Gujarat NRE Coke

1.  We have audited the attached Balance Sheet of Gujarat NRE Coke
 Limited as at March 31, 2009 and the Profit and Loss Account and Cash
 Flow Statement of the Company for the year ended on that date annexed
 thereto. These finan- cial 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 stan- dards
 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 disclo- sures 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 by the Companies (Auditor’s Report) (Amend- ment) Order, 2004,
 issued by the Central Government of In- dia in terms of sub-section
 (4A) of section 227 of the Com- panies Act, 1956 and on the basis of
 such checks of books and records of the company as we considered
 appropriate and according to the information and explanations given to
 us , we enclose in the Annexure a statement on the matters specified in
 paragraphs 4 and 5 of the said Order to the extent applicable.
 
 4.  Further to our comments in the Annexure referred to in para- graph
 3 above, we report that:
 
 (a)We have obtained all the information and explanations, which to the
 best of our knowledge and belief were nec- essary 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 agree- ment with the books of account;
 
 (d) In our opinion, the Balance Sheet, Profit and Loss Ac- count 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 to the extent applicable;
 
 (e)On the basis of written representations received from the directors
 as on 31st March, 2009, and taken on record by the Board of Directors,
 we report that none of the directors is disqualified as at 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; (f) In our
 opinion and to the best of our information and according to the
 explanations given to us, the said ac- counts read together with the
 significant accounting policies in schedule 17 and notes appearing
 thereon, 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 March 31, 2009;
 
 (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 referred to in paragraph 3 of our report of even date to the
 members of Gujarat NRE Coke Ltd. for the year ended 31st March 2009.
 
 (i) (a) The Company has maintained proper records showing full
 particulars, including quantitative details and situ- ation of fixed
 assets.
 
 (b) We were informed that the Company has a phased programme of
 physical verification of its fixed assets which, in our opinion, is
 reasonable having regard to the size of the Company and the nature of
 its assets. In accordance with this programme, fixed assets required to
 be verified were physically verified by management during the period
 under review and no material dis- crepancies were noticed on such
 verification.
 
 (c) Fixed assets disposed off during the year under review were not
 substantial and therefore do not affect the going concern status of the
 company.
 
 (ii) (a) During the year inventories have been physically veri- fied by
 the management at reasonable intervals. In our opinion, the frequency
 of verification is reasonable.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures of 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 is maintaining proper records of inven- tory. The
 discrepancies noticed during the physical veri- fication of inventories
 as compared to book records were not material and have been properly
 dealt with in the books of account.
 
 (iii) (a)During the year the company has not granted secured or
 unsecured loans to its subsidiary companies. The maxi- mum amount due
 during the year was Rs. 30.73 Crores and the year end balance
 outstanding was Rs. 6.92 crores.
 
 (b) The rate of interest and other terms and conditions of such loans
 are not, prima-facie, prejudicial to the inter- est of the company.
 
 (c) The subsidiary companies are regular in payment of interests. The
 principal amount of loan is repayable on demand.
 
 (d) There is no overdue amount in excess of Rs. One lac in respect of
 loans granted to subsidiary companies.
 
 (e) In our opinion and according to the information and explanations
 given to us, the company has not taken any loan from the companies,
 firm or other parties cov- ered in the Register maintained under
 section 301 of the Companies Act, 1956, hence paragraph iii (f) and iii
 (g) of this order are not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there exists an adequate in- ternal control system
 commensurate with the size of the company and the nature of its
 business with regard to purchases of inventory and fixed assets and
 with re- gard to the sale of goods and services. No major weak- ness in
 internal control system was observed.
 
 (v) (a) According to the information and explanations given to us, we
 are of the opinion that particulars of all con- tracts or arrangements
 referred to in section 301 of the Companies Act, 1956 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 pur- suance of contracts or arrangements
 entered in the reg- ister maintained under section 301 of the Companies
 Act, 1956 and exceeding value of rupees five lacs in re- spect of any
 party during the year have been made at prices which are reasonable
 having regard to prevailing market prices at the relevant time.
 
 (vi) In our opinion and according to the information and explanations
 given to us, the Company has not accepted any deposits from the public
 and consequently, the di- rectives issued by the Reserve Bank of India
 and the provisions of Section 58A, 58AA or any other relevant
 provisions of the Companies Act, 1956 and the rules framed there under
 are not applicable to the Company.
 
 (vii) In our opinion, the Company has an internal audit sys- tem
 commensurate with the size and the nature of its business.
 
 (viii) The Central Government has not prescribed rule for main- tenance
 of cost records under Section 209(1)(d) of the Companies Act, 1956 for
 Low-ash Metallurgical coke busi- ness. The cost records are maintained
 for steel plants as per rules. We have broadly reviewed such cost
 records relating to material, labour and other items of cost re- lated
 to steel plant. In our opinion prima facie the pre- scribed accounts
 and records have been made and main- tained correctly.
 
 (ix) (a) According to the information and explanations given to us and
 on the basis of our examination of the books of account, in our
 opinion, the Company has been gener- ally regular in depositing
 undisputed statutory dues including Provident Fund, Investor Education
 and Pro- tection Fund, Employees’ State Insurance, Income Tax, Sales
 Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any
 other material statutory dues with appropriate authorities during the
 year under review.  The Central Government has not prescribed the
 amount of cess for rehabilitation revival fund payable under section
 441 A of the Companies Act, 1956.  (b) According to the information and
 explanations given to us, no undisputed amount payable in respect of
 Income Tax, Sales Tax, wealth Tax, Service Tax, Cus- tom duty and
 Excise duty were in arrear as at 31st March, 2009, for a period of more
 than six months from the date they became payable.
 
 (c ) According to the information and explanations given to us and the
 records of the company examined by us, there were no dues in respect of
 Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise
 Duty and Cess that have not been deposited with the appropriate
 authorities on account of any dispute other than those as mentioned
 here-in-below:
 
 Nameofthe statute  Nature of     Amount    Period to which   Forum where
                    Dues       (Rs./Crores)the amount Relates disputes  
                                                              are pending
 
 Income Tax Act, 
 1961            Regular Assessment   0.03     2005-06          DCIT-11
 
 -Do-                    -Do-         3.52     2005-06      CIT (Appeals)
 
 (x) The Company does not have accumulated losses at the year ended 31st
 March, 2009 and has not incurred cash losses during the year under
 review and in the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to its
 banks or to any financial institutions or debenture holders.
 
 (xii) The Company has not granted loans and advances on the basis of
 security by way of pledge of shares, debentures and other securi- ties.
 
 (xiii) In our opinion and according to the information and explanations
 given to us, the Company is not a chit fund / nidhi / mutual benefit
 fund / society.
 
 (xiv) According to the information and explanations given to us, the
 Company is not dealing or trading in shares, securities, deben- tures
 and other investments. The investments have been held by the company in
 its own name except to the extent of exemption granted under section 49
 of the Companies Act, 1956
 
 (xv) In our opinion and according to the information and explanations
 given to us, the terms and conditions, on the basis of which the
 Company has given guarantees for loans taken by the subsidiary
 companies from banks or financial institutions, are not as such
 prejudicial to the interests of the Company.
 
 (xvi) In our opinion and according to the information and explanations
 given to us and on the basis of our examination of the books of
 account, the term loans were applied for the purpose for which such
 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 re- port
 that no funds raised on short-term basis have been used for long term
 investment.
 
 (xviii) According to the information and explanations given to us the
 com- pany has not made any preferential allotment of shares to par-
 ties and companies covered in the Register maintained under Section 301
 of the Companies Act, 1956
 
 (xix) According to the information of explanations given to us, the
 com- pany issued secured non-convertible debentures during the year
 (Refer note no. 4(a) of schedule 17B )
 
 (xx) The company has not raised any money by public issues during the
 year under review.
 
 (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 N.C. Banerjee & Co.  
                                               Chartered Accountants
 
                                                           B. Basu 
 Place: Kolkata                                            Partner
 Date : 27th day of June, 2009                Membership No. 12748