unsecured debentures of Rs. 10 each issued in the year 2007-08 at a
 premium of Rs.  112.64 each outstanding during the year on which no
 security or charge is required to be created
 
 xx) The Company has not raised any money through a public issue during
 the year.
 
 xxi) Based upon the audit procedures performed for the purpose of
 reporting the true and fair view of the financial statements and as per
 the information and explanations given by the management, we report
 that no fraud on or by the Company has been noticed or reported during
 the course of our audit.  
 
                                              For S. R. Batliboi & Co.  
                                                Chartered Accountants
 
 22 Camac Street                                
 Block C, 3rd Floor                                    Per Rahul Roy
 Kolkata-700 016.                                            a Partner
 
 Date : June 29, 2009                             Membership No. 53956