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Auditor Report of Essar Oil Ltd. Company
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Auditor Report of Essar Oil Ltd.

Mar 31, 2015

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

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

2. 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 the 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 frauds 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.

AUDITORS' RESPONSIBILITY

3. Our responsibility is to express an opinion on these financial statements based on our audit.

4. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

5. We conducted our audit in accordance with the 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.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the 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 the internal financial control relevant to the Company's preparation and fair presentation 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 operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the 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

7. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and further to the matters described in paragraph 8 below 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 its profit and its cash flows for the year ended on that date.

EMPHASIS OF MATTERS

8. We draw attention to:

(a) Note 7(ii) (a) to the financial statements regarding accounting for interest on debentures for the period October 1998 to April 2012 on cash basis, in accordance with the orders of the Gujarat High Court.

(b) Note 7(ii) (c) to the financial statements regarding measurement of certain borrowings in accordance with the Accounting Standard 30 on Financial Instruments, Recognition and Measurement as per the accounting policy consistently followed by the Company.

Our opinion is not modified in respect of these matters.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

9. As required by the Companies (Auditor's Report) Order, 2015 ("the Order") issued by the Central Government in terms of Section 143(11) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order.

10. 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 purposes of our audit;

(b) in our opinion, having regard and further to the matters described in paragraph 8 (a) above, 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 Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) having regard and further to the matters described in paragraph 8 above, 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) on the basis of the written representations received from the directors as on March 31, 2015 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 Section 164(2) of the Act.

(f) with respect to the other matters to be included in the Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, to the best of our knowledge and belief and according to the information and explanations given to us by the management:

i. The Company has disclosed the impact as estimated of pending litigations on its financial position in its financial statements in accordance with generally accepted accounting principles– Refer Note 30 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were 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.

Annexure to the Independent Auditors' Report

[Referred to in paragraph 9 under "Report on Other Legal and Regulatory Requirements" section of our report of even date]

1. In respect of its fixed assets:

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

(b) The fixed assets of the Company have been physically verified during the year by the Management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As per the information and explanation given to us by the Management, no material discrepancies as compared to book records were noticed in respect of the fixed assets verified during the year.

2. In respect of its inventories:

(a) As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

(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 were reasonable and adequate in relation to the size of the Company and the nature of its business. In respect of coal inventory requiring technical expertise for establishing physical quantities, the Company has hired independent agencies for physical verification of such stocks whose certificate we have relied upon.

(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.

3. According to the information and explanation 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 Act.

4. In our opinion and according to the information and explanations given to us, and considering that certain items purchased are of specialised nature and suitable alternative sources do not exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for 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 failure to correct major weaknesses in internal controls.

5. According to the information and explanations given to us, the Company has not accepted any public deposit during the year. Accordingly, the provisions of clause 3(v) of the Order are not applicable to the Company.

6. We have broadly reviewed the cost records maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under Section 148 (1) of Act in respect of manufacture of petroleum products 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 determine whether they are accurate or complete.

7. According to the information and explanations given to us, in respect of statutory dues:

(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employee State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues, as applicable, with the appropriate authorities.

There are no undisputed amounts payable in respect of the above statutory dues outstanding as at March 31, 2015 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, details of Income tax, Sales tax, Service tax, Customs Duty, Excise Duty and Value Added Tax which have not been deposited as on March 31, 2015 on account of disputes are given below:

Name of Statute Nature of dues Forum where dispute is pending

Gujarat Value Added Tax Sales Tax & Interest Gujarat Sales Tax Tribunal Act, 2003 Jt. Commissioner Appeal, Rajkot

Central Sales Tax Act, 1956 Sales Tax & Interest Jt. Commissioner Appeal, Rajkot

Central Excise Act, 1944 Excise Duty, Interest, Fine Central Excise & Service Tax and Penalty Appellate Tribunal (CESTAT)

Customs Act 1962 Customs Duty, Interest, Fine Commissioner of Customs and Penalty (Appeals)

Central Excise & Service Tax Appellate Tribunal (CESTAT)

Service Tax Rules, 1994 Penalty Central Excise & Service Tax Appellate Tribunal (CESTAT)

Commissioner of Central Excise (Appeals) Madhya Pradesh Sthaniya Entry Tax, Penalty and MP Commercial Tax Appellate Kshetra Me Mal Ke Pravesh Interest Board, Bhopal Par Kar Adhiniyam, 1976 High Court of Madhya Pradesh

Uttar Pradesh Value Added Sales tax and interest Addl. Commissioner of Tax Act, 2008 Commercial Tax (Appeal)

Income tax Act, 1961 Income tax and Interest Supreme Court

Bombay High Court

Name of Statute Period to which the Amount amount (Rs. in Crores) relates

Gujarat Value Added Tax Act 2003 2007-08 0.21

2008-09 690.27

Central Sales Tax Act 1956 2008-09, 88.22

2010-11

Central Excise Act 1944 2006-07 to 77.79 2012-13

Customs Act 1962 2009-10, 271.34 2012-13 and 2013-14

2008-09 0.26

Servise Tax Rules 1994 2005-06 to 1.77 2009-10

2004-05 0.08 2005-06

Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam 1976 2008-09 0.02

2007-08 0.06

Uttar Pradesh Value Added Tax Act 2008 2010-11 0.19

Income tax Act 1961 AY 1998-99 0.18

AY 2004-05 6.25

In respect of a customs duty demand of Rs. 2.86 crores, we are informed that the Company is in the process of fling an appeal before Central Excise & Service Tax Appellate Tribunal (CESTAT).

According to the information and explanations given to us, there were no dues pending to be deposited on account of any dispute in respect of Wealth Tax and Cess as on March 31, 2015.

(c) The Company has been regular in transferring amounts to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and Rules made there under within time.

8. The accumulated losses of the Company at the end of the financial year are less than 50% of its net worth (before deducting such accumulated losses) and the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

9. There have been no defaults in repayment of dues to financial institutions, banks, and debenture holders, barring repayment of two installments aggregating to Rs. 1,576.76 crores to a bank, which were deferred pending availing of long term export advance guaranteed by the same bank. The guarantee is with a condition that the export advance proceeds are to be utilized solely for the repayment of such dues, which have since been repaid.

10. In our opinion and according to the information and explanations given to us, the terms and conditions of a guarantee given by the Company for a loan taken by others from a bank is not, prima facie, prejudicial to the interests of the Company.

11. In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

12. To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

For Deloitte Haskins & Sells

Chartered Accountants

(Firm's Registration No. 117365W)

P. B. Pardiwalla

Partner

MUMBAI, May 25, 2015 Membership No. 40005


Mar 31, 2014

We have audited the accompanying financial statements of ESSAR OIL LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s 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 notified under the Companies Act, 1956 ("the Act")(which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. 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.

Auditors'' 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 the 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 the 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 the 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, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 aforesaid 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 of the Company for the year ended on that date; and

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

Emphasis of Matters

We draw attention to:

(a) Note 7(ii)(a) to the financial statements regarding accounting of interest on certain categories of debentures on a cash basis as per the Court order.

(b) Note 7(ii)(c) to the financial statements regarding measurement of certain borrowings covered by a Common Loan Agreement as per the accounting policy consistently followed by the Company.

(c) Note 37 to the financial statements regarding (i) approval by the shareholders at the Extraordinary General meeting of the Company held on May 06, 2014 for acquisition of preference shares of Essar Power Limited in part settlement of dues of Rs. 1,025.00 crores from Essar House Limited and acquisition of shares of an associate company so as to make it a wholly owned subsidiary (ii) receivable of balance dues of Rs. 917.58 crores from Essar House Limited and (iii) recovery of advances of Rs. 1,828.29 crores and security deposit of Rs. 590.00 crores from the aforesaid associate.

Our opinion is not qualified in respect of these matters.

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 in terms of Section 227(4A) 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 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 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 Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs).

(e) On the basis of the written representations received from the directors as on March 31, 2014 other than the nominee directors appointed by public financial institutions who have been granted exemption from the provisions of section 274(1)(g) of the Act, and taken on record by the Board of Directors, none of the said directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act.

Annexure to the Auditors'' Report

[Referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirements" section of our report of even date]

1. In respect of its fixed assets:

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

(b) The fixed assets of the Company have been physically verified during the year by the Management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As per the information and explanation given to us by the Management, no material discrepancies as compared to book records were noticed in respect of the fixed assets verified during the year.

(c) In our opinion and according to the information and explanations given to us, the Company has not made any substantial disposals of fixed assets during the year affecting the going concern status of the Company.

2. In respect of its inventories:

(a) As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

(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 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. No material discrepancies were noticed on physical verification as compared to book records.

3. According to the information and explanation given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/ from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii)

(a) to (g) of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, and considering that certain capital items purchased are of specialised nature and suitable alternative sources do not exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for 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 failure to correct major weaknesses in internal controls.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Act and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted public deposits within the meaning of Section 58A and 58AA of the Act, or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. Accordingly, the provisions of clause 4(vi) of the Order are not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business.

8. We have broadly reviewed the books of account/ records 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 Act in respect of manufacture of petroleum products 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 determine whether they are accurate or complete.

9. In respect of statutory dues:

(a) According to the information and explanations given to us, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Employee State Insurance, Income Tax, Sales Tax (refer paragraph (c) below), Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues, as applicable, with the appropriate authorities.

There are no undisputed amounts payable in respect of the above statutory dues outstanding as at March 31, 2014 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, details of Income tax, Sales tax, Service tax, Customs Duty and Excise Duty below, which have not been deposited as on March 31, 2014 on account of disputes are given below:

Name of Statute Nature of dues Forum where dispute is pending

Gujarat Value Added Sales Tax & Interest Gujarat Sales Tax Tax Act, 2003 Tribunal

Jt. Commissioner Appeal, Rajkot

Central Sales Tax Act, Sales Tax & Interest Jt. Commissioner 1956 Appeal, Rajkot

Central Excise Act Excise Duty, Interest, Central Excise & 1944 Fine and Penalty Service Tax Appellate Tribunal (CESTAT)

Customs Act, 1962 Customs Duty, Central Excise & Interest, Fine and Service Tax Penalty Appellate Tribunal (CESTAT) Commissioner of Customs Excise (Appeals)

Service Tax Rules, Penalty Central Excise & 1994 Service Tax Appellate Tribunal (CESTAT) Commissioner of Central Excise (Appeals)

Madhya Pradesh Entry Tax,Penalty MP Commercial Tax Sthaniya Kshetra Me and Interest Appellate Board, Bhopal

Mal Ke Pravesh Par High Court of Madhya Kar Adhiniyam, 1976 Pradesh

Uttar Pradesh Value Sales tax and interest Addl. Commissioner of Added Tax Act, 2008 Commercial Tax (Appeal)

Income tax Act, 1961 Income tax and Supreme Court Interest Bombay High Court

Name of Statute Period to which the Amount amount relates (Rs. in crore)

Gujarat Value Added Tax Act, 2003 2007-08 0.21

2008-09 633.11

Central Sales Tax Act, 2008-09 73.16 1956

Central Excise Act 1944 2006-07 74.13 2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

Customs Act, 1962 2008-09 127.44 2009-10 2012-13 2.34* 2013-14 0.05

Service Tax Rules, 2005-06 1.74 1994 2006-07 2007-08 2008-09 2009-10 2004-05 0.08 2005-06

Madhya Pradesh 2008-09 0.02 Sthaniya Kshetra Me

Mal Ke Pravesh Par 2007-08 0.06 Kar Adhiniyam, 1976

Uttar Pradesh Value 2010-11 0.19 Added Tax Act, 2008 Income tax Act, 1961 1997-98 0.18 2003-04 6.25

* Company is in the process of filing appeal.

According to the information and explanations given to us, there were no dues pending to be deposited on account of any dispute in respect of Wealth Tax and Cess as on March 31, 2014.

(c) In response to a Special Leave Petition filed by the Company with the Honourable Supreme Court seeking installments for payment of the sales tax dues without interest, the Honourable Supreme Court had, on September 13, 2012, passed an order allowing the payment of the balance sales tax dues in eight equal quarterly installments beginning January 2, 2014 with interest of 10% p.a. with effect from January 17, 2012.

Having regard to the above, the Company had made payment of all the instalments due with interest on respective due dates except for fourth installment due on October 02, 2013 for which the Company had filed an application on October 03, 2013 with the Honourable Supreme Court of India pleading for extension of time limit. The Honourable Supreme Court of India vide it order dated November 11, 2013 did not consider Company''s appeal favourably and accordingly, the Company had made the payment of fourth installment (together with interest for the period October 03, 2013 to November 22, 2013) on November 22, 2013.

10. The accumulated losses of the Company are more than 50% of its net worth. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. Out of total repayment of dues to financial institutions, banks and debenture holders of approx. Rs. 10,700.00 crores, we have observed delays in respect of dues of Rs. 514.93 crores (including interest) relating to onetime payment on account of CDR exit (excluding repayment of Rs. 664.00 crores to a bank which we are informed entailed procedural delay accepted by the lender). These have been regularised within 8 to 64 days from respective due dates. Rs. 250.00 crores repayment against refinance agreed with the lenders has not been considered for this purpose.

12. According to the information and explanations 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. Accordingly, the provisions of clause 4(xii) of the Order are not applicable to the Company.

13. The Company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for the loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

17. On the basis of an overall examination of the balance sheet of the Company and according to the information and explanations given to us, we report that funds raised on short-term basis amounting to Rs. 6,245.51 crores, have, prima facie, been used for long term investment /purposes. This excludes the effects of the judgment of the Supreme Court dated January 17, 2012 making the Company ineligible for a sales tax deferral scheme.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Sec. 301 of the Act. Accordingly, the provisions of clause 4 (xviii) of the Order are not applicable to the Company.

19. Having regard to the information and explanations given to us and the records examined by us, securities have been created in respect of the debentures considering the waivers from corporate debenture holders /prepayment option given to retail debenture holders.

20. The Company has not raised money by way of public issues during the year and the provisions of the Order are not applicable.

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company was noticed or reported during the year.

For Deloitte Haskins & Sells

Chartered Accountants (Firm Registration No. 117365W)

R.D. Kamat Partner Mumbai, May 20, 2014 Membership No. 36822


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of ESSAR OIL LIMITED ("the Company"), which comprise the Balance Sheet as at March 31, 2013, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s 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 Section 211(3C) of the Companies Act, 1956 ("the Act") and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal controls 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.

Auditors'' 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 the 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 the disclosures in the financial statements. The procedures selected depend on the auditors'' 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 the internal controls 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, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the 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 aforesaid 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 loss of the Company for the year ended on that date; and

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

Emphasis of Matters

We draw attention to:

(a) Note 7(ii)(c) to the financial statements detailing the recognition and measurement of the borrowings covered by a Common Loan Agreement which were hitherto covered by the Master Restructuring Agreement as per the accounting policy consistently followed by the Company; and Note 34 to the financial statements detailing the adoption of hedge accounting principles in respect of commodity derivative contracts, as set out in Accounting Standard (AS) 30, Financial Instruments: Recognition and Measurement, in absence of specific guidance under the Accounting Standards referred to in sub- section (3C) of section 211 of the Act.

(b) Note 7(ii)(a) to the financial statements describing the fact about accounting of interest on certain categories of debentures on a cash basis as per the Court order.

(c) Note 19 [footnote (ii)] to the financial statements regarding receivables of Rs. 2,177.82 crore from Essar House Limited and the management plans of securing the dues as explained therein.

Our opinion is not qualified in respect of these matters.

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 in terms of Section 227(4A) 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 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 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 Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act.

(e) On the basis of the written representations received from the directors other than the nominee directors appointed by public financial institutions who have been granted exemption from the provisions of section 274(1)(g) of the Act, and taken on record by the Board of Directors, none of the said directors is disqualified as on March 31, 2013 from being appointed as a director in terms of Section 274(1)(g) of the Act.

[Referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirements" section of our report of even date]

1. In respect of its fixed assets:

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

(b) The fixed assets of the Company have been physically verified during the year by the Management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As per the information given to us by the Management, no material discrepancies as compared to book records were noticed in respect of the fixed assets verified during the year.

(c) In our opinion and according to the information and explanations given to us, the Company has not made any substantial disposals of fixed assets during the year affecting the going concern status of the Company.

2. In respect of its inventories:

(a) As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

(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 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. Records of fuel at third party location from 2012-2013 are being streamlined and are not material in the context of overall inventory carried. No material discrepancies were noticed on physical verification as compared to book records.

3. According to the information and explanation given to us, the Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4 (iii) (a) to (g) of the Order are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, and considering that some of the items purchased are of specialised nature and suitable alternative sources do not exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for 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 failure to correct major weaknesses in internal controls.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Act and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted public deposits within the meaning of Section 58A and 58AA of the Act, or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. Accordingly, the provisions of clause 4(vi) of the Order are not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business.

8. 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 Act in respect of manufacture of petroleum products 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 determine whether they are accurate or complete.

9. In respect of statutory dues:

(a) According to the information and explanations given to us, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax (refer paragraph (c) below), Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues, as applicable, with the appropriate authorities. As explained to us, the provisions of Employees State Insurance are not applicable to the Company during the year.

There are no undisputed amounts payable in respect of the above statutory dues outstanding as at March 31, 2013 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us, details of Income tax, Sales tax, Service tax, Customs Duty and Excise Duty below, which have not been deposited as on March 31, 2013 on account of disputes are given below:

Name of Statute Nature of dues Forum where dispute is pending

Gujarat Value Added Tax Sales Tax & Gujarat Sales Tax Act 2003 Interest Tribunal

Jt. Commissioner Appeal, Rajkot

Central Sales Tax Act, Sales Tax & Jt. Commissioner 1956 Interest Appeal, Rajkot

Central Excise Act, 1944 Excise Duty, Central Excise & Interest, Fine Service Tax Appellate and Penalty Tribunal (CESTAT)

Commissioner of Central Excise (Appeals)

Name of Statute Period to Amount which the (Rs. in crore) amount relates

Gujarat Value Added Tax Act 2003 2007-08 0.20

2008-09 591.68*

Central Sales Tax Act, 1956 2008-09 68.23*

Central Excise Act, 1944 2006-07 72.82

2007-08

2008-09

2009-10

2010-11

2006-07 21.99

2007-08

2008-09

2009-10

2010-11

2011-12

Name of Statute Nature of dues Forum where dispute is pending

Customs Act 1962 Customs Duty, Central Excise & Interest, Fine Service Tax Appellate and Penalty Tribunal (CESTAT)

Commissioner of Customs Excise (Appeals)

Service Tax Rules, 1994 Penalty Commissioner of Central Excise (Appeals)

Central Excise & Service Tax Appellate Tribunal (CESTAT)

Madhya Pradesh Entry Tax, High Court of Sthaniya Kshetra Me Penalty and Madhya Pradesh

Mal Ke Pravesh Par Kar Interest Joint Commissioner Adhiniyam, 1976 of commercial tax

Income Tax Act, 1961 Income tax and Supreme Court Interest

Name of Statute Period to Amount which the (Rs. in crore) amount relates

Custom Act 1962 2006-07 0.42

2008-09

2010-11

2009-10 118.73**

2006-07 8.27

Service Tax Rules, 1994 2004-05 0.13

2005-06

2009-10

2005-06 1.38

Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 2008-09 0.02

2007-08 0.07

Income Tax Act, 1961 1997-98 0.18

*Appeal has been filed on April 30, 2013.

**Company is in the process of filing the appeal.

According to the information and explanations given to us, there were no dues pending to be deposited on account of any dispute in respect of Wealth Tax and Cess as on March 31, 2013.

(c) In response to a Special Leave Petition filed by the Company with the Honorable Supreme Court seeking installments for payment of the sales tax dues without interest, the Honorable Supreme Court has, on September 13, 2012, passed an order allowing the payment of the balance sales tax dues in eight equal quarterly installments beginning January 2, 2013 with interest of 10% p.a. with effect from January 17, 2012.

10. The accumulated losses of the Company are more than 50% of its net worth. The Company has not incurred cash losses during the current year. However, there were cash losses in the immediately preceding financial year

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders during the year.

12. According to the information and explanations 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. Accordingly, the provisions of clause 4(xii) of the Order are not applicable to the Company.

13. The Company is not a chit fund or a nidhi/mutual benefit fund/society. Accordingly, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

14. According to the information and explanations given to us, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Order are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for the loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interest of the Company.

16. In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained, other than temporary deployment pending application.

17. On the basis of an overall examination of the balance sheet of the Company and according to the information and explanations given to us, we report that funds raised on short-term basis amounting to Rs. 2,786.08 crore, have, prima facie, been used for long term investment /purposes. This excludes the effects of the judgment of the Supreme Court dated January 17, 2012 making the Company ineligible for a sales tax deferral scheme.

18. According to the information and explanations given to us, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Sec. 301 of the Act. Accordingly, the provisions of clause 4 (xviii) of the Order are not applicable to the Company.

19. According to the information and explanations given to us and the records examined by us, securities have been created in respect of the debentures except for the personal guarantees by some of the directors together with collateral securities.

20. The Company has not raised money by way of public issues during the year and the provisions of the Order are not applicable.

21. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company was noticed or reported during the year.

For Deloitte Haskins & Sells

Chartered Accountants

(Firm Registration No. 117365W)

R.D. Kamat

Partner

Mumbai, May 10, 2013 Membership No. 36822


Mar 31, 2012

1. We have audited the attached Revised Balance Sheet of Essar Oil Limited ("the Company") as at March 31, 2012, the Revised Statement of Profit and Loss and the Revised Cash Flow Statement for the year ended on that date, both annexed thereto ("the revised financial statements"). These revised financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these revised financial statements based on our audit.

2. We had previously audited the Balance Sheet of the Company as at March 31, 2012, the Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date, both annexed thereto ("the original financial statements") which were approved by the Board of Directors of the Company in its meeting held on May 12, 2012. Our report dated May 12, 2012 on the original financial statements expressed a modified opinion with respect to the matter described in paragraph 3(a)(ii) of the said report.

As explained in Note 38 to the attached revised financial statements, the original financial statements have been revised pursuant to revision of the financial statements for the years ended March 31, 2009, March 31, 2010 and March 31, 2011 ("the prior years") in accordance with the approval of the Ministry of Corporate Affairs ("the MCA") obtained during the financial year 2012-13 subsequent to the approval of the original financial statements by the Board of Directors of the Company. The said note explains the effect of the revision of the financial statements for the prior years on the opening balances for the financial year 2011-12. As explained in the Note, the effects of the revision of the financial statements of the prior years on the opening balances include decrease of opening balance of Reserves and Surplus as at April 01, 2011 by Rs. 3,006.17 Crores.

In view of the above, our report dated May 12, 2012 on the original financial statements stands replaced by this report.

3. 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.

4. Attention is invited to:

(a) Note 38 to the revised financial statements wherein it is stated that, the Honorable Supreme Court of India has vide its order dated January 17, 2012, set aside the order of the Honorable High Court of Gujarat dated April 22, 2008 which had earlier confirmed the Company's eligibility to the 'Capital Investment Incentive Premier/Prestigious Units Scheme 1995 - 2000' of the State of Gujarat ("the Scheme"), making the Company liable to immediately pay Rs. 6,168.97 Crores being the sales tax collected under the Scheme ("the sales tax dues"). The Company has deposited Rs. 1,000 Crores on account of the sales tax as per the directive of the Honorable Supreme Court on July 26, 2012. In response to a Special Leave Petition filed by the Company with the Honorable Supreme Court seeking payment of the sales tax dues in installments and without interest, the Honorable Supreme Court has, on September 13, 2012, passed an order allowing the payment of the balance sales tax dues in eight equal quarterly installments beginning January 2, 2013 with interest of 10% p.a. with effect from January 17, 2012.

Consequent to the above and having regard to the revision of the financial statements for the prior years referred in paragraph 2 above, the Company has reversed income of Rs. 978.59 Crores recognised during April 1, 2011 to December 31, 2011 by defeasance of the deferred sales tax liability under the Scheme, reversed liability of Rs. 45.21 Crores recognised during the said period towards contribution to a Government Welfare Scheme for being eligible under the Scheme, recognised interest income of Rs. 155.13 Crores (net of break up charges of Rs. 10.57 Crore) on account of interest receivable from the assignee of the defeased sales tax liability and recognised interest of Rs. 83.39 Crores (net of Rs. 43.33 Crores capitalized as cost of qualifying fixed assets) on sales tax dues; and presented the same under 'Exceptional Items' in the Revised Statement of Profit and Loss.

(b) Note 7(ii)(c) of the revised financial statements detailing the recognition and measurement of the borrowings covered by the Corporate Debt Restructuring Scheme ("the CDR") as per the accounting policy consistently followed by the Company in the absence of specific guidance available under the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 and consideration of the CDR exit proposal submitted by the Company which has been recommended for approval to the CDR Core Group by the CDR Empowered Group.

(c) Note 7(ii)(a) of the revised financial statements describing the fact about accounting of interest on certain categories of debentures on a cash basis as per the Court order.

5. As required by the Companies (Auditor's Report) Order, 2003, 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.

6. Further to our comments in paragraph 4 and in the Annexure referred to in paragraph 5 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 Revised Balance Sheet, Revised Statement of Profit and Loss and Revised Cash Flow Statement dealt with by this report are in agreement with the books of account;

(d) In our opinion, and according to the information and explanations given to us, the Revised Balance Sheet, Revised Statement of Profit and Loss and Revised Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 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 revised financial statements 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 Revised Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

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

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

7. On the basis of the written representations received from the directors, other than the nominee directors appointed by public financial institutions and banks who have been granted exemption from the provisions of Section 274(1) (g) of the Companies Act, 1956, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31, 2012 from being appointed as director under section 274(1)(g) of the Companies Act, 1956.

To, The Members of Essar Oil Limited

[Referred to in paragraph 5 our report of even date]

1. In respect of its fixed assets:

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

(b) The fixed assets of the Company have been physically verified during the year by the Management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. As per the information given to us by the Management, no material discrepancies as compared to book records were noticed in respect of the fixed assets verified during the year.

(c) In our opinion and according to the information and explanations given to us, the Company has not made any substantial disposals of fixed assets during the year affecting the going concern status of the Company.

2. In respect of its inventories:

(a) As explained to us, inventories were physically verified during the year by the Management at reasonable intervals.

(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 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. No material discrepancies were noticed on physical verification as compared to the book records.

3. According to the information and explanation given to us, the Company has neither granted nor taken any loans, secured or unsecured, to/ from 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 (g) of the Companies (Auditor's Report), Order, 2003 are not applicable to the Company.

4. In our opinion and according to the information and explanations given to us, and considering that some of the items purchased are of specialised nature and suitable alternative sources do not exist for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. Having regard to this, during the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls.

5. (a) To the best of our knowledge and belief and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements that need to be entered into the register maintained under Section 301 of the Companies Act, 1956 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any public deposits within the meaning of Section 58A and 58AA of the Companies Act, 1956, or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. No Order has been passed by the Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal. Accordingly, the provisions of clause 4 (vi) of the Companies (Auditor's Report), Order, 2003 are not applicable to the Company.

7. In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business.

8. We have broadly reviewed the books of account maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1 )(d) of the Companies Act, 1956 in respect of manufacture of petroleum products and are of the opinion that prima facie the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the records with a view to determine whether they are accurate or complete.

9. In respect of statutory dues:

(a) According to the information and explanations given to us, the Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax other than those covered in paragraph (c) below, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other statutory dues, as applicable, with the appropriate authorities. As explained to us, the provisions of Employees State Insurance are not applicable to the Company during the year.

There are no undisputed amounts payable in respect of the above statutory dues outstanding as at March 31, 2012 for a period exceeding six months from the date they became payable.

(b) According to the information and explanations given to us, details of Excise Duty, Customs Duty and Sales Tax other than those covered in paragraph (c) below, which have not been deposited as on March 31, 2012 on account of disputes are given below:

Name of Nature Forum where period to Amount Statute of dues dispute is which the (Rs. in pending amount Crores) relates

Gujarat Value Sales Tax & Gujarat Sales Tax 2007-08 0.20 Added Tax Act Interest Tribunal 2003

Central Excise Excise Duty, Central Excise 2006-07 49.20 Act, 1944 Interest, Fine & Service Tax 2007-08 and Penalty Appellate Tribunal (CESTAT) 2008-09

2009-10

Commissioner 2006-07 15.58 of Central Excise 2007-08 (Appeals) 2008-09

2009-10

Customs Act Customs Central Excise 2006-07 1.01 1962 Duty, Interest, & Service Tax 2008-09 Fine and Appellate Tribunal Penalty (CESTAT) 2010-11

Commissioner of 2006-07 7.49 Customs Excise (Appeals)

Service Tax Penalty Commissioner 2004-05 1.51 Rules, 1994 of Central Excise 2005-06 (Appeals) 2009-10

Madhya Pradesh Entry Tax, Tribunal 2008-09 0.02 Sthaniya Kshetra Penalty and Me Mal Ke Interest Pravesh Par Kar Adhiniyam Act, Deputy 2007-08 0.07 1976 Commissioner of Commercial Tax

According to the information and explanations given to us, there were no dues pending to be deposited on account of any dispute in respect of Income Tax, Wealth Tax, Service Tax, and Cess as on March 31, 2012.

(c) Note 38 to the revised financial statements and paragraph 4(a) of the auditors' report refer to the Supreme Court Judgment of January 17, 2012. The sales tax dues covered by the said judgment are Rs. 6,168.97 Crores. The Company has deposited Rs. 1,000 Crores on account of the sales tax as per the directive of the Honorable Supreme Court on July 26, 2012. In response to a Special Leave Petition filed by the Company with the Honorable Supreme Court seeking installments for payment of the sales tax dues without interest, the Honorable Supreme Court has, on September 13, 2012, passed an order allowing the payment of the balance sales tax dues in eight equal quarterly installments beginning January 2, 2013 with interest of 10% p.a. with effect from January 17, 2012. Accordingly, the Company has recognised liability on account of interest of Rs. 126.72 Crores from January 17, 2012 to March 31, 2012 in the revised financial statements.

10. The accumulated losses of the Company as at March 31, 2012 are more than 50% of its net worth. The Company has incurred cash losses during the year. There were no cash losses in the immediately preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to any financial institution or bank or debenture holders as at the balance sheet date.

12. According to the information and explanations given to us and based on the information available, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. Accordingly, the provisions of clause 4 (xii) of the Companies (Auditor's Report), Order, 2003 are not applicable to the Company.

13. 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 (Auditor's Report) Order, 2003 are not applicable to the Company.

14. In our opinion and according to the information and explanations given to us 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 (Auditor's Report), Order, 2003 are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for the loans taken by others from banks and financial institutions are not, prima facie, prejudicial to the interest of the Company.

16. To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application.

17. On the basis of an overall examination of the revised balance sheet as at March 31, 2012 and the revised cash flow statement of the Company for the year then ended and according to the information and explanations given to us, we report that funds raised on short-term basis amounting to Rs. 3,180.62 Crores have, prima facie, been used for long term investment/purposes.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Sec. 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (xviii) of the Companies (Auditor's Report), Order, 2003 are not applicable to the Company.

19. According to the information and explanations given to us and the records examined by us, securities have been created in respect of the debentures except for the personal guarantees by some of the directors together with collateral securities.

20. The Company has not raised any monies by way of public issues during the year. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditor's Report), Order, 2003 are not applicable to the Company.

21. To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company was noticed or reported during the year.

For Deloitte Hoskins & Sells

Chartered Accountants

(Registration No. 117365W)

R. D. Kamat

Partner

Mumbai, November 09, 2012 Membership No. 36822

 
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