National Aluminium Company

1.  We have audited the attached Balance Sheet of NATIONAL ALUMINIUM
 COMPANY LIMITED, as at 31st March, 2009, the Profit and Loss Account
 and the Cash Flow Statement of the Company 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 misstatements. 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 the 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 as
 amended by the Companies (Auditors’ Report) (Amendment) Order, 2004
 (hereinaf ter referred to as “the order”) 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.  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 account as required by law have
 been kept by the Company, so far as appears from our examination of the
 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.
 
 e.  In terms of Government of India, Ministry of Finance, Department of
 Company Affairs, Notification No.GSR 829 (E) dated 21st October,2003,
 Government Companies are exempt from the applicability of provisions of
 Section 274 (1) (g) 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 accounts read with significant
 accounting policies and notes on accounts appearing in Schedule X and
 Schedule Y respectively 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 31st March, 2009;
 
 ii.  in the case of the Profit & 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 for the
 year ended on that date.
 
 ANNEXURE TO THE AUDITORS’ REPORT
 
 (REFERRED TO IN PARAGRAPH (3) OF OUR REPORT OF EVEN DATE)
 
 i. (a) The Company has maintained proper records showing in most cases
 full particulars including quantitative details and situation of its
 Fixed Assets.
 
 (b) The company has a programme of conducting physical verification of
 non-movable assets at an interval of three years, which in our opinion
 is reasonable having regard to the size of the company and nature of
 its assets. All the movable assets, were physically verified during the
 year. As informed to us, no material discrepancies were noticed on such
 verification wherever reconciliations have been carried out and the
 same have been adjusted in the books.
 
 (c) In our opinion and according to the information and explanations,
 the Company has not disposed of f substantial part of fixed assets
 during the year.
 
 ii. (a) As explained to us, all inventories except stocks relating to
 expansion project, stocks with third parties and stocks in-transit have
 been physically verified by the management at reasonable intervals
 during the year.
 
 (b) In our opinion and according to the information and explanations
 given to us, the procedures for 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) In our opinion and according to the information and explanations
 given to us, the Company has maintained proper records of its
 inventories. The discrepancies noticed on physical stock and book
 records relating to shortages have been dealt with in the books of
 account, while excesses have been ignored except in case of finished
 goods.
 
 iii. (a) According to information and explanations given to us, the
 Company has not granted any loans, secured or unsecured, to Companies,
 firms or other parties covered in the register maintained under section
 301 of the Companies Act, 1956. Accordingly, sub-clauses (b), (c) & (d)
 of the order are not applicable.
 
 (e) The Company has not taken any loans, secured or un-secured, from
 Companies, firms or other parties covered in the register maintained
 under section 301 of the Companies Act, 1956. Accordingly sub-clauses
 (f) & (g) are not applicable.
 
 iv. In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business with regard
 to purchase of inventory, fixed assets and for the sale of goods and
 services. During the course of our audit, we have not observed any
 major failures in the internal control system.
 
 v. According to information and explanations given to us, the Company
 has not entered into any contracts or arrangements which require to be
 recorded in a register maintained under section 301 of the Companies
 Act, 1956.
 
 vi.  The Company has not accepted any deposits from the public during
 the year.
 
 vii.  In our opinion, the Company’s internal audit system is
 commensurate with the size and nature of its business.
 
 viii. We have carried out a limited review of the records maintained by
 the Company, pursuant to the Rules made by the Central Government for
 the maintenance of cost records under section 209(i) (d) of the
 Companies Act, 1956 in respect of manufacturing activities and are of
 the opinion that prima facie, the prescribed cost records have been
 maintained. We have not, however, made a detailed examination of the
 records with a view to determine whether these are accurate and
 complete.
 
 ix. According to the information and explanations given to us and on
 the basis of our examination of the books of accounts, the Company is
 generally regular in depositing undisputed statutory dues including
 Provident Fund, Investor Education and Protection Fund, Income Tax,
 Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise duty, Cess,
 Electricity Duty with the appropriate authority.
 
 According to the information and explanations given to us, no
 undisputed amounts are payable in respect of Income Tax, Sales Tax,
 Wealth Tax, Service Tax, Custom Duty, Excise duty, Cess and other
 material statutory dues applicable to it as at 31st March, 2009 for a
 period of more than six months from the date on which they become
 payable.
 
 According to the information and explanations given to us, there are
 disputed statutory dues which have not been deposited as given herein
 below:
 
 Statute    Nature of Dues  Amount Disputed  Amount Deposited Forum where
                                                              disputes 
                                                              are
                             (Rs.in crore)   (Rs.in crore)    pending
 
 Sales Tax   Sales Tax         222.61            32.78        Commiss
                                                              ionrate
                               168.31            39.09        Tribunal
                                76.45            22.49        High Court
                               467.37            94.36
 
 Entry Tax   Entry Tax          24.30            14.38        Commissi
                                                               onrate
                                22.67            14.11        Tribunal
                                 6.95             4.90       High Court
                                53.92            33.38
 
 Central    
 Excise Act, Excise Duty        66.63             0.23        Commiss
                                                              ionrate
 1944                            9.97             0.59        Tribunal
                                76.60             0.82
 
 Customs Act,
 1962       Custom Duty          0.40             0.11        Commiss
                                                              ionrate
                                 3.17              Nil        Tribunal
                                 3.57             0.11
 
 Income 
 Tax Act, 
 1961        Income Tax        168.88           124.63        Commiss
                                                              ionrate
                                34.60            43.96       Tribunal
                               203.48           168.58
              TOTAL            804.94           297.25
 
 x.  The Company has no accumulated losses at the end of the financial
 year and has not incurred any cash losses during the financial year
 covered by our audit 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 a
 financial institution, bank or debenture holders.
 
 xii.  Based on our examination of the records and the information and
 explanations given to us, the Company has not granted any loans and
 advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 xiii.  The Company is not a chit fund or a nidhi/mutual benefit fund/
 society. Therefore the provisions of clause 4(xiii) of the Order are
 not applicable to the Company.
 
 xiv.  The Company is not dealing or trading in shares, securities,
 debentures and other investments. Therefore the provisions of clause
 4(xiv) of the Order are not applicable to the Company.
 
 xv.  According to the information and explanations given to us, the
 Company has not given any guarantee for loans taken by others from bank
 or financial institutions.
 
 xvi.  Based on our examination of the records and the information and
 explanations given to us, the Company has not raised any term loans
 during the year under audit.
 
 xvii.  According to the information and explanations and on an overall
 examination of the Balance Sheet of the Company, we report that no
 funds raised on short-term basis have been used for long-term
 investment of the company.
 
 xviii.  According to the information and explanations given to us, the
 Company has not made any preferential allotment of shares to Companies,
 firms or other parties covered in the register maintained under section
 301 of the Companies Act, 1956.
 
 xix.  Based on our examination of the records and the information and
 explanations given to us, the Company has not issued debentures during
 the year.
 
 xx.  The Company has not raised any money by way of public issue during
 the year.
 
 xxi.  To the best of our knowledge and belief 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 P. A . & Associates 
                                               Chartered Accountants
 
 Place : Bhubaneswar                               (CA S. S. Poddar)
 Date  : 03rd June, 2009                                    Partner
                                                Membership.No.51113