Udaipur Cement Works Ltd.

We have audited the accompanying financial statements of M/s Udaipur Cement Works Limited (''the Company'') which comprise the Balance Sheet as at 31st March 2014, the Statement of Profit and Loss and Cash Flow Statement for the period ended on that date and a summary of significant accounting policies and other explanatory information. Management''s Responsibility for the Financial Statements Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (''the Act'') read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor''s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give the information required by the Act 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, 2014; (ii) in the case of the Statement of Profit and Loss, of the profit / loss for the period ended on that date; and (iii) in the case of Cash Flow Statement, of the cash flows for the period ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor''s Report) Order, 2003 (the Order), as amended, issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2. As required by section 227(3) of the Act, 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 those books; c. The Balance Sheet, the Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account; d. In our opinion, the Balance Sheet the Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in subsection (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairsin respect of section 133 of the Companies Act, 2013. e. On the basis of written representations received from the directors as on 31st March, 2014, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956. However, all the directors of the company except Mr. S.K. Kinra, special director appointed by Hon''ble BIFR & Mr. Ganpat Singh, appointed as Additional Director on November 1, 2012 are disqualified to be appointed/ re-appointed as directors in any other public company; f. Since the Central Government has not issued any notification as to the rate at which the cess is to be paid under section 441A of the Companies Act, 1956 nor has it issued any Rules under the said section, prescribing the manner in which such cess is to be paid, no cess is due and payable by the Company. ANNEXURE TO THE AUDITOR''S REPORT [Referred to in Paragraph (1) of the Auditors'' Report of even date to the members of Udaipur Cement Works Limited for the period ended 31st March 2014] i) a) The Company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets. b) Physical verification of fixed assets has been carried out by the management according to the program of physical verification in phased manner and no material discrepancies were noticed from such verification. c) As per information and explanations provided by the management and records made available to us, fixed assets disposed off during the period, were not substantial and as such it has not affected the going concern status of the Company. ii) a) Physica verification of inventories has been conducted by the management during the period under audit and at the end of the year. b) The procedure of physical verification of inventory followed by the management is 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 material discrepancies noticed on physical verification have been properly dealt with in the books of accounts. Further, a sum of Rs 333.79 lacs has been written-off during the period relating to inventory becoming unusable on account of obsolesce, corrosion, weathering, etc. due to suspension of the plant operations since 2002. (iii) a) The Company has not granted any loans secured or unsecured to Companies, firms or other parties covered in the registered maintained u/s 301 of the Act and accordingly the provisions of paragraph 4(iii)(b) to (d) are not applicable. b) The Company has not taken any loans secured or unsecured from Companies, firms or other parties covered under the registered maintained u/s 301 of the Act and accordingly the provisions of paragraph 4(iii)(e) to (g) are not applicable. iv) The Company has an adequate internal control system commensurate to the size of the Company and nature of its business for the purchase of inventory and fixed assets and for sale of goods & services and no major weaknesses in internal control system has been noticed. v) According to the information and explanations given to us, we are of the opinion that the Company has entered all the transactions required to be entered in the register maintained under section 301 of the Act and transaction made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time. vi) The Company has not accepted any deposits from public within the meaning of the directives issued by the Reserve Bank of India and under the provisions of section 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 Law Tribunal or Reserve Bank of India or any court or any other tribunal in this regard. vii) Internal Audit has been carried out by the own Internal Audit Department formed within the organization and the audit system is commensurate with a size and a nature of business of the Company viii) We have broadly reviewed the books of account maintained by the Company pursuant to the order made by the Central G o v er nm e nt f or t he maintenance of cost records under section 209(1) (d) of the Companies Act, 1956 in respect of the Company''s products to which the said rules are made applicable and are of the opinion that prima facie, the prescribed records have been made and maintained. We have not, however, made a detailed examination of the said records with a view to determine whether they are accurate. ix) d) According to the records of the Company and information and explanations given to us, the Company is regular in depositing undisputed statutory dues, 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 March, 2014. e) According to the records and information and explanations given to us there are following dues under various taxes which has not been deposited on account of any dispute and the amounts involved and the forum where dispute is pending are given below: - Name of the Statute Nature of The Dues Period Forum whe ending ispute Amount (InRs.) Central Excise Act Excise Duty 1995-96 High Court 4,40,017 Excise Duty (Interest) 2000-01 Assistant Commissioner Central Service Tax Act Service Tax 1997-98 Assistant Cotmmis sioner 66,05,892 Sales Tax Act Sales Tax 1999- 2000 (Comm.Tax) 8,14,000 Sales Tax (Interest) 1996-97, 1997-98 & 1998-99 (Comm. Tax) 9,11,000 Sales Tax 1996-97 (Comm. Tax) Circle ''B'' Jammu 25,04,900 x) The Company''s accumulated losses at the end of the period are more than fifty percent of its net worth and it has not incurred cash losses in the current period but Company has incurred cash losses in the immediately preceding period. xi) On the basis of records made available and information and explanations given to us, the Company has not defaulted in repayment of dues, considering the sanction of BIFR scheme, to financial institutions, banks and debenture holders. 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) The Company has obtained a term loan from a Bank. Pending its utilization for the purpose it has been sanctioned, the amount is temporarily held in Current Account of the Company. xvii) Based on the examination of the documents and records made available and on the basis of information and explanations given to us, we are of the opinion that the Company has not raised any short-term funds. Accordingly, the provisions of clause 4(xvii) are not applicable to the Company. xviii) According to the information and explanations given to us, the Company has made preferential allotment of equity shares during the period to the Holding Company amounting to Rs. 7800 Lacs in pursuance to BIFR scheme. xix) According to information & explanations provided by the management, no debentures have been issued during the period. Accordingly, the provisions of clause 4 (xix) are not applicable to the Company. xx) The Company has not raised any money through a public issue during the period. Accordingly, the provisions of clause 4(xx) are not applicable to the Company. xxi) Based on 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 management. For OM PRAKASH S. CHAPLOT & CO. Chartered Accountants FRN 000127C O. P. CHAPLOT Place : Udaipur Partner Dated : 15th May 2014 M.No. 010184