ambuja cement eastern ltdmerged Auditors report

AMBUJA CEMENT EASTERN LIMITED ANNUAL REPORT 2005 AUDITORS REPORT TO THE MEMBERS OF AMBUJA CEMENT EASTERN LIMITED We have audited the attached Balance Sheet of Ambuja Cement Eastern Limited as at 31st December 2005, Profit and Loss Account and the Cash Flow Statement for the eighteen months period 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 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) (Amendment) Order, 2004, (the Order) issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956 (hereinafter referred to as the Act) and according to the information and explanations given to us and on the basis of such checks as we consider appropriate, 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 accounts, as required by law have been kept by the company so far as appears from our examination of those books; c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement referred to in this report are in agreement with the books of accounts; d) 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 Section 211(3C) of the Companies Act, 1956; e) On the basis of written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st December 2005 from being appointed as a director in terms of Section 274 (1) (g) of the Companies Act, 1956. f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with notes given in Schedule N, 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 India: i) in case of the Balance Sheet, of the state of affairs of the company as at 31st December, 2005; ii) in case of the Profit and Loss Account, of the profit of the company for the eighteen months period ended on that date; and iii) in case of the Cash Flow Statement, of the cash flows for the eighteen months period ended on that date. For Lodha & Co. Chartered Accountants R P Singh Partner Membership No. 52438 S R Batliboi & Associates Chartered Accountants Per Sudhir Soni a Partner Membership No. 41870 Place : Mumbai Date : 23rd January, 2006 ANNEXURE TO THE AUDITORS REPORT TO THE MEMBERS OF AMBUJA CEMENT EASTERN LIMITED i. a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. b. As informed, the fixed assets are physically verified by the management in a phased manner, which in our opinion is reasonable having regard to the size of the Company and the nature of its fixed assets. As informed, no material discrepancies were noticed on such verification. c. During the period, the Company has not disposed off substantial part of its fixed assets. ii. a. As informed, the inventory has been physically verified during the period by the management. In our opinion, the frequency of such verification is reasonable. b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Company 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 according to the information and explanations given to us, the discrepancies noticed on physical verification were not material and the same have been properly dealt with in the books of account. iii. a. The Company had taken a secured loan, from the erstwhile ultimate holding company listed in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount outstanding against the above loan during the period was Rs. 1344.82 lacs and the period-end balance was Rs. 918.41 lacs. The Company has not granted any loan secured or unsecured to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956. b. In our opinion and according to the information and explanations given to us, the terms and conditions of aforesaid loan, which is interest free, are not prima facie prejudicial to the interest of the Company. c. In respect of the above loan, the Company is regular in repaying the principal amounts as stipulated. d. In respect of the aforesaid loan, there is no over due amounts outstanding at the Balance Sheet date. iv. In our opinion and according to the information and explanations given to us and on the basis of reasonable tests as considered necessary, 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 with regard to purchase of inventory, fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls. v. a. According to the information and explanations given to us and on the basis of reasonable test, we are of the opinion that the transactions that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered. b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rupees Five Lakhs in respect of any party during the period have been made at prices which are reasonable having regard to prevailing market prices at the relevant time. vi. The Company has not accepted any deposits during the period from public within the meaning of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956. vii. In our opinion, the Company has an internal audit system, which is 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 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 accounts and records have been made and maintained. ix a. According to the information and explanations given to us, the Company has been regular in depositing the undisputed statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities. As far as available from the records verified by us and according to the information and explanations given to us, there were no arrears of dues outstanding for a period of more than six months as at 31st December 2005 from the date they became payable. b. According to the information and explanation given to us, the details of disputed dues of Income Tax, Sales Tax, Wealth Tax, Service Tax, Excise Duty, Custom Duty and Cess, as applicable, are as follows: Name Nature of Amount A B of the Dues (Rs. in Statute lacs) Central Sales Tax 6.96 1999-00 Appellate Sales Tax Act, 1956 Sales Tax Sales Tax 101.46 1995-96, 99-00, Appellate Act of 01-02,02-03 relevant states 23.97 1988-89, 90-91, Assessing 97-98, 2000-01 Authority 9.86 1991-92 High Court 123.89 1991-92, 92-93, Tribunal 93-94, 96-97, 98-99 Total 266.14 A = Period to which amount relates B = Forum where the dispute is pending Out of the sum of Rs.266.14 lacs, stay received for Rs.183.96 lacs. x. The Company does not have any accumulated losses as at the end of the period and the Company has not incurred cash losses during the financial period covered by our audit and in the immediately preceding financial year. xi. As per books and records maintained by the Company, and according to the information and explanations made available to us, the Company has not defaulted in repayment of any dues to financial institutions or banks or debenture holders during the period. xii. According to the information and explanations given to us and based on the documents and records produced, 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. According to the information and explanations given to us, 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 given to us, the Company is not engaged in dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company. xv. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by its associates or subsidiaries or others from bank or financial institutions. xvi. In our opinion, on the basis of information and explanations given to us, the term loans were applied for the purposes for which the loans were obtained. xvii. According to the information and explanations given to us and on 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 investments. xviii. According to the information and explanations given to us, the Company has not made any preferential allotment of shares during the period to any parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956. xix. According to the information and explanations given to us, the Company did not have any outstanding debentures during the period. xx. According to the information and explanations given to us, the Company has not raised any money through a public issue during the period. xxi. During the course of our examination of the books of accounts and records of the Company carried out in accordance with the generally accepted auditing practices and according to the information and explanations given to us, we have neither come across any incidence of fraud on or by the Company nor have we been informed of any such case by the management. For Lodha & Co. Chartered Accountants R P Singh Partner Membership No. 52438 S R Batliboi & Associates Chartered Accountants Per Sudhir Soni a Partner Membership No. 41870 Place : Mumbai Date : 23rd January, 2006