We have audited the attached Balance Sheet of Udaipur Cement Works
Limited as at 31st December 2008, the Profit & 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
Companys 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 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
presentation. We believe that our audit provides a reasonable basis for
1. As required by the Companies (Auditors report) Order, 2003 (The
Order) (as amended) issued by the Central Government of India in terms
of section 227(4A) of the Companies Act, 1956(The Act), and on the
basis of such checks of the books and records of the company as we
considered appropriate and according to the information and
explanations given to us during the course of audit, we enclose in the
Annexure, a statement on the matters specified in the paragraphs 4 and
5 of the said Order.
2. Further to our comments in the Annexure referred to in paragraph 1
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
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 those
c) The Balance Sheet, Profit & Loss Account and cash flow statement
dealt with by this report are in agreement with the books of account;
d) In our opinion and to the best of our information, the profit & Loss
Account, Balance Sheet and the Cash Flow Statement comply with the
accounting standards referred to in section 211 (3C) of the Companies
Act, 1956, to the extent applicable except to the extent non -
provision of interest liability etc. and preparation of accounts on
going concern basis (AS-1), non-provision for leave encashment, (note
no. 2-AS 15), non- determination of current net Realisable Value of
Inventory and Non- determination/ non- provision of obsolete and
unusable assets and Inventory and for impairment of assets(note no.3-
AS-2, AS-10 and AS-28);
e) On the basis of written representations received from the directors,
as on 31st December, 2008, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
31st December, 2008 from being re-appointed as a director of the
company in terms of the clause (g) of sub- (1) of section 274 of the
companies Act, 1956. However all the directors of the company are
disqualified to be appointed/ reappointed as directors in any other
f) Attention is invited to:
(i) Note no. 1 & 11 of Schedule 14 regarding preparation of accounts on
going concern basis for the reasons stated in the said notes and our
inability to comment thereon;
(ii) Note no. 2 of Schedule 14 regarding non-provision of salary ,
wages , allowances and other benefit etc. as stated in the said note
(iii) Note no. 3 of Schedule 14 regarding valuation of respective
inventories as valued, considered same as in the previous year and have
been taken on the same value as in the previous year and non provision
of adjustment of lower of net realisable value over cost of inventories
and non provision for obsolete, shortages, damaged and non-moving,
inventories and fixed assets and for impairment of assets (amount
unascertained) as stated in the said note.
(iv) Note no. 4(a) of Schedule 14 regarding non provision of interest
on secured loans, bank borrowings, trade deposits, royalty, dues
payable to Ajmer Vidyut Vitaran Nigam Ltd. (AWNL), excise duty demand
and penal interest, liquidated damages, etc. thereon as stated in the
said note (amount unascertained and regarding non-accounting of
interest earned on certain deposits.
(v) Note No. 4(c) of Schedule 14 regarding non-accounting of interest
earned on certain deposits as stated in the said note (amount
(vi) Note No. 14 of Schedule 14 regarding non-provisiorl against
overdue debtors amounting to Rs. 3,78,70,578 and loans and advances
amounting to Rs. 4,72,70,130.
(vii) Note No. 21,14, 6 & 11 of Schedule 14 regarding pending
reconciliation/ confirmation of balances of secured loans, unsecured
loans, deferred interest, creditors, other current liabilities, banks,
deposits, debtors, loans and advances and contingent liabilities
considered to the extent identified by the management and our inability
to comment thereon.
(viii) Note No. 13 of Schedule 14 regarding non-provision of interest
on overdue liability of Sundry Creditors under Current Liabilities &
Provisions as defined under the Micro, Small and Medium Enterprises
Development Act, 2006 (amount unascertained) and identification of
such parties and their dues by the management and our inability to
comment on the same.
We further report that the loss for the year, balance in profit & loss
account, assets and liabilities as stated are withbut considering the
impact of items mentioned in para (f)(i) to (v), (vii) & (viii) above.
Had the observation made in para (f) (v) above been considered, loss
for the year would have been Rs. 15,98,15,010 (as against reported
Figure of Rs 7,46,74,302), debit balance in profit & loss account would
have been Rs. 2,97,11,13,194 (as against reported figure of Rs.
2,88,59,72,486), debtors would have been Rs. Nil (as against reported
figure of Rs. 3,78,70,578) and loans & advances would have been Rs.
10,00,00,000 (as against reported figure of Rs. 14,72,70,130).
Subject to the foregoing, in our opinion and to the best of our
information and according to the explanations given to us, the said
balance sheet, profit & Loss account and the cash flow statement read
together with the 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
a) In the case of the Balance sheet, of the state of affairs of the
Company as at 31st December, 2008;
b) In the case of the Profit & loss Account, of the . loss 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
ANNEXURETOTHE AUDITORS REPORT
[Referred to in Paragraph (1) of the Auditors Report of even date to
the members of Udaipur Cement Works Limited for the year ended
a) Records showing full particulars including quantitative details and
situation of fixed assets have been maintained by the company. This
should be read with our comments in para (b) below.
b) Physical verification of fixed assets has not been conducted by the
management during the year due to plant operation being under
suspension as stated in note no. 3 of Schedule 14. Discrepancy, if any,
in this respect could not be ascertained and commented by us.
c) As per information and explanations provided by the management and
records made available to us, fixed assets disposed off during the year
were not substantial.
a) Physical verification of inventories has not been conducted by the
Management during the year as stated in note no.3 of Schedule 14.
b) In our opinion and having regard to our comments in Para (ii)(a)
above, the procedures of physical verification of inventory needs to be
made adequate in relation to the size of the company and nature of its
c) On the basis of information and records made available, inventory
records are maintained (subject to note no.3 of Schedule 14) but in the
absence of physical verification report, it is not possible to
ascertain and comment on discrepancy between book records and physical
inventory and adjustments, if any and ascertainment of amount thereof
read together with note no.3 of Schedule 14.
iii) The company has neither granted nor taken any loans, secured or
unsecured to and from companies, firms or other parties covered in the
register maintained under section 301 of the Act. Accordingly, the
provisions of clause 4(iii) (b) to (d), (f) & (g) of the order are not
iv) Internal control system require to be strengthened to be made
commensurate with the size of the company and the nature of its
business for the sale of fixed assets and services and read with our
comments elsewhere and note no 3,14, & 21 of Schedule 14.
v) According to the information and explanations provided by the
management and based upon audit procedure performed, we are of the
opinion that there are no particulars of contracts or arrangements
referred to in section 301 of the Act to be entered in the register
required to be maintained under that section, accordingly, the
provisions of clause 4 (v) (b) of the order are not applicable.
vi) In our opinion and according to the information and explanations
given to us, the company has not accepted any deposits from the public
within the meaning of the directives issued by Reserve Bank of India
and the provision of sections 58A, 58AA or any other relevant
provisions of the Act and the rules framed there under. As informed to
us, no order has been passed by the Company Law Board or National
Company Law Tribunal or Reserve Bank of India or any Court or any other
Tribunal in this regard.
vii) No Internal Audit has been carried out during the year as stated
in note no. 17 of Schedule 14.
viii) We have broadly reviewed the books of account maintained by the
company 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
records have been made and maintained read with Note no. 3 of schedule
14. We have not, however, made a detailed examination of the said
records with a view to determine whether they are accurate.
i) According to the legal opinion obtained by the company liability of
provident fund contribution arises only when salaries and wages are
actually paid, accordingly we are not in a position to express opinion
about payable amount in respect of provident fund contribution. As
informed to us, Employee State Insurance is not applicable to the
company. Further, according to the records of the Company and
information and explanations given to. us, the company is generally
regular (except delay in case of Sales Tax, Excise Duty, Income Tax,
Royalty including as reported below) in depositing undisputed statutory
dues including Investor Education and Protection Fund, Wealth Tax,
Service Tax, Custom Duty, Cess and other material Statutory dues with
the appropriate authorities to the extent applicable. There are no
material statutory dues payable for a period of more than six months
from the date they became payable as at 31st Dec, 2008 except Sales Tax
Rs. 13,44,27,346, Excise Duty Rs. 70,54,778, , Electricity dues Rs.
1,83,17,491, Cess Rs. 55,853 and Royalty Rs. 62,61,385, further this is
to be read together with note no. 2, 4(a) and 21 of Schedule 14.
b) According to the records and information and explanations given to
us, there are no dues in respect of Wealth Tax, Custom Duty and Cess
that have not been deposited with the appropriate authorities on
account of any dispute and the dues in respect of Income Tax, Excise
Duty, Service Tax and Sales Tax that have not been deposited on account
of dispute and the forum where the dispute is pending are given below:-
Name of the Nature of The Dues Period
Central Excise Excise Duty 1995-96
Service Tax Act Service Tax 1997-98
Sales Tax Act Sales Tax 1999-2000
(Interest) 1996- 97, 1997- 98
& 1998 -99
Forum where Amount (In Rs.)
dispute is pending
High Court 4,40,017
x) The companys accumulated losses at the end of the financial year
are more than fifty percent of its net worth and it has also incurred
cash losses in the current financial year and also in the immediately
preceding financial year.
xi) On the basis of records made available and information and
explanations given to us, the company has defaulted in repayment of
dues, considering restructuring scheme, to financials institutions,
banks and debenture holders, the details of which are given below:
Particulars Amount Over due as on 31.12.2008 Maximum Balance
(Including accrued interest to the outstanding
extent provided for) during the year
Debentures holders Rs. 31,50,16,353 (including
carried over Rs. 31,50,16,353
from previous year)
Banks Rs 18,66,44,358 (including
carried over Rs. 18,66,44,358
from previous year)
Institutions Rs 47,31,29,933 (including
carried over Rs. 47,31,29,933
from previous year)
Deferred Interest Rs. 10,82,29,116 Rs. 10,82,29,116
Above is to be read with note no. 4, 5 & 21 of Schedule 14
xii) According to 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) According to the information and explanations provided by the
management, the company is not dealing in or trading in shares,
securities, debentures and other investments.
xv) According to the information and explanations given to us, the
company has not given any guarantee for loans taken by others from
banks or financial institutions.
xvi) In our opinion and according to the records, information and
explanations given to us, the Company has not availed any fresh term
loan during the year.
xvii) Based on the examination of the documents and records made
available and on the basis of information and explanations given to us
and on an overall examination of financial statements, we are of the
opinion that the company has not used funds raised on short- term basis
for long-term investment.
xviii) According to the information and explanations given to us, the
company has not made any preferential allotment of shares during the
year to any parties or companies covered in the register maintained
under section 301 of the Companies Act, 1956.
xix) According to information & explanations provided by the management
no debentures have been issued during the year. In respect of
debentures outstanding during the year security or charge had been
created as stated in note no. B1 of schedule- 3.
xx) The company has not raised any money through a public issue during
xxi) Based oh the audit procedures performed and on the basis of
information and explanations provided by the management which have been
relied upon by us, no fraud on or by the company has been noticed or
reported during the course of our audit or have been informed by the
FOR OM PRAKASH S CHAPLOT & CO.
Date : 08.04.2009 Partner
Place : Udaipur M. No. 10184