1. We have audited the attached Balance Sheet of Adhunik Metaliks
Limited ('the Company') as at 30th June 2012 and also the Statement of
Profit and Loss and the cash flow statement for the fifteen months
period 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 the 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 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 the management, as well as evaluating the overall financial
statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 (as
amended) 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 above, we
report that :
i. 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.
ii. 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.
iii. 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.
iv. In our opinion, the balance sheet, the statement of profit and loss
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.
v. On the basis of the written representations received from the
directors, as on 30th June 2012, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
30th June 2012 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Company's Act, 1956.
vi. Attention is drawn to claims receivable of Rs. 2450.00 lacs accounted
for by the Company towards supply of inferior quality of raw material
by vendors. Pending acceptance of the above claims by the respective
vendors, we are unable to opine on the quantification and
recoverability of these claims and thus its consequential impact, if
any, on the Company's financial statements.
vii. Except for the possible effect of the observation in para (vi)
above, 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 ndia;
a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 30th June 2012;
b) in the case of the Statement of profit and loss, of the loss for the
period ended on that date; an
c) in the case of the Cash Flow Statement, of the cash flows for the
period ended on that date.
(Referred to in our report of even date to the members of Adhunik
Metaliks Limited as at and for the fifteen months period ended 30th
June, 2012)
i) a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
b) All fixed assets have not been physically verified by the management
during the period but there is a regular programme of verification in a
phased manner to cover all the items of fixed assets over a period of
three years which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. As informed, no
material discrepancies were noticed on such verification.
c) There was no substantial disposal of fixed assets during the period.
ii) a) The management has conducted physical verification of inventory
at reasonable intervals during the period.
b) As the Company's inventory of raw materials and finished goods
mostly includes bulk materials which require technical expertise for
establishing the quantity thereof, the Company has hired independent
agencies for physical verification of such stocks. Relying on the
above verification by independent expert agencies and according to the
information and explanations furnished to us, the procedures of
physical verification of inventory followed by the management are
reasonable and adequate in relation to the size of the Company and the
nature of its business.
c) The Company is maintaining proper records of inventory and no
material discrepancies were noticed on physical verification of
inventories.
iii) a) According to the 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, the provisions of clause
4(iii)(a) to (d) of the Order are not applicable to the Company and
hence not commented upon.
b) According to the information and explanations given to us, the
Company has not taken any loans, secured or unsecured, from companies,
firms or other parties covered in the register maintained under section
301 of the Companies Act, 1956. Accordingly, the provisions of clauses
4(iii)(e) to (g) of the Order are not applicable to the Company and
hence not commented upon.
iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business, for the
purchase of inventory and fixed assets and for the sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the company in respect of these areas.
v) a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Companies Act, 1956 that
need to be entered into the register maintained under section 301 have
been so entered.
b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees five lakhs have been
entered into during the financial year at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
vi) The Company has not accepted any deposit from the public within the
purview of Section 58A, 58AA or any other relevant provisions of the
Companies Act, 1956 and the rules framed there under.
vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii) We have broadly reviewed the books of account maintained by the
Company pursuant to the rules made by the Central Government for the
maintenance of cost records under section 209(1)(d) of the Companies
Act, 1956 for the steel products manufactured by the Company, and are
of the opinion that prima facie, the prescribed accounts and records
have been made and maintained.
ix) a) Undisputed statutory dues including provident fund, employees'
state insurance, income-tax, sales-tax, wealth-tax, service tax,
customs duty, excise duty, cess and other material statutory dues have
generally been deposited with delays with the appropriate authorities.
As explained, there is no amount due for deposit with Investor
Education & Protection Fund.
b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, employees'
state insurance, investor education and protection fund, income-tax,
sales-tax, wealth-tax, service tax, custom duty, excise duty, cess and
other material statutory dues were outstanding, as on the Balance Sheet
date for a period of more than six months from the date they became
payable except in following cases which have since been paid:
Name of the Nature of dues Amount Period to which
statute (Rs.in
lacs) the amount relates
Income tax
Act, 1961 Corporate dividend tax 8.52 September 2011
Maharashtra
Value Value Added Tax and
Central 164.60 October and
November 2011
Added Tax and
Central Sales Tax on sale of
goods
Sales Tax
c) According to the records of the Company, there are no dues
outstanding of income tax, sales-tax, wealth-tax, service tax, customs
duty, excise duty and cess on account of any dispute except as
mentioned below :
Name of the Nature of dues Amount
statute (Rs.in lacs)
Orissa Entry Tax Entry tax on machinery & 63.97
spares & Capital Goods
Central Sales Tax
(Orissa) Demand against transfer of stock to 123.40
Rules 57 branches and consignment agents
Central Sales Tax Demand against discrepancies 20.05
identified during investigation
Central Sales Tax Disallowance of sale against Form-C, 839.39
Form-H and transfer of stock to
branches
Orissa Value Added Tax Dispute on account of disallowance 140.16
of Input Tax credit
Orissa Sales Tax Dispute on gross turnover vis-a-vis 6.65
taxable turnover
Orissa Sales Tax Demand against discrepancies 12.06
identified during investigation
Central Excise and Dispute towards Cenvat credit
on structural 2,175.97
Service Tax steel used for construction of
capital goods, input,
classification, excise duty on
job work, transaction value for
stock transfer etc.
Name of the Period to which Forum where dispute
Statute the amount relates is pending
Orissa Entry Tax 2002-08 Orissa Sales Tax Tribunal /
Additional Commissioner of
Sales Tax. Cuttack
Central Sales Tax
(Orissa) Rules 57 2003-04 Orissa Sales Tax Tribunal,
Cuttack
Central Sales Tax 2003-04 Deputy Commissioner of Sales
Tax, Rourkela
Central Sales Tax 2004-12 Orissa Sales Tax Tribunal,
Cuttack, Deputy Commissioner
of Sales Tax, Rourkela,
Additional Commissioner
of Sales Tax, Cuttack
Orissa Value Added Tax 2005-07 Orissa Sales Tax Tribunal &
High Court, Orissa, Cuttack
Orissa Sales Tax 2003-05 Orissa Sales Tax Tribunal,
Cuttack, Deputy Commissioner
of Sales Tax, Rourkela
Orissa Sales Tax 2003-04 Deputy Commissioner of Sales
Tax, Rourkela
Central Excise
and Service Tax 2003-09 CESTAT (Kolkata), Additional
Commissioner (Adjudication)
Bhubaneswar, Commissioner
(Appeal), Bhubaneswar
x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
xi) Based on our audit procedures and as per the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to banks except for a delay in repayment of dues to
the banks to the extent of Rs. 33,154.65 lacs (the delay in such
repayment for less than 30 days is Rs. 22,157.25 lacs and for the period
between 30 to 90 days is Rs. 10,997.40 lacs in each individual case), of
which Rs. 6,960.70 lacs was in arrears as on the balance sheet date.
Further, as informed, there were no outstanding dues to the debenture
holders and financial institutions.
xii) According to the information and explanations given to us and
based on the documents and records produced before us, the Company has
not granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
xiii) In our opinion, 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.
xiv) In our opinion, the Company is not dealing or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable.
xv) According to the information and explanations given to us, the
Company has pledged a part of its investments for loan taken by its
wholly owned subsidiary company from bank, the terms and conditions
whereof, in our opinion, are not prima-facie prejudicial to the
interest of the Company. According to the information and explanations
given to us, the Company has not given any guarantee for loans taken by
others from financial institutions.
xvi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which these
loans were obtained.
xvii) According to the information and explanations given to us 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.
xviii) The Company has not made any preferential allotment of shares
during the period to parties or Companies covered in the register
maintained under section 301 of the Companies Act, 1956.
xix) The Company did not have any outstanding debentures during the
period.
xx) The Company has not raised any money through a public issue during
the period.
xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and as per
the information and explanations given by the management, we report
that no fraud on or by the Company has been noticed or reported during
the period.
For S. R. Batliboi & Co.
Firm registration number: 301003E
Chartered Accountants
per R. K. Agrawal
Place Kolkata Partner
Date : 29th August, 2012 Membership No. 16667