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Hindalco Industries

BSE: 500440|NSE: HINDALCO|ISIN: INE038A01020|SECTOR: Aluminium
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« Mar 15
Auditor's Report (Hindalco Industries) Year End : Mar '16
We have audited the accompanying standalone financial statements of
 HINDALCO INDUSTRIES LIMITED (the Company), which comprise the Balance
 Sheet as at 31st March, 2016, the Statement of Profit and Loss, the
 Cash Flow Statement for the year then ended, and a summary of the
 significant accounting policies and other explanatory information.
 
 Management''s Responsibility for the Standalone Financial Statements
 
 The Company''s Board of Directors is responsible for the matters stated
 in Section 134(5) of the Companies Act, 2013 (the Act), with respect
 to the preparation of these standalone 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 the Accounting Standards
 specified under Section 133 of the Act, read with Rule 7 of the
 Companies (Accounts) Rules, 2014. This responsibility also includes
 maintenance of adequate accounting records in accordance with the
 provisions of the Act for safeguarding the assets of the Company and
 for preventing and detecting frauds and other irregularities; selection
 and application of appropriate accounting policies; making judgments
 and estimates that are reasonable and prudent; and design,
 implementation and maintenance of adequate internal financial controls,
 that were operating effectively for ensuring the accuracy and
 completeness of the accounting records, relevant to the preparation and
 presentation of the financial statements that give a true and fair view
 and are free from material misstatement, whether due to fraud or error.
 
 Auditor''s Responsibility
 
 Our responsibility is to express an opinion on these standalone
 financial statements based on our audit. We have taken into account the
 provisions of the Act, the accounting and auditing standards and
 matters which are required to be included in the audit report under the
 provisions of the Act and the Rules made thereunder.
 
 We conducted our audit in accordance with the Standards on Auditing
 specified under Section 143(10) of the Act. 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 the 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 financial control relevant
 to the Company''s preparation of the financial statements that give a
 true and fair view in order to design audit procedures that are
 appropriate in the circumstances. An audit also includes evaluating the
 appropriateness of the accounting policies used and the reasonableness
 of the accounting estimates made by the Company''s Directors, as well as
 evaluating the overall presentation of the financial statements.
 
 We believe that the audit evidence we have obtained is sufficient and
 appropriate to provide a basis for our audit opinion on the standalone
 financial statements.
 
 Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, the aforesaid standalone 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, of the state of affairs of the Company as
 at 31st March, 2016, and its Profit and its cash flows for the year
 ended on that date.
 
 Emphasis of Matters
 
 We draw attention to Note No. 43 of the Financial Statement, explaining
 that in compliance to the scheme of arrangement under Sections 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
 has, during the year, identified and adjusted following against
 Business Reconstruction Reserve:
 
 a.  provision for diminution in the carrying value of Investments in
 one of its Subsidiaries and of a Jointly Controlled Entity aggregating
 to Rs. 35.50 crore,
 
 b.  impairment loss of Rs. 561.70 crore (deferred tax of Rs. 194.39
 crore) related to one of its cash generating units,
 
 c.  expenses of Rs. 279.46 crore for exited project, against Business
 Reconstruction Reserve.
 
 Had the above impact be considered the reported Profit before tax and
 Profit after tax of Rs. 732.61 crore and Rs. 607.25 crore,
 respectively, would have been converted in to loss before tax of Rs.
 144.05 crore and loss after tax of Rs. 75.02 crore.
 
 Our report is not qualified in respect of this matter.
 
 Report on Other Legal and Regulatory Requirements
 
 1.  As required by the Companies (Auditor''s Report) Order, 2016; issued
 by the Central Government of India in terms of Sub-section (11) of
 Section 143 of the Act (the order), and on the basis of examination
 of the books and records of the Company and according to the
 information and explanations given to us, we give in the Annexure A
 statement on the matters specified in the paragraph 3 and 4 of the
 Order.
 
 2.  As required by Section 143(3) of the Act, we report that:
 
 a) we have sought and 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 it appears from our examination of those
 books;
 
 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 aforesaid standalone financial statements comply
 with the applicable Accounting Standards specified under Section 133 of
 the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
 
 e) on the basis of the written representations received from the
 directors as on 31st March, 2016, taken on record by the Board of
 Directors, none of the directors is disqualified as on 31st March,
 2016, from being appointed as a director in terms of Section 164(2) of
 the Act;
 
 f) With respect to the adequacy of the internal financial controls over
 financial reporting of the Company and the operating effectiveness of
 such controls, refer to our separate Report in Annexure ''B''; and
 
 g) With respect to the other Matters to be included in the Auditor''s
 Report in accordance with Rule 11 of the Companies (Audit and Auditors)
 Rules, 2014, in our opinion and to the best of our information and
 according to the explanations given to us:
 
 i. the Company has disclosed the impact of pending litigation on its
 financial position in its financial statements – Refer Note 50A(a),
 c(iii) and c(iv) to the financial statements.
 
 ii. the Company has long-term contracts including derivative contracts
 as at 31st March, 2016 for which there were no material foreseeable
 losses.
 
 iii. there has been no delay in transferring amounts, required to be
 transferred, to the Investor Education and Protection Fund by the
 Company, except Rs. 0.09 crore which are held in abeyance due to
 pending legal cases.
 
 Annexure A referred to in paragraph 1 under the heading Report on
 Other Legal and Regulatory Requirements of our report of even date
 
 Re: Hindalco Industries Limited (the Company)
 
 I.  (a) The Company has maintained proper records showing full
 particulars including quantitative details and situation of Fixed
 Assets.
 
 (b) As per the information and explanations given to us, physical
 verification of fixed assets has been carried out in terms of the
 phased program designed to cover all items over a period of three
 years, which, in our opinion, is reasonable having regard to size of
 the Company and nature of its assets. Pursuant to the program, a
 portion of fixed assets has been physically verified by the management
 during the year, and no material discrepancies between books record and
 physical inventory has been noticed.
 
 (c) According to the information and explanations given to us and on
 the basis of the examination of the records of the Company, the title
 deeds of the immovable properties are held in the name of the Company
 except in the following cases:
 
 Particulars      Total      Whether     Gross Block 
                                        (as at         Remarks
                  Number of  Leasehold/  31st March, 
                                         2016) 
                  Cases      Freehold    Amount
 
 Unit – Birla
 Copper              4       Leasehold   Rs. 21.30 
                                         crore         Lease deed is
 Dahej Industrial 
 Area, Lakhigam, 
 Dahej, Taluka: 
 Vagra,                                                pending
 Dist: Bharuch
 (199.68 acre)
 
 Unit - Birla 
 Copper              1       Freehold    Rs. 0.06 
                                         crore         Registration
 Block No: 42 
 Kesrol, Dist: 
 Bharuch
 (6.13 acre)                                           in the name of
                                                       the Company is
                                                       pending
 
 Unit – Aditya 
 Aluminium           1       Leasehold   Rs. 57.94
                                         crore         Lease deed is
 12 Villages 
 of Aditya 
 Aluminium 
 Project 
 (253.29 acre)                                         pending
 
 II.  As per the information and explanations given to us, the
 inventories have been physically verified at reasonable intervals
 during the year by the management except materials lying with third
 parties, where confirmations are obtained. The discrepancies noticed on
 the physical verification of inventory as compared to book stock were
 not material.
 
 III.  The Company has not granted any loans, secured or unsecured, to
 companies, firms, limited liability partnership or other parties listed
 in the register maintained under Section 189 of the Companies Act,
 2013. Accordingly the provisions of paragraphs 3(III), 3(III)(a) to
 3(III)(c) of the said order are not applicable.
 
 IV.  In our opinion and according to the information and explanations
 given to us, the Company has complied with the provisions of Sections
 185 and 186 of the Act, with respect to Loans and Advances made,
 guarantee given and investments made.
 
 V.  The Company has not accepted any deposit from the public within the
 meaning of Sections 73, 74, 75 and 76 of the Act and Rules framed
 thereunder to the extent notified.
 
 VI.  We have broadly reviewed the books of account maintained by the
 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 148(1) of the Companies Act, 2013, 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.
 
 VII.  (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, Employee''s State Insurance, Income Tax, Sales Tax,
 Wealth Tax, Service Tax, Duty of Customs, Duty of Excise, Value Added
 Tax, 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 amounts payable in
 respect of Provident Fund, Employee''s State Insurance, Income Tax,
 Sales Tax, Wealth Tax, Service Tax, Duty of Customs, Duty of Excise,
 Value Added Tax, Cess and other material statutory dues were in arrears
 as at 31st March, 2016, for a period of more than six months from the
 date they became payable .
 
 (b) According to the information and explanation given to us, the dues
 of Sales Tax, Income Tax, Duty of Custom , Wealth Tax, Duty of Excise,
 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,
 2016, are as under:
 
 Name of the
 Statute          Nature of Dues    Amount    Period to which the amount
                                              relates 
                                   (Rs. in 
                                    Crore)
 
 Central Sales 
 Tax Act and      Sales Tax          3.94     2003-2004, 2012-2013 to
                                              2015-2016
 Local Sales 
 Tax act                             8.87     1986-1987, 1989-1990, 
                                              1991-1992, 1992-1993, 
                                              1999-2000 to 2003-2004,
                                              2005-2006, 2006-2007
 
                                     1.37     2002-2003, 2005-2006
 
                                    59.70     1991-1992, 1996-1997 to 
                                              2002-2003, 2005-2006 to
                                              2012-2013
 
 The Central 
 Excise Act ,1944 Excise Duty        2.45     1989-1990 to 1995-1996,
                                              2000-2001, 2009-2010, 
                                              2011-2012
 
                                   157.74     1988-1990 to 2014-2015
 
                                   178.94     2001-2002 to 2013-2014 
 
 The Service
 Tax under the    Service Tax        0.35     2009-2010
 Finance 
 Act, 1994                          73.69     2002-2003 to 2013-2014
 
                                    22.96     2004-2005 to 2013-2014
 
 The Customs 
 Act, 1962        Customs Act       22.78     2009-2010 and 2010-2011
 
                                     5.29     2006-2007
 
 The Income-
 tax Act, 1961    Income Tax     1,396.30     2008-2009 to 2011-2012
 
 Adhosanrachna 
 Vikas            Chhattisgarh       0.27     2005-2006 to 2011-2012
 Evam Parayavaran 
 Upkar            Development
                  and
 Adhiniyam, 2005  Environment
                  Cess
 
 Shakti Nagar 
 Special Area     Cess on Coal       3.98     1997-1998 to 2011-2012
 Development
 Authority
 
 The Building 
 and Other        Cess             100.00     2011-2012
 Construction 
 Workers 
 (Regulation of 
 Employment and 
 Conditions of
 Service)
 Act & Rules
 (BOCW Act)
 
 Green Cess       Cess               6.16     2012-2013 to 2015-2016
 
 Name of the Statute     Forum where the disputes are pending
 
 Central Sales Tax Act   The Hon''ble Supreme Court of India
 
                         The Hon''ble High Court
 
                         Tribunal
 
                         Asst Commissioner/Commissioner/ Revisionary 
                         Authorities Level
 
 The Central Excise 
 Act, 1944               The Hon''ble High Court
 
                         Customs, Excise and Service Tax 
                         Appellate Tribunal (CESTAT)
 
                         Asst Commissioner/Commissioner/
                         Revisionary Authorities Level
 
 The Service Tax under
 the Fiance Act, 1994    The Hon''ble High Court
 
                         Customs, Excise and Service Tax
                         Appellate Tribunal (CESTAT)
 
                         Asst Commissioner/Commissioner/
                         Revisionary Authorities Level
 
 The Customs Act, 1962   Customs, Excise and Service Tax
                         Appellate Tribunal (CESTAT)
 
                         Asst Commissioner/Commissioner/
                         Revisionary Authorities Level
 
 The Income-tax 
 Act, 1961               Commissioner of Income Tax (Appeals)
 
 Adhosanrachna Vikas 
 Evam Parayavaran Upkar
 Adhiniyam, 2005         The Hon''ble Supreme Court of India
 
 Shakti Nagar Special
 Area Development 
 Authority               The Hon''ble Supreme Court of India
 
 The Building and Other
 Construction Workers    The Hon''ble Supreme Court of India
 
 Green Cess              The Hon''ble Supreme Court of India
 
 VIII. According to the records of the Company examined by us and the
 information and explanations provided to us, the Company has not
 defaulted in repayment of loans or borrowings to any Financial
 Institutions or Banks or dues to debenture holders. Further, as at the
 Balance Sheet date, the Company does not have any loans or borrowing
 from the Government.
 
 IX.  In our opinion and according to the information and explanations
 given to us, the money raised by way of term loans have been applied
 for the purpose for which they were obtained. The Company has not
 raised any money by way of initial public offer or further public offer
 including debt instruments during the year.
 
 X.  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 have neither come across any instances of
 material fraud by the Company or on the Company by its officers or
 employees noticed or reported during year nor have been informed of any
 such case by the Management.
 
 XI.  According to the information and explanations given to us and
 based on our examination of the records of the Company, the Company has
 paid/provided for managerial remuneration in accordance with the
 requisite approvals mandated by the provisions of Section 197 read with
 Schedule V of the Act.
 
 XII.  The Company is not a Nidhi Company. Accordingly, paragraph 3(XII)
 of the Order is not applicable.
 
 XIII. According to the information and explanations given to us and
 based on our examination of the records of the Company, transactions
 with the related parties are in compliance with Sections 177 and 188 of
 the Act where applicable, and details of such transactions have been
 disclosed in the financial statements as required under Accounting
 Standard (AS)-18, Related Party Transactions.
 
 XIV. The Company has not made any preferential allotment or private
 placement of shares or fully or partly converted debentures during the
 year. Accordingly, paragraph 3(XIV) of the Order is not applicable to
 the Company.
 
 XV.  According to the information and explanations given to us and
 based on our examination of the records of the Company, the Company has
 not entered into non-cash transactions with directors or persons
 connected with him. Accordingly, paragraph 3(XV) of the Order is not
 applicable.
 
 XVI. The Company is not required to be registered under Section 45-IA
 of the Reserve Bank of India Act, 1934.  Accordingly, paragraph 3(XVI)
 of the Order is not applicable to the Company.
 
 
                                                    For SINGHI & CO.
 
                                              Chartered Accountants 
 
                                      Firm Registration No. 302049E
 
                                                      (RAJIV SINGHI)
 
 Place : Mumbai                                             Partner
 
 Date : 28th May, 2016                         Membership No. 53518
Source : Dion Global Solutions Limited
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