IVRCL Assets & Holdings Ltd Merged Auditor Reports

IVRCL ASSETS AND HOLDINGS LIMITED ANNUAL REPORT 2010-2011 AUDITORS REPORT To The Members of IVRCL Assets & Holdings Limited 1. We have audited the attached Balance Sheet of IVRCL Assets & Holdings Limited (the Company) as at March 31, 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 Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. 2. 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 our opinion. 3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order. 4. As more fully discussed in note 14 to the schedule 20 of the financial statements, the Company has invested Rs. 12,521,655,107 (including loans given aggregating to Rs. 1,757,852,357) as at March 31,2011 in three of its subsidiaries engaged in Road Built. Operate, Transfer (BOT) Projects. These subsidiaries had been acquired through amalgamation at fair values, determined based on the future projected cash flows of toll collections. Toll collections of the subsidiaries of the current year are substantially lower than the above projected cash flows. Management believes that the reduction in toll collections is temporary and accordingly no provision in respect of diminution in the value of investments is necessary. However, having regard to the uncertainty in achieving future cash flows, we are unable to comment on the carrying value of the aforesaid investments and consequential effects, if any, on the accompanying financial statements. 5. 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 our knowledge 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 the Company so far as appears from our examination of those books; iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account; iv. 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 except for our comments in para 4 above; v. On the basis of the written representations received from the directors, as on March 31, 2011, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; and vi. Subject to the our comments in para 4 above, the impact of the which is presently not ascertainable, in our opinion and to the best of our information and according to the explanations given to us, the said accounts 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: a) in the case of the balance sheet, of the state of affairs of the Company as at March 31, 2011; b) in the case of the profit and 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. For S.R. BATLIBOI & ASSOCIATES For CHATURVEDI & PARTNERS Firm registration number: 101049W Firm registration number: 307068E Chartered Accountants Chartered Accountants Per Vikas Kumar Pansari Per R N Chaturvedi Partner Partner Membership No.: 93649 Membership No.: 92087 Place: Hyderabad Date : May 28, 2011 Annexure referred to in paragraph 3 of our report of even date Re: IVRCL Assets & Holdings Limited (the Company) (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification. (c) There was no substantial disposal of fixed assets during the year. (ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year. (b) The procedures of physical verification of inventory followed by the management 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 no material discrepancies were noticed on physical verification. (iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are not applicable to the Company and hence not commented upon. (e) The Company had taken loan from one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 3,894,533,787 and the year-end balance of loan taken from such party was Rs. 3,874,533,787. (f) In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions for such loan is not prima facie prejudicial to the interest of the Company. (g) In respect of the loan taken, repayment of the principal amount is as stipulated and payment of interest has been regular. (iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that some of the contracts entered are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is generally an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. Read with above, during the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the company in respect of these areas. (v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered. (b) In respect of transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs for purchase and sale of construction contracts and services entered into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time. (vi) The Company has not accepted any deposits from the public. (vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. (viii) To the best of our knowledge and as explained, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 for the products of the Company. (ix)(a) Undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, customs duty, excise duty and other material statutory dues have generally been regularly deposited with the appropriate authorities except for income tax, wealth tax, professional tax, service tax and works contract tax where there have been slight delays in few cases. Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable. (c) According to the information and explanation given to us, there are no dues of income tax, sales-tax, wealth tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute. (x) Without considering the impact of our observations in paragraph 4 of the audit report, which is presently not ascertainable, the Company has no accumulated losses at the end of the financial year. The Company has incurred cash losses in the current and immediately preceding financial year. (xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. (xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company. (xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 (as amended) 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 others from bank or financial institutions. (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. (xvii) According to the information and explanations given to us and on an 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 investment. (xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956. (xix) The Company has created security charge in the year in respect of the 1500 debentures of Rs. 1,000,000 each issued during the previous year. The Company has issued unsecured debentures during the year, on which no security or charge is required to be created. (xx) The Company has not raised any money by public issue during the year ended March 31, 2011. (xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the year. For S.R. BATLIBOI & ASSOCIATES For CHATURVEDI & PARTNERS Firm registration number: 101049W Firm registration number: 307068E Chartered Accountants Chartered Accountants Per Vikas Kumar Pansari Per R N Chaturvedi Partner Partner Membership No.: 93649 Membership No.: 92087 Place: Hyderabad Date : May 28, 2011.