We have audited the attached balance sheet of HINDALCO INDUSTRIES
LIMITED as at 31st March, 2011 and also the profit and loss account and
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.
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 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
As required by the Companies (Auditor''s report) Order, 2003, as amended
by the Companies (Auditor''s Report) (Amendment) Order, 2004 issued by
the Central Government of India in terms of sub-section (4A) of Section
227 of the Companies Act, 1956, we enclose as Annexure, a statement on
the matters specified in the paragraphs 4 and 5 of the said order.
Further to our comments in the Annexure referred above, we report that:
1) We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purpose of our
2) 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
3) The Balance Sheet, Profit & Loss Account and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
4) In our opinion, the Balance Sheet, Profit and Loss Account and 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.
5) On the basis of the written representations received from the
directors as on 31st March , 2011 and taken on record by the Board of
Directors, we report that none of the Directors is disqualified as on
31st March, 2011 from being appointed as a Director in terms of clause
(g) of sub-section (1) of Section 274 of the Companies Act, 1956;
6) 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 in Schedule 19 and notes appearing
thereon give the information required by the Companies Act, 1956 (as
amended) in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India;
a) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011;
(b) In the case of the Profit and Loss Account, of the Profit for the
year ended on that date; and
(c) In the case of Cash Flow Statement, of the Cash Flows for the year
ended on that date.
ANNEXURE TO THE AUDITORS'' REPORT
I. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of Fixed
(b) Fixed Assets have been physically verified by the management
according to a phased program designated to cover all items over a
period of three years which in our opinion is, reasonable having regard
to size of the Company and the nature of its assets. Pursuant to the
program, certain fixed assets have been physically verified by the
management during the year and no material discrepancies between book
record and physical inventory has been noticed.
(c) No substantial part of fixed assets has been disposed of during the
year, which has bearing on the going concern assumption.
II. (a) Physical verification of inventory, (except stocks in transit
and stocks lying with third parties, confirmation for which has been
obtained) have been conducted at reasonable intervals during the year
by the management/ outside agencies.
(b) In our opinion, the procedures of physical verification of
inventory followed by the management are reasonable and adequate in
relation to the size of the Company and nature of its business.
(c) The Company has maintained proper records of inventory. No material
discrepancies were noticed on physical verification.
III. (a) The Company has not granted any loans, secured or unsecured
to companies, firms or other parties listed in the register maintained
under Section 301 of the Companies Act, 1956.
(b) The Company has not taken any loans, secured or unsecured from
companies, firms or other parties listed in the register maintained
under Section 301 of the Companies Act, 1956.
IV. On the basis of checks carried out during the course of audit and
as per explanations given to us, we are of the opinion that there are
adequate internal control procedures 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 and services. During the
course of our audit, no major weakness has been noticed or reported in
the internal controls.
V. In our opinion and according to the information and explanations
given to us, there are no contracts or arrangements referred to in
Section 301 of the Companies Act, 1956, particulars of which needs to
be entered into register maintained under Section 301 of the Act.
Accordingly, clause 4(v)(b) of the Order is not applicable.
VI. The Directives issued by the Reserve Bank of India and the
provisions of Sections 58A and 58AA and other relevant provisions of
the Companies Act, 1956 and the rules framed there-under have been
complied with in respect of deposits accepted from the public. We have
been informed that, no order has been passed by Company Law Board or
National Company Law Tribunal or Reserve Bank of India or any other
Court or Tribunal in this regard.
VII. The Company has an internal audit system, which in our opinion is
commensurate with the size and nature of the business.
VIII. The Company has maintained proper cost records as prescribed by
Central Government under Section 209 (1) (d) of the Companies Act, 1956
for the products of the Company but no detailed examination of such
records has been carried out by us.
IX. (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, Investor Education and Protection Fund, Employee''s
State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax,
Customs Duty, Excise Duty, Cess and other statutory dues with the
appropriate authorities. According to the information and explanations
given to us no undisputed statutory dues as above were outstanding as
at 31st March, 2011 for a period of more than 6 months from the date
they became payable.
(b) According to the information and explanations given to us, the dues
of Sales Tax, Income Tax, Customs Duty, Wealth Tax, Excise Duty,
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
2011 are as under:
Name of the Nature of Amount Period to which
relates Forum where the
Statue Dues (Rs. in
Crores) are pending
Tax Act Sales Tax 11.66 1986-1987,
1990-1991, High Court
Sales Tax Act 1992-1993, 1995
7.98 1998-1999 to
2002-2003 to Tribunal
1996-1997 to Asst
Excise Excise Duty 168.32 2000-2001 to
2007-2008 Supreme Court
2008-2009 to High Court
30.37 1988-1990 to
3.09 2000-2001 to
Tax Service Tax 19.62 1997-1998 to
2004-2005 to Tribunal
Act , 1962 Customs Act 18.32 2003-2004 to
Adhosanrachna Chhattisgarh 0.13 2005-2006 to
2010-2011 Supreme Court
Vikas Evam Development and
Upkar Environment Cess
Special Cess on Coal 6.30 1997-1998 to
2010-2011 Supreme Court
Act 1961 Income Tax 14.56 1996-1997 ITAT
X. The Company does not have any accumulated losses and has not
incurred cash losses in the current financial year and in the
immediately preceding financial year.
XI. The Company has not defaulted in repayment of dues to Financial
Institutions or Banks or Debenture holders.
XII. According to the information and explanations given to us, the
Company has not granted any loans or 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/
XIV. The Company is not in the business of dealing or trading in
shares. 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. The Shares,
Securities, Debentures and other Investments have been held by the
Company, in its own name except to the extent of exemption, granted
under Section 49 of the Companies Act, 1956.
XV. In our opinion and according to the information and explanations
given to us, the terms and conditions on which the Company has given
corporate guarantees for loans taken by its Subsidiaries and Joint
Ventures from Banks and Financial Institutions (including foreign
banks) are not prima facie prejudicial to the interest of the Company.
XVI. Based on information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained though unutilized funds which were not required for
immediate use for capital expenditure have been temporarily invested in
mutual funds / bank deposit.
XVII.According to the information and explanations given to us and on
the basis of our overall examination of the Balance Sheet and Cash Flow
Statement, we report that no funds raised on short term basis have been
used for long term investment of the Company.
XVIII.During the year under audit, the Company has not made any
preferential allotment of Shares to parties and Companies covered under
register maintained under Section 301 of the Companies Act, 1956.
XIX. During the year under audit, the Company has neither issued any
debentures nor was any debentures outstanding at the year end.
XX. The Company has not raised any money by Public Issues during the
XXI. 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 report that following fraud has been
detected during the year.
Duty Entitlement Pass Book and Vishesh Krishi Gram Udyog Yojna
licenses for Rs 48.43 crore, purchased by the Company from market and
used for payment of custom duty on import of raw material, were
purportedly claimed to be fake and are being investigated by
Directorate of Revenue Intelligence (DRI) Ahmedabad. The Company has
voluntarily paid entire amount to the Custom Authorities with interest
of Rs. 10.11 crore. The total amount paid Rs. 58.54 crore has been
charged to Profit & Loss Account during the year. The Company has
initiated legal action against the seller.
For SINGHI & CO.,
Camp: Mumbai Chartered Accountants
Dated: The 30th day of May, 2011 Firm Registration No.302049E
1-B, Old Post Office Street, (Partner)
Kolkata-700 001 Membership No. 53518