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Auditor Report of Kakatiya Cement Sugar & Industries Ltd.

Mar 31, 2014

Report on the Financial Statements

We have audited the accompanying financial statements of Kakatiya Cement Sugar and Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 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

Management is responsible for the preparation of these financial statements that give a true and fair view of thefinancial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 ("the Act"), read with general circular 8/2014, dated 4th April, 2014 issued by Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor''s Responsibility

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. 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 auditopinion.

Opinion

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 March 31, 2014;

b) in the case of the 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

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 Companies Act, 1956 read with general circular 8/2014, dated 4th April, 2014 issued by Ministry of Corporate Affairs.

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

ANNEXURE

RE: KAKATIYA CEMENT SUGAR AND INDUSTRIES LIMITED

REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING OF "REPORT ON OTHER LEGAL AND REGULATORY

REQUIREMENTS" OF OUR REPORT OF EVEN DATE

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

b. The fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such physical verification.

c. The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

ii. a. The inventories have 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 inventories 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 has maintained proper records of its inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. a. The Company has not granted any loans to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

b. The Company has taken unsecured loans from one party covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was ` 350 Lakhs and the year- end balance of loans taken is ` 350 Lakhs.

c. In our opinion, the rate of interest and other terms and conditions on which loans have been taken from the parties covered in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie prejudicial to the interest of the Company.

d. The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of 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 for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

v. a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

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

vi. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public.

vii. In our opinion, the Company has an internal audit system commensurate with the 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 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. According to the information and explanations given to us and the records of the company examined by us, the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales tax, custom duty, excise duty, cess and other statutory dues as applicable with the appropriate authorities and there were no arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable.

b. According to the information and explanations given to us and records of the Company examined by us, the particulars of sales tax, income tax, customs duty, excise duty, service tax and wealth tax, as at 31st March, 2014 which have not been deposited on account of dispute pending, are as under:

Name of the Nature of dues Amount Period to which Forum where Statute (in Lakhs) the amount the Dispute is relates pending

Income-Tax Act, 1961 Income-tax 12.42 Assessment years High Court of 1999-2000 Andhra Pradesh 2000-2001

2001-2002

Income-Tax Act, 1961 Income-tax 52.97 Assessment year CIT (Appeals) 2010-11

Income-Tax Act, 1961 Income-tax 64.45 Assessment year CIT (Appeals) 2011-12

x. The company has no accumulated losses and it has not incurred any cash losses during the financial year covered by our audit or in the immediately preceding financial year.

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

xii. According to information and explanations given to us and based on the documents and records produced to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv. In our opinion and according to the information and explanation given to us, the Company is not dealing in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

xv. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

xvi. The company has not raised any new term loans during the year.

xvii. In our opinion and according to the information and explanation to us, and on an overall examination of the Balance sheet of the Company, we report that no funds raised on short-term basis have been used for long term investments.

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

xix. The Company has not issued any debentures during the year.

xx. The Company has not raised any funds on public issue and hence disclosure on the end use of money raised by the public issue is not applicable to the Company.

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 year.



for M. ANANDAM & CO.

CHARTERED ACCOUNTANTS

(Firm Regn.No.000125S)



Place : Hyderabad A.V. Sadasiva

Date : 26th May 2014 PARTNER

M. No. 018404


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying financial statements of Kakatiya Cement Sugar and Industries Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2013, 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

Management is responsible for the preparation of these financial statements that give a true and fair view of thefinancial position, financial performance and cash flows of the Company in accordance with 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.

Auditor''s 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. 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 auditopinion.

Opinion

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 March 31, 2013;

b) in the case of the 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

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 theAccounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

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 Companies Act, 1956.

ANNEXURE

RE: KAKATIYA CEMENT SUGAR AND INDUSTRIES LIMITED

REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING OF "REPORT ON OTHER LEGAL AND REGULATORY

REQUIREMENTS" OF OUR REPORT OF EVEN DATE

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

b. The fixed assets have been physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and the nature of its business. No material discrepancies were noticed on such physical verification.

c. The Company has not disposed off any substantial part of its fixed assets so as to affect its going concern status.

ii. a. The inventories have 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 inventories 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 has maintained proper records of its inventories. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii. a. The Company has not granted any loans to companies, firms or other parties listed in the register maintained under Section 301 of the Companies Act, 1956.

b. The Company has taken unsecured loans from two parties covered in the register maintained under section 301 of the Companies Act, 1956. The maximum amount involved during the year was RS. 150 Lakhs and the year-end balance of loans taken is RS. 30 Lakhs.

c. In our opinion, the rate of interest and other terms and conditions on which loans have been taken from the parties covered in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie prejudicial to the interest of the Company.

d. The Company is regular in repaying the principal amounts as stipulated and has been regular in the payment of 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 for the sale of goods. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.

v. a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956 have been so entered.

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

vi. In our opinion and according to the information and explanations given to us, the company has not accepted any deposits from public.

vii. In our opinion, the Company has an internal audit system commensurate with the 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 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. According to the information and explanations given to us and the records of the company examined by us, the Company is regular in depositing undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales tax, custom duty, excise duty, cess and other statutory dues as applicable with the appropriate authorities and there were no arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable.

x. The company has no accumulated losses and it has not incurred any cash losses during the financial year covered by our audit or in the immediately preceding financial year.

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

xii. According to information and explanations given to us and based on the documents and records produced to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv. In our opinion and according to the information and explanation given to us, the Company is not dealing in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

xv. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loan taken by others from banks or financial institutions. Accordingly, the provisions of clause 4(xv) of the Companies (Auditors'' Report) Order, 2003 are not applicable to the Company.

xvi. The company has not raised any new term loans during the year.

xvii. In our opinion and according to the information and explanation to us, and on an overall examination of the Balance sheet of the Company, we report that no funds raised on short-term basis have been used for long term investments.

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

ix. The Company has not issued any debentures during the year.

xx. The Company has not raised any funds on public issue and hence disclosure on the end use of money raised by the public issue is not applicable to the Company.

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 year.

for M. ANANDAM & CO.

CHARTERED ACCOUNTANTS

(Firm Regn.No.000125S)

Place : Hyderabad A.V. Sadasiva

Date : 27.05.2013 PARTNER

M. No. 018404


Mar 31, 2012

1. We have audited the attached Balance Sheet of Kakatiya Cement Sugar & Industries Limited, as at 31st March, 2012 and the Statement of Profit & Loss and Cash Flow statement for the year ended on that date annexed there to. 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 issued by the Company Law Board in terms of Section 227(4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in paragraphs 4 & 5 of the said Order.

4. Further to our comments in the annexure referred to in paragraph 3 above.

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

b) In our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of such books.

c) The Balance Sheet, Statement of Profit & Loss and Cash Flow Statements dealt with by this report are in agreement with the books of accounts.

d) In our opinion the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956 to the extent applicable, except that the provision for leave encashment cash basis instead of actuarial valuation (Refer Note 1 (viii) (c) of the finanancial statements).

e) On the basis of written representations received from the Directors of the Company, as on 31st March, 2012 and taken on record by the Board of Directors, we report that none of the Director is disqualified as at 31st March, 2012 from being appointed as a Director in terms of Clause (g) of the Sub-Section (1) Section 274 of the Companies Act, 1956.

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

i. In the case of Balance Sheet, of the State of Affairs of the Company as at 31st March, 2012;

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 Statements, of the Cash Flows for the year ended on that date.

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

b. The management has physically verified most of the fixed assets of the company and no material discrepancies were noticed on such physical verification.

c. No substantial part of the fixed assets has been disposed off during the year.

2) 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 inventories followed by the management are reasonable and adequate commensurate with the size of the company and nature of its business.

c. On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3) a. The Company has not granted any loans to the parties covered under section 301 of the Companies Act,1956.

b. The company has taken an unsecured loan from one party covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year is Rs. 2.30 Crore and closing balance outstanding is Rs.30 Lakh. The Company has not granted loans to Companies, firms etc., listed in the register maintained under Section 301 of the Act.

c. The rate of interest and the terms and conditions of loan taken are prima facie not prejudicial to the interest of the Company. The payment of the principal amount and the interest are also regular.

4) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures 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. Further, on the basis of our examinations and according to the information and explanations given to us, we have neither come across nor have been informed of any instance of major weaknesses in the aforesaid internal control systems.

5) a. According to the information and explanations given to us, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 of the Companies Act, 1956, have been so entered.

b. In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements with companies, firms or other parties listed in the Register maintained under Section 301 of the Act do not exceed Rs.5 lakhs in value, and the transactions made are at the prices which are reasonable and having regard to the prevailing market prices at the relevant time.

6) The company has complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

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

8) 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.

9) a. According to the records of the Company, the undisputed statutory dues including Provident Fund, Employees State Insurance, service tax, excise duty, sales tax and cess have been generally regularly deposited with the appropriate authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of the aforesaid dues were outstanding as at 31st March, 2012 for a period of more than six months from the date they become payable.

b. According to the records of the company examined, there are no dues of Customs tax, Wealth tax, Excise duty / Cess, except in case of Income tax the details of which are given below:

Name of the Nature of dues Amount Period to which Forum where Statute (in Lakhs) the amount the Dispute is relates pending

Income Tax Act, Disallowance of unabsorbed Rs. 12.42 Assessment Years High Court of 1961 depreciation/ business losses. 1999-2000 Andhra Pradesh

2000-2001

2001-2002

Income Tax Act, Disallowance U/S 80 IA Exemption Rs. 456.45 Assessment Year CIT 1961 2009-2010 (Appeals)

10) The company has no accumulated losses and has not incurred any cash losses during the financial year covered by our audit or in the immediately preceding financial year.

11) Based on our audit procedures and according to the information and explanations given to us, we are of the opinion that the company has not defaulted in repayment of dues to financial institutions & banks.

12) During the year, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

14) In our opinion and according to the information and explanations given to us, the company is not dealing in shares, securities, debentures and other investments. Accordingly the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

15) The company has not given any guarantee for loans taken by others from banks or financial institutions.

16) The company has not raised new term loans during the year. The term loans outstanding were applied for the purposes for which they were taken.

17) According to the information and explanation given to us and on overall examination of balance sheet of the company, we are of the opinion that there are no funds raised for short term basis that have been used for long term investment.

18) During the year, the Company has not made any preferential allotment of shares to the parties and Companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19) The Company has not raised any money by way of issue of Debentures during the year, hence paragraph (xix) of the order is not applicable to the company.

20) According to the information and explanations given to us during the year the company has not raised any funds on public issue and hence this clause is not applicable to the company.

21) According to the information and explanations given to us no fraud on or by the company has been noticed or reported during the course of our audit.

for M. ANANDAM & CO.

CHARTERED ACCOUNTANTS

(Firm Regn.No.000125S)

A.V. Sadasiva

Place : Hyderabad PARTNER

Date : 20.08.2012 M. No. 18404


Mar 31, 2011

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

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

1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure hereto a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our Comments in the annexure referred to in paragraph 1 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, the Company has kept proper books of account as required by law, so far as appears from our examination of those books.

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

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable, except that the provision for gratuity has been arrived on accrual basis and leave encashment on cash basis instead of actuarial valuation (Refer Note.1 (vii) of Schedule XII).

e. On the basis of written representations received from the Directors of the company, as on 31st March, 2011 and taken on record by the board of directors, wherever applicable we report that none of the directors is disqualified as at 31st March, 2011 from being appointed as a director of the Company in terms of clause (g) of sub-section (1) Section 274 of the Companies Act, 1956.

f. In our opinion, and to the best of our information and according to the explanations given to us, the said financial statements read together with the significant Accounting Policies and other notes there on 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 the Profit & Loss account, of the Profit of the Company for the year ended on that date; and

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

ANNEXURE TO THE AUDITORS' REPORT (Statement referred to in paragraph 1 of our Report of even date)

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

b) The management has physically verified most of the fixed assets of the company and no material discrepancies were noticed on such physical verification.

c) No substantial part of the fixed assets has 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 inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii) a) The company has taken unsecured loans from persons listed in the register maintained under Section 301. Maximum outstanding during the year was Rs 2.30crores and closing outstanding is Rs 2.30 crores. The Company has not granted loans to Companies, firms etc., listed in the register maintained under Section 301 of the Act.

b) The terms and conditions of loan taken are prima facie not prejudicial to the interest of the company.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.

v) a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 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 with companies, firms or other parties listed in the Register maintained under Section 301 of the Act do not exceed Rs 5 lakhs in value, and the transactions made are at the prices which are reasonable and having regard to the prevailing market prices at the relevant time.

vi) The company has complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

vii) The company has an internal audit system commensurate with the size and nature of its business.

viii) The company, in our opinion and according to the information and explanations given to us, has made and maintained accounts and records prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956 in respect of cement and power divisions. We have not examined the contents of these accounts and records.

ix) a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales- tax, wealth-tax, custom duty, excise-duty, service tax, Cess and other statutory dues applicable to it and there were no arrears of outstanding statutory dues as at the last day of the financial year concerned for a period of more than six months from the date they became payable.

b) According to the information and explanations given to us the following are the particulars of disputed dues and amounts not paid thereon on account of sales tax, income tax and Central Excise:

Name of the Nature of dues Amount Period to which Forum where Statute (in Lakhs) the amount the Dispute is relates pending

Income Tax Act, Disallowance of unabsorbed Rs 12.42 Assessment Years High Court of 1961 depreciation/ business losses. 1999-2000 Andhra Pradesh 2000-2001

2001-2002

Income Tax Act, Disallowance U/S 80 IA Exemption Rs 436.18 Assessment Year ITAT,

1961 2007-2008 Hyderabad

Income Tax Act, Disallowance U/S 80 IA Exemption Rs 319.92 Assessment Year CIT (Appeals)

1961 2008-09



x) The company has no accumulated losses and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

xi) The company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

xii) During the year, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv) The company is not a dealer or trader in shares, securities, debentures and other investment.

xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the cash flow statement and the Balance Sheet of the Company, in our opinion the funds raised on short term basis have prima facie not been used for long term investment.

xviii) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

xix) According to the information and explanations given to us, the Company has not raised any money by way of issue of debentures during the year.

xx) According to the information and explanations given to us, the Company has not raised any money by way of public issue during the year. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditor's Report) Order, 2003 are not applicable to the company.

xxi) During the course of audit, based upon the audit procedures performed and information and explanations given by the management, no instance of fraud on or by the company has been noticed or reported during the course of our audit.

for M. ANANDAM & CO.

CHARTERED ACCOUNTANTS

(Firm Regn.No.000125S)

A.V. SADASIVA Place : Hyderabad PARTNER

Date : 24th August, 2011 M. No. 18404


Mar 31, 2010

We have audited the attached Balance Sheet of M/s. Kakatiya Cement Sugar & Industries Limited, as at 31st March, 2010 and the Profit & Loss Account for the year ended on that date annexed thereto and Cash Flow Statement for the year ended on that date. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

1. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the annexure hereto a statement on the matters specified in paragraphs 4 and 5 of the said order.

2. Further to our Comments in the annexure referred to in paragraph 1 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, the Company has kept proper books of account as required by law, so far as appears from our examination of those books.

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

d. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub section (3C) of Section 211 of the Companies Act, 1956, to the extent applicable, except that the provision for gratuity has been arrived on accrual basis and leave encashment on cash basis instead of actuarial valuation (Refer Note.1 (vii) of Schedule XII).

e. On the basis of written representations received from the Directors of the company, as on 31st March, 2010 and taken on record by the board of directors, wherever applicable we report that none of the directors is disqualified as at 31st March, 2010 from being appointed as a director of the Company in terms of clause (g) of sub-section (1) Section 274 of the Companies Act, 1956.

f. In our opinion, and to the best of our information and according to the explanations given to us, the said financial statements read together with the significant Accounting Policies and other notes there on 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 the Profit & Loss account, of the Profit of the Company for the year ended on that date; and

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

ANNEXURE TO THE AUDITORS REPORT

(Statement referred to in paragraph 1 of our Report of even date)

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

b) The management has physically verified most of the fixed assets of the company and no material discrepancies were noticed on such physical verification.

c) No substantial part of the fixed assets has 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 inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) On the basis of our examination of the records of inventory, we are of the opinion that the company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

iii) a) The company has taken unsecured loans from persons listed in the register maintained under Section 301. Maximum outstanding during the year was Rs.2.60crores and closing outstanding is Rs.2.30 crores. The Company has not granted loans to Companies, firms etc., listed in the register maintained under Section 301 of the Act.

b) The terms and conditions of loan taken are prima facie not prejudicial to the interest of the company.

iv) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.

v) a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the transactions that need to be entered into the register maintained under section 301 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 with companies, firms or other parties listed in the Register maintained under Section 301 of the Act do not exceed Rs.5 lakhs in value, and the transactions made are at the prices which are reasonable and having regard to the prevailing market prices at the relevant time.

vi) The company has complied with the provisions of Sections 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public.

vii) The company has an internal audit system commensurate with the size and nature of its business.

viii) The company, in our opinion and according to the information and explanations given to us, has made and maintained accounts and records prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956 in respect of cement and power divisions. We have not examined the contents of these accounts and records.

ix) a) According to the records of the company, the company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, income-tax, sales-tax, wealth-tax, custom duty, excise-duty, service tax, Cess and other statutory dues applicable to it.

b) According to the information and explanations given to us the following are the particulars of disputed dues and amounts not paid thereon on account of sales tax, income tax and Central Excise:

Name of the Nature of dues Amount

Statute (in Lakhs)

Income Tax Act, Disallowance of unabsorbed Rs.12.42

1961 depreciation/ business losses.

AP VAT Act Regarding Sales tax on Rs.11.98

Molasses Sales, Input Tax

credit on coal etc.,

Income Tax Act, Disallowance U/S 80 IA Exemption Rs.115.00

1961 Name of the Period to which Forum where

Statute the amount the Dispute is

relates pending

Income Tax Act, Assessment years High Court of

1961

1999-2000, Andhra Pradesh

2000-2001

2001-2002

AP VAT Act 2001-2002 High Court of

2002-2003 Andhra Pradesh

2005-2006

Income Tax Act, Assessment Year CIT (Appeals)

1961 2007-08

x) The company has no accumulated losses and it has not incurred any cash losses in the financial year ended on that date or in the immediately preceding financial year.

xi) The company has not defaulted in repayment of dues to financial institutions, banks or debenture holders.

xii) During the year, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

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

xiv) The company is not a dealer or trader in shares, securities, debentures and other investment.

xv) The company has not given any guarantee for loans taken by others from banks or financial institutions.

xvi) According to the information and explanations given to us, the term loans were applied for the purpose for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of the cash flow statement and the Balance Sheet of the Company, in our opinion the funds raised on short term basis have prima facie not been used for long term investment.

xviii) According to the information and explanations given to us, during the year the Company has not made preferential allotment of shares to parties and companies covered in the register covered and recorded in the register maintained under Section 301 of the Companies Act, 1956.

xix) According to the information and explanations given to us, the Company has not raised any money by way of issue of debentures during the year.

xx) According to the information and explanations given to us, the Company has not raised any money by way of public issue during the year. Accordingly, the provisions of clause 4 (xx) of the Companies (Auditors Report) Order, 2003 are not applicable to the company.

xxi) During the course of audit, based upon the audit procedures performed and information and explanations given by the management, no instance of fraud on or by the company has been noticed or reported during the course of our audit.



for M. ANANDAM & CO.

CHARTERED ACCOUNTANTS

(Firm Regn.No.000125S)



A.V. SADASIVA

Place : Hyderabad PARTNER

Date :14th August, 2010 M. No. 18404

 
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