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Hindalco Industries
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« Mar 13
Auditor's Report (Hindalco Industries) Year End : Mar '14
1) We have audited the accompanying financial statements of HINDALCO
 INDUSTRIES LIMITED (the Company), which comprise the Balance Sheet as
 at 31st March, 2014, and the Statement of Profi t and Loss and Cash
 Flow Statement for the year then ended, and a summary of significant
 accounting policies and other explanatory information.
 
 Management''s Responsibility for the Financial Statements
 
 2) Management is responsible for the preparation of these financial
 statements that give a true and fair view of the financial position,
 financial performance and cash fl ows of the company in accordance
 with the accounting principles generally accepted in India, including
 Accounting Standards referred to in sub-section (3C) of section 211 of
 the Companies Act, 1956 (the Act) read with the General Circular
 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs
 in respect of section 133 of the Companies Act, 2013 and Accounting
 Standard (AS)-30 to the extent it relates to Derivative Accounting , as
 prescribed by The Institute of Chartered Accountants of India. This
 responsibility includes the design, implementation and maintenance of
 internal control relevant to the preparation and presentation of the fi
 nancial statements that give a true and fair view and are free from
 material misstatement, whether due to fraud or error.
 
 Auditors'' Responsibility
 
 3) Our responsibility is to express an opinion on these financial
 statements based on our audit. We conducted our audit in accordance
 with the Standards on Auditing issued by the Institute of Chartered
 Accountants of India. Those standards require that we comply with
 ethical requirements and plan and perform the audit to obtain
 reasonable assurance about whether the financial statements are free
 from material misstatement.
 
 An audit involves performing procedures to obtain audit evidence about
 the amounts and disclosures in the financial statements. The
 procedures selected depend on the auditor''s judgment, including the
 assessment of the risks of material misstatement of the financial
 statements, whether due to fraud or error. In making those risk
 assessments, the auditor considers internal control relevant to the
 Company''s preparation and fair presentation of the financial
 statements in order to design audit procedures that are appropriate in
 the circumstances, but not for the purpose of expressing an opinion on
 the effectiveness of the company''s internal control. An audit also
 includes evaluating the appropriateness of accounting policies used and
 the reasonableness of the accounting estimates made by management, as
 well as evaluating the overall presentation of the financial
 statements. We believe that the audit evidence we have obtained is
 suffi cient and appropriate to provide a basis for our audit opinion.
 
 Opinion
 
 4) In our opinion and to the best of our information and according to
 the explanations given to us, the financial statements 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 31st March, 2014.
 
 b) In the case of the Statement of Profi t and Loss, of the profi t for
 the year ended on that date, and
 
 c) In the case of the Cash Flow Statement, of the cash fl ows for the
 year ended on that date.
 
 Emphasis of Matter
 
 5) Attention is invited to Note No. 38 of Notes to Financial Statements
 explaining that in compliance to scheme of arrangement u/s 391 to 394
 of the Companies Act 1956 approved by the Hon''ble Bombay High Court
 vide order dated 29th June 2009, the management of the Company during
 the year has identifi ed and adjusted provision for diminution in the
 carrying value of Investment in one of the Subsidiary, amounting to Rs.
 86.06 Crore against Business Reconstruction Reserve. This has resulted
 in the profi t before tax and profi t after tax for the year being
 higher by Rs. 86.06 Crore. Our opinion is not qualifi ed on this matter.
 
 Report on other Legal and Regulatory Requirements
 
 6) As required by the Companies (Auditor''s Report) Order, 2003 (the
 Order) issued by the Central Government of India in terms of
 sub-section (4A) of section 227 of the Act, we give in the Annexure a
 statement on the matters specifi ed in paragraphs 4 and 5 of the Order.
 
 7) As required by section 227(3) of the Act, 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 purpose 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, Statement of Profi t and Loss and Cash Flow
 Statement dealt with by this report are in agreement with the books of
 account.
 
 d) In our opinion, the Balance Sheet, Statement of Profi t and Loss and
 Cash Flow Statement comply with the accounting standards referred to in
 sub-section (3C) of section 211 of the Companies Act, 1956 (the Act)
 read with the General Circular 15/2013 dated 13th September 2013 of the
 Ministry of Corporate Affairs in respect of Section 133 of the
 Companies Act, 2013 and Accounting Standard (AS)-30 to the extent it
 relates to Derivative Accounting , as prescribed by The Institute of
 Chartered Accountants of India..
 
 e) On the basis of written representations received from the directors
 as on 31st March 2014, and taken on record by the Board of Directors,
 none of the directors is disqualifi ed as on 31st March 2014, from
 being appointed as a director in terms of clause (g) of sub-section (1)
 of section 274 of the Companies Act, 1956.
 
 Annexure referred to in paragraph 6 under the heading Report on other
 legal and regulatory requirements of our report of even date.  Re:
 Hindalco Industries Ltd. (the Company)
 
 I.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of Fixed
 Assets.
 
 (b) Fixed Assets have been physically verifi ed by the management
 according to a phased program designated to cover all items over a
 period of three years, which in our opinion is reasonable having regard
 to size of the Company and the nature of its assets. Pursuant to the
 program, a portion of fi xed assets has been physically verifi ed by
 the management during the year and no material discrepancies between
 book record and physical inventory has been noticed.
 
 (c) No substantial part of fi xed assets has been disposed of during
 the year, which has bearing on the going concern assumption.
 
 II.  (a) Physical verifi cation of inventory, (except stocks in transit
 and stocks lying with third parties, confirmation for which has been
 obtained) have been conducted at reasonable intervals during the year,
 by the management/ outside agencies.
 
 (b) In our opinion, the procedures of physical verifi cation of
 inventory followed by the management are reasonable and adequate in
 relation to the size of the Company and nature of its business.
 
 (c) The Company has maintained proper records of inventory. No material
 discrepancies were noticed on physical verifi cation of inventory as
 compared to book records except for shortage in coal amounting to
 Rs.12.51 Crore and the same has been properly dealt with in the books of
 accounts.
 
 III.  (a) The Company has not granted any loans, secured or unsecured
 to companies, firms or other parties listed in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 (b) The Company has not taken any loans, secured or unsecured from
 companies, firms or other parties listed in the register maintained
 under Section 301 of the Companies Act, 1956.
 
 IV.  On the basis of checks carried out during the course of audit and
 as per explanations given to us, we are of the opinion that there is
 adequate internal control system commensurate with the size of the
 Company and the nature of its business; for the purchase of inventory
 and fi xed assets and for the sale of goods and services.  Further, on
 the basis of our examination of the records of the Company and
 according to the information and explanation given to us, no major
 weakness has been noticed or reported in the internal controls except
 as disclosed in the paragraph XXI of this report.
 
 V.  (a) In our opinion and according to the information and explanation
 given to us, the transactions that need to be entered into register
 maintained under section 301 of the Companies Act, 1956 have been so
 entered.
 
 (b) As per the information and explanations give to us and the records
 of the Company examined by us, there are no contract or arrangements
 made for transactions exceeding Rupees 5,00,000 in respect of each
 party, for sale and purchase of goods and services in pursuance of
 section 301 of the Company''s Act,1956.
 
 VI.  The Company has not accepted any deposit from the public within
 the meaning of section 58A and 58AA of the Companies Act 1956 and the
 rules framed there under.
 
 VII.  The Company has an internal audit system, which in our opinion is
 commensurate with the size and nature of its business.
 
 VIII. We have broadly reviewed the books of accounts maintained by
 Company in respect of product, where pursuant to the rule made by the
 Central Government of India the maintenance of cost records has been
 prescribed under section 209 (1) (d) of the Companies Act 1956 and are
 of the opinion that, prima facie, the prescribed records have been
 maintained. We have, however, not made a detailed examination of the
 records with a view to determine whether they are accurate or complete.
 
 IX.  (a) According to the information and explanations given to us and
 on the basis of our examination of the books of account, the Company is
 generally regular in depositing undisputed statutory dues including
 Provident Fund, Investor Education and Protection Fund, Employee''s
 State Insurance, Income Tax,
 
 Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and
 other statutory dues with the appropriate authorities. According to the
 information and explanations given to us and the records of the Company
 examined by us, no undisputed statutory dues as above were outstanding
 as at 31st March, 2014 for a period of more than 6 months from the date
 they became payable.
 
 (b) According to the information and explanations given to us, the dues
 of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty,
 Service Tax and Cess which have not been deposited on account of any
 dispute and the forum where the dispute is pending as on 31st March
 2014 are as under:
 
 Name of the Statute           Nature of Dues              Amount
                                                         (Rs. in Crore)
 
 Central Sales Act and Local   Sales Tax                    0.40
 Sales Tax Act
 
                                                           15.47
 
                                                            6.13
 
                                                           47.35
 
 The Central Excise Act, 
 1994                          Excise Duty                155.31
 
                                                            8.32
 
                                                           37.65
 
                                                           45.33
 
 The Service Tax under the     Service Tax                  0.67
  Finance Act, 1994
 
                                                           88.48
 
                                                           20.09 
 
 The Income Tax Act, 1961      Income Tax                 691.24
 
 Adhosanrachna Vikas           Chhattisgarh                 0.26
 
 Evam Parayavaran Upkar        Development and
 Adhiniyam, 2005               Environment Cess
 
 Shakti Nagar Special Area     Cess on Col                 11.17
                               Development Authority
 
 The Building and Other        Cess                       100.00
 Construction Workers
 (Regulation of Employment
 and Conditions of Service) Act
 & Rules (BOCW Act)
 
 
 Name of the Statue       Period to which the 
                           amount relates        Forum where the
                                                 disputes are
                                                   pending
 
 Central Sales Act and Local
 Sales Tax Act               2003-2004          The Supreme Court
 
                          1986-1987, 1989-1991, 
                          1992-1993, 1995-      The High Court
                          1996, 2003-204, 2004
                          -2005, 2006-2007
                          1994-1995, 1997-1998 
                           to 2000-2001,        Tribunal
 
                          2001-2002 to 2008-2009
 
                          1991-1992, 1994-1995 
                          to 2012-2013          Asst Commissioner/
                                                Commissioner/ 
                                                Revisionnery
                                                Authorities Level
 
 The Central Excise Act, 
 1994                     1999-2000 to 2007-
                          2008                  The Supreme Court
 
                          1994-1995, 2000-2001, 
                          2007-2008 to          The High Court
                          2011-2012
 
                          1988-1990, 1991-1992, 
                          1993-1994, 1999-      Customs, Excise and
                                                Service Tax
                          2000 to 2011-2012     Appeellate Tribunal 
                                                (CESTAT)
 
                          1987-1988, 1996-1997 
                          to 2009-2010,         Asst Commissioner/
                          2011-2012, 2012-2013  Commissioner/  
                                                Revisionnery Authorit
                                                 -ies Level
 
 The Service Tax under the
 Finance Act, 1994        1997-2000, 2002-2008  The High Court
 
                          2002-2003 to 2011-
                          2012                  Customs, Excise and  
                                                Service Tax Appeellate
                                                Tribunal (CESTAT)
 
                          2001-2002, 2004-2005
                          to 2006-2007,         Asst Commissioner/
                          2008-2009 to 2011-
                          2012                 Commissioner/ Revisionnery
                                               Authorities Level
 
 The Income Tax Act, 1961 2008-2009, 2009-2010    CIT (Appeals)
 
 Adhosanrachna Vikas
 Evam Parayavaran Upkar
 Adhiniyam, 2005
 Shakti Nagar Special Area
 Development Authority    2005-2006 to 2011-
                          2012                    The Supreme Court
                          1997-1998 to 2013-2014  The Supreme Court
 The Building and Other
 Construction Workers
 (Regulation of Employment
 and Conditions of Service)                      
 Act & Rules (BOCW Act) 2011-2012               The Supreme Court
 
 X.  The Company does not have any accumulated losses and has not
 incurred cash losses in the current financial year and in the
 immediately preceding financial year.
 
 XI.  The Company has not defaulted in repayment of dues to Financial
 Institutions or Banks or Debenture holders.
 
 XII.  According to the information and explanations given to us, the
 Company has not granted any loans or advances on the basis of security
 by way of pledge of Shares, Debentures and other Securities.
 
 XIII. The provisions of any special statute applicable to chit
 fund/nidhi/mutual benefit fund/societies are not applicable to the
 Company.
 
 XIV. The Company is not in the business of dealing or trading in
 Shares, Securities, Debentures and other Investments.
 
 XV.  In our opinion and according to the information and explanations
 given to us, the terms and conditions on which the Company has given
 corporate guarantees for loans taken by its Subsidiary from Banks and
 Financial Institutions are not prima facie prejudicial to the interest
 of the Company.
 
 XVI.  Based on information and explanations given to us and records of
 the Company examined by us, in our opinion, the term loans have been
 applied for the purpose for which they were obtained. Though unutilized
 funds which were not required for immediate use for capital expenditure
 have been temporarily invested in mutual funds / bank deposit.
 
 XVII.  According to the information and explanations given to us and on
 the basis of our overall examination of the Balance Sheet and Cash Flow
 Statement, we report that no funds raised on short term basis have been
 used for long term investment of the Company.
 
 XVIII.  During the year under Audit, the Company has made preferential
 allotment of shares to parties and companies covered in the register
 maintained under section 301 of the Companies Act 1956. The price at
 which shares have been issued on conversion of warrants, has been
 determined as per the Securities and Exchange board of India (Issue of
 Capital and Disclosure Requirement) Regulation, 2009, which in our
 opinion is not prejudicial to the interest of the Company.
 
 XIX.  The Company has created securities / charges in respect of
 secured debentures issued.
 
 XX.  The Company has not raised any money by Public Issues during the
 year.
 
 XXI.  During the course of our examination of the books and records of
 the Company, carried out in accordance with the Generally Accepted
 Auditing Practice in India, and according to the information and
 explanations given to us, we report that the following fraud on the
 Company was detected during the year-:
 
 In the matter of weighment and recording of receipt of coal purchased
 at one of its unit where contractor/ transporter and some of the
 Company''s employees were involved. As explained by the management, the
 impact of this could not be ascertained /quantifi ed at this stage as
 the matter is under investigation.  However, the shortage observed in
 coal inventory on physical verifi cation amounting to Rs. 12.51 Crore has
 been fully provided for in the books of accounts.
 
 As explained by the management, necessary steps have been taken to
 strengthen the internal control systems in these regard and it is not
 expected to have any impact on the financial results of the Company
 going forward.
 
                                              For SINGHI & CO.
 
                                         Chartered Accountants 
                                  Firm Registration No.302049E
 
                                                (RAJIV SINGHI)
 
 Place: Mumbai                                         Partner
 
 Date: 29th day of May, 2014              Membership No. 53518
 
 
 
 
 
 
Source : Dion Global Solutions Limited
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