1. We have audited the attached balance sheet of Hindustan Zinc
Limited (the Company) as at 31 March 2011, the profit and loss account
and cash flow statement of the Company for the year ended on that date,
both annexed thereto. These financial statements are the
responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with generally accepted
auditing standards 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 (Auditors Report) Order, 2003, 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. We draw attention to Note 15 on Schedule 18, relating to long-term
investment in equity shares of a power Company being classified as an
intangible asset (Schedule 4) and amortised. This treatment is in
preference to requirements of Accounting Standard 30 Financial
Instruments: Recognition and Measurement, Accounting Standard 26
Intangible Assets; and Schedule XIV of the Companies Act, 1956. This
has resulted in profit after tax being lower by Rs. 3.49 Crores (2010: Rs.
3.41 Crores), investments being lower by Rs. 98.41 Crores (2010: Rs. 98.41
Crores), fixed assets being higher by Rs. 51.36 Crores (2010: Rs. 56.03
Crores), deferred tax liability being lower by Rs. 15.27 Crores (2010: Rs.
14.08 Crores) and reserves and surplus being lower by Rs. 31.78 Crores
(2010: Rs. 28.30 Crores).
5. Further to our comments in the Annexure referred to in paragraph 3
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 our
audit;
b. in our opinion, proper books of accounts 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 Profit and Loss Account 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 Profit and Loss Account 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
the Companies Act, 1956 except for Paragraph 4 above. Additionally, the
Company has chosen to early adopt Accounting Standard 30, Financial
Instruments: Recognition and Measurement arising from the Announcement
of the Institute of Chartered Accountants of India on 29 March 2008 as
stated in Note 16 on Schedule 18.
e. 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:
i. in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March 2011;
ii. in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
iii. in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
6. On the basis of written representations received from the directors
as on 31 March 2011 and taken on record by the Board of Directors, we
report that none of the directors is disqualified as on 31 March 2011
from being appointed as a director in terms of Section 274(1)(g) of the
Companies Act, 1956.
Annexure to the Auditors Report (Referred to in paragraph 3 of
Auditors Report of even date)
1. In our opinion and according to the information and explanation
given to us, the nature of the Companys business/activities during the
year are such that clauses (iii), (v), (vi), (x), (xii), (xiii), (xv),
(xvi), (xviii), (xix), and (xx) of Companies (Auditors Report) Order
2003, are not applicable to the Company. In respect of the other
clauses, we report as under:
2. In respect of its fixed Assets:
i. The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
ii. The fixed assets were physically verifed during the year by the
Management in accordance with a regular programme of verifcation which,
in our opinion, provides for physical verifcation of all the fixed
assets at reasonable intervals. According to the information and
explanation given to us, no material discrepancies were noticed on such
verifcation.
iii. In our opinion and according to the information and explanations
given to us, a substantial part of fixed assets has not been disposed of
by the Company during the year.
3. In respect of its inventories:
i. As explained to us, the inventories were physically verifed during
the year by the management which is at reasonable intervals.
ii. In our opinion and according to the information and explanations
given to us, the procedures of physical verifcation of inventories
followed by the management were reasonable and adequate in relation to
the size of Company and the nature of its business.
iii. In our opinion, and according to the information and explanations
given to us, the Company has maintained proper records of its
inventories and no material discrepancies were noticed on physical
verifcation.
4. In our opinion and according to the information and explanations
given to us, having regard to the explanations that some of the items
purchased are of special nature and suitable alternative sources are
not readily available for obtaining comparable quotations, there is an
adequate internal control system commensurate with the size of the
Company and nature of its business with regards to purchases of
inventory and fixed assets and the sale of goods. There are no sale of
services. During the course of our audit, we have not observed any
major weakness in such internal control system.
5. In our opinion, the Company has an adequate internal audit system
commensurate with the size of the Company and the nature of its
business.
6. We have broadly reviewed the books of account and records
maintained by the Company relating to the manufacture of Zinc, Lead,
Sulphuric Acid and generation of electricity, pursuant to the order
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
maintained and being made up. We have, however, not made a detailed
examination of the records with a view to determining whether they are
accurate or complete.
7. According to the information and explanations given to us, and the
records of the Company examined by us:
i. The Company has been regular in depositing with appropriate
authorities undisputed statutory dues including Provident Fund,
Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth
Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material
statutory dues.
ii. Disputed sales tax, excise duty, and Income-tax dues aggregating Rs.
21.24 Crores, Rs. 63.88 Crores and Rs. 561.08 Crores respectively, have not
been deposited since the matters are pending with the relevant forum as
per annexure A attached.
8. In our opinion and according to the information and explanations
given to us, the Company has not defaulted in repayment of dues to
banks and fnancial institutions.
9. In our opinion and according to the information and explanations
given to us, the Company is not a dealer or trader in shares,
securities, debentures and other investments. The Company has
maintained proper records of transactions and contracts in respect of
shares, securities, debentures and other investments and timely entries
have been made therein. All shares, securities, debentures and other
investments have been held by the Company in its own name.
10. In our opinion and according to the information and explanations
given to us and on an overall examination of the Balance Sheet, we
report that funds raised on short- term basis have not been used during
the year for long- term investment.
11. To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no significant
fraud on the Company has been noticed or reported during the year.
Amount
Nature of statute Nature of dues (Rs. in Crores)
Companys appeals:
(a) Sales Tax Claim Disputes in respect of
Sales Tax rate 21.24
difference/classification and
stock transfers treated as
sales for the financial
year 1980-81 to 2009-10
(b) Central Excise
Duty Admissibility of Modvat/Cenvat
credit on 63.88
inputs, capital goods, alleged
duty demand on captive use of
intermediate goods, reversal
of the amount on dispatch of
by-products, duty on valuation
and storage/handling losses,
for the FY 1985-86 to FY 2009-10
(c) Income Tax Disputes in respect appeals
pending 124.40
before CIT(A) for AY 1996-97 and
AY 2008-09
Disputes in respect appeals
pending 4.62
before Tribunal for AY 1998-99 to
AY 2003-04 and AY 2006-07
Disputes in respect appeals
pending before 25.00
High Court for AY 1992-93 to AY 1994-95,
AY 1996-97 AY 1997-98 and AY 2003-04
Sub Total (a): 154.02
Departments appeals:
Income Tax Relief granted by CIT (A)
for AY 1989-90 331.69
to AY 1991-92, AY 1996-97 to
AY 2009-10 for differences in
computation, allowances
of certain expenses and enhancement
of rebate, etc.
Relief granted by Tribunal
for AY 1990-91 75.37
to AY 1994-95 & AY 1996-97 for
differences in computation,
allowances of certain expenses
and enhancement of rebate, etc.
Sub Total (b): 407.06
Sub Total (a) + (b): 561.08
TOTAL 646.21
Name of statue Forum pending at
Companys appeals:
(a) Sales Tax Claim Dy Commissioner,
Joint Commissioner,
CTO, Tribunal and High Court.
(b) Central Excise Duty CESAT, Commissioner
(Appeals) and High Court/
Supreme Court
(c) Income Tax CIT(A)
Tribunal
High Court
Departments appeals:
Income Tax Tribunal/Assessing Officer
High Court/Supreme Court
TOTAL
For Deloitte Haskins & Sells
Chartered Accountants
(Registration No. 117366W)
Shyamak R. Tata
Partner
M. No. 38320
Place : Mumbai
Date : April 21, 2011
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