1. We have audited the attached Balance Sheet of Alumeco India
Extrusion Limited (the Company) as at 30 June 2012, the Statement of
Profit and Loss and the Cash Flow Statement for the year ended on that
date, annexed thereto. These financial statements are the
responsibility of the Company''s Management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by Management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
3. As more fully explained in Note 2.24 of the financial statements,
the Company has accumulated losses of Rs.197,852,028 as at 30 June 2012
which have exceeded the paid up capital and reserves (Rs.160,522,805) of
the Company at that date. Also, the Company had made a reference to the
Board for Industrial & Financial Reconstruction (BIFR) in terms of
Section 15(1) of the Sick Industrial Companies (Special Provisions)
Act, 1985 and had been declared sick on 9 February 2010. It is
currently in the process of working out a rehabilitation scheme with
Considering the financial position of the Company as at 30 June 2012,
there exists uncertainty as to whether the Company will be able to
continue as a going concern. However, based on its ongoing efforts to
improve the performance, management believes that the Company will be
able to generate cash flows sufficient to meet its liabilities in the
near future. Accordingly, the financial statements for the year ended
30 June 2012 have been prepared on a going concern basis and do not
include any adjustments relating to the recoverability and
classification of recorded asset amounts, or, to amounts or
classification of liabilities that may be necessary if the Company is
unable to continue as a going concern.
4. As more fully explained in Note 2.40 of the financial statements,
during the year ended 30 June 2012 and 30 June 2011, the Company has
accrued for managerial remuneration, which exceeds the limits specified
in Schedule XIII to the Companies Act, 1956 (''the Act'')to the extent of
Rs. 9,083 and Rs.143,856 respectively. The Company has applied for Central
Government of India''s approval for the same, which is pending as at the
date of our report. Pending the receipt of such an approval, such
excess remuneration has not been paid.
5. As required by the Companies (Auditor''s Report) Order, 2003 (the
Order), as amended, issued by the Ministry of Corporate Affairs in
terms of sub-section (4A) of Section 227 of the Act, we enclose in the
Annexure a statement on the matters specified in paragraphs 4 and 5 of
the said Order.
6. Further to our comments in the Annexure referred to in paragraph 5
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
(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
(c) the Balance Sheet, the Statement of Profit and Loss and the Cash
Flow Statement dealt with by this report are in agreement with the
books of account;
(d) in our opinion, the Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement dealt with by this report comply with the
Accounting Standards referred to in sub-section (3C) of Section 211 of
(e) on the basis of written representations received from the directors
as at 30 June 2012, and taken on record by the Board of Directors, we
report that none of the Director is disqualified as at 30 June 2012
from being appointed as a Director in terms of clause (g) of
sub-section (1) of Section 274 of the Act, on the said date; and
(f) except for the effects of the matters described in paragraph 3 and
4 above, in our opinion and to the best of our information and
according to the explanations given to us, the said accounts, give the
information required by the Act, in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India:
a. in the case of the Balance Sheet, of the state of affairs of the
Company as at 30 June 2012;
b. in the case of the Statement of Profit and Loss, of the loss of the
Company for the year ended on that date; and
c. in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT
The Annexure referred to in the Auditors'' report to the members of
Alumeco India Extrusion Limited (the Company) on the financial
statements for the year ended 30 June 2012. We report that:
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
(b) The Company has a regular programme of physical verification of its
fixed assets by which all fixed assets are verified annually. In our
opinion, this periodicity of physical verification is reasonable having
regard to the size of the Company and the nature of its assets. In
accordance with the programme, all fixed assets were physically
verified during the year. No material discrepancies were noticed on
(c) Fixed assets disposed off during the year were not substantial, and
therefore, do not affect the going concern assumption.
(ii) (a) The inventory, except goods-in-transit, has been physically
verified by the Management during the year. In our opinion, the
frequency of such verification is reasonable.
(b) The procedures for the physical verification of inventories
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 has maintained proper records of inventory. The
discrepancies noticed on verification between the physical stocks and
the book records were not material.
(iii) (a) The Company has neither granted nor taken any loans, secured
or unsecured to or from companies, firms or other parties covered in
the register maintained under Section 301 of the Companies Act, 1956
(''the Act''). Accordingly, clauses 4(iii) (a) to 4 (iii) (g) of the
Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanations
given to us, and having regard to the explanation that purchases of
certain items of inventories are for the Company''s specialised
requirements and suitable alternative sources are not available to
obtain comparable quotations, there is an adequate internal control
system commensurate with the size of the Company and the nature of its
business for purchase of inventories, services and fixed assets and for
the sale of goods. The activities of the Company do not involve sale of
services. We have not observed any major weakness in the internal
control system during the course of the audit.
(v) (a) In our opinion, and according to the information and
explanations given to us, the particulars of contracts or arrangements
referred to in Section 301 of the Act have been entered in the register
required to be maintained under that Section.
(b) In our opinion, and according to the information and explanations
given to us, the transactions made in pursuance of contracts and
arrangements referred to in (v)(a) above and exceeding the value of Rs. 5
lakh with any party during the year are for the Company''s specialised
requirements for which suitable alternative sources are not available
to obtain comparable quotations. However, on the basis of information
and explanations provided, the same appear reasonable.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules prescribed by the Central Government of
India for maintenance of cost records under Section 209(l)(d) of the
Act and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained. However, we have not made a
detailed examination of the records.
(ix) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the Company, amounts
deducted/ accrued in the books of account in respect of undisputed
statutory dues including Provident Fund, Employees'' State Insurance,
Income-tax, Sales-tax, Service tax, Customs duty, Excise duty and other
material statutory dues have been generally regularly deposited during
the year by the Company with the appropriate authorities though there
has been a slight delay in a few cases. As explained to us, the Company
did not have any dues on account of Investor Education and Protection
Fund and Wealth Tax. According to the information and explanations
given to us, there are no undisputed amounts payable in respect of
Provident Fund, Employees'' State Insurance, Income- tax, Sales- tax,
Service tax, Customs duty, Excise duty and other material statutory
dues that were in arrears as at 30 June 2012 for a period of more than
six months from the date they became payable except for income tax
amounting to Rs.3,015,288 which is outstanding for more than six months
as at 30 June 2012. As explained to us, the Company did not have any
dues on account of Investor Education and Protection Fund and Wealth
(b) According to the information and explanations given to us, there
are no dues of Service tax and Customs duty which have not been
deposited with the appropriate authorities on account of any dispute.
According to the information and explanations given to us, the
following dues of Income tax, Sales tax and Excise duty have not been
deposited by the Company on account of disputes:
Name of the Nature of Amount Period to
which the Forum where
Statute the Dues (Rs.) amount relates dispute is
Central Excise Interest and 49,064,648 2002-05 CESTAT,
Act, 1944 Penalty
Central Sales Central 1,250,000 2001-02 High court,
Tax Act,1956 Sales Tax (1,000,000)* Andhra Pradesh
Central Sales Central 3,943,021 2002-03 Appellate
Tax Act, 1956 Sales Tax Commissioner,
Central Excise Interest and 6,037,966 2005-06 Appellate
Act, 1944 Penalty (3,268,218)* Hyderabad
Central Sales Central 8,685,252 Previous year Additional
Tax Act,1956 Sales Tax 2003-04 to
* The amounts in parenthesis represent the payment made under protest.
(x) The accumulated losses at the end of the financial year amounting
to Rs.197,852,028 have exceeded its networth aggregating to Rs.
160,522,805. The Company has incurred cash losses in the current
financial year. However, no cash losses have been incurred in the
immediately preceding financial year.
(xi) The Company did not have any dues to any financial institution,
banks or debenture holders during the year.
(xii) The Company has not granted any loans and advances on the basis
of security by way of pledge of shares, debentures and other
(xiii) In our opinion and according to the information and explanations
given to us, the Company is not a chit fund /nidhi/ mutual benefit
(xiv) According to the information and explanations given to us, the
Company is not dealing or trading in shares, securities, debentures and
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
Banks or financial institutions.
(xvi) In our opinion and according to the information and explanations
given to us, the term loan taken by the Company in earlier years has
been applied for the purpose for which they were raised.
(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 the short term funds amounting to Rs.101,546,466 have been used for
(xviii) The Company has not made any preferential allotment of shares
to companies / firms / parties covered in the register maintained under
Section 301 of the Act.
(xix) The Company did not have any outstanding debentures during the
(xx) The Company has not raised any money by public issues.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
course of our audit.
for B S R & Company
Firm''s registration number: 128032W
Place: Hyderabad Zubin Shekary
Date: 29th August 2012 Partner
Membership No: 048814