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Auditor Report of Hindustan Zinc Ltd.

Mar 31, 2015

We have audited the accompanying financial statements of HINDUSTAN ZINC 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 the significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of 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

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 thereunder.

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.

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 internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the 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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2015 ("the Order") issued by the Central Government 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.

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

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the 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 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), together with the early adoption by the Company of Accounting Standard (AS) 30 Financial Instruments, Recognition and Measurement, effective April 1, 2007, and the consequential limited revisions as has been announced by the Institute of Chartered Accountants of India to certain Accounting Standards, as stated in Note 2 (a) and 38.

(e) On the basis of the written representations received from the directors as on 31st March, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 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 Auditor''s Report in accordance with Rule 11 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 to Note 25 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 1 UNDER ''REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS'' SECTION OF OUR REPORT OF EVEN DATE)

(i) In respect of its fixed assets:

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

(b) Some of the fixed assets were physically verified during the year by the Management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification.

(ii) In respect of its inventories:

(a) As explained to us, the inventories (excluding inventories with third parties) 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 and no material discrepancies were noticed on physical verification.

(iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 189 of the Companies Act, 2013.

(iv) In our opinion and according to the information and explanations given to us,having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available 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. During the year, the Company did not have transactions in respect of sale of services.During the course of our audit we have not observed any major weaknesses in such internal control system.

(v) According to information and explanations given to us, the Company has not accepted any deposits from public during the year. In respect of unclaimed deposits, the Company has complied with the provisions of sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the rules made thereunder.

(vi) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 read with Companies (Cost Records and Audit) Amendment Rules, 2014 prescribed by the Central Government under Section 148 of the Companies Act, 2013 and are of the opinion that, prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(vii) 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, Income-tax, Sales Tax, Wealth Tax, Service Tax, Duty of customs, Duty of excise, Value added tax, Cess and any other material statutory dues with the appropriate authorities. We are informed that the provisions of Employees'' State Insurance Act, 1948 are not applicable to the Company

There were no undisputed statutory dues in arrears as at 31st March, 2015 for a period of more than six months from the date they became payable.

(b) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs duty, Excise duty, Value added tax and Cess which have not been deposited as on March 31, 2015 on account of disputes are given below:

Period to Name of Nature of dues which the Statute amount relates

Company''s appeals

Sales Tax Claims Disputes in respect of sales tax difference F.Y. 1980-81 to / classification and stock transfers treated 2014-15 as sales.

Central Excise Admissibility of Modvat / Cenvat credit on F.Y. 1985-86 to Duty inputs, capital goods, alleged duty 2014-15 demand on captive use of intermediate goods, reversal of the amount on dispatch of by-products, duty on valuation and storage/ handling losses.

Income Tax Disputes in respect appeals pending AY 1996-97, 1997-98, before CIT (A). 1999-2000, 2008-09 and 2011-12.

Department''s Relief granted by CIT (A) for differences AY 1989-90 to 1991- appeals in computation, allowances of certain 92, 1993-94, 1998- Income Tax expenses and enhancement of rebate, etc. 99 and 2000-01 to 2009-10

Relief granted by Tribunal for differences in AY 1990-91 to 1994- computation, allowances of certain 95 and 1996-97 expenses and enhancement of rebate, etc.

Sub Total

Total

Name of Statue Amount Forum where dispute is Pending (Rs.in Crore)

Company''s appeals

Sales Tax Claims Deputy Commissioner, Joint 104.40 Commissioner, Commercial Tax Department, Tribunal, High Court and Supreme Court.

Central Excise Duty Central Excise & Service Tax 419.35 Appellate Tribunal, Commissioner (Appeals) and High Court / Supreme Court.

Income Tax Commissioner of Income Tax 370.88 (Appeals)

Department''s appeals Income Tax Tribunal / Set aside Assessing 609.71 Officer/ CIT (A)

High Court / Supreme Court 113.04

Sub Total 722.75

Total 1,617.38

(c) The amounts required to be transferred to investor education and protection fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within the prescribed time.

(viii) The Company does not have any accumulated losses as at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.

(ix) The Company has not taken any borrowings from banks, financial institutions or by way of debentures. Accordingly, the provisions of clause 3(ix) of the Order are not applicable to the Company.

(x) According to the information and explanations given to us and the records of the Company examined by us, the Company has not given any guarantees for loans taken by others from banks or financial institutions. Accordingly, the provisions of clause 3(x) of the Order are not applicable to the Company.

(xi) The Company has not taken any term loans during the year. Accordingly the provisions of clause 3(xi) of the Order are not applicable to the Company.

(xii) 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 LLP

Chartered Accountants

(Firm''s Registration No. 117366W/W-100018)

Jitendra Agarwal

Partner

(Membership No. 87104)

Place: Mumbai

Date : April 20, 2015


Mar 31, 2013

We have audited the accompanying financial statements of HINDUSTAN ZINC 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 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, 2013;

(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.

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 dealt with by this report, comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956, together with the early adoption by the Company of Accounting Standard (AS) 30 Financial Instruments, Recognition and Measurement effective April 1, 2007, and the consequential limited revisions as have been announced by the Institute of Chartered Accountants of India to certain Accounting Standards, as stated in Note 2(a) and 38.

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

1. Having regard to the nature of the Company''s business/ Activities/results during the year, clauses (x), (xii), (xiii), (xv), (xvi), (xviii), (xix), and (xx) of paragraph 4 of the Order are not applicable to the Company. In respect of the other clauses, we report as under:

2. In respect of its fixed Assets:

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

ii. Some of the fixed assets were physically verified during the year by the Management in accordance with a programme of verification, which in our opinion provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verification.

iii. The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.

3. In respect of its inventories:

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

ii. 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 Company and the nature of its business.

iii. 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.

4. 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.

5. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regards to purchases of inventory and fixed assets and the sale of goods. During the year, the Company did not have transactions in respect of sale of services. During the course of our audit, we have not observed any major weakness in such internal control system.

6. To the best of our knowledge and belief and according to the information and explanations given to us, there are no contracts or arrangements that were required to be entered in the Register maintained in pursuance of Section 301 of the Companies Act.

7. According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year. In respect of unclaimed deposits, the Company has complied with the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956.

8. In our opinion, the internal audit functions carried out during the year by an external agency appointed by the Management have been commensurate with the size of the Company and the nature of its business.

9. We have broadly reviewed the cost records 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 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 cost records with a view to determine whether they are accurate or complete.

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

i. The Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other material statutory dues applicable to it with the appropriate authorities.

ii. There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2013 for a period of more than six months from the date they became applicable.

iii. Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited as on March 31, 2013 on account of disputes are given below:

Name of Statute Nature of dues Amount (Rs. In Crores)

COMPANY''S APPEALS

A Sales Tax Claims Disputes in respect of sales tax 54.12 difference / classification and stock transfers treated as sales.

Sub Total (A) 54.12

B Central Admissibility of Modvat /Cenvat credit 92.03 Excise Duty on inputs, capital goods, alleged duty demand on captive use of intermediate goods, reversal of the amount on dispatch of by-products, duty on valuation and storage/ handling losses.

Sub Total (B) 92.03

C Income Tax Disputes in respect appeals pending 421.51 before Commissioner of Income Tax (Appeals).

Disputes in respect appeals pending 2.36 before High Court

Sub Total (C) 423.87

DEPARTMENT''S APPEALS

D Income Tax Relief granted by Commissioner of 446.82 Income Tax (Appeals) for differences in computation, allowances of certain expenses and enhancement of rebate, etc.

Relief granted by Tribunal for 52.78 differences in computation, allowances of certain expenses and enhancement of rebate, etc.

Sub Total (D) 499.60

Sub Total (E) = (C) (D) 923.47

Total (A) (B) (E) 1,069.62

Name of Statute Period to which the Forum where dispute is amount relates pending

Sales Tax Claims FY 1980-81 to 2010-11 Deputy Commissioner, Joint Commissioner, Commercial Tax Department, Tribunal and High Court.

Central Excise Duty FY 1985-86 to 2010-11 Central Excise & Service Tax Appellate Tribunal, Commissioner (Appeals) and High Court / Supreme Court.

Income Tax Ay 1996-97, 1997-98, Commissioner of Income 2006-07, 2007-08, 2009-10 Tax (Appeals) and 2010-11.

AY 1992-93 to 1994-95, High Court 1996-97, 1997-98 and 2003-04.

Income Tax AY 1989-90 to 1991-92, Tribunal / Set aside 1993-94 and 1996-97 to Assessing Officer/ 2009-10 Commissioner of Income Tax (Appeals)

AY 1990-91 to 1994-95 and High Court / Supreme 1996-97 Court

11. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not obtained any borrowing from financial institutions or by way of debentures.

12. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of shares, securities, debentures and other investments and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name.

13. In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have, prima facie, not been used during the year for long-term investment.

14. 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 Registration No. 117366W)

K. A. Katki

(Partner)

(Membership No. 038568)

Place: Mumbai

Date: April 25, 2013


Mar 31, 2012

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

2. We conducted our audit in accordance with generally accepted auditing standards in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We draw attention to Note 40 relating to long-term investment in equity shares of a power company being classified as an intangible asset (Note 10.B) and amortised. This treatment is in preference to requirements of Accounting Standard 30 'Financial Instruments: Recognition and Measurement', Accounting Standard 26 'Intangible Assets'; and Schedule XIV of the Companies Act, 1956. This has resulted in profit after tax being lower by Rs 3.16 Crores (FY2011: Rs 3.49 Crores), investments being lower by Rs 98.41 Crores (FY2011: Rs 98.41 Crores), fixed assets being higher by Rs 46.69 Crores (FY2011: Rs 51.36 Crores), deferred tax liability being lower by Rs 16.78 Crores (FY2011: Rs 15.27 Crores) and reserves and surplus being lower by Rs 34.94 Crores (FY2011: Rs 31.78 Crores).

4. 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.

5. Further to our comments in paragraph 3 and the Annexure referred to in paragraph 4 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 accounts 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 dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 except for Paragraph 4 above. Additionally, the Company has chosen to early adopt Accounting Standard 30, Financial Instruments: Recognition and Measurement arising from the Announcement of the Institute of Chartered Accountants of India on 29th March, 2008 as stated in Note 41.

e. in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2012;

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

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

6. On the basis of written representations received from the directors as on March 31, 2012 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 a director in terms of Section 274(1)(g) of the Companies Act, 1956.

1. In our opinion and according to the information and explanation given to us, the nature of the Company's business/ activities during the year are such that clauses (iii), (v), (vi), (x), (xii), (xiii), (xv), (xvi), (xviii), (xix), and (xx) of Companies (Auditors' Report) Order 2003, are not applicable to the Company. In respect of the other clauses, we report as under:

2. In respect of its fixed Assets:

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

ii. The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

iii. In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

3. In respect of its inventories:

i. As explained to us, the inventories were physically verified during the year by the management which is at reasonable intervals.

ii. 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 Company and the nature of its business.

iii. 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.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regards to purchases of inventory and fixed assets and the sale of goods. There are no sale of services. During the course of our audit, we have not observed any major weakness in such internal control system.

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

6. We have broadly reviewed the cost records maintained by the Company, including pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost 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, and the records of the Company examined by us:

i. The Company has been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues.

ii. Disputed sales tax, excise duty, and Income-tax dues aggregating Rs 66.03 Crores, Rs 61.91 Crores and Rs 670.06 Crores respectively, have not been deposited since the matters are pending with the relevant forum as per annexure 'A' attached.

8. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and financial institutions.

9. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. The Company has maintained proper records of transactions and contracts in respect of shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

10. In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long term investment.

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

Name of Statute Nature of dues Amount (Rs in Crores)

Company's appeals:

A Sales Tax Claims Disputes in respect of sales 66.03 tax rate difference / classification and stock transfers treated as sales.

Sub Total (a) 66.03

B Central Excise Duty Admissibility of Modvat / 61.91 Cenvat credit on inputs, capital goods, alleged duty demand on captive use of intermediate goods, reversal of the amount on dispatch of by-products,duty on valuation and storage/ handling losses.

Sub Total (b) 61.91

C Income Tax Disputes in respect appeals 165.84 pending before CIT(A).

Disputes in respect appeals 2.36 pending before High Court.

Sub Total (c) 168.20

Department's appeals:

Income Tax Relief granted by CIT (A) for 446.82 differences in computation, allowances of certain expenses and enhancement of rebate, etc

Relief granted by Tribunal 55.04 for differences in computation, allowances of certain expenses and enhancement of rebate, etc

Sub Total (d) 501.86

Sub Total (e) = (c) (d) 670.06

Total (a) (b) (e) 798.00

Name of Statute Period to which the Forum where dispute is amount relates pending

Company's appeals:

A Sales Tax Claims F.Y. 1980-81 to 2008-09 Dy Commissioner, Joint Commissioner, CTO, Tribunal and High Court.

B Central Excise Duty F.Y. 1985-86 to 2010-11 CESAT, Commissioner (Appeals) and High Court / Supreme Court.

C Income Tax A.Y. 1996-97, 1997-98, CIT(A) 2006-07, 2007-08 and 2009-10.

A.Y. 1992-93 to 1994-95, HC 1996-97, 1997-98 and 2003-04.

Department's appeals:

Income Tax A.Y. 1989-90 to 1991- Tribunal / Set Aside 92,1993-94, and 1996-97 AO/C(A) to 2009-10

A.Y. 1990-91 to 1994- 95 High Court / Supreme and 1996-97 Court

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No. 117366W)

Shyamak R. Tata

Partner

M. No. 38320

Place: Mumbai

Date: April 19, 2012


Mar 31, 2011

1. We have audited the attached balance sheet of Hindustan Zinc Limited (the Company) as at 31 March 2011, the profit and loss account and cash flow statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with generally accepted auditing standards in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. We draw attention to Note 15 on Schedule 18, relating to long-term investment in equity shares of a power Company being classified as an intangible asset (Schedule 4) and amortised. This treatment is in preference to requirements of Accounting Standard 30 Financial Instruments: Recognition and Measurement, Accounting Standard 26 Intangible Assets; and Schedule XIV of the Companies Act, 1956. This has resulted in profit after tax being lower by Rs. 3.49 Crores (2010: Rs. 3.41 Crores), investments being lower by Rs. 98.41 Crores (2010: Rs. 98.41 Crores), fixed assets being higher by Rs. 51.36 Crores (2010: Rs. 56.03 Crores), deferred tax liability being lower by Rs. 15.27 Crores (2010: Rs. 14.08 Crores) and reserves and surplus being lower by Rs. 31.78 Crores (2010: Rs. 28.30 Crores).

5. Further to our comments in the Annexure referred to in paragraph 3 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 accounts as required by law have been kept by the Company so far as it appears from our examination of those books;

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

d. in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956 except for Paragraph 4 above. Additionally, the Company has chosen to early adopt Accounting Standard 30, Financial Instruments: Recognition and Measurement arising from the Announcement of the Institute of Chartered Accountants of India on 29 March 2008 as stated in Note 16 on Schedule 18.

e. in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2011;

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

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

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

Annexure to the Auditors Report (Referred to in paragraph 3 of Auditors Report of even date)

1. In our opinion and according to the information and explanation given to us, the nature of the Companys business/activities during the year are such that clauses (iii), (v), (vi), (x), (xii), (xiii), (xv), (xvi), (xviii), (xix), and (xx) of Companies (Auditors Report) Order 2003, are not applicable to the Company. In respect of the other clauses, we report as under:

2. In respect of its fixed Assets:

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

ii. The fixed assets were physically verifed during the year by the Management in accordance with a regular programme of verifcation which, in our opinion, provides for physical verifcation of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verifcation.

iii. In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.

3. In respect of its inventories:

i. As explained to us, the inventories were physically verifed during the year by the management which is at reasonable intervals.

ii. In our opinion and according to the information and explanations given to us, the procedures of physical verifcation of inventories followed by the management were reasonable and adequate in relation to the size of Company and the nature of its business.

iii. 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 verifcation.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regards to purchases of inventory and fixed assets and the sale of goods. There are no sale of services. During the course of our audit, we have not observed any major weakness in such internal control system.

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

6. We have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of Zinc, Lead, Sulphuric Acid and generation of electricity, pursuant to the order made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956, and are of the opinion that prima facie the prescribed accounts and records have been maintained and being made up. We have, however, not made a detailed examination of the records with a view to determining whether they are accurate or complete.

7. According to the information and explanations given to us, and the records of the Company examined by us:

i. The Company has been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues.

ii. Disputed sales tax, excise duty, and Income-tax dues aggregating Rs. 21.24 Crores, Rs. 63.88 Crores and Rs. 561.08 Crores respectively, have not been deposited since the matters are pending with the relevant forum as per annexure A attached.

8. In our opinion and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks and fnancial institutions.

9. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures and other investments. The Company has maintained proper records of transactions and contracts in respect of shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the Company in its own name.

10. In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short- term basis have not been used during the year for long- term investment.

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

Amount Nature of statute Nature of dues (Rs. in Crores)

Companys appeals:

(a) Sales Tax Claim Disputes in respect of Sales Tax rate 21.24 difference/classification and stock transfers treated as sales for the financial year 1980-81 to 2009-10

(b) Central Excise Duty Admissibility of Modvat/Cenvat credit on 63.88 inputs, capital goods, alleged duty demand on captive use of intermediate goods, reversal of the amount on dispatch of by-products, duty on valuation and storage/handling losses, for the FY 1985-86 to FY 2009-10

(c) Income Tax Disputes in respect appeals pending 124.40 before CIT(A) for AY 1996-97 and AY 2008-09

Disputes in respect appeals pending 4.62 before Tribunal for AY 1998-99 to AY 2003-04 and AY 2006-07

Disputes in respect appeals pending before 25.00 High Court for AY 1992-93 to AY 1994-95, AY 1996-97 AY 1997-98 and AY 2003-04

Sub Total (a): 154.02

Departments appeals:

Income Tax Relief granted by CIT (A) for AY 1989-90 331.69 to AY 1991-92, AY 1996-97 to AY 2009-10 for differences in computation, allowances of certain expenses and enhancement of rebate, etc. Relief granted by Tribunal for AY 1990-91 75.37 to AY 1994-95 & AY 1996-97 for differences in computation, allowances of certain expenses and enhancement of rebate, etc.

Sub Total (b): 407.06

Sub Total (a) + (b): 561.08

TOTAL 646.21

Name of statue Forum pending at

Companys appeals:

(a) Sales Tax Claim Dy Commissioner, Joint Commissioner, CTO, Tribunal and High Court.

(b) Central Excise Duty CESAT, Commissioner (Appeals) and High Court/ Supreme Court

(c) Income Tax CIT(A) Tribunal High Court

Departments appeals:

Income Tax Tribunal/Assessing Officer High Court/Supreme Court

TOTAL



For Deloitte Haskins & Sells Chartered Accountants (Registration No. 117366W)

Shyamak R. Tata

Partner

M. No. 38320

Place : Mumbai Date : April 21, 2011


Mar 31, 2010

1. We have audited the attached balance sheet of Hindustan Zinc Limited (the company) as at March 31,2010, the profit and loss account and cash flow statement of the Company for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with generally accepted auditing standards in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. We draw attention to Note 17 on Schedule 18, relating to long-term investment in equity shares of a power company being classified as an intangible asset (Schedule 4) and amortised. This treatment is in preference to requirements of Accounting Standard 30 Financial Instruments: Recognition and Measurement, Accounting Standard 26 Intangible Assets; and Schedule XIV of the Companies Act, 1956. This has resulted in profit aftertax being lower by Rs 3.41 crores (2009: Rs 3.08 crores), investments being lower by Rs 98.41 crores (2009: Rs 98.41 crores), fixed assets being higher by Rs 56.03 crores (2009: Rs 60.70 crores), deferred tax liability being lower by Rs 14.08 crores (2009: Rs 12.82 crores) and reserves and surplus being lower by Rs 28.30 crores (2009: Rs 24.89 crores).

5. Further to our comments in the Annexure referred to in paragraph 3 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 accounts as required by law have been kept by the Company so far as it appears from our examination of those books;

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

d. in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 except for Paragraph 4 above. Additionally, the Company has chosen to early adopt Accounting Standard 30, Financial Instruments: Recognition and Measurement arising from the Announcement of the Institute of Chartered Accountants of India on 29th March 2008 as stated in Note 18 on Schedule 18

e. in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i. in the case of the Balance Sheet, of the state of affairs of the Company as at March 31,2010;

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

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

6. On the basis of written representations received from the

directors as on March 31,2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on March 31,2010 from being appointed as a director in terms of Section 274(l)(g) of the Companies Act, 1956.

Annexure to the Auditors Report

(Referred to in paragraph 3 of Auditors Report of even date)

1. In our opinion and according to the information and explanation given to us, the nature of the Companys business/activities during the year are such that clauses, (iii), (v), (vi), (x), (xii), (xiii), (xv), (xvi), (xviii), (xix), and (xx) of Companies (Auditors Report) Order 2003, are not applicable to the Company. In respect of the other clauses, we report as under:

2. In respect of its fixed Assets:

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

ii. The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.

iii. In our opinion and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed off by the Company during the year.

3. In respect of its inventories:

i. As explained to us, the inventories were physically verified during the year by the management which is at reasonable intervals.

ii. 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 Company and the nature of its business.

iii. 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.

4. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and nature of its business with regards to purchases of inventory andfixed assets and the sale of goods. There are no sale of services. During the course of our audit, we have not observed any major weakness in such internal control system.

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

6. We have broadly reviewed the books of account and records maintained by the Company relating to the manufacture of Zinc, Lead and Sulphuric Acid, pursuant to the order made by the Central Government for the maintenance of cost records under Section 209(1) (d) of the Companies Act, 1956, and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have, however, not madea detailed examination of the records with a view to determining whether they are accurate or complete.

7. According to the information and explanations given to us, and the records of the Company examined by us:

i. The Company has generally been regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Income-tax, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and any other material statutory dues.

ii. Disputed sales tax, excise duty, and Income-tax dues aggregating to Rs 21.21 crores, Rs 43.90 crores and Rs 389.02 crores respectively, have not been deposited since the matters are pending with the relevant forum as per annexure A attached.

8. In our opinion and according to the information and explanations given to us,the Company has not defaulted in repayment of dues to banks and financial institutions.

9. In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in shares, securities, debentures & other investments. The company has maintained proper records of transactions and contracts in respect of shares, securities, debentures and other investments and timely entries have been made therein. All shares, securities, debentures and other investments have been held by the company in its own name.

10. In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet, we report that funds raised on short-term basis have not been used during the year for long term investment.

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

For Deloitte Haskins & Sells

Chartered Accountants

(Registration No. 117366W)

Shyamak R. Tata

Partner

M. No. 38320

Place: Mumbai

Date: April 21,2010





 
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