Home  »  Company  »  Jayaswal Neco Indust  »  Quotes  »  Auditor Report
Enter the first few characters of Company and click 'Go'

Auditor Report of Jayaswal Neco Industries Ltd.

Mar 31, 2015

We have audited the accompanying standalone financial statements of Jayaswal Neco Industries Limited (Rs.the CompanyRs.), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (Rs.the ActRs.) 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 . This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

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

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

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company's directors, as well as evaluating the overall presentation of the financial statements.

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

Basis for Qualified Opinion

As mentioned in Note No. 12.11 to the standalone financial statements, during the year the Hon'ble Supreme Court of India cancelled 3 coal blocks of the Company and subsequently these blocks have been allotted to different bidders in the E- auction by the Ministry of Coal, Government of India. The Company has filed a writ petition before the Hon'ble Delhi High Court challenging the provision of ordinance and tendering process and no adjustments have been made in the value of these 3 coal mining assets for the reasons mentioned therein. We were unable to determine whether any adjustments to these amounts were necessary.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Rs.Basis for Qualified OpinionRs. paragraph above, 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 31st March, 2015 and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 (Rs.the OrderRs.) issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

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

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

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

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

d. In our opinion, the aforesaid 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;

e. The matter described in the Basis for Qualified Opinion paragraph above, in our opinion, may have an adverse effect on the functioning of the company.

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

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. The Company has disclosed the impact of pending litigations on its financial position in its financial statements as referred to in Note 12.09, 12.10 and 30 (A) to the standalone financial statements except for the possible effect of the matters described in the basis for Qualified Opinion.

ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts except for the possible effect of the matters described in the basis for Qualified Opinion.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

ANNEXURE TO INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under the heading Rs.Report on Other Legal and Regulatory RequirementsRs. of our report of even date to the members of Jayaswal Neco Industries Limited on the accounts for the year ended 31st March, 2015)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company and nature of its assets. No material discrepancies were noticed on such physical verification as compared with the available records.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management except for inventories in transit and lying with job workers for which management confirmation has been received. In our opinion the frequency of verification is reasonable.

b. As the company's inventory of raw materials mostly comprises bulk materials such as iron ore, coal, coke etc. requiring technical expertise for establishing the quality and quantification thereof, the Company has physically verified such stocks on volumetric basis. Relying on the above and according to the information and explanations furnished to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted by the company to companies, firms or other parties covered in the register maintained under section 189 of the Act:

a. The company has given advances in the nature of loan to its subsidiary, and as per the information and explanations given to us; the above advances along with the interest are not due for repayment.

b. As the loan is not due for repayment, the question of overdue amount does not arise.

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

v. According to the information and explanations given to us, the Company has not accepted any deposit from the public.

Therefore, the provisions of Clause (v) of paragraph 3 of the Companies (Auditor's Report) Order, 2015 are not applicable to the Company.

vi. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under Section 148(1) (d) of the Act and are of the opinion that, prima facie, the prescribed accounts and cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

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

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Value Added Tax, Cess and any other statutory dues with the appropriate authorities during the year except in certain cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2015 for a period of more than six months from the date they became payable.

b. The disputed statutory dues of Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise Duty ,Value added tax and Cess aggregating to Rs. 8353.87 Lacs, that have not been deposited on account of Disputed matters pending before appropriate authorities are as under:

Nature of Dues Name of the Statute Period Amount Forum where Involved (Rs. in lacs) (*) dispute is pending Custom Duty Custom Act, 1962 1998-99 765.10 Supreme Court 2004-05 100.00 CESTAT

Excise Duty/ Central Excise Act, 1944 2000-01 5.52 Supreme Court

Service Tax 2008-10 5.03 Appellate Tribunal 2001-12 2088.28 CESTAT

2005-08 1.98 Additional

Commissioner

2005-10 82.32 Commissioner (Appeal) Sales Tax / Central Sales Tax Act, 1956 and 1993-94, 1995-97, 1128.62 Joint Commissioner

VAT and Entry Sales Tax Acts of various 2002-03 & 2004-05

Tax states 1996-97, 2002-03 1281.77 Deputy & 2006-09 Commissioner

Electricity Cess / Electricity Act, 2003 and 2004-05 to 2010-11 2680.49 Supreme Court

Duty Chhattisgarh State Electricity 2011-12 200.00 High Court Regulatory Commission 2006-08 14.76 Chief Engineer (Electrical) department

Total 8353.87

(*) Net of amount deposited under protest

c. There was no such amount which was required to be transferred to Investor Education and protection fund in accordance with the relevant provision of the Companies Act, 1956 and rule made there under. viii. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year. ix. Based on our audit procedures and according to the information and explanations given by the management, we are of the opinion that as on 31st March, 2015 the Company has not defaulted in repayment of dues to banks, except the repayment of principal amount of Rs. 1618.89 lacs and interest of Rs. 6,557.07 lacs for a period less than sixty days. x. The Company has given corporate guarantees aggregating to Rs. 1,181 lacs for loan taken by an associate company from a bank. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not, prima facie, prejudicial to the interest of the Company. xi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been applied for the purpose for which they were raised. xii. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the standalone financial statements and as per the information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Firm Registration No. - 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

Partner Partner

Membership No. - 35629 Membership No. - 30154

Place: Mumbai Place: Nagpur

Date : 29th May, 2015


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting principles generally accepted in India, including, Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act") read with general circular 15/2013 dated 13th 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

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the accounts read together with significant accounting policies and notes thereon, give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: -

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2014;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Act read with the general circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

e. On the basis of written representations received from the directors as on 31st March 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31st 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 INDEPENDENT AUDITORS'' REPORT (Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Jayaswal Neco Industries Limited on the accounts for the year ended 31st March, 2014)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management except for inventories in transit and lying with job workers for which management confirmation has been received. In our opinion the frequency of verification is reasonable.

b. As the company''s inventory of raw materials mostly comprises bulk materials such as iron ore, coal, coke etc. requiring technical expertise for establishing the quality and quantification thereof, the Company has physically verified such stocks on volumetric basis. Relying on the above and according to the information and explanations furnished to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Act:

a. The company has given advances in the nature of loan to two parties in respect of which maximum amount involved during the year was Rs. 690.92 lacs and the year-end balance was Rs. 671.31 lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. As per the information and explanations given to us, the above advances along with the interest are not due for repayment.

d. As the loans are not due for repayment, the question of overdue amounts does not arise.

e. The company has taken loans from eighteen such parties in respect of which maximum amount involved during the year was Rs. 35,229.79 lacs and the year-end balance was Rs. 13,569.72 lacs.

f. In our opinion and according to the information and explanations given to us, the rate of interest, wherever applicable, and other terms and conditions are not prima facie prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loans along with interest payable are repayable on demand and are not due for repayment.

iv. In our opinion and according to the information and explanations given to us, 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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Act:

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per the information available with the Company, except for certain transactions for purchase of services and projects of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs to be further strengthened to make it commensurate with its size and 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 Act 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. According to the information and explanations given to us in respect of statutory dues:

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2014 for a period of more than six months from the date they became payable except for environment cess on coal aggregating to Rs. 9.85 lacs.

b. The disputed statutory dues of Income tax, Sales tax, Service tax, Custom duty, Wealth tax, Excise Duty and Cess aggregating to Rs. 10422.42 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

(Rs.in Lacs)

Nature of Dues Statute Period Involved

Custom Duty Custom Act, 1962 1998-99

2004-05

Excise Duty/ Central Excise Act, 1944 2000-01 Service Tax 2006-07

1998-99 and 2001-02 to 2010-11 2005-06 to 2009-10

Sales Tax / Central Sales Tax Act, 1956 1996-97 VAT and Entry Tax and Sales Tax Acts of various 1993-94, 1995-97, states 2002-03 and 2004-05

1996-97,2002-03 and 2006-09

2002-03

Electricity Cess / Electricity Act, 2003 and 2004-05 to 2010-11 Duty Chhattisgarh State Electricity 2009-10 Regulatory Commission 2011-12

TOTAL

Nature of Dues Amount Forum where dispute (*) is pending

Custom Duty 733.11 Supreme Court

100.00 CESTAT

Excise Duty/ Service Tax 5.52 Supreme Court

603.47 High Court

1,387.70 CESTAT

91.82 Commissioner (Appeals)

Sales Tax / VAT and Entry Tax 6.98 Appellate Tribunal

1,924.27 Joint Commissioner (A)

2,050.84 Deputy Commisioner(A)

7.70 Additional Commissioner (A)

Electricity Cess / Duty 3,062.01 Supreme Court

249.00 Supreme Court

200.00 High Court

TOTAL 10422.42

(*) Net of amount deposited under protest.

x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2014 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

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

xv. The Company has given corporate guarantees aggregating to Rs. 1181 lacs for loan taken by an associate company from a bank. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not, prima facie, prejudicial to the interest of the Company.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purpose for which they were raised or pending utilization have been temporary kept with the banks.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company as at 31st March, 2014, related information as made available to us and as represented to us, by the management, we are of the opinion, that no funds raised on short term basis have been utilized for long term purposes.

xviii. During the year, the Company has made preferential allotment of 46,672,000 equity shares to nine companies covered in the Register maintained under Section 301 of the Act. According to the information and explanations given to us these shares are issued in terms of Securities and Exchange Board of India (Issue Of Capital and Disclosure Requirements) Regulations, 2009 and accordingly, the prices at which these shares are issued are not prima facie prejudicial to the interest of the company.

xix. The Company has not issued any debentures and hence provisions of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xx. During the year covered by our report the company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R. Koria S. R. Chhallani

Partner Partner

Membership No. - 35629 Membership No. - 30154

Mumbai Nagpur Date : 30th April, 2014


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting principles generally accepted in India, including, Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company''s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

In our opinion and to the best of our information and according to the explanations given to us, the accounts read together with significant accounting policies and notes thereon, give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:-

i. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2013;

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

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

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

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

d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub section (3C) of section 211 of the Act;

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

(Referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date to the members of Jayaswal Neco Industries Limited on the accounts for the year ended 31st March, 2013)

i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management except for inventories in transit and lying with job workers for which management confirmation has been received. In our opinion the frequency of verification is reasonable.

b. As the company''s inventory of raw materials mostly comprises bulk materials such as iron ore, coal, coke etc. requiring technical expertise for establishing the quality and quantification thereof, the Company has physically verified such stocks on volumetric basis. Relying on the above and according to the information and explanations furnished to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the Act:

a. The company has given advances in the nature of loan to two parties in respect of which maximum amount involved during the year was Rs. 623.40 Lacs and the year-end balance was Rs. 623.40 lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. As per the information and explanations given to us, the above advances are repayable on demand.

d. As the loans are repayable on demand, the question of overdue amounts does not arise. In respect of interest there are no overdue amounts.

e. The company has taken loans from eight such parties in respect of which maximum amount involved during the year was Rs. 7778.13 lacs and the year-end balance was Rs. 6272.42 Lacs .

f. In our opinion and according to the information and explanations given to us, the rate of interest, wherever applicable, and other terms and conditions are not prima facie prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loans are not due for repayment and there is no overdue amount of principal and interest.

iv. In our opinion and according to the information and explanations given to us, 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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Act:

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Act and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per the information available with the Company, except for certain transactions for purchase of services, projects and sale of goods of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs to be further strengthened to make it commensurate with its size and 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 Act 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. According to the information and explanations given to us in respect of statutory dues:

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2013 for a period of more than six months from the date they became payable.

b. The disputed statutory dues aggregating to Rs. 9919.76 Lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

(Rs.in Lacs)

Nature of Dues Statute Period Involved

Custom Duty Custom Act, 1962 1998-99

2004-05

Excise Duty Central Excise Act, 1944 2000-01

Excise Duty Central Excise Act, 1944 2006-07

Excise Duty Central Excise Act, 1944 1998-99 to 2010-11

Excise Duty Central Excise Act, 1944 1995-96 and 2006-07 & 2007-08 to 2009-10

Service Tax Service Tax 2005-06 to 2009-10,

Sales Tax Central Sales Tax Act, 1956 1996-97

Sales Tax Central Sales Tax Act, 1956 1995-96 to 96-97, 2002-03 and 2004-05

Sales Tax Central Sales Tax Act, 1956 1996-97,2002-03 and 2005-06 to 2009-10

Sales Tax Central Sales Tax Act, 1956 2002-03

Entry Tax Chattisgarh Entry Tax Act, 1976 1990-91 and 2004-05

Electricity Electricity Act, 2003 2004-05 to 2010-11 Cess/duty Chhattisgarh State Electricity 2009-10 Regulatory Commission

Electricity Act, 2003 2011-12

Nature of Dues Amount Forum where dispute (*) is pending

Custom Duty 712.95 Supreme Court

100.00 CESTAT

Excise Duty 5.52 Supreme Court

Excise Duty 1,203.47 High Court

Excise Duty 1,415.50 CESTAT

Excise Duty 42.38 Commissioner (Appeals)

Service Tax 143.93 CESTAT

Sales Tax 6.98 Appellate Tribunal

Sales Tax 2,072.57 Joint Commissioner (A)

Sales Tax 2,047.23 Deputy Commisioner (A)

Sales Tax 7.70 Additional Commissioner (A)

Entry Tax 0.55 High Court

Electricity Cess/duty 1,711.98 Supreme Court

249.00 Supreme Court

200.00 High Court

TOTAL 9,919.76

(*) Net of amount deposited under protest.

x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2013 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor''s Report) Order, 2003 is not applicable to the Company.

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

xv. The Company has given corporate guarantees aggregating to Rs. 1181 lacs for loan taken by an associate company from a bank. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purpose for which they were raised or pending utilization have been temporary kept with the banks.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company as at 31st March, 2013, related information as made available to us and as represented to us, by the management, we are of the opinion, that no funds raised on short term basis have been utilized for long term purposes.

xviii. During the year, the Company has made preferential allotment of 94,875,000 equity shares to nine companies covered in the Register maintained under Section 301 of the Act. According to the information & explanation given to us these shares are issued in terms of Securities and Exchange Board of India (Issue Of Capital and Disclosure Requirements) Regulations, 2009 and accordingly, the prices at which these shares are issued are not prima facie prejudicial to the interest of the company.

xix. The Company has not issued any debentures and hence provisions of clause 4 (xix) of the Companies (Auditor''s Report) Order, 2003 are not applicable to the Company.

xx. During the year covered by our report the company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R. Koria S. R. Chhallani

Partner Partner

Membership No. - 35629 Membership No. - 30154

Mumbai Nagpur

Date: 25th May, 2013


Mar 31, 2012

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

2. We conducted our audit in accordance with 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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 issued by the Central Government of India in terms of Sub-section (4A) of Section 227 of the Companies Act, 1956, we give in the Annexure hereto, a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the company.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

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

iii) The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv) In our opinion the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the directors as on 31st March, 2012 and taken on records by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act 1956. As regards to Directors nominated by Financial Institutions / Banks, they are exempted from the provisions of Section 274 (1) (g) in view of general circular issued by the Department of Company Affairs.

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

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

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

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

ANNEXURE TO AUDITOR'S REPORT Referred to in paragraph 3 of our report of even date

As required by the Companies (Auditor's Report) Order, 2003 issued by Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that:- i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company. No material discrepancies were noticed on such physical verification.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified during the year by the management except for inventories in transit and lying with job workers for which management confirmation has been received. In our opinion the frequency of verification is reasonable.

b. As the company's inventory of raw materials mostly comprises bulk materials such as iron ore, coal, coke etc. requiring technical expertise for establishing the quality and quantification thereof, the Company has physically verified such stocks on volumetric basis. Relying on the above and according to the information and explanations furnished to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the company to/from companies, firms or other parties covered in the register maintained under section 301 of the companies Act 1956:

a. The company has given advances in the nature of loan to three parties in respect of which maximum amount involved during the year was Rs. 1143.18 lacs and the year-end balance was Rs. 254.12 lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. As per the information and explanations given to us, the above advances are repayable on demand.

d. As the loans are repayable on demand, the question of overdue amounts does not arise. In respect of interest there are no overdue amounts.

e. The company has taken loans from two such parties in respect of which maximum amount involved during the year was Rs 6,500.03 lacs and the year-end balance was Rs. 582.68 lacs.

f. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loans are not due for repayment, where repayment schedule exist and there is no overdue amount of principle and interest.

iv. In our opinion and according to the information and explanations given to us, 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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per the information available with the Company, except for certain transactions for purchase of services, projects and sale of goods of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to the information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs further improvement to make it commensurate with the size and nature of the business of the company.

viii. The Central Government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have been told that the cost records are under preparation and hence could not be verified by us.

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

a. The company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2012 for a period of more than six months from the date they became payable except for the Electricity Duty and VAT of Rs 79.58 Lacs and Rs. 283.13 Lacs out of which electricity duty has since been paid.

c. The disputed statutory dues aggregating to Rs. 7,994.95 lacs, that have not been deposited on account of matters pending before appropriate authorities are as under:

(Rs.in Lacs)

Nature of Dues Statute Period Involved Amount (*) Forum where dispute is pending

Custom Duty Custom Act, 1962 2004-05 100.00 CESTAT 1998-99 687.30 Supreme Court Entry Tax Chattisgarh Entry Tax Act, 1976 0.55 High Court

Excise Duty Central Excise Act, 1944 1998-2010 2,626.55 CESTAT

Excise Duty Central Excise Act, 1944 1995-96 to 2006-10 30.83 Commissioner (Appeals)

Excise Duty Central Excise Act, 1944 2000-01 5.52 Supreme Court

Sales Tax Central Sales Tax Act, 1956 2002-03 7.70 Additional Commissioner

Sales Tax Central Sales Tax Act, 1956 1996-97, 2002-03, 2004-05 and 2006-08 97.56 Deputy Commissioner

Sales Tax Central Sales Tax Act, 1956 1995-97, 2002-03 and 2004-05 2,072.57 Joint Commissioner

Service Tax Service Tax 2005-06 61.59 CESTAT

VAT Chhattisgarh State

Vat Act, 2005 2007-08 721.83 Deputy Commissioner

Electricity Cess 2004-05 to 2010-11 1,333.95 Supreme Court

Chhattisgarh State

Electricity Regulatory

Commission 249.00 Supreme Court

Total 7,994.95

(*) Net of amount deposited under protest.

x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2012 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

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

xv. The Company has given corporate guarantees aggregating to Rs. 1,181 lacs for loan taken by an associate company from a bank. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

xvi. The Company has raised new term loans during the year. To the best of our knowledge and according to the information and explanations given to us the term loans outstanding at the beginning of the year and those raised during the year were prima facie been either used for the purpose for which they were raised or pending utilization have been temporary kept with the banks.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the balance sheet of the Company as at 31st March, 2012, related information's as made available to us and as represented to us, by the management, we are of the opinion, that no funds raised on short term basis have been utilized for long term purposes.

xviii. During the year, the Company has made preferential allotment of 7,44,35,500 equity shares to ten companies covered in the Register maintained under Section 301 of the Companies Act, 1956. According to the information & explanation given to us these shares are issued in terms of Securities and Exchange Board of India (Issue Of Capital and Disclosure Requirements) Regulations, 2009 and accordingly, the prices at which these shares are issued are not prima facie prejudicial to the interest of the company.

xix. The Company has not issued any debentures and hence provisions of clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

xx. During the year covered by our report the company has not raised any money by public issue.

xxi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the company was noticed or reported during the course of our audit.

For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

(Partner) (Partner)

Membership No. - 35629 Membership No. - 30154

Mumbai Nagpur

Date: 12th May, 2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of JAYASWAL NECO INDUSTRIES LIMITED, as at 31st March, 2011 and also the Profit and Loss Account and Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the 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 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the 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 issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we give in the Annexure hereto, a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable to the Company.

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

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

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

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

iv) In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the directors as on 31st March, 2011 and taken on records by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2011 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act 1956. As regards to Directors nominated by Financial Institutions / Banks, they are exempted from the provisions of Section 274 (1) (g) in view of general circular issued by the Department of Company Affairs.

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

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

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

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

ANNEXURE TO AUDITOR'S REPORT Referred to in paragraph 3 of our report of even date

As required by the Companies (Auditor's Report) Order, 2003 issued by Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that:- i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management need to be strengthened considering the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act 1956:

a. The Company has given advances in the nature of loan to a party in respect of which maximum amount involved during the year was Rs 9,089.24 Lacs and the year-end balance was Rs Nil.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions were not prima facie prejudicial to the interest of the Company.

c. Since there is no outstanding amount at the year end, the provisions of clause (iii) (c) and (d) are not applicable.

d. The Company has taken loans from two such parties in respect of which maximum amount involved during the year was Rs 6,113.45 Lacs and the year-end balance was Rs. 6,036.73 Lacs.

e. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

f. As per the information and explanations given to us, the above loans are not due for repayment, where repayment schedule exist and there is no overdue amount of principle and interest.

iv. In our opinion and according to the information and explanations given to us, 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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in section 301 of the Companies Act, 1956:

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

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered in the register maintained under section 301 of the Companies Act, 1956 and exceeding the value of Rs.5,00,000 in respect of each party during the year have been made at prices which appear reasonable as per information available with the Company, except for certain transactions for purchase of services and sale of goods of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs further improvement to make it commensurate with the size and nature of the business of the Company.

viii. The Central Government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

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

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases.

Further, since the Central Government has till date not prescribed the amount of cess payable under section 441A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the Company in depositing the same.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2011 for a period of more than six months from the date they became payable except for the Electricity Duty of Rs 78.99 Lacs.

c. The disputed statutory dues aggregating to Rs. 6,086.77 Lacs, that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

(Rs. in Lacs)

Name of the Statute Nature of dues Year Amounts Forum where dispute is pending

Central Excise Act, 1944 Excise Duty 1995-96, 2404.07 CESTAT 1998-99 to 2009-10

1998-99 & 2002-03 to 2003-04 22.98 Commissioner (A)

2007-08 22.24 High Court

2000-01 5.52 Supreme Court

Finance Act Service Tax 2005-06 & 2006-07 62.68 CESTAT

Customs Act, 1962 Cess 1998-99 661.65 CESTAT

Custom Duty 2004-05 100.00 CESTAT

Central Sales Tax Act, 1956 Sales Tax 1996-97, 2002-03, 2004-05 & 2006-07 55.82 Deputy Commissioner (A)

Sales Tax 2002-03 7.70 Additional Commissioner

Sales Tax 1995-96,

2002-03 &

2004-05 1,256.17 Joint Commissioner

Chhattisgarh Entry Tax Act, Entry Tax 1990-91 & 1976 2004-05 0.55 High Court

Electricity Act, 2003 Electricity Cess 2004-05 to 2010-11 1,333.95 Supreme Court

Mines & Minerals (Regulations Environme -ntal & 2006-07 to 153.43 High Court & Infrastructure Development) 2010-11 Act,1957 Development Cess

Total 6,086.77 x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2011 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of clause 4 (xiii) of the Companies (Auditor's Report) Order, 2003 is not applicable to the Company.

xiv. The Company has maintained proper records of transactions and contracts in respect of trading in shares and other securities and timely entries have been made therein. The investments are held by the Company in its own name except for certain shares, which are lodged for transfer.

xv. The Company has given corporate guarantees aggregating to Rs. 1,181 Lacs for loan taken by an associate Company from a bank. The management is of the opinion that the terms and conditions are not prejudicial to the interests of the Company. We are, however, unable to comment on the same.

xvi. To the best of our knowledge and belief and according to information and explanations given to us, in our opinion, the term loans raised have prima facie been applied for the purpose for which they were raised.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the Balance Sheet of the Company as at 31st March, 2011, related information as made available to us and as represented to us, by the management, we are of the opinion, that funds raised on short term basis aggregating to Rs.4,768.47 Lacs have been utilized for long term purposes.

xviii. The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained underSection 301 of the Companies Act, 1956.

xix. The Company has not issued any debentures and hence provisions of clause 4 (xix) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

xx. During the year covered by our report the Company has not raised any money by public issue.

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



For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

Membership No. 35629 Membership No. 30154

Mumbai Nagpur

Date: 28th May, 2011


Mar 31, 2010

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

2. We conducted our audit in accordance with 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 misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that:

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the

purposes of our audit;

ii) In our opinion, proper books of account, as required by law, have been kept by the Company, so far as appears from our

examination of such books;

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

iv) In our opinion the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in compliance with the Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the directors as on 31st March, 2010 and taken on records by the Board of Directors, we report that none of the directors is disqualified as on 31st March, 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act 1956. As regards to Directors nominated by Financial Institutions / Banks, they are exempted from the provisions of Section 274 (1) (g) in view of general circular issued by the Department of Company Affairs.

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

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

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

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

ANNEXURE TO AUDITORS REPORT Referred to in paragraph 3 of our report of even date

As required by the Companies (Auditors Report) Order, 2003 issued by Central Government of India in terms of Section 227 (4A) of the Companies Act 1956, and on the basis of such checks as we considered appropriate, we further report that:- i. In respect of its fixed assets:

a. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets on the basis of available information.

b. As explained to us, the Company has physically verified certain assets, in accordance with a phased program of verification, which in our opinion is reasonable, having regard to the size of the Company.

c. In our opinion, the Company has not disposed off substantial part of fixed assets during the year and the going concern status of the Company is not affected.

ii. In respect of its inventories:

a. As explained to us, inventories have been physically verified by the management at regular intervals during the year.

b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management needs to be strengthened considering the size of the Company and the nature of its business.

c. According to the information and explanations given to us and on the basis of our examination of inventory records, we are of the opinion that the Company is maintaining proper records of inventory. As explained to us, discrepancies noticed on physical verification of the inventories between the physical inventories and book records were not material, having regard to the size of the operations of the Company, and the same have been properly dealt with.

iii. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other parties covered in the register maintained under section 301 of the companies Act 1956:

a. The Company has given advances in the nature of loan to a party in respect of which maximum amount involved during the year was Rs 8,435.75 lacs and the year-end balance was Rs 6,319.16 lacs.

b. In our opinion and according to the information and explanations given to us, the rate of interest and other terms and conditions are not prima facie prejudicial to the interest of the Company.

c. As per the information and explanations given to us, the above advances are repayable on demand. The interest is payable on demand.

d. In respect of the said loans, the same are repayable on demand and therefore the question of overdue amounts does not arise. In respect of interest there are no overdue amounts.

e. The Company has taken loans from two such parties in respect of which maximum amount involved during the year was Rs 2532.64 lacs and the year-end balance was Rs. 39.02 lacs.

f. In our opinion and according to the information and explanations given to us, the rate of interest, wherever paid and other terms and conditions are not prima facie prejudicial to the interest of the Company.

g. As per the information and explanations given to us, the above loans are repayable on demand and there is no repayment schedule.

iv. In our opinion and according to the information and explanations given to us, 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, fixed assets and also for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v. In respect of the contracts or arrangements referred to in Section 301 of the Companies Act, 1956:

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

b. According to the information and explanations given to us, these contracts or arrangements have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, except for certain transactions for purchase of goods and services and sale of goods and services of specific nature for which alternative quotations are not available and hence we are unable to comment upon.

vi. According to information and explanations given to us, the Company has not accepted any deposits from the public and hence directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Companies Act, 1956 and the rules framed there under are not applicable for the year under audit.

vii. In our opinion the Company has an internal audit system, which needs further improvement to make it commensurate with the size and nature of the business of the Company.

viii. The Central Government has prescribed maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 in respect of certain manufacturing activities of the Company. We have broadly reviewed the accounts and records of the Company in this connection and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the same.

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

a. The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities during the year except in few cases.

b. According to the information and explanations given to us, no undisputed amounts payable in respect of such statutory dues were outstanding as at 31st March, 2010 for a period of more than six months from the date they became payable except for the Environmental Cess of Rs 85.16 Lacs.

c. The disputed statutory dues aggregating to Rs. 2433.74 lacs, that have not been deposited on account of disputed matters pending before appropriate authorities are as under:

Sr No Name of the Statute Nature of dues Year

1. Central Excise Act, 1944 2001-07

1997-99 &

2002-07

Excise Duty 2000-01

Customs Act, 1962 Cess 1998-99

Custom Duty 2004-05

Central Sales Tax Sales Tax 1995-96 &

2001-06

Sales Tax 1995-Dec,

97 &

2001-03

Chattisgarh Entry Entry Tax 1990-91 Tax Act, 1976

Exit Tax Nagar Nigam Cess 2004-05 &

2005-06

Total



(Rs. in Lacs)

Sr. No Name of the Statute Amounts Forum where dispute

is pending

1. Central Excise Act, 1944 691.96 CESTAT

26.83 Commissioner (A)

5.52 Supreme Court

Customs Act, 1962 636.01 CESTAT

100.00 CESTAT

Central Sales Tax 165.28 Deputy Commissioner (A)

807.27 Joint Commissioner

Chattisgarh Entry 0.32 Deputy Commissioner Tax Act, 1976 (A)

0.55 Deputy Commissioner (A)

2433.74



x. The Company does not have accumulated losses at the end of the financial year. The Company has not incurred cash losses during the financial year covered by the audit and in the immediately preceding financial year.

xi. Based on our audit procedures and information and explanations given by the management, we are of the opinion that as on 31st March, 2010 the Company has not defaulted in repayment of dues to banks and financial institutions.

xii. In our opinion and according to the explanations given to us and based on the information available, no loans and advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv. The Company has maintained proper records of transactions and contracts in respect of trading in shares and other securities and timely entries have been made therein. The investments are held by the Company in its own name except for certain shares, which are lodged for transfer.

xv. The Company has given corporate guarantees aggregating to Rs. 1181 lacs for loans taken by others from a bank. The management is of the opinion that the terms and conditions are not prejudicial to the interests of the Company. We are, however, unable to comment on the same.

xvi. To the best of our knowledge and belief and according to information and explanations given to us, in our opinion, the term loans raised have prima facie been applied for the purpose for which they were raised.

xvii. On the basis of review of utilization of funds, which is based on overall examination of the Balance Sheet of the Company as at 31st March, 2010, related information as made available to us and as represented to us, by the management, we are of the opinion, that funds raised on short term basis have not prima facie been utilized for long term purposes.

xviii The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Companies Act, 1956.

xix. The Company has not issued any debentures and hence provisions of clause 4 (xix) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

xx. During the year covered by our report the Company has not raised any money by public issue.

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



For Chaturvedi & Shah For Agrawal Chhallani & Co.

Chartered Accountants Chartered Accountants

(Registration No. : 101720W) (Registration No. : 100125W)

R Koria S. R. Chhallani

Membership No. 35629 Membership No. 30154

Mumbai Nagpur

Date: 28th May, 2010



 
Subscribe now to get personal finance updates in your inbox!