AUDITORSTO THE MEMBERS OF UNITECH LIMITED
1. We have audited the attached Balance Sheet of Unitech Limited (the 'Company')as at 31st March 2011, the Profit and Loss Account and also the Cash FlowStatement for the year ended on that date annexed thereto, in which are incorporated theunaudited returns of Libya Branch (the 'Branch') (refer Note No. 2 of Schedule 16). Thesefinancial statements are the responsibility of the company's management. Ourresponsibility 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 acceptedin India. Those Standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
3. As required by the Companies (Auditor's Report) Order, 2003 ('the order'), issued bythe Central Government of India in terms of sub-section (4A) of section 227 of theCompanies Act, 1956 ('the Act'), we enclose in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said Order except in respect of the Branch.
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 ourknowledge 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 thecompany so far as appears from our examination of those books and proper unaudited returnsreceived by us from the Branch not visited by us.
(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account and with the unaudited returns fromthe branch.
(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the accounting standards referred to in sub-section(3C) of section 211 of the Act.
(v) On the basis of written representations received from the directors, as on 31stMarch, 2011 and taken on record by the Board of Directors, we report that none of thedirectors is disqualified as on 31st March, 2011 from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 of the Act.
(vi) Without qualifying our opinion, we draw attention to (a) Note No. 2 of Schedule 16regarding the Branch and consequential loss thereof, if any;
(b) Note No. 15 of Schedule 16 regarding advances against projects pendingcommencement, though unsecured and unconfirmed, are considered good by the management andwe have relied on management contention; (c) Note No. 16 of Schedule 16 regarding Advancesrecoverable, though unsecured and unconfirmed, are considered good by the management andwe have relied on management contention.
(vii) In our opinion and to the best of our information and according to theexplanations given to us, the said financial statements together with the notes thereonand schedules 1 to 16, give the information required by the Act, in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India:
(a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31stMarch, 2011;
(b) In the case of the Profit and Loss Account, of the Profit of the Company for theyear ended on that date; and
(c) In the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.
For Goel Garg & Co.,
Chartered Accountants
FRN : 000397N
(J. L. GARG)
Partner
Membership Number: 5406
Place: New Delhi
Dated: 29th May, 2011
(Referred to in Paragraph 3 of the Auditors' Report of even date to the members ofUnitech Limited on the financial statements for the year ended 31st March,2011)
In terms of information and explanations given to us and the books and records examinedby us, we report that:
(i) In respect of its fixed assets:
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The fixed assets are physically verified by the management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to this programme, certain fixed assets were physically verified by themanagement during the year and no material discrepancies were noticed on suchverification.
c. Fixed Assets disposed off during the year were not substantial and therefore, do notaffect the going concern assumption.
(ii) In respect of its inventories:
a. The inventories also include Project in Progress. The procedures of physicalverification of the above in phased manner followed by the management are reasonable andadequate in relation to the size of the Company and the nature of its business.
b. The procedures of physical verification of inventories followed by the managementare reasonable and adequate in relation to the size of the company and the nature of itsbusiness.
c. In our opinion, the Company is maintaining proper records of inventory. Thediscrepancies noticed on physical verification of inventory as compared to the bookrecords were not material.
(iii) The Company has not granted any loans secured or unsecured to companies, firms orthe other parties covered in the register maintained under section 301 of the Act.Therefore, the provisions of paragraph 4(iii)(b), (c) & (d) are not applicable. Duringthe year the Company has taken unsecured loan from one company covered in the registermaintained under section 301 of the Companies Act, 1956. The maximum amount involvedduring the year was Rs. 259.75 Crores and the year end balance of loan taken was Rs. 10.60Crores. In our opinion, the rate of interest and other terms and conditions on which loanshave been taken from company, listed in the register maintained under section 301 of theCompanies Act, 1956 are not prima facie, prejudicial to the interest of the Company.Further, the company is regular in repaying the principal amounts as stipulated and hasbeen regular in the payment of interest.
(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 companyand nature of its business with regard to purchases of inventory, fixed assets and withregard to the sale of goods and services. During the course of our audit, we have notobserved any continuing failure to correct major weaknesses in internal control system ofthe company.
(v) a. According to the information and explanations given to us, we are of the opinionthat the particulars of all contracts or arrangements that need to be entered into theregister maintained under Section 301 of the Act, have been so entered.
b. In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registermaintained under section 301 of the Act, and exceeding the value of Rs. 5 lakhs in respectof any party during the year have been made at prices which are reasonable having regardto prevailing market prices at the relevant time.
(vi) In our opinion and according to the information and explanations given to us, theCompany has generally complied with the provisions of Sections 58A & 58AA and otherrelevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 withregard to the deposits accepted from the public. No order has been passed by the CompanyLaw Board or National Company Law Tribunal or Reserve Bank of India or any Court or anyother Tribunal, on the Company in respect of deposits accepted.
(vii) The Company has an internal audit system commensurate with the size and nature ofits business.
(viii) We are informed that the Central Government has not prescribed the maintenanceof cost records for any of the Company's products under Section 209(I)(d) of the Act.
Accordingly paragraph 4 (viii) of the order is not applicable.
(ix) In respect of statutory dues:
According to the information and explanations given to us in respect of statutory dues:
a. The Company is generally regular in depositing undisputed statutory dues, whereverapplicable with appropriate authorities during the year.
b. No undisputed amounts payable in respect of income tax, wealth tax, service tax,sales tax and cess were in arrears, as at 31.03.2011 for a period of more than six monthsfrom the date they became payable.
c. The following dues have not been deposited by the company on account of disputes,since the appeals are pending before the relevant authorities.
| Name of the Statute | Nature of dues | Financial Year/Period | Amount (Rs. in Crores) | Forum where dispute is pending |
| Income Tax Act, 1961 | Income Tax Matter under dispute | Assessment Year 2005-06 | 0.74 | Commissioner of Income Tax(Appeals) |
| Service Tax Act, 1994 | Service Tax Demand | 01-12-2005 to 31-07-2007 | 0.86 | Commissioner, Central Excise(Adj.) New Delhi and Hon'ble Delhi High Court, Delhi |
| Total | | | 1.60 | |
(x) The Company does not have any accumulated losses at the end of the financial yearand has not incurred cash losses in the financial year and in the immediately precedingfinancial year.
(xi) On the basis of audit procedures performed by us and according to the information,explanation and representations given to us by the management, the Company had delayed incertain repayments of dues (including interest) to banks and financial institutions. Thedelayed principal amount and the interest aggregated to Rs. 141.37 crores and Rs. 29.39Crores respectively and delays range from 1 day to 106 days.
(xii) The Company has not granted any loans and advances on the basis of security byway of pledge of shares, debentures and other securities. Accordingly Paragraph 4 (xii) ofthe order is not applicable.
(xiii) In our opinion, the company is not a Chit Fund or a Nidhi / Mutual Benefit Fund/ Society. Accordingly, paragraph 4 (xiii) of the Order, is not applicable.
(xiv) The company is not dealing in or trading in shares, securities, debentures andother investments. Accordingly, paragraph 4 (xiv) of the Order is not applicable.
(xv) The Company has given corporate guarantees amounting to Rs. 1281.36 Crores forloans taken by its subsidiaries and associates from banks and financial institutions. Theterms and other conditions, in our opinion, are not prima facie prejudicial to theinterest of the company.
(xvi) According to the information and explanations given to us and records examined byus, the term loans have generally been applied for the purpose for which they were raised.
(xvii) According to the information and explanations given to us and on an overallexamination of Balance Sheet of the Company, we report that no funds raised on short termbasis have been used for long term investment. No long term funds have been used tofinance short term assets.
(xviii) During the year, 177,500,000
Warrants were converted into equal number of equity shares of Rs. 2/-each at a premiumof Rs. 48.75 per share in compliance with the SEBI (Issue of Capital and Disclosure)Regulations, 2009 which resulted in increase in the paid-up capital of the Company by Rs.35.50 Crores. Hence, at the end of the year, the Company had no warrants outstanding forconversion.
(xix) According to information and explanations given to us, during the year covered byour audit report, the company has not issued any debentures.
(xx) The company has not raised any money by way of Public Issue during the year.
(xxi) According to the information and explanations given to us, no fraud on or by thecompany has been noticed or reported during the course of our audit.
For Goel Garg & Co.,
Chartered Accountants
FRN : 000397N
(J. L. GARG)
Partner
Membership Number: 5406
Place: New Delhi
Dated: 29th May, 2011