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Auditor Report of Hindustan Wires Ltd.

Mar 31, 2015

1. We have audited the accompanying financial statements of HINDUSTAN WIRES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of significant accounting policies and other explanatory information which we have signed under reference to this report.

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 and presentation of these standalone 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 provision 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. 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. We conducted our audit in accordance with the Standards on Auditing specified under Section143(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.

4 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 the 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 accounting policies used and reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

5 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6 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:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2015;

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

Report on Other Legal and Regulatory Requirements

7 As required by the Companies (Auditor’s Report) Order, 2015 (‘Order’), issued by the Central Government of India in terms of subsection (11) of section 143 of the Act, we enclose in the Annexure, a statement on the matters specified in paragraphs 3 and 4 of the said Order, to the extent applicable.

8. As required by Section143 (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 accounts as required by the 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, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in section 133 of the Companies Act, 2013;

e. on the basis of written representations received from the directors as on 31 March 2015, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2015 from being appointed as director in terms of section 164(2) of the Companies Act, 2013 and

f. With respect to the other matters to be included in the Auditor’s Report in accordance with Rule11 of the Companies (Audit and Auditors)Rules,2014,in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements -Refer Note 24 & 25 to the financial statements;

ii. The Company did not have any long term contracts and had no derivative contracts outstanding as at 31 March 2015; and

iii. The Company did not have any dues on account of Investor Education and Protection Fund

ANNEXURE TO THE INDEPENDENT AUDITORS’ REPORT

(Referred to in paragraph 7 of our report of even date to the members of Hindustan Wires Limited on the financial statements for the year ended 31st March, 2015)

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

(b) As explained to us, physical verification of fixed assets has been carried out in terms of the phased programme of verification of its fixed assets adopted by the Company and no material discrepancies were noticed on such verification. In our opinion the frequency of verification is reasonable, having regard to the size of the Company and nature of its business.

ii) (a) The inventories have been 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 inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory. In our opinion, discrepancies noticed on physical verification of stocks were not material in relation to the operations of the Company.

iii) (a) According to the information and explanations given to us, the Company has during the year, in the ordinary course of its business, granted unsecured loans to its Holding Company covered in the register maintained under section 189 of the companies Act,2013. The loans are repayable on demand. There are no overdue amounts as at 31st March, 2015 in respect of such loans.

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

v) The Company has not accepted public deposits during the year.

vi) The Central Government has not prescribed maintenance of cost accounts for the type of activities of the Company pursuant to the rules made by the Central Government of India for the maintenance of cost records under clause (d) of Sub Section (1) of Section 148 of the Companies Act, 2013

vii) (a) According to the records examined by us , the Company is generally regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees state insurance, income tax , sales tax , wealth tax, service tax, duty of custom, duty of excise, value added tax, cess and other statutory dues wherever applicable. According to the information and explanations given to us, no undisputed arrears of statutory dues were outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable.

(b) According to the records of the Company, the details of dues in respect of sale tax, income tax, duties of customs, wealth tax, service tax, duty of excise, cess and value added tax which have not been deposited on account of disputes and the forum where the dispute is pending are: NIL

(c) The Company did not have any dues on account of Investor Education and Protection Fund.

viii) The Company has been registered for a period of more than 5 years and its accumulated losses at the end of the financial year are more than 50% of its net worth. The Company has not incurred cash losses during the financial year covered by our audit, as well as in the immediately preceding financial year of the Company.

ix) Based on our audit procedures and the information given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank.

x) According to the information and explanations given to us, Company has not given any guarantee during the year for loans taken by others from banks or financial institution.

xi) In our opinion and according to the information and explanations given to us, the term loans taken by the Company have been applied for the purpose for which they were obtained.

xii) Based upon the audit procedures performed and to the best of our knowledge and according to the information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

PLACE : NOIDA FOR K.N. GUTGUTIA & COMPANY DATE : 22nd MAY, 2015 CHARTERED ACCOUNTANTS FRN 304153E

(B.R. GOYAL) PARTNER M.NO. 12172


Mar 31, 2014

1. We have audited the accompanying financial statements of HINDUSTAN WIRES LIMITED ("the Company"), which comprises the Balance Sheet as at March 31,2014 and the Statement of Profit and Loss and the 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

2. 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 principles generally accepted in India, including 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

3. 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.

4. 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.

5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

6. In our opinion and to the best of our information and according to the explanations given to us, the financial statement 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 31st March, 2014;

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

(c) In the case of Cash Flow Statement, of the Cash Flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

7. 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 Companies Act 1956 (the Act), we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

8. 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 appears from our examination of those books;

c) The Balance Sheet, Statement of Profit & 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 & Loss, and Cash Flow Statement referred to in this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Company''s Act; 1956.

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

This is the Annexure referred to in paragraph 7 of our report of even date to the member of Hindustan Wires Limited (the Company) for the year ended 31st March, 2014

i) In respect of Fixed Assets:

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

b) The Fixed Assets have been physically verified by the management during the year and discrepancies noticed on such verification were not material.

c) As per the records and information & explanation given to us, fixed assets disposed off during the year were not significant.

ii) In respect of Inventories:

a) The inventory has been physically verified during the year by the management at reasonable intervals.

b) In our opinion, the procedure of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification of inventory as compared to the book records.

iii) In respect of Loans:

a) The Company has not granted unsecured loans to the Companies, Firms or other parties listed in the register maintained Under Section 301 of the Companies Act, 1956 and accordingly clause 3 (a)to 3 (d) is not applicable to it.

b) The Company has not taken unsecured loan during the year from any of the Associate Company listed in the register maintained under Section 301 of the Companies Act 1956. The maximum balance of loans taken and outstanding during the year were Rs. 117.71 Lacs. The year end balances of loans taken from such companies covered under Section 301 of the Companies Act, 1956 were Rs. 91.21 Lacs.

c) In our opinion, the rate of interest wherever applicable and other terms and conditions on which such unsecured loans have been taken are not, prima facie, prejudicial to the interest of the Company.

d) The unsecured loans are repayable on demand. In respect of interest on such loans (Rs. 81.21 Lacs except Rs. 10 Lacs) the Company cannot make any payment of the interest as per terms of Rehabilitation Scheme sanctioned by BIFR / AAIFR. As informed to us the concerned parties have also agreed to waive off the interest on their respective loans. In respect of loan of Rs. 10 Lacs the Company is regular in making payment of interest.

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

v) a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of

contracts or arrangements, that needed to be entered into the register maintained under section 301 of the Companies Act, 1956 has been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements ( exceeding the value of Rs. 5 lacs in respect of each party during the year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of clause (vi) of the Companies (Auditor''s Report ) order, 2003 are not applicable to the Company.

vii) In our opinion, the Company has an internal Audit System commensurate with the size and nature of its business.

viii) As informed to us, the Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

ix) (a) According to the records of the Company, it is regular in depositing undisputed statutory dues of Provident Fund, Employees'' State Insurance, Income Tax, Service Tax, VAT, Excise duty, Sale Tax, Cess and other material statutory dues with appropriate authorities.

(b) According to the records of the Company, it has not deposited disputed amount of statutory dues on account of Sales Tax for which the details are as hereunder : -

Nature ofthe Dues Year to which Amount Forum where dispute it relates (Rs. In Lacs) is pending

Sales Tax 1982 to 1985 18.97 Punjab & Haryana High Court at Chandigarh

x) The Company has been registered for a period of more than five years and its accumulated losses at the end of the financial year are more than 50% of its net worth. The Company has not incurred cash loss in the current financial year as well as in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of any dues to Banks, financial institutions and 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 has not given any guarantee for loans taken by others from banks or Financial Institutions.

xiv) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund / society. Therefore, the provision of clause 4(XIII) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

xv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4(XIV) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

xvi) The Company has not taken any new term loans from Bank and/or Financial Institutions during the year.

xvii) On the basis of information and explanations given to us and on an overall examination of the financial statements of the Company, funds raised on short term basis, prima facie, have not been used for long term investments.

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

xix) The Company has neither issued debentures during the year nor any creation of security is pending in respect of debentures raised in earlier years.

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

xxi) Based upon on our audit procedure applied and according to the information and explanation given to us and to the best of our knowledge and belief no fraud on or by the Company has been noticed or reported during the year.

PLACE : NEW DELHI FOR K.N. GUTGUTIA & COMPANY DATE : 27th May, 2014 CHARTERED ACCOUNTANTS

FRN 304153E

(B.R. GOYAL) PARTNER M.NO. 12172


Mar 31, 2011

We have audited the attached Balance Sheet of HINDUSTAN WIRES LIMITED as at 31st March, 2011 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount 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.

We report that:

1. 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.

2. 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 the books.

3. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

4. In our opinion the Balance Sheet, Profit & Loss Account and Cash Flow Statement complies with the mandatory Accounting Standards (AS) referred in section 211(3c) of the Companies Act, 1956.

5. On the basis of written representation received from the Directors of the Company as on 31st March, 2011, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2011 from being appointed as Director under section 274(1) (g) of the Companies Act, 1956.

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with accounting policies and notes thereon and together with Schedules annexed thereto, and subject to :-

(i) That deferred tax assets as assumed by the management is based upon the projections which have been relied upon by us, and

(ii) That amounts recoverable from the public sector oil companies have been estimated and arrived at by the management and relied upon by us, 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 Standards generally accepted in India:-

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2011 and

b) In the case of Profit & Loss Account, of the profit for the year ended on that date.

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

As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate, we further state that:

i) In respect of Fixed Assets:

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

b) The Fixed Assets have been physically verified by the management during the year and discrepancies noticed on such verification have been properly dealt with in the accounts.

c) In terms of Sanctioned Rehabilitation Scheme by AAIFR, part of fixed assets was disposed off in the earlier years. However, it has not affected the status of going concern since the company has diversified its business activities and has set up a unit for manufacturing Industrial Gases and the same is in operation.

ii) In respect of Inventories:

a) The inventory has been physically verified during the year by the management at reasonable intervals.

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) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verification of inventory as compared to the book records were not material, have been properly dealt with in the books of account.

iii) In respect of Loans:

a) The Company has not granted unsecured loans to the Companies, Firms or other parties listed in the register maintained Under Section 301 of the Companies Act, 1956 and accordingly clause 3 (a)to 3 (d) is not applicable to it.

b) The Company has not taken any unsecured loans during the year from the Holding Company and from any Associate company listed in the register maintained under Section 301 of the Companies Act 1956. However the year end balances of loans taken from such companies covered under Section 301 of the Companies Act, 1956 were Rs. 250.71 lacs.

c) In our opinion, the rate of interest wherever applicable and other terms and conditions on which such unsecured loans have been taken are not, prima facie, prejudicial to the interest of the Company.

d) The unsecured loans are repayable on demand. In respect of interest on such loans the Company cannot make any payment of the interest as per terms of Rehabilitation Scheme sanctioned by BIFR / AAIFR. As informed to us the concerned parties have also agreed to waive off the interest on their respective loans.

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

v)

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into the register maintained under section 301 of the Companies Act, 1956 has been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements ( exceeding the value of Rs. 5 lacs in respect of each party during the year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of clause (vi) of the Companies (Auditor's Report) order, 2003 are not applicable to the Company.

vii) In our opinion, the Company has an internal Audit System commensurate with the size and nature of its business.

viii) As informed to us, the Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

ix) (a) According to the records of the Company, it is regular in depositing undisputed statutory dues of Provident Fund, Employees' State Insurance, Income Tax, Service Tax, VAT, Excise duty, Cess and other material statutory dues, with appropriate authorities. However the undisputed statutory dues on account of Sales Tax and interest & damages on P.F. outstanding for more than six months at the year end are Rs. 9.14 lacs and Rs 4.81 Lacs respectively.

(b) According to the records of the Company, it has not deposited disputed amount of statutory dues on account of Sales Tax and ESI for which the details are as hereunder : -

Nature of Year to Amount Forum where dispute is pending the Dues which (Rs. In it relates Lacs)

Sales Tax 1982 to 1985 18.97 High Court at Chandigarh

1973 - 1974 3.36 Tribunal at Kolkata

E.S.I 2002- 2003 0.21 Employees Insurance court, Faridabad

x) The Company has been registered for a period of more than five years and its accumulated losses at the end of the financial year are more than 50% of its net worth. The Company has not incurred cash loss in the current financial year as well as in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of any dues to Banks, financial institutions and 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 has not given any guarantee for loans taken by others from banks or Financial Institutions.

xiv) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund / society. Therefore, the provision of clause 4(XIII) of the Companies (Auditors' Report) Order , 2003 are not applicable to the Company.

xv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4(XIV) of the Companies (Auditors' Report) Order, 2003 are not applicable to the Company.

xvi) The Company has not taken any new term loans from Bank and/or Financial Institutions during the year.

xvii) On the basis of information and explanations given to us and on an overall examination of the financial statements of the Company, funds raised on short term basis have, prima facie, not been used for long term investments or towards repayment of long term borrowings.

xviii) The Company has not made during the year any preferential allotment of shares to parties and companies covered in the Register maintained U/S 301 of the Companies Act, 1956.

xix) The Company has neither issued debentures during the year nor any creation of security is pending in respect of debentures raised in earlier years.

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

xxi) Based upon on our audit procedure applied and according to the information and explanation given to us and to the best of our knowledge and belief no fraud on or by the Company has been noticed or reported during the year.

FOR K.N. GUTGUTIA & COMPANY CHARTERED ACCOUNTANTS

(B.R. GOYAL) PARTNER M.NO. 12172 ICAI'S FRN 304153E

PLACE : NEW DELHI DATE : 25th MAY,2011




Mar 31, 2010

We have audited the attached Balance Sheet of HINDUSTAN WIRES LIMITED as at 31st March, 2010 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto.. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount 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.

We report that:

1. 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.

2. 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 the books.

3. The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

4. In our opinion the Balance Sheet, Profit & Loss Account and Cash Flow Statement complies with the mandatory Accounting Standards (AS) referred in section 211 (3c) of the Companies Act, 1956.

5. On the basis of written representation received from the Directors of the Company as on 31st March, 2010, and taken on record by the Board of Directors, none of the Directors is disqualified as on 31st March, 2010 from being appointed as Director under section 274(1) (g) of the Companies Act, 1956.

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts read with accounting policies and notes thereon and together with Schedules annexed thereto, and subject to :-

(i) That deferred tax assets as assumed by the management is based upon the projections which have been relied upon by us, and

(ii) That provision for doubtful debts has been estimated and arrived at by the management and relied upon by us, 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 Standards generally accepted in India:-

a) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2010 and

b) In the case of Profit & Loss Account, of the profit for the year ended on that date.

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

As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956 and on the basis of such checks as we considered appropriate, we further state that:

i) In respect of Fixed Assets:

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

b) The Fixed Assets have been physically verified by the management during the year and discrepancies noticed on such verification have been properly dealt with in the accounts.

c) In terms of Sanctioned Rehabilitation Scheme by AAIFR, part of fixed assets was disposed off. However, it has not affected the status of going concern since the company has diversified its business activities and has set up a unit for manufacturing Industrial Gases and the same is in operation.

ii) In respect of Inventories:

a) The inventory has been physically verified during the year by the management at reasonable intervals.

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) The Company is maintaining proper records of inventory and the discrepancies noticed on physical verification of inventory as compared to the book records were not material, have been properly dealt with in the books of account.

iii) In respect of Loans:

a) The Company has not granted unsecured loans to the Companies, Firms or other parties listed in the register maintained Under Section 301 of the Companies Act, 1956 and accordingly clause 3 (a)to 3 (d) is not applicable to it.

b) The Company has not taken any unsecured loans during the year from the Holding Company and from any Associate company listed in the register maintained under Section 301 of the Companies Act 1956. However the year end balances of loans

c) Taken from such companies covered under Section 301 of the Companies Act, 1956 were Rs. 310.71 lacs.

d) In our opinion, the rate of interest wherever applicable and other terms and conditions on which such unsecured loans have been taken are not, prima facie, prejudicial to the interest of the Company.

e) The unsecured loans are repayable on demand. In respect of interest on such loans the Company can not make any payment of the interest as per terms of Rehabilitation Scheme sanctioned by BIFR / AAIFR. As informed to us the concerned parties have also agreed to waive off the interest on their respective loans.

iv) In our opinion, and according to the information and explanations given to us, there are adequate internal

control systems commensurate with the size of the Company and the nature of its business for the purchases of inventory, fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control systems.

V)

a) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements, that needed to be entered into the register maintained under section 301 of the Companies Act, 1956 has been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements ( exceeding the value of Rs. 5 lacs in respect of each party during the year) have been made at prices which are generally reasonable having regard to the prevailing market prices at the relevant time.

vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public. Therefore, the provisions of clause (vi) of the Companies (Auditors Report) order, 2003 are not applicable to the Company.

vii) In our opinion, the Company has an internal Audit System commensurate with the size and nature of its business. viii) As informed to us, the Central Government has not prescribed maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 for any of the products of the Company.

ix) (a) According to the records of the Company, it is regular in depositing undisputed statutory dues of Provident Fund, Employees State Insurance, Income Tax, Service Tax, VAT, Excise duty, Cess and other material statutory dues, with appropriate authorities except in respect of Sales Tax. The undisputed statutory dues on account of Sales Tax outstanding for more than six months at the year end are Rs. 9.14 lacs.

(b) According to the records of the Company, it has not deposited disputed amount of statutory dues on account of Sales Tax, Excise duty, ESI and PF for which the details are as hereunder: -

Nature of Year to which Amount Forum where dispute is pending

the Dues it relates (Rs. In Lacs)

Sales Tax 1982 to 1985 18.97 High Court at Chandigarh

1973 -1974 3.36 Tribunal at Kolkata

E.S.I 2002-2003 0.21 Employees Insurance court, Faridabad

P.F. 1991-2001 4.81 Tribunal at New Delhi



x) The Company has been registered for a period of more than five years and its accumulated losses at the end of the financial year are more than 50% of its net worth. The Company has not incurred cash loss in the current financial year as well as in the immediately preceding financial year.

xi) The Company has not defaulted in repayment of any dues to Banks, financial institutions and 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 has not given any guarantee for loans taken by others from banks or Financial Institutions.

xiv) In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund / society. Therefore, the provision of clause 4(XIII) of the Companies (Auditors Report) Order , 2003 are not applicable to the Company.

XV) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provision of clause 4(XIV) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xvi) The Company has not taken any new term loans from Bank and/or Financial Institutions during the year.

XVii) On the basis of information and explanations given to us and on an overall examination of the financa statements of the Company, funds raised on short term basis have, prima facie, not been used for long term investments or towards repayment of long term borrowings.

xviii) The Company has not made during the year any preferential allotment of shares to parties and companies covered in the Register maintained U/S 301 of the Companies Act, 1956.

xix) The Company has neither issued debentures during the year nor any creation of security is pending in respect of debentures raised in earlier years.

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

XXi) Based upon on our audit procedure applied and according to the information and explanation given to us and to the best of our knowledge and belief no fraud on or by the Company has been noticed or reported during the year.



PLACE : NEW DELHI FOR K.N. GUTGUTIA & COMPANY

DATE : 29th MAY,2010 CHARTERED ACCOUNTANTS

(B.R. GOYAL)

PARTNER

M.NO. 12172

ICAIS FRN 304153E



 
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