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Auditor Report of HSIL Ltd.

Mar 31, 2017

To the Members of HSIL Limited

Report on the Standalone Financial Statements

1. We have audited the accompanying standalone financial statements of HSIL Limited (the ''Company''), which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial

Statements

2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the ''Act'') with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (''Ind AS'') specified under Section 133 of the Act. 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 standalone 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 standalone financial statements based on our audit.

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

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether these standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls 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. 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.

7. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in paragraph 10 of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on these standalone financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors on the separate financial statements of the Demerged Undertaking, the aforesaid standalone 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 including Ind AS specified under Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31 March 2017, its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Emphasis of Matter

9. We draw attention to Note 57(b) to the standalone financial statements regarding the utilization of the Business Reconstruction Reserve (‘BRR’) created in accordance with a scheme of arrangement (the ‘Scheme’) approved by the Hon’ble Calcutta High Court. The Scheme provides that the Board of Directors of the Company can utilize the BRR, inter alia, to recognize write off of old non-moving and slow moving inventory. In accordance with the Scheme, the Board of Directors of the Company have credited an amount of Rs.838.63 lakh to the statement of profit and loss towards write off of old non-moving and slow moving inventory. The applicable accounting standards and accounting principles generally accepted in India do not provide for credit of amounts released from reserves to the statement of profit and loss. Had the accounting principles generally accepted in India been followed, the expense in the statement of profit and loss would have been higher by Rs.838.63 lakh and the profit after tax (including other comprehensive income) and the balance of other equity would have been lower by Rs.838.63 lakh. Our audit opinion is not qualified in the respect of this matter.

Other Matters

10. We draw attention to Note 56 to the financial statements of the Company pertaining to the demerger of the retail business undertaking of Hindware Home Retail Private Limited (‘Demerged Undertaking’) into the Company. We did not audit the financial statements of the Demerged Undertaking, whose financial statements reflect total assets of Rs.4,916.75 lakh and net assets of Rs.938.52 lakh as at 31 March 2017, total revenues of Rs.9,592.68 lakh and net cash outflows amounting to Rs.40.72 lakh for the year ended on that date. The financial statements related to the Demerged Undertaking have been audited by another firm of chartered accountants whose report has been furnished to us by the management and our opinion on standalone financial statements, in so far as it relates to the amounts and disclosures included in respect of this Demerged Undertaking, and our report in terms on sub section (3) of Section 143 of the Act, in so far as it relates to the aforesaid Demerged Undertaking, is based solely on the reports of the other auditor.

Our opinion above on the standalone financial statements and our report on other legal and regulatory requirements below, are not modified in respect of the above matters with respect to our reliance on the work done by and the reports of the other auditor.

11. The Company had prepared separate sets of statutory financial statements for the year ended 31 March 2016 and 31 March 2015 in accordance with the Accounting Standards prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) on which we issued auditor’s reports to the shareholders of the Company dated 23 May 2016 and 18 May 2015 respectively. These financial statements have been adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have also been audited by us. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

12. As required by the Companies (Auditor''s Report) Order, 2016 (the ''Order'') issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I, a statement on the matters specified in paragraphs 3 and 4 of the Order.

13. Further to cur comments in Annexure I, based on cur audit and on the consideration of the report of the other auditor on the separate financial statements of the Demerged Undertaking, 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 cur knowledge and belief were necessary for the purpose of cur audit,

b) in our opinion, proper books of account as required by law have been kept by the Company sc far as it appears from cur examination of these books,

c) the standalones financial statements dealt with by this report are in agreement with the books of account,

d) in cur opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act,

e) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors of the Company are disqualified as on 31 March 2017 from being appointed as a director in terms of Section 164(2) of the Act,

f) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the Demerged Undertaking and the operating effectiveness of such controls, refer to our separate report in Annexure II, and

g) with respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the report of the other auditor on the separate financial statements of the Demerged Undertaking

i. the Company, as detailed in Note 50 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position,

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses, and

iii. there has been no delay in transferring amounts, required to be transferred, to the

Investor Education and Protection Fund by the Company,

iv. the Company has provided disclosures in Note 58 to the financial statements regarding holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016. Based on the audit procedures performed and taking into consideration the information and explanations given to us, in our opinion, the total receipts, total payments and total amount deposited in banks are in accordance with the books of account maintained by the Company. However, in the absence of sufficient appropriate audit evidence, we are unable to comment upon the appropriateness of classification between Specified Bank Notes and other denomination notes of ''Permitted receipts'', ''Non-permitted receipts'', ''Permitted payments'' and ''Amount deposited in banks'' as disclosed under such Note.

Annexure I

Annexure I to the Independent Auditor''s Report of even date to the members of HSIL Limited, on the standalone financial statements for the year ended 31 March 2017

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit and based on the report of the other auditor of the Demerged Undertaking, and to the best of our knowledge and belief, we report that

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

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are included under the head ''Property, plant and equipment'') are held in the name of the Company.

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit. No material discrepancies were noticed on the aforesaid verification.

(iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees and security.

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) The Central Government has not specified maintenance of cost records under sub-section (1) of Section 148 of the Act, in respect of Company''s products and services. Accordingly, the provisions of clause 3(vi) of the Order are not applicable.

(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, to the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of income-tax, sales-tax, service-tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows

Statement of Disputed Dues

Name of the statute

Nature of dues

Amount (Rs. lakh)

Amount paid under protest (Rs. lakh)

Period to which the amount relates

Forum where dispute is pending

The Central Excise Act, 1944

Central Excise

27.81

-

FY 1987-89

Commissioner of Central Excise, Rohtak

The Central Excise Act, 1944

Central Excise

103.98

10.74

FY 2005-06

Customs, Excise and Service tax Appellate Tribunal

The Central Excise Act, 1944

Central Excise

166.12

40.00

FY 2009-10

Customs, Excise and Service tax Appellate Tribunal

The Central Excise Act, 1944

Central Excise

53.29

3.81

FY 2005-07

Customs, Excise and Service tax Appellate Tribunal

The Central Excise Act, 1944

Central excise

6.22

-

FY 2008-10

Commissioner, Mangalore

The Central Excise Act, 1944

Central excise

7.98

-

FY 2004-05 To 2005-06

Assistant Commissioner of Central Excise, Navanagar

The Central Excise Act, 1944

Central excise

8.19

-

January 2015 to December 2015

Assistant Commissioner of Central Excise, Hyderabad

Delhi Sales Tax Act, 1975

Sales tax

232.08

37.25

FY 2004-05 to 2011-12

Commissioner (Appeals), Sales-tax.

Karnataka Value Added Tax Act

Sales tax

5.93

-

FY 2012-13

Commissioner (Appeals), Sales-tax.

Andhra Pradesh Value Added Tax Act

Sales tax

6.94

3.19

FY 2011-12 and 2012-13

Appellate Deputy Commissioner Rural Division, Hyderabad.

Finance Act, 1994

Service tax

3.02

1.40

March 2006 to September 2006

Customs, Excise and Service tax Appellate Tribunal, Bangalore

Finance Act, 1994

Service tax

2.57

2.57

July 2005 to March 2006

Customs, Excise and Service tax Appellate Tribunal, Bangalore

Finance Act, 1994

Service tax

77''77

40.20

FY 2010-11 and 2011-12

The Hon''ble Supreme Court of India

Income-tax Act, 1961

Income-tax

3.84

-

Assessment year 2011-12

Commissioner Income-tax (Appeals), Calcutta


(viii) The Company has not defaulted in repayment of loans or borrowings to any bank or financial institution or government during the year. The Company did not have any outstanding debentures during the year.

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements eto., as required by the applicable Ind AS.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

Independent Auditor''s report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (the ''Act'')

1. In conjunction with cur audit of the standalones financial statements of HSIL Limited (the ''Company''), as of and for the year ended 31 March 2017, we have audited the internal financial controls over financial reporting (IFCOFR) of the Company as of that date.

Management''s Responsibility for Internal Financial Controls

2. The Company’s Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the

Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the ‘Guidance Note’) issued by the Institute of Chartered Accountants of India (‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the company’s business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors'' Responsibility

3. Our responsibility is to express an opinion on the Company’s IFCOFR based on our audit. We conducted our audit in accordance with the Standards on Auditing, issued by the ICAI and deemed to be prescribed under section 143(10) of the Act, to the extent applicable to an audit of IFCOFR and the Guidance Note issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate IFCOFR were established and maintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCOFR and their operating effectiveness. Our audit of IFCOFR included obtaining an understanding of IFCOFR, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.

5. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditor in terms of their report referred to in the Other Matter paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Company’s IFCOFR.

Meaning of Internal Financial Controls over Financial

Reporting

6. A company’s IFCOFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s IFCOFR includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over

Financial Reporting

7. Because of the inherent limitations of IFCOFR, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the IFCOFR to future periods are subject to the risk that IFCOFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2017, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by ICAI.

Other Matter

9. We did not audit the IFCOFR of the Demerged Undertaking, whose financial statements reflect total assets of Rs.4,916.75 lakh as at 31 March 2017, total revenues of Rs.9,592.68 lakh and net cash out flows amounting to Rs.40.72 lakh for the year ended on that date. Our report on the adequacy and operating effectiveness of the IFCOFR for the Company under Section 143(3)(i) of the Act in so far as it relates to the IFCOFR of the Demerged Undertaking is solely based on the report of the auditor of the Demerger Undertaking. Our opinion is not modified in respect of the above matter with respect to our reliance on the work done by and the reports of the other auditors.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm''s Registration No.001076N/N500013

per Lalit Kumar

Place Gurugram Partner

Date 18 May 2017 Membership No.095256


Mar 31, 2016

1. We have audited the accompanying standalone financial statements of HSIL Limited (the ''Company''), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information.

Management''s Responsibility for the Standalone Financial Statements

2. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the ''Act'') with respect to the preparation of these 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 (as amended). This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; 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.

Auditor''s Responsibility

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

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

5. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

6. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial controls 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. 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.

7. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

8. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 31 March 2016, its profit and its cash flows for the year ended on that date.

Emphasis of Matter

9. We draw attention to Note 49 to the financial statements regarding the utilisation of the Business Reconstruction Reserve (''BRR'') created in accordance with a scheme of arrangement (the ''Scheme'') approved by the Hon''ble Calcutta High Court. The Scheme provides that the Board of Directors of the Company can utilise the BRR, inter alia, to recognize diminution in the value of investment. In terms of the Scheme, the Board of Directors of the Company have credited an amount of Rs. 1,643.46 lacs to the statement of profit and loss towards diminution in the carrying value of a long-term investment in one of its overseas subsidiaries. The applicable accounting standards and accounting principles generally accepted in India do not provide for credit of amounts released from reserves to the statement of profit and loss. Had the accounting principles generally accepted in India been followed, the exceptional item of expense in the statement of profit and loss would have been higher by Rs. 1,643.46 lacs and the profit after tax and the balance of surplus in the statement of profit and loss would have been lower by Rs. 1,643.46 lacs. Our audit opinion is not qualified in the respect of this matter

Report on Other Legal and Regulatory Requirements

10. As required by the Companies (Auditor''s Report) Order, 2016 (the ''Order'') issued by the Central Government of India in terms of Section 143(11) of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

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

a. we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c. the standalone financial statements dealt with by this report are in agreement with the books of account;

d. in our opinion, read with paragraph 9 above, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);

e. on the basis of the written representations received from the directors as on 31 March 2016 and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 from being appointed as a director in terms of Section 164(2) of the Act;

f. we have also audited the internal financial controls over financial reporting (IFCOFR) of the Company as of 31 March 2016 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 23 May 2016 as per Annexure II expressed an unqualified opinion; and

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

i. as detailed in Note 31 to the standalone financial statements, the Company has disclosed the impact of pending litigations on its standalone financial position;

ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

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

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification.

(c) The title deeds of all the immovable properties (which are included under the head ''fixed assets'') are held in the name of the Company.

(ii) In our opinion, the management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit. No material discrepancies were noticed on the aforesaid verification.

(iii) The Company has granted unsecured loans to a company covered in the register maintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of grant of such loans are not, prima facie, prejudicial to the Company''s interest.

(b) the schedule of repayment of principal has been stipulated wherein the principal amounts are repayable on demand and since the repayment of such loans has not been demanded, in our opinion, repayment of the principal amount is regular;

(c) there is no overdue amount in respect of loans granted to such companies, firms, LLPs or other parties.

(iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees, and security

(v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

(vi) The Central Government has not specified maintenance of cost records under sub-section (1) of Section 148 of the Act, in respect of Company''s products and services. Accordingly, the provisions of clause 3(vi) of the Order are not applicable.

(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, to the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of income-tax, sales-tax, service tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows:

Statement of Disputed Dues

Name of the statute Nature of Amount Amount paid period to which the Forum where dispute is dues (Rs. lacs) under protest amount relates pending (Rs. lacs)

The Central Excise Act, Central excise 4.98 2.50 Financial year (''FY'') Customs, Excise and Service 1944 1990-91 tax Appellate Tribunal

The Central Excise Act, Central excise 27.81 - FY 1987-89 Commissioner of Central 1944 Excise, Rohtak

The Central Excise Act, Central excise 103.98 10.74 FY 2005-06 Customs, Excise and Service 1944 tax Appellate Tribunal

The Central Excise Act, Central excise 166.12 40.00 FY 2009-10 Customs, Excise and Service 1944 tax Appellate Tribunal

The Central Excise Act, Central excise 53.26 3.81 FY 2005-07 Customs, Excise and Service 1944 tax Appellate Tribunal

Name of the statute Nature of Amount Amount paid period to which the Forum where dispute is dues (Rs. lacs) under protest amount relates pending (Rs. lacs)

The Central Excise Act, Central excise 6.20 - FY 2008-10 Commissioner, Manglore 1944

The Central Excise Act, Central excise 7.98 - FY 2004-05 To 2005-06 Assistant Commissioner of 1944 Central Excise, Navanagar

Delhi Sales Tax Act, 1975 Sales tax 245.82 37.25 FY 2004-05 to 2011-12 Commissioner (Appeals), Sales-tax.

Andhra Pradesh Value Sales tax 1.03 - FY 2012-13 and 2013-14 Appellate Deputy Added Tax Act Commissioner Rural Division, Hyderabad.

Andhra Pradesh Value Sales Tax 6.94 3.19 FY 2011-12 and 2012-13 Appellate Deputy Added Tax Act Commissioner Rural Division, Hyderabad.

Finance Act, 1994 Service tax 3.02 1.40 March 2006 to September Customs, Excise and Service 2006 tax Appellate Tribunal, Bangalore

Finance Act, 1994 Service tax 2.57 2.57 July 2005 to March 2006 Customs, Excise and Service tax Appellate Tribunal, Bangalore

Income-tax Act, 1961 Income- tax 3.84 - Assessment year 2011-12 Commissioner Income-tax (Appeals), Calcutta

(viii) The Company has not defaulted in repayment of loans or borrowings to any bank or financial institution or government during the year. The Company did not have any outstanding debentures during the year.

(ix) The Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purposes for which the loans were obtained.

(x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the company in accordance with the requisite approvals mandated by the provisions of section 197 of the Act read with Schedule V to the Act.

(xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

(xiii) In our opinion, all transactions with the related parties are in compliance with Sections 177 and 188 of Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable accounting standards.

(xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

(xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.



For Walker Chandiok & Co LLp

Chartered Accountants

Firm''s Registration No.: 001076N/N500013



per Lalit Kumar

place : Gurgaon Partner

date : 23 May 2016 Membership No.: 095256


Mar 31, 2015

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

MANAGEMENT''S RESPONSIBILITY FOR THE STANDALONE FINANCIAL STATEMENTS

2 The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the ''Act'') with respect to the preparation of these 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 (as amended) This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act; safeguarding the assets of the Company; 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

AUDITOR''S RESPONSIBILITY

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

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

5 We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement

6 An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error In making those risk assessments, the auditor considers internal financial controls 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

7 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements

OPINION

8 In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone 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 31 March 2015, its profit and its cash flows for the year ended on that date

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

9 As required by the Companies (Auditor''s Report) Order, 2015 (the ''Order'') issued by the Central Government of India in terms of Section 143(1 1) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order

10 AS REQUIRED BY SECTION 143(3) OF THE ACT,WE REPORT THAT:

a we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c the standalone financial statements dealt with by this report are in agreement with the books of account;

d in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended);

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

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 as detailed in Note 32 to the standalone financial statements, the Company has disclosed the impact of pending litigations on its standalone financial position;

ii the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses; and

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 AUDITOR''S REPORT

of even date to the members of HSIL Limited, on the financial statements for the year ended 31 March 2015

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets No material discrepancies were noticed on such verification

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year, except for goods in transit

(b) 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 no material discrepancies between physical inventory and book records were noticed on physical verification

(iii) The Company has granted unsecured loans to a company covered in the register maintained under Section 189 of the Act; and with respect to the same:

(a) receipt of the principal amount and the interest is regular; and

(b) there is no overdue amount in respect of loans granted to such a company

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas

(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended) Accordingly, the provisions of clause 3(v) of the Order are not applicable

(vi) We have broadly reviewed the books of account maintained by the Companyn pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company''s products and services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete

(vii) (a) The Company is regular in depositing undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, with the appropriate authorities Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable

(b) The dues outstanding in respect of income-tax, sales-tax, wealth tax, service tax, duty of customs, duty of excise, value added tax and cess on account of any dispute, are as follows:

Name of the statute Nature of Amount Amount paid dues (lacs) under protest (lacs)

The Central Excise Act, Central excise 4.98 2.50 1944

The Central Excise Act, Central excise 27.81 - 1944

The Central Excise Act, Central excise 103.98 10.74 1944

The Central Excise Act, Central excise 166.12 40.00 1944

The Central Excise Act, Central excise 53.26 3.81 1944

The Central Excise Act, Central excise 6.20 - 1944

The Central Excise Act, Central excise 1.19 - 1944

The Central Excise Act, Central excise 2.61 - 1944

The Central Excise Act, Central excise 7.98 - 1944

Delhi Sales Tax Act, Sales tax 253.35 37.25 1975

Andhra Pradesh Value Added Sales tax 1.03 - Tax Act

Finance Act, 1994 Service tax 3.02 1.40



Finance Act, 1994 Service tax 2.57 2.57



Andhra Pradesh Value Added Sales Tax 6.94 3.19 Tax Act

Income-tax Act, 1961 Income-tax 3.84 -

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

The Central Excise Act, Financial year Customs, Excise and 1944 Service tax (''FY'') 1990-91 Appellate Tribunal

The Central Excise Act, FY 1987-89 Commissioner of Central 1944 Excise, Rohtak

The Central Excise Act, FY 2005-06 Customs, Excise and 1944 Service tax Appellate Tribunal

The Central Excise Act, FY 2009-10 Customs, Excise and 1944 Service tax Appellate Tribunal

The Central Excise Act, FY 2005-07 Customs, Excise and 1944 Service tax Appellate Tribunal

The Central Excise Act, FY 2008-10 Commissioner, Manglore 1944

The Central Excise Act, September 2004 Commissioner, Belgaum 1944 to December 2004

The Central Excise Act, FY 2009-10 Commissioner of Excise 1944 Appeals, Mysore

The Central Excise Act, FY 2004-05 Assistant Commissioner of 1944 To 2005-06 Central Excise, Navanagar

Delhi Sales Tax Act, FY 2004-05 Commissioner (Appeals), 1975 to 2011-12 Sales- tax

Andhra Pradesh Value FY 2012-13 and Appellate Deputy Commissioner Added Tax Act 2013-14 Rural Division, Hyderabad

Finance Act, 1994 March 2006 to Customs, Excise and Service tax

September 2006 Appellate Tribunal, Bangalor

Finance Act, 1994 July 2005 to Customs, Excise and Service tax March 2006 Appellate Tribunal, Bangalore

Andhra Pradesh Value FY 2011-12 and Appellate Deputy Commissioner Added Tax Act 2012-13 Rural Division, Hyderabad

Income-tax Act, 1961 Assessment year Commissioner Income-tax 2011-12 (Appeals), Calculata

(c) The Company has transferred the amount required to be transferred to the investor education and protection fund in accordance with the relevant provisions of the Companies Act, l956 (l of l956) and rules made thereunder within the specified time

(viii) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year

(ix) The Company has not defaulted in repayment of dues to any bank during the year The Company did not have any outstanding debentures or dues to financial institution during the year

(x) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company

(xi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained

(xii) No fraud on or by the Company has been noticed or reported during the period covered by our audit

For Walker Chandiok & Co LLP

(Formerly Walker, Chandiok & Co) Chartered Accountants Firm''s Registration No : 00I076N/N5000I3

per Lalit Kumar Place : Gurgaon Partner Date : 18 May 2015 Membership No : 095256


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

2. 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 the Accounting Standards notified under the Companies Act, 1956 (the ''Act'') read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013. 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

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 auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers 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 Company''s internal control. 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 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 31 March 2014;

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

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

Report on Other Legal and Regulatory Require- ments

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 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 purpose of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the financial statements dealt with by this report are in agreement with the books of account;

d. in our opinion, the financial statements comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013; and

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

ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT

of even date to the members of HSIL Limited on the financial statements for the year ended 31 March 2014 Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year, except for goods-in-transit.

(b) 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 no material discrepancies between physical inventory and book records were noticed on physical verification.

(iii) (a) The Company has granted unsecured loan to one party covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year is Rs. 500 lacs and the year-end balance is Rs. Nil.

(b) In our opinion, the rate of interest and other terms and conditions of such loans are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans granted, receipt of the principal amount and the interest is regular.

(d) There is no overdue amount in respect of loans granted to such company.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act in respect of Company''s products/services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year- end for a period of more than six months from the date they become payable.

b) The dues outstanding in respect of sales tax, income-tax, custom duty, wealth tax, excise duty, cess on account of any dispute, are as follows:

Name of the statute Nature of dues Amount (Rs. in lacs) The Central Excise Act, 1944 Duty on captive 5.00 consumption of plaster of paris

The Central Excise Act, 1944 Duty on cisterns cleared 27.80 with fittings

The Central Excise Act, 1944 Duty on C.I boring/brass/ 103.98 copper boring/ capital goods scrap/waste paper/waste shrink/ stretch film

The Central Excise Act, 1944 Duty on Structural steel 166.12

Delhi Sales Tax Act, 1975 Sales tax demand due 253.35 to non-submission of statutory forms

APVAT Act Availment of credit on 11.36 value added tax for purchase of plant related items

Finance Act, 1994 Availment of cenvat 3.33 credit on service tax for outward freight

APVAT Act Availment of credit on 6.94 value added tax for purchase of LPG

Entry Tax Act Entry tax on electrical 24.20 panels and other items

Income Tax Act, 1961 Demand u/s 143(3) 62.65

The Central Excise Act,1944 Clearance of pet bottles 53.26 from the manufacturing plant without proper invoice and payment of excise duty

The Central Excise Act, 1944 Non-payment of service 4.72 tax on good transport agency service.

Name of the statute Amount paid Period to under protest which the (Rs. in lacs) amount relates

The Central Excise Act, 1944 2.50 FY 1990 - 91

The Central Excise Act, 1944 - FY 1987 - 89

The Central Excise Act, 1944 10.74 FY 2005-06

The Central Excise Act, 1944 40.00 FY 2009-10

Delhi Sales Tax Act, 1975 37.25 FY 2004-05 to 2011-12

APVAT Act - FY 2011-12 and 2012-13

Finance Act, 1994 3.33 FY 2004-05 to FY 2006 -07

APVAT Act 3.19 FY 2011-12 and 2012-13

Entry Tax Act 12.66 FY 2013-14

Income Tax Act, 1961 - AY 2011-12

The Central Excise Act,1944 3.81 FY 2006-07

The Central Excise Act, 1944 - FY 1999-2000 and FY 2005- 08

Name of the statute Forum where dispute is pending

The Central Excise Act, 1944 Customs, Excise and Service tax Appellate

The Central Excise Act, 1944 Commissioner of Central Excise, Rohtak

The Central Excise Act, 1944 Customs, Excise and Service tax Appellate Tribunal.

The Central Excise Act, 1944 Customs, Excise and Service tax Appellate Tribunal.

Delhi Sales Tax Act, 1975 Commissioner (Appeals), sales tax.

APVAT Act Appellate Deputy Commissioner Rural Division, Hyderabad.

Finance Act, 1994 Customs, Excise and Service tax Appellate Tribunal

APVAT Act Appellate Deputy Commissioner Rural Division, Hyderabad.

Entry Tax Act Rajasthan High Court.

Income Tax Act, 1961 Commissioner Income Tax (Appeals)

The Central Excise Act,1944 Customs, Excise and Service tax Appellate Tribunal

The Central Excise Act, 1944 Customs, Excise and Service tax Appellate Tribunal

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) The Company has not defaulted in repayment of dues to any bank or financial institution during the year. The Company did not have any outstanding debentures during the year.

(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. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

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

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xvii)In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker Chandiok & Co LLP (formerly Walker, Chandiok & Co) Chartered Accountants Firm Registration No.: 001076N

per Atul Seksaria

Place: Gurgaon Partner Date: 29 May 2014 Membership No.: 086370


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

2. 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 the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' 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 auditors'' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers 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 suficient 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:

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

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

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

Report on Other Legal and Regulatory Requirements

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 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 purpose of our audit;

b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. the financial statements dealt with by this report are in agreement with the books of account;

d. in our opinion, the financial statements comply with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Act; and

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

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed of during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) 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 no material discrepancies were noticed on physical verification.

(iii) (a) The Company has granted unsecured loans to one party covered in the register maintained under Section 301 of the Act. The maximum amount outstanding during the year is Rs. 925 lacs and the year-end balance is Rs. 725 lacs.

(b) In our opinion, the rate of interest and other terms and conditions of such loans are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans granted, the interest and principal amounts are repayable on demand and since the repayment of such loans has not been demanded, in our opinion, repayment of the interest and principal amount is regular.

(d) There is no overdue amount in respect of loans granted to such companies, firms or other parties.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Act in respect of Company''s products / services and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. However, we have not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax, excise duty, cess on account of any dispute, are as follows:

Name of the statute Nature of dues Amount Rs. in lacs

The Central Excise Act,1944 Duty on captive 5.00 consumption of plaster of paris

The Central Excise Act, 1944 Duty on cisterns cleared 27.80 with fittings

The Central Excise Act,1944 Duty on C.I boring / brass 103.98 / copper boring / capital goods scrap / waste paper / waste shrink / stretch film

The Central Excise Act, 1944 Duty on Structural steel 166.12

Delhi Sales Tax Act, 1975 Sales tax demand due 114.32 to non-submission of statutory forms

Income Tax Act, 1961 Excess claim of 283.60 depreciation on Glass Furnace

APVAT Act Duty on inter-unit transfer 33.72 of bottles

Finance Act, 1994 Availment of cenvat credit 3.33 on Service Tax for outward freight

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

The Central Excise Act,1944 FY 1990 - 91 Customs, Excise and Service tax Appellate Tribunal. Out of this, Rs. 2.50 lacs has been paid under protest

The Central Excise Act,1944 FY 1987 - 89 Commissioner of Central Excise, Rohtak

The Central Excise Act,1944 FY 2005-06 Commissioner of Customs & Central Excise (Appeals). Out of this demand, Rs. 10.74 lacs has been deposited by the Company under protest.

The Central Excise Act,1944 FY 2009-10 Commissioner of Customs & Central Excise (Appeals). Out of this demand, Rs. 40.00 lacs have been deposited by the Company under protest.

The Central Excise Act,1944 FY 1998-99 to Commissioner (Appeals), sales 2009-10 tax. Out of this demand, Rs. 36.37 lacs has been deposited by the Company and assessment for the year

The Central Excise Act,1944 1998-99 to 2004-05 involving disputed tax of Rs. 77.95 lacs has been remanded back to the Assessing Oficer.

The Central Excise Act,1944 AY 2009-10 Commissioner Income Tax (Appeals) Out of a total demand, Rs. 283.60 lacs, the Company has deposited Rs. 225 lacs against such demand.

The Central Excise Act,1944 FY 2009-10 and Additional Commissioner of 2010-11 Commercial taxes - Legal. Out of this demand, Rs. 16.86 lacs have been deposited by the Company under protest.

The Central Excise Act,1944 FY 2004-05 to FY Customs, Excise and Service tax 2006 -07 Appellate Tribunal.

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) The Company has not defaulted in repayment of dues to any bank or financial institution during the year. The Company did not have any outstanding debentures during the year.

(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. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

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

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co

Chartered Accountants

Firm Registration No.: 001076N

per Atul Seksaria

Place: Gurgaon Partner

Date: 24 May 2013 Membership No.: 086370


Mar 31, 2012

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

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

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

4. Without qualifying our opinion, we draw attention to Note 49 to the financial statements regarding the scheme of arrangement ('the scheme'), approved by Hon'ble Calcutta High Court. In terms of the scheme, the Company has revalued only a portion of its freehold land by crediting the resulting gain of Rs. 22,500 lacs to the Business Reconstruction Reserve Account ("the BRR account"). The applicable accounting standards and generally accepted accounting principles do not provide for revaluation of part of a class of asset. However, the Company has followed the accounting treatment as prescribed under the scheme approved by the Hon'ble High Court. Had the Company followed the generally accepted accounting principles, freehold land and reserves as on 31 March 2012 would have been lower by Rs. 22,500 lacs.

5. Further to our comments in the Annexure referred to above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) The financial statements dealt with by this report are in agreement with the books of account;

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

(e) In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub- section (3C) of Section 211 of the Act and 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, in the case of:

(i) The Balance Sheet, of the state of affairs of the Company as at 31 March 2012;

(ii) The Statement of Profit and Loss, of the profit for the year ended on that date; and

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

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The Company has a regular program of physical verification of its fixed assets under which fixed assets are verified in a phased manner over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) 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 no material discrepancies were noticed on physical verification.

(iii) (a) The Company has granted unsecured loans to two parties covered in the register maintained under Section 301 of the Act. the maximum amount outstanding during the year is Rs. 1,500 lacs and the year-end balance is Rs. 900 lacs.

(b) In our opinion, the rate of interest and other terms and conditions of such loans are not, prima facie, prejudicial to the interest of the Company.

(c) In respect of loans granted, the interest and principal amounts are repayable on demand and since the repayment of such loans has not been demanded, in our opinion, repayment of the interest and principal amount is regular.

(d) There is no overdue amount in respect of loans granted to such companies, firms or other parties.

(e) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58a and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the order are not applicable.

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

(viii) 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 maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) The Company is regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of sales-tax, income-tax, custom duty, wealth-tax, excise duty, cess on account of any dispute, are as follows:

Name of the Nature of dues Amount statute (Rs. in lacs)

The Central Duty on captive 5.00 Excise Act,1944 consumption of plaster of paris

The Central Duty on cisterns 27.80 Excise Act,1944 cleared with fittings

The Central Duty on C.I boring/ 103.98 Excise Act,1944 brass / copper boring / capital goods scrap / waste paper / waste shrink / stretch film

The Central Duty on Structural 166.12 Excise Act,1944 steel

Delhi Sales Sales tax demand 189.99 due to non Tax Act, submission of 1975 statutory forms

APVAT Act Duty on interunit 33.72 transfer of bottles

Finance Act, Availment of 3.33 1994 cenvat credit on Service Tax for outward freight

APVAT Act Demand raised for 20.88 VAT

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

The Central Excise Act, 1944 FY 1990 - 1991 Customs, Excise and Service tax Appellate Tribunal. Out of this, Rs. 2.50 lacs has been paid under protest

The Central Excise Act, 1944 FY 1987 - FY 1989 Commissioner of Central Excise, Rohtak

The Central Excise Act, 1944 FY 2005-06 Commissioner of Customs & Central Excise (Appeals). Out of this demand, Rs. 10.74 lacs has been deposited by the Company under protest.

The Central Excise Act, 1944 FY 2009-10 Commissioner of Customs & Central Excise (Appeals). Out of this demand, Rs. 40.00 lacs have been deposited by the Company under protest.

Delhi Sales Tax Act, 1975 FY 1998-99 to Commissioner (Appeals), sales tax. 2009-10 Out of this demand, Rs. 32.28 lacs has been deposited by the Company and assessment for the year 1998-99 to 2004-05 involving disputed tax of Rs. 106.76 lacs has been remanded back to the Assessing Officer.

APVAT Act FY 2009-10 and Additional Commissioner of 2010-11 Commercial taxes - Legal. Out of this demand, Rs. 16.86 lacs have been deposited by the Company under protest.

Finance Act 1994 FY 2004-05 to FY Customs, Excise and Service tax 2006-07 Appellate Tribunal.

APVAT Act FY 2004-05 and Deputy Commissioner 2006-07

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) The Company has not defaulted in repayment of dues to any bank or financial institution during the year. the Company did not have any outstanding debentures during the year.

(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. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

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

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which these loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) During the year, the Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under Section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) According to the information and explanations given to us, except for fraudulent withdrawal of funds at one of the unit of the Company, described in note 44 to the financial statements, no fraud on or by the Company has been noticed or reported during the period covered by our audit. As further informed to us, the Company has taken adequate follow up action, including strengthening of systems.

For Walker, Chandiok & Co

Chartered Accountants

Firm Registration No.: 001076N

per B. P. Singh

Place : Gurgaon Partner

Date : 29 May 2012 Membership No.: 70116


Mar 31, 2011

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

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

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

4. Further to our comments in the Annexure referred to above, we report that:

a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. The financial statements dealt with by this report are in agreement with the books of account;

d. 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 clause (g) of sub-section (1) of section 274 of the Act;

e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act and the Rules framed there under and 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, in the case of:

i) the Balance Sheet, of the state of affairs of the Company as at 31 March 2011;

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

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

Annexure to the Auditors' Report of even date to the members of HSIL Limited, on the financial statements for the year ended 31 March 2011

Based on the audit procedures performed for the purpose of reporting a true and fair view on the financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

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

(b) 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 no material discrepancies were noticed on physical verification.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to (d) of the Order are not applicable.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4(iii) (f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act, in respect of the Company's products. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

(ix) (a) The Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, excise duty, cess on account of any dispute, are as follows:

Name of the Nature of Statute dues Amount Period to which the (Rs. in lacs) amount relates

The Central Duty on captive 5.00 June 1990 to April Excise Act,1944 consumption of 1991 plaster of paris

The Central Duty on cisterns 27.80 Feb. 1988 to July Excise Act,1944 cleared with fittings 1988

The Central Duty on C.I boring/ 103.98 2004-05 to 2005-06 Excise Act,1944 brass/ copper boring/ capital goods scrap/ waste paper/ waste shrink/ stretch film

The Central Duty on Structural 166.12 2009-10 Excise Act,1944 Steel

Delhi Sales Tax Sales tax demand due 219.91 1998-99 to 2006-07 Act, 1975 to non submission of statutory forms

The Income Tax Income tax and 5.71 AY 2004-05 Act, 1961 wealth tax demand







Name of the Forum where dispute is Statute pending

The Central Excise Act,1944 Customs, Excise and Service tax Appellate Tribunal. Out of this, Rs. 2.50 lacs has been paid under protest

The Central Excise Act,1944 Commissioner of Central Excise, Rohtak

The Central Excise Act,1944 Commissioner of Customs & Central Excise (Appeals). Out of this demand, Rs. 10.74 lacs has been deposited by the Company under protest

The Central Excise Act,1944 Commissioner of Customs & Central Excise (Appeals).

Delhi Sales Tax Act, 1975 Commissioner (Appeals), sales tax. Out of this demand, Rs.32.28 lacs has been deposited by the Company and assessment for the year 1998-99 to 2004- 05 involving disputed tax of Rs. 106.76 lacs has been remanded back to the Assessing Officer.

The Income Tax Act, 1961 Commissioner of Income Tax (Appeals)

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) In our opinion, the Company has not defaulted in repayment of dues to a financial institution or a bank. There were no outstanding debentures during the year.

(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. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or financial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which the loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit.

For Walker, Chandiok & Co

Chartered Accountants Firm Registration No: 001076N

per B. P. Singh

Place : Gurgaon Partner

Date : 18 May 2011 Membership No. 70116


Mar 31, 2010

1. We have audited the attached Balance Sheet of HSIL Limited, (the Company) as at 31 March 2010, and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date annexed thereto (collectively referred as the ‘fnancial statements). These fnancial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these Financial statements based on our audit.

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

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

4. Without qualifying our opinion, we draw attention to Note 21 on Schedule 20 to the financial statements regarding the Scheme of Arrangement (the Scheme), approved by Honble Calcutta High Court. In terms of the Scheme, the Company has revalued only a portion of its freehold land by crediting the resulting gain of Rs. 23,500 lacs to the Business Reconstruction Reserve Account ("the BRR account") and has transferred Rs. 3,732.63 lacs (detailed in the Note) from the BRR account to the profit and loss account. The applicable accounting standards and generally accepted accounting principles do not provide for revaluation of part of a class of asset and credit of amounts released from reserves to the profit and loss account. However, the Company has followed the accounting treatment as prescribed under the Scheme approved by Honble High Court at Kolkata. Had the Company followed the generally accepted accounting principles, the profit after tax would have been lower by Rs. 3,732.63 lacs and reserves would have been lower by Rs. 27,232.63 lacs.

5. Further to our comments in the Annexure referred to above, we report that:

a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

b. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c. The financial statements dealt with by this report are in agreement with the books of account;

d. On the basis of written representations received from the directors, as on 31 March 2010 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31 March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Act;

e. In our opinion and to the best of our information and according to the explanations given to us, the financial statements dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act and the Rules framed there under and 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, in the case of:

i) the Balance Sheet, of the state of affairs of the Company as at 31 March 2010;

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

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

Annexure to the Auditors Report

Annexure to the Auditors Report of even date to the members of HSIL Limited (formerly known as Hindustan Sanitaryware & Industries Limited), on the Financial statements for the year ended 31 March 2010

Based on the audit procedures performed for the purpose of reporting a true and fair view on the Financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, we report that:

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

(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) In our opinion, a substantial part of fixed assets has not been disposed off during the year.

(ii) (a) Physical verification of inventory (except stock in transit) has been carried out at reasonable intervals. Finished goods inventories are being verified by the management in a phased manner over the period of two years.

(b) 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 but its coverage needs to be increased.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) The Company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4(iii)(b) to (d) of the Order are not applicable.

(b) The Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clauses 4(iii) (f) and 4(iii)(g) of the Order are not applicable.

(iv) In our opinion, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services.

(v) (a) In our opinion, the particulars of all contracts or arrangements that need to be entered into the register maintained under section 301 of the Act have been so entered.

(b) In our opinion, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public within the meaning of sections 58A and 58AA of the Act and the Companies (Acceptance of Deposits) Rules, 1975. Accordingly, the provisions of clause 4(vi) of the Order are not applicable.

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

(viii) To the best of our knowledge and belief, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of section 209 of the Act, in respect of Companys products. Accordingly, the provisions of clause 4(viii) of the Order are not applicable.

(ix) (a) The Company is generally regular in depositing the undisputed statutory dues including provident fund, investor education and protection fund, employees state insurance, income tax, sales tax, wealth tax, service tax, custom duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate authorities. Further, no undisputed amounts payable in respect thereof were outstanding at the year end for a period of more than six months from the date they become payable.

(b) The dues outstanding in respect of sales tax, income tax, custom duty, wealth tax, excise duty, cess on account of any dispute, are as follows:

Name

of the Nature of dues Amount

Statute Rs. in

lacs

The Central Duty on captive 5.00 Excise Act,1944 consumption of plaster of paris

The Central Duty on cisterns cleared 27.80 Excise Act,1944 with fittings

The Central Duty on C.I boring/ brass/ 91.48 Excise Act,1944 copper boring/ capital goods scrap/ waste paper/ waste shrink/ stretch film

Delhi Sales Tax Sales tax demand due 172.50 Act, 1975 to non submission of statutory forms

The Income Tax Income tax and wealth 182.29 Act, 1956 tax demand



Name of the Period to Forum where dispute is

Statute which the pending

amount relates



The Central June 1990 to Customs, Excise and Service tax Excise Act,1944 April 1991 Appellate Tribunal.Out of this, Rs. 2.50 lacs has been paid under protest.

The Central Feb. 1988 to Commissioner of Central Excise, Excise Act,1944 July 1988 Rohtak

The Central 2002-03 to Commissioner of Customs & Excise Act,1944 2006-07 Central Excise (Appeals).Out of this demand, Rs. 10.74 lacs has been deposited by the Company under protest

The Central 1998-99 to Commissioner (Appeals), sales Excise Act,1945 2005-06 tax. Out of this demand, Rs. 32.28 lacs has been deposited by the Company and assessment for the year 1998-99 to 2004-05- involving disputed tax of Rs. 106.76 lacs has been remanded back to the Assessing officer.

The Sales Tax AY 2002-03 to Commissioner of Income Tax Act,1975 2004-05 (Appeals)

(x) In our opinion, the Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and the immediately preceding financial year.

(xi) In our opinion, the Company has not defaulted in repayment of dues to a financial institution or a bank. There were no outstanding debentures during the year.

(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. Accordingly, the provisions of clause 4(xii) of the Order are not applicable.

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

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable.

(xv) In our opinion, the terms and conditions on which the Company has given guarantee for loans taken by others from banks or fnancial institutions are not, prima facie, prejudicial to the interest of the Company.

(xvi) In our opinion, the Company has applied the term loans for the purpose for which the loans were obtained.

(xvii) In our opinion, no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. Accordingly, the provisions of clause 4(xviii) of the Order are not applicable.

(xix) The Company has neither issued nor had any outstanding debentures during the year. Accordingly, the provisions of clause 4(xix) of the Order are not applicable.

(xx) The Company has not raised any money by public issues during the year. Accordingly, the provisions of clause 4(xx) of the Order are not applicable.

(xxi) No fraud on or by the Company has been noticed or reported during the period covered by our audit. For Walker, Chandiok & Co

Chartered Accountants

Firm Registration No: 001076N



per B. P. Singh

Place : Gurgaon Partner

Date : 20 May 2010 Membership No. 70116

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