Sterlite Industries (India)
BSE: 500900 | NSE: STER | ISIN: INE268A01031 | Metals - Non Ferrous
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| Auditor's Report | Year End : Mar '08 |
1. We have audited the attached Balance Sheet of ‘STERLITE INDUSTRIES
(INDIA) LIMITED’ (‘the Company’), as at March 31, 2008 and the Profit
and Loss Account and also the Cash Flow Statement 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. These Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement. An audit also
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 (Auditor’s Report) Order, 2003 issued
by Central Government of India in terms of Section 227 (4A) of the
Companies Act 1956, we enclose in the Annexure a statement on the
matters specified in the paragraphs 4 and 5 of the said order.
4. As mentioned in Note No. 9 of Schedule 20 in respect of early
adoption of Accounting Standard (AS) – 30 on ‘Financial Instruments:
Recognition and Measurement’ and limited revision arising out of it in
other Accounting Standards, issued by ‘The Institute of Chartered
Accountants of India’ (ICAI), the Company has measured all it’s
Financial Assets and Financial Liabilities at their respective fair
values. Accordingly, Accounting Standard (AS) – 13 on ‘Accounting for
Investments’ and Accounting Standard (AS) – 11, ‘The Effects of Changes
in Foreign Exchange Rates’ have been followed only for those
transactions which are not within the scope of Accounting Standard (AS)
– 30. Had the Company followed (AS) – 13 and (AS) – 11 in their
entirety, the carrying value of Investments, Reserve & Surplus and
Profit for the year (net of tax), would have been Lower by Rs. 71.47
crore, Rs. 90.89 crore and
Rs. 54.25 crore, respectively and carrying value of unsecured loans
would have been higher by Rs. 46.75 crore.
5. Further to our comments in the above paragraphs and Annexure
referred to 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 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
such books;
c) The Balance Sheet and Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
d) In our opinion the Balance Sheet and the Profit & Loss Account and
Cash Flow Statement complies with the Accounting Standards referred to
in Section 211 (3C) of the Companies Act, 1956 including Accounting
Standard (AS) – 30 on ‘Financial Instruments: Recognition and
Measurement’ and limited revision arising out of it in other Accounting
Standards, issued by ICAI as mentioned in paragraph 4 above;
e) On the basis of the written representations received from the
Directors as on March 31, 2008, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2008 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 accounts read together with
Significant Accounting Policies and notes 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, 2008;
II) in the case of the Profit & Loss Account, of the Profit 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 AUDITORS’ REPORT
(REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE)
As required by the Companies (Auditor’s Report) Order, 2003 issued by
Central Government of India in terms of Section 227 (4A) of the
Companies Act 1956, and on the basis of such checks as we considered
appropriate, we further report that:- (i) In respect of its fixed
assets:
(a) The Company has generally maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
(b) As explained to us, the fixed assets have been physically verified
by the management in accordance with a phased programme of
verification, which in our opinion is reasonable, considering the size
and nature of its business. No material discrepancies were noticed on
such verification as compared with the available records.
(c) In our opinion and according to the information and explanations
given to us, the Company has not made any substantial disposal of fixed
assets during the year and going concern status of the Company is not
affected.
(ii) In respect of its inventories:
(a) As explained to us, inventories have been physically verified by
the management at reasonable intervals.
(b) In our opinion and according to the information and explanations
given to us, the procedure of physical verification of inventories
followed by the management is reasonable and adequate in relation to
the size of the Company and the nature of its business.
(c) According to the information and explanations given to us and on
the basis of our examination of inventory records, we are of the
opinion that the Company is maintaining proper records of inventory. As
explained to us, discrepancies noticed on physical verification of the
inventories between the physical inventories and book records were not
material, having regard to the size of the operations of the Company,
and the same have been properly dealt with.
(iii)
(a) According to the information and explanations given to us, there
are two Companies covered in the register maintained under section 301
of the Companies Act, 1956, to which the Company has granted loans. The
maximum amount involved during the year was Rs. 689 crore and the year-
end balance of loans granted to such party was Rs. 689 crore.
(b) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions of the
loans given by the Company, are prima facie not prejudicial to the
interest of the Company.
(c) The loan given to one party was repayable on demand and there was
no repayment schedule and in respect of another party the loan was not
due for refund at year end. The Interest on above loans was due for
recovery as at year end.
(d) In respect of the loan given to one party the same was repayable on
demand and in respect of another party it is not due for repayment
therefore the question of overdue amount does not arise.
(e) According to the information and explanations given to us, the
Company has not taken any loan from companies, firms and other parties
covered in the register maintained under section 301 of the Companies
Act, 1956, hence requirement of clauses 4 (iii) (f) and (g) of the
Companies (Auditor’s Report) Order, 2003 are not applicable.
(iv) In our opinion and according to the information and explanations
given to us there are adequate internal control procedures commensurate
with the size of the Company and the nature of its business for the
purchase of inventories and fixed assets and for sale of goods and
services. We have not observed any continuing failure to correct major
weakness in the internal control.
(v) In respect of the contracts or arrangements referred to in Section
301 of the Companies Act, 1956:
(a) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of contracts or
arrangements, that needed to be entered in the register maintained
under section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion & according to the information and explanations
given to us, there are no transactions in pursuance of contracts or
arrangements entered in the register maintained under section 301 of
the Companies Act, 1956 aggregating during the year to Rs. 5,00,000
(Rupees five lac only) or more in respect of any party in the said
financial year.
(vi) The Company has not accepted any deposit from the public and hence
directives issued by the Reserve Bank of India and the provisions of
section 58A and 58 AA of the Companies Act, 1956 and rules framed there
under are not applicable for the year under audit.
(vii) In our opinion, the Company has an internal audit system
commensurate with its size and nature of its business.
(viii) We are informed by the management that Central Government has
prescribed the maintenance of Cost Records under section 209 (1) (d) of
the Companies Act, 1956, in respect of manufacture of copper and
sulphuric acid. We have broadly reviewed the accounts and records of
the Company in this connection and are of the opinion that, prima
facie; prescribed accounts and records have been made and maintained.
We have not, however, made a detailed examination of the records with a
view to determine whether they are accurate.
(ix) In respect of statutory dues:
(a) According to the records of the Company, the Company has generally
been regular in depositing with appropriate authorities undisputed
statutory dues, including Provident Fund, Employees State Insurance,
Income-tax, Sales-tax, Wealth tax, Service Tax, Custom Duty, Excise
Duty, Cess and any other material statutory dues. According to the
information and explanations given to us, no undisputed amounts payable
in respect of such statutory dues, except Rs. 0.63 crore in respect of
Investor Education and Protection Fund, as at 31st March 2008 for a
period of more than six months from the date they became payable, which
is held in abeyance due to pending legal case.
(b) According to the information and explanations given to us, the
disputed statutory dues aggregating to Rs. 155.51 crore, that have not
been deposited on account of matters pending before appropriate
authorities are as under:
Amount
Name of the Statute Nature of the Dues (Rs. in crore)
Income Tax Act, 1961 Income Tax 5.02
Finance Act, 1994 Service Tax 15.73
Central Excise Act, 1944 Excise Duty 116.28
Tamilnadu General Sales
Tax Act, 1959 Sales Tax 1.69
0.60
Central Sales Tax Act, 1956 Sales Tax 2.10
Tamilnadu Tax and Consumption
or Sale of Electricity Act, 2003 Generation Tax 14.09
TOTAL 155.51
Period to which
amount relates Forum where dispute is pending
2003-2004 Income Tax Appellate Tribunal
2002-2003 to
2006-2007 High Court
1996-1997 to
2007-2008 CESTAT
1998-1999 Deputy Commercial Tax Officer,
Tuticorin
1997-1998 Sales Tax Appellate Tribunal
(Additional Bench)
1998-1999 to
2000 -2001 Deputy Commercial Tax
Officer, Tuticorin
2003-2004 to
2007-2008 High Court
(x) The Company does not have accumulated losses at the end of
financial year. It has not incurred any losses during the financial
year covered by the audit and in the immediately preceding financial
year.
(xi) Based on our audit procedures and information and explanations
given by the management, we are of the opinion that the Company has not
defaulted in repayment of dues to financial institutions, banks or
debenture holders.
(xii) According to the information and explanations given to us, the
Company has not granted loans and advances on the basis of security by
way of pledge of shares, debenture and other securities.
(xiii) In our opinion, the Company is not a chit fund, a nidhi or a
mutual benefit society. Therefore, the provisions of clause 4 (xiii) of
the Companies (Auditor’s Report) Order 2003 are not applicable to the
Company.
(xiv) The Company has maintained proper records of transactions and
contracts in respect of trading in securities and timely entries have
been made therein. The investments are held by the Company in its own
name.
(xv) According to the information and explanations given by the
management, the Company has given guarantees for loan taken by others
from banks and financial institutions as mentioned in note no. 27 (f)
of Schedule 20. During the year the Company has further provided Rs.
52.79 crore in respect of guarantees given on behalf of one of the
Company (refer note no. 4 of the Schedule 20) and made payment of Rs.
44 crore against the above said guarantees. As the terms and conditions
for guarantees are not stipulated we are unable to comment whether the
same are prejudicial to the interest of the Company.
(xvi) According to the information and explanations given to us, no
term loans are raised during the year.
(xvii) On the basis of review of utilization of funds, which is based
on overall examinations of the balance sheet of the Company as at 31st
March 2008, related information as made available to us and as
represented to us by the management, we are of the opinion that the
funds raised on short term basis have not prima facie been, utilized
for long term investments.
(xviii) During the year the Company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under section 301 of the Companies Act, 1956.
(xix) The Company has not issued any secured debentures during the year
under audit.
(xx) We have verified the end use of moneys raised by right issues of
equity shares and American Depository Shares represented by equity
shares and the same has been disclosed in the note no. 15 and 16,
respectively, of schedule 20 to notes forming part of accounts.
(xxi) According to the information and explanations given to us, no
fraud on or by the Company has been noticed or reported during the
year.
For Chaturvedi & Shah For Das & Prasad
Chartered Accountants Chartered Accountants
R KORIA BN AGARWALA
PARTNER PARTNER
Membership No. 35629 Membership No. 11709
Place: Mumbai
Date : 26 April 2008
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