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Auditor Report of Deccan Cements Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of Deccan Cements Ltd ("the Company"), which comprise the Balance Sheet as at March 31,2015, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134 (5) of the Companies Act, 2013 ("the Act") with respect to 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 principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting the fraud and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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 have taken into account the provisions of the Act, the accounting and auditing standards and the matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with Standards on Auditing specified under Section 143(10) of the Act. 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 financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and other operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, made by the Company's Directors, 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 on the financial statements.

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 of the state of affairs of the Company as at March 31,2015, and it's profit and it's cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements:

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government of India, in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 of the Order.

2. As required by section 143(3) of the Act, we report that:

a) We have sought and 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 the Cash Flow Statement dealt with by this Report are in agreement with the books of account

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) According to the information and explanations given to us and in our opinion, there are no financial transactions or matters which have any adverse effect on the functioning of the company;

f) On the basis of written representations received from the directors as on March 31,2015, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015, from being appointed as a director in terms of sub-section (2) of Section 164 of the Act.

g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, to the best of our information and according to the explanations given to us and in our opinion:

i. the Company has disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note 27 to the financial statements.

ii. the Company does not have any long-term contracts including derivative contracts for which there are any material foreseeable losses.

iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

STATEMENT REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE

i. a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) The management has conducted physical verification of major fixed assets during the year and as explained to us, no material discrepancies have been noticed on such verification.

ii. a) The inventory (excluding stocks with third parties) has been physically verified by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. In our opinion, the frequency of verification is reasonable.

b) In our opinion, 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) In our opinion and according to the information and explanation given to us and on the basis of our examination of the inventory records, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification of inventory as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

iii. 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 189 of the Companies Act, 2013. Therefore clause 3(iii) of the Order is not applicable.

iv. According to the information and explanations given to us and in our opinion, there are adequate internal control systems commensurate with the size of the Company and nature of its business for the purchase of inventory and 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. In our opinion and according to the information and explanation given to us the Company has complied with the provisions of Section 73 and Section 74 of the Act and the rules framed there under and applicable directives issued by Reserve Bank of India with regard to deposits accepted.

vi. On the basis of records produced to us, we are of the opinion that prima facie the Cost Records and Accounts prescribed by the Central Government under Section 148(1) of the Act have been maintained. However, we are not required to and have not carried out any detailed examination of such Records and Accounts.

vii. a. The Company has been regular in depositing undisputed applicable statutory dues including Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess, Investor Education and Protection Fund and other material statutory dues applicable to it with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess, Investor Education and Protection Fund and other material statutory dues were in arrears, as at 31st March 2015 for a period of more than six months from the date they became payable.

b. According to the information and explanation given to us, there are no dues of Provident Fund, Employees State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues which have not been deposited on account of any dispute except:

Name of the Nature of Dues Assessment year Statue to wh|ch the amount relates

Income Tax Act Disallowance of debenture Issue 1997-98 1961 expenses and bad debts.

Andhra Pradesh Sales Tax on packing material 1993-94 General Sales Tax Act/ VAT Sales tax demand for the deemed 1999-00 Act. excess production based on energy & audit 2000-01

Sales Tax Demand for interest --

Sales Tax Demand - recovery of 2002-03 to 2004 - 05 excess paid interest.

Water Cess Dispute on water rates levied on 1997-98 the quantum of water used in the to generation of power. 2007-08

Electricity Duty Dispute on duty levied by A.P 2003-04 Govt. on electricity generated and to consumed. 2008-09

Central Excise Dispute on Cenvat availed on MS March 2008 to Angles, MS Plates, MS Sheets, April 2009 HR Coils.

A.P.M.M.C. Dispute on Seigniorage Fee to be Rules, 1966 paid on Minor Minerals.

Name of the Statute Rs in Lakh Forum where dispute is pending

Income Tax Act 1961 6.46 Income Tax appellate Tribunal, Hyderabad.

Andra Pradesh General 11.52 High Court of Andhra Pradesh Sales Tax/Act Vat Act

85.68 High Court of Andhra Pradesh

137.24 Deputy Commissioner (Appeals) Hyderabad

51.61 High Court of Andhra Pradesh

Water Cess 723.29 High Court of Andhra Pradesh

Electricity Duty 316.23 High Court of Andhra Pradesh

Central Excise 412.64 CESTAT, Bangalore

A.P.M.M.C. 23.59 Ministry of Mines & Geology, Rules 1966 Telengana

viii. The Company has no accumulated losses as at March 31, 2015. Further it has not incurred any cash losses in the financial year under report and in the immediately preceding financial year.

ix. According to the information and explanations given to us and in our opinion, as at March 31, 2015, the company has no dues to financial institutions / banks. The company has not issued any debentures.

x. 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.

xi. According to the information and explanations given to us and in our opinion, during the year under report, no term loans were availed.

xii. During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and according to the information and explanations given to us, no instance of fraud on or by the company was noticed or reported during the year, nor have we been informed of such case by the management.

M Bhaskara Rao & Co Chartered Accountants Firm Registration Number: 000459S

V K Muralidhar Hyderabad, Partner May 30, 2015 Membership Number: 201570


Mar 31, 2014

We have audited the accompanying financial statements of Deccan Cements Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, 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"). 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 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") 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, 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, 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;

e) on the basis of written representations received from the directors as on March 31, 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

STATEMENT REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE

(i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) According to the information and explanations given to us, the Management has conducted physical verification of major fixed assets during the year, which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the Company has not disposed off substantial part of fixed assets and hence, reporting on the going concern status in this regard does not arise.

(ii) a) The inventories has been physically verified during the year by the Management at reasonable intervals. In our opinion, the frequency of the 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 Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanation given to us, and on the basis of our examinations of the inventory records, the Company is maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) a) According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub clauses (b), (c) and (d) of clause (iii) of this Order are not applicable.

e) According to the information and explanations given to us, the Company has taken unsecured deposits from six parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the outstanding balances of said deposits aggregated to Rs. 940 Lakh.

f) The rate of interest and other terms and conditions of unsecured deposits taken by the Company, are not prima facie prejudicial to the interest of the Company; and

g) Payment of the principal amount and interest are regular.

(iv) In our opinion and, according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control.

(v) (a) In our opinion and, according to the information and explanations given to us, the transactions that need to be entered into the Register maintained u/s 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 arrangements entered in the register maintained under section 301 of the Companies Act, 1956 in respect of other parties are reasonable.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provision of section 58A, 58AA or any other relevant provision of Companies Act 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

(vii) The internal audit of the Company has been conducted by a firm of Chartered Accountants. The scope and coverage of internal audit commensurate with the size of the Company and nature of its business.

(viii) On the basis of records produced to us, we are of the opinion that, prima facie the cost records and accounts prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956, have been maintained. However, we are not required to and, have not carried out any detailed examinations of such accounts and records.

(ix) a) According to the information and explanations given to us and according to the books and records produced and examined by us, in our opinion, undisputed statutory 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 any other statutory dues as applicable, have been regularly deposited during the year with the appropriate authorities in India. There are no arrears of statutory dues as at 31st March, 2014 which are outstanding for a period of more than 6 months from the date they became payable.

b) According to the information and explanations given to us, there are no dues on accounts of Income Tax / Sales Tax / Wealth Tax / Service Tax / Custom Duty / Excise Duty / Cess as at March 31, 2014 which have not been deposited on account of dispute except the following:

Name of the Nature of Dues Assessment Rs. In Forum Statue year to Lakh where dispute which the is pending amount relates

Income Tax Disallowance of 1997-98 6.46 Income Tax Act 1961 debenture issue appellate expenses and Tribunal, bad debts. Hyderabad.

Andhra Sales Tax on 1993-94 11.52 High Court of A.P. Pradesh packing material

General Sales tax demand 1999-2000 85.68 High Court of A.P. Sales for the deemed & 2000-01 Tax Act/ VAT excess production Act based on energy audit

Sales Tax Demand 137.24 Deputy Commissioner for interest (Appeals) Hyderabad

Sales Tax Demand 51.61 High Court of A.P. for recovery of excess interest paid.

Water Cess Dispute on water 1997-98 723.29 High Court of A.P. rates levied on to the quantum of 2007-08 water used in the generation of power

Electricity Dispute on duty 2003-04 316.23 High Court of A.P. Duty levied by A.P to Govt. on 2008-09 electricity generated and consumed.

Central Dispute on Mar 2008 412.64 CESTAT Excise Cenvat availed to on MS Angles, April 2009 MS Plates, MS Sheets, HR Coils.

A.P.M.M.C. Dispute on 23.59 Directors Rules, 1966 Seigniorage Fee (Mines & Geology) to be paid on Minor Minerals.

Customs Dispute 2012-13 40.82 CESTAT Duty regarding classification of coal as steam or Bituminous imported

(x) The Company has no accumulated losses as at 31st March, 2014. Further the company has not incurred any cash losses in the financial year under report and in the immediately preceding financial year.

(xi) Based on our Audit procedures and on the information and explanations given by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

(xii) 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 / Nidhi / Mutual Benefit Fund / Society. Therefore, the provisions of clause 4(xiii) of this Order are not applicable to the Company.

(xiv) In the opinion and according to information and explanations given to us, the Company does not deal or trade in shares, securities, debentures and other investments. All Long term investments are held by the Company in its own name.

(xv) In the opinion and according to information and explanations given to us, the Company does not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) During the year under report, the Company has not obtained fresh term loans. The Term loans obtained in earlier years have been applied for the purpose for which they were obtained.

(xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short term basis which have been used for long term investment by the Company.

(xviii) 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 during the year.

(xix) The Company has not issued any debentures.

(xx) The Company has not raised any money by public issue during the year.

(xxi) During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and in accordance to the information and explanations given to us we have neither come across any instances 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 M. Bhaskara Rao & Co; Chartered Accountants Firm Registration Number : 000459S

(V.K. Muralidhar) Place : Hyderabad Partner Date : 20.05.2014 Membership Number : 201570


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Deccan Cements Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, 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"). 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 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:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2013;

b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") 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, 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, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) on the basis of written representations received from the directors as on March 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

STATEMENT REFERRED TO IN OUR REPORT OF EVEN DATE

(i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) According to the information and explanations given to us, the Management has conducted physical verification of major fixed assets during the year, which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the Company has not disposed off substantial part of fixed assets and hence, reporting on the going concern status in this regard does not arise.

(ii) a) The inventories has been physically verified during the year by the Management at reasonable intervals. In our opinion, the frequency of the 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 Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanation given to us, and on the basis of our examinations of the inventory records, the Company is maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

(iii) a) According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, sub clauses (b), (c) and (d) of clause (iii) of this Order are not applicable.

b) According to the information and explanations given to us, the Company has taken unsecured loans from other parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year and the outstanding balances of said loans aggregated to Rs 104.41 Lakhs and Nil respectively.

c) The rate of interest and other terms and conditions of unsecured loans taken by the Company, are not prima facie prejudicial to the interest of the Company; and

d) Payment of the principal amount and interest are regular.

(iv) In our opinion and, according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control.

(v) a) According to the information and explanations given to us, 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 arrangements entered in the register maintained under section 301 of the Companies Act, 1956 in respect of other parties are reasonable.

(vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provision of section 58A, 58AA or any other relevant provision of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

(vii) The internal audit of the Company has been conducted by a firm of Chartered Accountants. The scope and coverage of internal audit commensurate with the size of the Company and nature of its business.

(viii) On the basis of records produced to us, we are of the opinion that, prima facie the cost records and accounts prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956, have been maintained. However, we are not required to and, have not carried out any detailed examinations of such accounts and records.

(ix) a) According to the information and explanations given to us and according to the books and records produced and examined by us, in our opinion, undisputed statutory 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 any other statutory dues as applicable, have been regularly deposited during the year with the appropriate authorities in India. There are no arrears of statutory dues as at 31st March 2013 which are outstanding for a period of more than 6 months from the date they became payable.

b) According to the information and explanations given to us, there are no dues on accounts of Income Tax / Sales Tax / Wealth Tax / Service Tax / Custom Duty / Excise Duty / Cess as at March 31, 2013 which have not been deposited on account of dispute except the following:

(x) The Company has no accumulated losses as at 31st March 2013. Further it has not incurred any cash losses in the financial year under report and in the immediately preceding financial year.

(xi) Based on our Audit procedures and on the information and explanations given by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

(xii) 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 / Nidhi / Mutual Benefit Fund / Society. Therefore, the provisions of clause 4(xiii) of this Order are not applicable to the Company.

(xiv) In the opinion and according to information and explanations given to us, the Company does not deals or trade in shares, securities, debentures and other investments. All Long term investments are held by the Company in its own name.

(xv) In the opinion and according to information and explanations given to us, the Company does not given any guarantee for loans taken by others from banks or financial institutions.

(xvi) During the year under report, the Company has not obtained fresh term loans. The Term loans obtained in earlier years have been applied for the purpose for which they were obtained.

(xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short term basis which have been used for long term investment by the Company.

(xviii) 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 during the year.

(xix) The Company has not issued any debentures.

(xx) The Company has not raised any money by public issue during the year.

(xxi) During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and in accordance to the information and explanations given to us, we have neither come across any instances 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 M Bhaskara Rao & Co.

Chartered Accountants

Firm Registration Number: 000459S

V K Muralidhar

Place : Hyderabad Partner

Date : 21.05.2013 Membership Number: 201570


Mar 31, 2012

1. We have audited the attached Balance Sheet of DECCAN CEMENTS LIMITED as at 31st March, 2012, the Statement of Profit and Loss and also the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company's 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 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 (Auditor's Report) Order, 2003 as amended by the Companies (Auditor's Report) Order, (Amendment) 2004 issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matter 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 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, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet, Statement of Profit and Loss 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;

v) On the basis of written representations received from the directors, as on 31st March, 2012 and, taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with "Significant Accounting Policies" and notes thereon 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, 2012;

ii) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (STATEMENT REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE)

i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) According to the information and explanations given to us, the Management has conducted physical verification of major fixed assets during the year, which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the Company has not disposed off substantial part of fixed assets and hence, reporting on the going concern status in this regard does not arise.

ii) a) The inventories have been physically verified during the year by the Management at reasonable intervals. In our opinion, the frequency of the 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 Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanation given to us, and on the basis of our examinations of the inventory records, the Company maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

iii) a) According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub clauses (b), (c) and (d) of clause (iii) of this Order are not applicable.

e) According to the information and explanations given to us, the Company has taken unsecured loans from other parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the period and the outstanding year end balances of said loans aggregate to Rs 586.64 Lakhs and Rs 104.41 Lakhs respectively.

f) The rate of interest and other terms and conditions of unsecured loans taken by the Company, are not prima facie prejudicial to the interest of the Company; and

g) Payment of the principal amount and interest are regular.

iv) In our opinion and, according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control.

v) (a) According to the information and explanations given to us, 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 arrangements entered in the register maintained under section 301 of the Companies Act, 1956 in respect of other parties are reasonable.

vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provision of section 58A, 58AA or any other relevant provision of companies act 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company law board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

vii) The internal audit of the Company has been conducted by a firm of Chartered Accountants. The scope and coverage of internal audit commensurate with the size of the Company and nature of its business.

viii) On the basis of records produced to us, we are of the opinion that, prima facie the cost records and accounts prescribed by the Central Government under Section 209(1) (d) of the Companies Act, 1956, have been maintained. However, we are not required to and, have not carried out any detailed examinations of such accounts and records.

ix) a) According to the information and explanations given to us and according to the books and records produced and examined by us, in our opinion, undisputed statutory 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 any other statutory dues as applicable, have been regularly deposited during the year with the appropriate authorities in India. There are no arrears of statutory dues as at 31st March,

2012 which are outstanding for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us, there are no dues on accounts of Income Tax / Sales Tax / Wealth Tax / Service Tax / Custom Duty / Excise Duty / Cess as at March 31,2012 which have not been deposited on account of dispute except the following :

Assessment year Name of Rs.In Forum where dispute is Nature of Dues to which the the Statue Lacs. pending amount relates

Disallowance of debenture issue 1997-98 6.46 Income Tax appellate Income Tax expenses and Act,1961 bad debts. Tribunal, Hyderabad. CIT(appeals) Hyderabad. Sales Tax on packing material 1993-94 11.52 High Court of Andhra Pradesh

Andhra Sales tax on transfer of clinker from 2001-02 & 9.30 High Court of Andhra Pradesh cement division to slag division 2005-06 306.14 Pradesh general General Sales tax demand for the deemed 1999-2000 & 85.68 Sales Tax Deputy Commissioner Act,/VAT excess production based on energy 2000-01 (Appeals) Hyderabad Act. audit

Sales tax deferment on additional 2001-02 168.97 High Court of Andhra products manufactured Pradesh

Dispute on water rates levied on 1997-98 723.29 the quantum of water used in the two 2007-08 generation of water.

Others Dispute on duty levied by A.P 2003-04 To 316.23 High court Govt. One of Andhra electricity Pradesh generated and 2008-09 consumed.

x) The Company has no accumulated losses as at 31st March, 2011. Further it has not incurred any cash losses in the financial year under report and in the immediately preceding financial year.

xi) Based on our Audit procedures and according to the information and explanations given by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institution, banks or debenture holders.

xii) 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 / Nidhi / Mutual Benefit Fund / Society. Therefore, the provisions of clause 4(xiii) of this Order are not applicable to the Company.

xiv) In the opinion and according to information and explanations given to us, the Company does not deals or trade in shares, securities, debentures and other investments. All investments are held by the Company in its own name.

xv) In the opinion and according to information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) During the year under report, the Company has not obtained term loans. The Term loans obtained have been applied for the purpose for which they were obtained.

xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short term basis which have been used for long term investment by the Company.

xviii) 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 during the year.

xix) The Company has not issued any debentures.

xx) The Company has not raised any money by public issue during the year.

xxi) During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and according to the information and explanations given to us we have neither come across any instances 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 M.BHASKARA RAO & CO.,

Chartered Accountants

Firm Registration Number. 00459 S

(V.K. MURALIDHAR)

Place : Hyderabad Partner

Date : 15.05.2012 Membership Number. 201570


Mar 31, 2011

1. We have audited the attached Balance Sheet of DECCAN CEMENTS LIMITED as at 31st March, 2011, the Profit and Loss Account and also the Cash Flow Statement of the Company 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 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 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 by the Companies (Auditors Report) Order. (Amendment) 2004 issued by the Central Government in the terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matter specified in paragraphs 4 and 5 of the said order.

4. Further to our comments in the Annexure referred to in paragraph (1) 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 accounts;

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 the Section 211 of the Companies Act, 1956;

v) On the basis of written representations received from the directors, as on 31st March, 2011 and, taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with "Significant Accounting Policies" and notes thereon 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, 2011;

ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (STATEMENT REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE)

i) a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

b) According to the information and explanations given to us, the Management has conducted physical verification of major fixed assets during the year, which in our opinion is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) According to the information and explanations given to us, the Company has not disposed off substantial part of fixed assets and hence, reporting on the going concern status in this regard does not arise.

ii) a) The inventories have been physically verified during the year by the Management at reasonable intervals. In our opinion, the frequency of the 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 Management are reasonable and adequate in relation to the size of the Company and nature of its business.

c) In our opinion and according to the information and explanation given to us, and on the basis of our examinations of the inventory records, the Company maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

iii) a) According to the information and explanations given to us, the Company has not granted any loan, secured or unsecured to the companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub clauses (b), (c) and (d) of clause (iii) of this Order are not applicable.

e) According to the information and explanations given to us, the Company has taken unsecured loans from other parties covered in the register maintained under section 301 of the Companies Act, 1956. the maximum amount involved during the period and the outstanding balances of said loans aggregated to Rs.728.14 Lacs and Rs.586.64 Lacs respectively.

f) The rate of interest and other terms and conditions of unsecured loans taken by the Company, are not prima facie prejudicial to the interest of the Company; and

g) Payment of the principal amount and interest are regular.

iv) In our opinion and, according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and the nature of its business with regard to the purchase of inventory and fixed assets and for the sale of goods and services.

During the course of our audit, we have not observed any continuing failure to the correct major weaknesses in internal control.

v) a) According to the information and explanations given to us, 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 arrangements entered in the register maintained under section 301 of the Companies Act, 1956 in respect of other parties are reasonable.

vi) In our opinion and according to the information and explanations given to us, the Company has compiled with the provision of section 58A, 58AA or any other relevant provision of Companies Act 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company and law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the company in respect of the aforesaid deposits.

vii) The Internal audit of the Company has been conducted by a firm of Chartered Accountants. The scope and coverage of internal audit commensurate with the size of the Company and nature of its business.

viii) On the basis of records produced to us, we are of the opinion that, prima facie the cost records and accounts prescribed by the Central Government under Section 209(l)(d) of the Companies Act, 1956, have been maintained. However, we are not required to and, have not carried out any detailed examinations of such accounts and records.

ix) a) According to the information and explanations given to us and according to the books and records produced and examined by us, in our opinion, undisputed statutory 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 any other statutory dues as applicable, have been regularly deposited during the year with the appropriate ¦ authorities in India. There are no arrears of statutory dues as at 31st March, 2011 which are outstanding for a period of more than 6 months from the date they became payable.

b) According to the information and explanations given to us, there are no dues on accounts of Income Tax / Sales Tax / Wealth Tax / Service Tax / Custom Duty / Excise Duty / Cess as at March 31, 2011 which have not been deposited on account of dispute except the following:.

Name Assessment year Rs. Forum where of the Nature of Dues to which the in dispute is Statute amount relates Lacs pending

Disallowance of debenture issue 1997-98 6.46 Income Tax Appellate Income Tax expenses and bad debts Tribunal, Hyderabad. Act 1961 Disallowance of deduction 2006-07 359.03 CIT (appeals), claimed u/s 80 I (A). Hyderabad.

Sales tax on packing materials 1993-94 11.52 High Court of Andhra Pradesh Sales tax on transfer of clinker 2001-02 9.30 High Court of A.P. Andhra Pradesh from cement division to slag 2005-06 306.14 High, Court of division Andhra Pradesh General Sales Tax Act,/ VAT Act. Sales tax demand for the 1999-2000 Deputy deemed excess production & 85.68 Commissioner (Appeals) based on energy audit 2000-01 Hyderabad Sales tax deferment on 2001-02 168.97 High Court of additional products manufactured Andhra Pradesh Difference in voltage surcharge 1999-2000 42.33 High Court of charged by AP Transco Andhra Pradesh Others Dispute on water rates levied 1997-98 723.29 High Court of on the quantum of water used to Andhra Pradesh in the generation of power . 2007-08 Dispute on duty levied by 2003-04 AP Govt, on electricity to 316.23 High Court of generated and consumed. 2008-09 Andhra Pradesh

x) The Company has no accumulated losses as at 31st March, 2011. Further it has not incurred any cash losses in the financial year under report and in the immediately preceding financial year.

xi) Based on our Audit procedures and according to the information and explanations given by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions, banks or debentures holders.

xii) 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 / Nidhi / Mutual Benefit Fund / Society. Therefore, the provisions of clause 4(xiii) of this Order are not applicable to the Company.

xiv) In our opinion and according to the information and explanations given to us, the Company does not deal or trade in shares, securities, debentures and other investments. All Long term investments are held by the Company in its own name.

xv) In our opinion and according to the information and explanations given to us, the Company does not give any guarantee for loans taken by others from banks or financial institutions.

xvi) During the year under report, the Company has not obtained term loans. The Term loans obtained have been applied for the purpose for which they were obtained.

xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short term basis which have been used for long term investment by the Company.

xviii) The Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956 during the year.

xix) The Company has not issued any debentures.

xx) The Company has not raised any money by public issue during the year.

xxi) During the course of our examinations of the books and records of the Company carried out in accordance with the generally accepted practices in India and according to the information and explanations given to us we have neither come across any instances of fraud on or by the Company, noticed or reported during the year nor have been informed of such case by the Management.

For M.Bhaskara Rao & Co.,

Chartered Accountants

Firm Registration No.00459 S

(V.K.MURALIDHAR)

Place : Hyderabad Partner

Date : 30.05.2011 Membership No.201570






Mar 31, 2010

We have audited the attached Balance sheet of Deccan Cements Limited, as at March 31, 2010, the Profit & Loss Account and also Cash Flow Statement of the Company 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.

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 overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

1. As required by the Companies (Auditors Report) Order, 2003 as amended by the Companies (Auditors Report) Order, (Amendment) 2004 issued by the Central Government 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.

2. Further to our comments in the Annexure referred to in paragraph (1) above, 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 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 appears from our examination of those books;

c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt

with by this report are in agreement with the books of account;

d) in our opinion, the Balance Sheet, Profit & 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 Companies Act, 1956;

e) on the basis of written representations received from the Directors as on March 31, 2010 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on March 31, 2010 from being appointed as a Director in terms of Clause (g) of Sub-section (1) of Section 274 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 with "Significant Accounting Policies" and notes thereon 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 March 31, 2010;

ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and

iii) in case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

ANNEXURE TO THE AUDITORS REPORT (STATEMENT REFERRED TO IN PARAGRAPH (1) OF OUR REPORT OF EVEN DATE)

i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of its fixed assets.

(b) According to the information and explanations given to us, the management has conducted physical verification of major fixed assets during the year, which in our opinion is reasonable having regard to the size of the company and the nature of the assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us, the company has not disposed off substantial part of fixed assets hence, reporting on the going concern status in this regard does not arise.

ii) (a) The inventory has been physically verified during the year by the Management at reasonable intervals. In our opinion the frequency of verification is reasonable.

(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and nature of its business.

(c) In our opinion and according to the information and explanations given to us and, on the basis of our examination of the inventory records, the Company is maintaining proper records. The discrepancies noticed on physical verification of inventory as compared to book records were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.

iii) a) According to the information and explanations given to us, the company has not granted any loan, secured or unsecured to companies, firms or other parties covered

in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, sub clauses (b), (c) and (d) of clause (iii) of this Order are not applicable.

b) According to the information and explanations given to us, the company has taken unsecured loans from other parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the period and the outstanding balances of said loans aggregated to Rs.728.14 Lacs and Rs.728.14 Lacs respectively.

c) The rate of interest and other terms and conditions of unsecured loans taken by the company, are not prima facie prejudicial to the interest of the company; and

d) Payment of the principal amount and interest are regular.

iv) In our opinion and according to the information and explanations given to us, there is adequate internal control system commensurate with the size of the Company and nature of its business, with regard to the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal controls.

v) (a) According to the information and explanations given to us, 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 arrangements entered in the register maintained under section 301 of the Companies Act, 1956 in respect of other parties are reasonable.

vi) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal on the Company in respect of the aforesaid deposits.

vii) The Internal Audit of the Company has been conducted by a Firm of Chartered Accountants. The scope and coverage of Internal Audit is commensurate with the size of the Company and nature of its business.

viii) On the basis of records produced to us, we are of the opinion that, prima facie the cost records and accounts prescribed by the Central Government under Section 209(l)(d) of the Companies Act, 1956, have been maintained. However, we are not required to and, have not carried out any detailed examination of such accounts and records.

ix) (a) According to the information and explanations given to us and according to the books and records as produced and examined by us, in our opinion, undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income tax, Sales-tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other statutory dues as applicable, have been regularly deposited during the year with the appropriate authorities in India. There are no arrears of Statutory dues as at March 31, 2010 which are outstanding for a period more than 6 months from the date they became payable. (b) According to the information and explanations given to us, there are no dues on account of Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, and Cess as at March 31, 2010 which have not been deposited on account of dispute except the following:

Name of Nature of Dues Assessment year Rs.in Forum where

the Statute to which the Lacs. dispute is pending amount relates

Disallowance of debenture issue 1997-98 6.46 Income Tax Appel- late

Income Tax expenses and bad debts Tribunal,Hyderabad. Act 1961 Disallowance of deduction 2006-07 359.03 CIT (appeals). claimed u/s 80 I (A). Hyderabad.

Sales tax on pac- king materials 1993-94 11.52 High Court of Andhra Pradesh Sales tax on transfer of clinker 2001-02 9.30 High Court of A.P. from cement division to slag 2005-06 306.14 High Court of Andhra Pradesh division Andhra Pradesh

General Sales Dispute on input tax credit 2004-05 16.13 High Court of

Tax Act, /VAT Act. on coal Andhra Pradesh

Sales tax demand for the 1999-2000 Deputy deemed excess production & 85.68 Commissioner (Appeals) based on energy audit 2000-01 Hyderabad Sales tax deferment on 2001-02 168.97 High Court of additional products manufactured Andhra Pradesh

Difference in voltage surcharge 1999-2000 42.33 High Court of charged by AP Transco Andhra Pradesh

Others Dispute on water rates levied 1997-98 723.29 High Court of on the quantum of water used To Andhra Pradesh in the generation of power. 2007-08

Dispute on duty levied by 2003-04 AP Govt, on electricity To 316.23 High Court of generated and consumed. 2008-09 Andhra Pradesh

x) The Company has no accumulated losses as onfs March 31, 2010. Further it has not incurred any cash losses in the financial year under report and in the immediately preceding financial year.

xi) Based on our Audit procedures and on the information and explanations given by the Management, we are of the opinion that the Company has not defaulted in repayment of dues to financial institutions or banks or debenture holders.

xii) 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 / Nidhi / Mutual Benefit Fund / Society. Therefore the provisions of clause 4(xiii) of this Order are not applicable to the company.

xiv) In our opinion and according to information and explanations given to us, the Company does not deal or trade in shares, securities, debentures and other investments. All long term investments are held by the Company in its own name.

xv) In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for the loans taken by others from bank or financial institutions.

xvi) The Company has obtained term loans during the financial year. The term loans obtained have been applied for the purpose for which they were obtained.

xvii) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised on short- term basis, which have been used for long-term investments by the Company.

xviii)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 during the year.

xix) The company has not issued any debentures.

xx) The company has not raised any money by public issue during the year.

xxi) During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted practices in India and according to the information and explanations given to us we have neither come across any instances 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 M. Bhaskara Rao & Co.,

Chartered Accountants Firm Registration No. 00459S

Anil Kumar Mehta

Partner Membership No. 14284

Place : Hyderabad Date : 28th May, 2010

 
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