Samruddhi Cement Ltd merged Auditor Reports

SAMRUDDHI CEMENT LIMITED ANNUAL REPORT 2009-2010 AUDITORS REPORT TO THE MEMBERS OF SAMRUDDHI CEMENT LIMITED 1. We have audited the attached Balance Sheet of SAMRUDDHI CEMENT LIMITED (the Company) as at 31st March, 2010, the Profit and Loss Account and the Cash Flow Statement of the Company for the period 4th September, 2009 (date of incorporation) to 31st March 2010, both 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 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and the disclosures in the financial statements. An audit also includes assessing the accounting principles used and the 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. 3. As required by the Companies (Auditors Report) Order, 2003 (CARO) issued by the Central Government in terms of Section 227(4A) 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. Further to our comments in the Annexure referred to in paragraph 3 above, we report as follows: (a) 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; (b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books; (c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956; (e) 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: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010; (ii) in the case of the Profit and Loss Account, of the profit of the Company for the period from 4th September, 2009 (date of incorporation) to 31st March 2010 and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the period 4th September, 2009 (date of incorporation) to 31st March 2010. 5. On the basis of the written representations received from the Directors as on 31st March, 2010 taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of Section 274(1)(g) of the Companies Act, 1956. For DELOITTE HASKINS & SELLS For G.P. KAPADIA & CO. Chartered Accountants Chartered Accountants (Registration No. 117364W) (Registration No. 104768W) B.P. Shroff Atul Desai Partner Partner Membership No.: 34382 Membership No.: 30850 Place : MUMBAI Date : May 18, 2010 ANNEXURE TO THE AUDITORS REPORT: (Referred to in paragraph 3 of our report of even date): (i) Having regard to the nature of the Companys business/activities/ results clauses (x) regarding cash loss incurred by the Company, (xiii) regarding chit fund, nidhi/ mutual benefit fund/ societies and (xiv) regarding dealing or trading in shares, securities, debentures and other investments of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the period by the Management in accordance with a programme of verification, which in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the period, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. (iii) In respect of its inventory: (a) As explained to us, the inventories were physically verified during the period by the Management except stocks lying with third parties for which confirmations have been obtained. In our opinion the frequency of verification is reasonable. (b) In our opinion and according to the information and explanation given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. (c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. (iv) The Company has neither granted nor taken any loans, secured or unsecured, to/from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956. (v) In our opinion and according to the information and explanations given to us, there is 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. During the course of our audit, we have not observed any major weakness in such internal control system. (vi) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956. (vii) According to the information and explanations given to us, the Company has not accepted any deposit from the public in terms of the provisions of Sections 58A and 58AA or any other relevant provisions of the Companies Act, 1956. (viii) In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business. (ix) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956 in respect of the Companys products to which the said rules are applicable and are of the opinion that prima facie the prescribed accounts and records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company. (x) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed dues, including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of above mentioned statutory dues in arrears as at 31st March, 2010 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty and Cess, to the extent applicable, which have not been deposited as on 31st March, 2010 on account of disputes and the forum where the dispute is pending are given below: Name of the statute Forum where dispute Amount Period (Nature of dues) is pending (Rs. in Crores) 1. Sale Tax and Value Supreme Court, High Court 89.21 1994-2010 Added Act (Tax) Tribunal 3.29 1988-2010 Appellate Authorities 28.29 1990-2010 Assessing Authorities 0.04 2000-2010 2. Income Tax Act, Supreme Court, High Court 0.47 2006-2009 1961 (Tax) Appellate Authorities 0.01 2009-2010 3. Central Excise Supreme Court, High Court 2.47 1995-2010 Act, 1944 (Duty/Penalty) Tribunal 36.92 1994-2010 Appellate Authorities 4.64 2001-2010 Assessing Authorities 5.20 1991-2010 4. Cess under various Supreme Court, High Court 78.35 2002-2010 Acts (Cess/Interest) 5. Service Tax under Tribunal 21.47 1997-2010 the Finance Act, 1994 (Tax) Appellate Authorities 1.51 2004-2010 (xi) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks, financial institutions and debenture holders during the period. (xii) In our opinion and according to the information and explanation given 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 and according to the information and explanation given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions. (xiv) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained other than temporary deployment pending application. (xv) In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used for long term investment. (xvi) According to the information and explanations given to us, during the period covered by our audit report, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956. (xvii) According to the information and explanations given to us and the records examined by us, security/charges in respect of debentures transferred pursuant to the Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956, demerging the cement business of the parent company, Grasim Industries Limited into the Company on 1st October, 2009, which became effective on 18th May, 2010 are yet to be registered in the name of the Company. (xviii) According to the information and explanations given to us, the Company has not raised any money by way of public issue during the period. (xix) During the course of our examination of the books and records of the company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year nor have we been informed of such case by the management. For DELOITTE HASKINS & SELLS For G.P. KAPADIA & CO. Chartered Accountants Chartered Accountants (Registration No. 117364W) (Registration No. 104768W) B.P. Shroff Atul Desai Partner Partner Membership No.: 34382 Membership No.: 30850 Place : MUMBAI Date : May 18, 2010 AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE: We have examined the compliance of conditions of corporate governance procedures implemented by Samruddhi Cement Limited as on 18th May, 2010, as stipulated in Clause 49 of the Listing Agreement. The compliance of conditions of Corporate Governance is the responsibility of the management. Our responsibility was limited to the review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. On the basis of our review and according to the information and explanation given to us, and representation made by the management, the conditions of Corporate Governance as stipulated on Clause 49 of the Listing Agreement have been complied with by the Company. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. For G.P. KAPADIA & CO., Chartered Accountants ATUL B. DESAI Place : Mumbai Partner Date : May 18, 2010 (Membership No. 30850)