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Auditor Report of Keerthi Industries Ltd.

Mar 31, 2015

1. We have audited the accompanying Financial Statements of KEERTHI INDUSTRIES LIMITED, HYDERABAD, TELANGANA ("The Company") which comprise the Balance Sheet as at 31st March, 2015 and the Statement of Profit and Loss and the Cash flow statement for the year ended, and Summary of Significant Accounting Policies and other explanatory information.

Management's responsibility for the Financial Statements

2. The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the companies Act, 2013 ("the Act") with respect to the preparation 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 of 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.

Auditor's Responsibility

3. 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.

4. 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.

5. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company's preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company's Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

7. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the company as at 31 March 2015 and its profit and its cash flow for the year ended on that date

Emphasis of matter

8. We draw attention to Note No. 25.6 to the financial statements relating to confirmation of balances in respect of some of the trade receivables, loans & advances and trade payables. Our opinion is not qualified in respect of this matter.

Report on other Legal and Regulatory requirements

9. As required by the Companies(Auditor's Report) Order 2015 ("the Order") issued by the Central Government of India in terms of sub-section(11) of section 143 of the Companies Act 2013, we give in the Annexure, a statement on the matters specified in paragraphs 3 and 4 of the Order .

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

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

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

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

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

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

i. the Company does not have any pending litigations which would impact its financial position

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

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

ANNEXURE REFERRED TO IN PARAGRAPH 9 OF OUR REPORT OF EVEN DATE

Statement on the Companies (Auditor's Report) Order, 2015 Re: KEERTHI INDUSTRIES LIMITED

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

(b) All the assets have not been physically verified by the management during the year but there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

ii) (a) The 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) The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records have been properly dealt with in the books of account.

iii) (a) The company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained u/s.189 of the Act.

(b) In view of our comment in clause iii (a) above and clause iii (b) of paragraph 3 of the aforesaid Order are not applicable to the Company.

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

v) The Company has not accepted deposits from the public. Hence the provisions of Sections 73 to 76 and other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 are not applicable to the Company.

vi) We have broadly reviewed the books of account relating to materials, labour and other items of costs maintained by the Cement Division of the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under sub-section (1) of Section 148 of the Companies Act, 2013 and are of the opinion that prime facie, the prescribed accounts and records have been made and maintained.

vii) (a) The company is regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Employees State Insurence, Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess.

(b) According to the information and explainations given to us, there are no dues of customsduty and wealth tax which have not been deposited on account of any disputes. The details of disputed Exice Duty, Income Tax, Service Tax and Sales Tax have not been deposited with the appropriate authorities are as fallows.

Name of Period to which the Statute/ Nature of Dues Amount' the amount S No Authority relates

AP General Tax on packing FY 1990- 91 1 18,77,197 Sales Tax Act material and FY 1991- 92

Central Sales Central Sales 2 57,13,367 FY 2004- 05 Tax Act Tax

FY 2000- 01, Central Sales Central Sales the Order was 3 39,25,213@ Tax Act Tax passed during FY 2007-08 Commercial Central Sales 4 Taxes Dept. 6,20,112 FY 1993- 94 Tax Karnataka

February 2006 to August 2010, Central 5 Central Excise 1,90,02,358 Show cause Excise Act notice received on 10.11.2010.

s Name of No.the Statute Forum where Authority Due date dispute is pending

1. AP General Not mentioned Sales Tax Sales Tax Act in demand Appellate notice Authority

2. Central Sales Not mentioned Sales Tax Tax Act in demand Appellate notice Authority

3. Central Sales Not mentioned AP Sales Tax in demand tribunal. notice

4. Commercial Not mentioned Hon'ble Taxes Dept., in demand High Court Karnataka notice of Karnataka

5. Central Not mentioned CES1A1, Excise Act in the demand Bangalore notice

@ Against the demand of Rs. 39,25,213, the Company has paid Rs. 19,08,835.

viii) There are no accumulated losses as at yearend under report. The company has not incurred cash losses during the financial year covered by our audit and incurred cash losses in the immediately preceding financial year.

ix) 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 institutions and Banks.

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

xi) During the year the company has not availed any term loans from banks or financial institutions. Accordingly, the provisions of clause 3(xi) of the above referred Order are not applicable to the company.

xii) 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 K.S. RAO & CO.,

Chartered Accountants Firms' Regn.No.003109S

Sd/-

(P.GOVARDHANA REDDY)

Place: Hyderabad Partner

Date : 29.05.2015 Membership No.029193


Mar 31, 2014

We have audited the accompanying Financial Statements of KEERTHI INDUSTRIES LIMITED, HYDERABAD (A.P) ("The Company") which comprise the Balance Sheet as at 31st March, 2014 and the Statement of Profit and Loss and cash flow statement for the year then ended, and 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 Standards referred in the 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 the 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 misstatements 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 our opinion on the effectiveness of the entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the Financial statements

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

Opinion:

In our opinion and to the best of our inform and according to 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 loss for the year ended on that date; and

c) In the case of the Cash flow statements, of the cash flow for the year ended on that date.

Emphasis of Matter:

We draw attention to Note No. 24.5 to the financial statements relating to confirmation of balances in respect of some of the trade receivables, loans & advances and trade payables. Our opinion is not qualified in respect of this matter.

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, the 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, 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 Act;

f. Since the Central Government has not issued any notification as to the rate at which cess is to be paid under section 441A of the Companies Act 1956 nor has it issued any rules under the said section prescribing the manner in which such cess is to be paid, no cess is due and payable by the company.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE Statement on the Companies (Auditor''s Report) Order, 2003 Re: KEERTHI INDUSTRIES LIMITED

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

b) All the assets have not been physically verified by the management during the year, but there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any of its fixed assets that would affect the going concern status of the Company.

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

b) In our opinion, 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 is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and book records were not material.

3. a) The Company has not granted any unsecured loans to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Hence, clauses (iii) (a) to (d) of the said order are not applicable.

b) The Company had taken unsecured loans from two bodies Corporate and from two parties covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year and the closing balance was Rs. 1179.99 lakhs;

c) In our opinion, the terms and conditions on which loans have been taken are not, prima-facie, prejudicial to the interest of the Company.

d) Time schedule for repayment has not been fixed. Hence we cannot offer any comment on the over dues.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to 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.

5. a) According to the information and explanations given to us by the Management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register to be maintained under that section.

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 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted deposits from the public within the meaning of the provisions of Section 58A, Section 58AA and the other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 and hence the same are not applicable to the Company for the time being.

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

8. We have broadly reviewed the books of account relating to materials, labour and other items of costs maintained by the Cement Division of the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prime facie, the prescribed accounts and records have been made and maintained. .

9. a) According to the information furnished to us and in our opinion, the Company is regular in depositing with

i appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears as at March 31, 2014 for a period of more than six months from the date they became payable.

c) According to the records of the Company and the information and explanations given to us, the dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess, which have not been deposited on account of any dispute are as follows:

Statement showing particulars of Disputed Dues

S. NAme of Nature of Amount Rs Period to which the No the statute Dues amount relates Authonty

1 AP General Tax on 18,77,197 FY 1990-91 Sales Tax Act packing and material FY 1991-92

2 Central Sales Central 57,13,367 FY 2004-05 Tax Act Sales Tax

3 Central Sales Central 39,25,213 FY 2000-2001, the Tax Act Sales Tax Order was passed during FY 2007-08

4 Commercial Central 6,20,112 FY 1993-94 Taxes Dept. Sales Tax Kamataka

5 Central Excise Central 1,90,02,358 February 2006 to Act Excise August 2010, Show cause notice received on 10.11.2010.

6 Income-tax Income 2,62,59,373# FY 2006-07. Act, 1961 Tax Revised Assessment order received on 05.01.2013.

7 Income-tax Income 1,83,80,281 FY 2005-06. Act, 1961 Tax Revised Assessment order received on 04-03-2014



Name of the Statute/Authority Due date Forum where dispute is pending

AP General Sales Tax Act Not Sales Tax mentioned Appellate in demand Authority notice

Central Sales Tax Act Not Appellate Dy. mentioned Commissioner in demand notice

Central Sales Tax Act Not AP Sales Tax mentioned Tribunal. in demand notice

Commercial Taxes Dept., Kamataka Not Hon''ble High mentioned Court of in demand Kamataka notice

Central Excise Act Not CESTAT, mentioned in Bangalore the demand notice

Income tax Act 1961 Not ITAT, Hyderabad mentioned in the demand notice

Income tax Act 1961 Not Commissioner mentioned in (Appeals) III the demand Hyderabad notice

@ Against the demand of Rs.39,25,213, the Company has paid Rs. 19,08,835. # Against the demand of Rs.2,62,59,373, the Company has paid Rs. 1,82,99,755.

10. The Company has accumulated losses as at the end of the financial year. The Company has incurred cash losses during the financial year covered by our audit and in the immediate preceding financial year.

11. 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 institutions and Banks excepting interest amount of Rs84.01 lakhs outstanding at the end of the year.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Order referred to above are not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Order referred to above are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. In our opinion, and according to the information and explanations given to us, the term loans were applied for the purpose for which the loans were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the funds raised on short-term basis have prima-facie been used during the year for long- term investment.

18. During the year, 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.

19. During the year under report, the Company has not issued any debentures. Accordingly the provisions of clause 4(xix) of the above referred Order are not applicable to the Company.

20. During the year, the Company has not made any public issue and hence, the provisions of clause 4(xx) of the above referred Order are 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 K.S.RAO & CO., Chartered Accountants. Firms'' Regn.No.003109S

Place: Hyderabad (P.GOVARDHANA REDDY) Date: 29.05.2014 Partner Membership No.029193


Mar 31, 2013

Report on the Financial Statements

We have audited the accompanying Financial Statements of KEERTHI INDUSTRIES LIMITED, HYDERABAD (A.P) ("The Company") which comprise the Balance Sheet as at 31st March, 2013 and the Statement of Profit and Loss and cash flow statement for the year then ended, and 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 Standards referred in the 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 the 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 misstatements 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 the management, as well as evaluating the overall presentation of the Financial statements

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

Emphasis of Matter:

We draw attention to Note No. 24.5 to the financial statements relating to confirmation of balances in respect of some of the trade receivables, loans & advances and trade payables. Our opinion is not qualified in respect of this matter.

Opinion :

In our opinion and to the best of our inform and according to 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 Loss for the year ended on that date; and

c) In the case of the Cash Flow Statement, of the cash flow 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, the 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;

f. Since the Central Government has not issued any notification as to the rate at which cess is to be paid under section 441A of the Companies Act 1956 nor has it issued any rules under the said section prescribing the manner in which such cess is to be paid, no cess is due and payable by the company.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE

Statement on the Companies (Auditor''s Report) Order, 2003 Re: KEERTHI INDUSTRIES LIMITED

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

b) All the assets have not been physically verified by the management during the year, but there is a regular program of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any of its fixed assets that would affect the going concern status of the Company.

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

b) In our opinion, 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 is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and book records were not material.

3. a) The Company has not granted any unsecured loans to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Hence, clauses (iii) (a) to (d) of the said order are not applicable.

b) The Company had taken unsecured loan from two bodies Corporate and from a party covered in the register maintained under Section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 1042.32 lakhs and the closing balance was Rs. 996.44 lakhs;

c) In our opinion, the terms and conditions on which loans have been taken are not, prima-facie, prejudicial to the interest of the Company.

d) Time schedule for repayment has not been fixed. Hence we cannot offer any comment on the over dues.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to 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. I

5. a) According to the information and explanations given to us by the Management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register to be maintained under that section.

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 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted deposits from the public within the meaning of the provisions of Section 58A, Section 58AA and the other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 1975 and hence the same are not applicable to the Company for the time being.

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

8. We have broadly reviewed the books of account relating to materials, labour and other items of costs maintained by the Cement Division of the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prime facie, the prescribed accounts and records have been made and maintained. In respect of Electronics Division, the Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

9. a) According to the information furnished to us and in our opinion, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears as at March 31, 2013 for a period of more than six months from the date they became payable.

Against the demand of Rs.39,25,213, the Company has paid Rs.19,08,835. # Against the demand of Rs.2,62,59,373, the Company has paid Rs. 1,82,99,755.

10. The Company does not have any accumulated losses as at the end of the financial year. The Company has incurred cash losses during the financial year covered by our audit and not incurred in the immediate preceding financial year.

11. 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 institutions and Banks.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. The Company is not a chit fund or a nidhi/ mutual benefit fund/ society. Therefore, the provisions of clause 4(xiii) of the Order referred to above are not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Order referred to above are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. In our opinion, and according to the information and explanations given to us, the term loans were applied for the purpose for which the loans were raised.

17. According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that the funds raised on short-term basis have prima-facie been used during the year for long- term investment.

18. During the year, 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.

19. During the year under report, the Company has not issued any debentures. Accordingly the provisions of clause 4(xix) of the above referred Order are not applicable to the Company.

20. During the year, the Company has not made any public issue and hence, the provisions of clause 4(xx) of the above referred Order are 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 K.S.RAO & CO.,

Chartered Accountants.

Firms'' Regn.No.003109S

Sd/-

(P.GOVARDHANA REDDY)

Partner

Membership No.029193

Place: Hyderabad

Date: 29.05.2013


Mar 31, 2012

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

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

4. Further to our comments in the Annexure referred to 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 those 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 comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956.

v) On the basis of written representations received from the Directors, as on 31st March, 2012 and taken on record 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;

5. a) There are no confirmation of balances, by Sundry Debtors, Creditors and for Loans and Advances.

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to our comment in Para 5 above, read in conjunction with the Schedules annexed therewith 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:

a) in the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2012;

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

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

Annexure to the Auditor's Report: referred to in paragraph 3 of our report of even date,

Re: KEERTHI INDUSTRIES LIMITED, HYDERABAD.

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

b) All the assets have not been physically verified by the management during the year, but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any of its fixed assets that would affect the going concern status of the Company.

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

b) In our opinion, 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 is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and book records were not material.

3. a) The Company has not granted any unsecured loans to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Hence, clauses (iii) (a) to (d) of the said order are not applicable.

b) The Company had taken unsecured loan from a Body Corporate and from a party covered in the register maintained under Section 301 of the Companies Act, 1956.Maximum amount involved and the year end balance was Rs.656.04 lakhs and Rs.142.87 lakhs respectively; and

c) In our opinion, the terms and conditions on which loans have been taken are not, prima-facie, prejudicial to the interest of the Company.

d) Time schedule for repayment has not been fixed. Hence we cannot offer any comment on the over dues.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to 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.

5. a) According to the information and explanations given to us by the Management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register to be maintained under that section

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 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted deposits from the public. Hence the provisions of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits)Rules, 1975 are not applicable to the Company for the time being.

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

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Cement Division of the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prime facie the prescribed accounts and records have been made and maintained. In respect of Electronics Division, the Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

9. a) According to the records, the Company is regular in depositing with appropriate authorities undisputed statutory l dues including Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income- tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty, Excise Duty and Cess were in arrears as at March 31, 2012 for a period of more than six months from the date they became payable.

c) According to the records of the Company and the information and explanations given to us, the dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty and Cess, which have not been deposited on account of any dispute are as follows:

STATEMENT OF DISPUTED DUES

S. Name of the Nature of Dues Amount Rs. No Statute

i) AP General Tax Liability on 18,77,197 Sales Tax Act packing material

ii) Central Sales Central Sales Tax 74,29,390 Tax

iii) Commercial Central Sales Tax 6,20,112 Tax Department Govt.of Karnataka

iv) AP General Central Sales Tax 39,25,213 Sales Tax Act

v) Customs, Central Central Excise 1,90,02,358 Excise & Service Tax

vi) Income tax Income Tax 2,90,96,803 Department

Name of the status Period to which Forum where the amount Due date relates dispute is pending

Ap General sales Tax Act 1990-91& Not mentioned Sales Tax

1991-92 in demand notice Appellate

Authority

Central Sales Tax 2003-04& Not mentioned Appellate 2004-05 in demand notice Dy. Commissioner

Commercial Tax Department Gove of Karnataka 1993-94 Not mentioned Honourable in demand notice High Court of Karnataka

Ap General Sales Tax Accounting year Not mentioned AP Sales Tax 2000-2001, in demand notice Tribunal. the Order was passed in the year 2007-08

Customs Central Execise &Service Tax February 2006 Not mentioned Customs, to August 2010. in the demand Excise& Service Show cause notice Tax Appellate notice received Tribunal on 10.11.2010.

Income Tax Department Accounting Not mentioned Commissioner year 2006-07. in the (appeals). Assessment assessment order received order. on 14.11.2011.

10. The Company has no accumulated losses as at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. 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 institutions and Banks.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. 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 are not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditor's Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. In our opinion and according to the information and explanations given to us the term loans were applied for the purpose for which the loans were raised.

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

18. During the year, 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.

19. During the year under report, the Company has not issued any debentures. Accordingly the provisions of clause 4(xix) of the above referred Order are not applicable to the Company.

20. During the year, the Company has not made any public issue and therefore the question of disclosing the end use of money raised by public issue does not arise.

21. Based upon the audit procedures performed and according to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year.

for K.S.RAO & CO.

Chartered Accountants Firm's Registration Number: 003109S

(P.Govardhana Reddy)

Partner

Membership Number: 029193

Place: Hyderabad

Date : 31st August, 2012


Mar 31, 2010

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

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

4. Further to our comments in the Annexure referred to 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 those 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 Row 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.

v) On the basis of written representations received from the Directors, as on 31st March, 2010 and taken on record 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;

5. There are no confirmation of balances, by Sundry Debtors, Creditors and for Loans and Advances.

6. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to our comment in Para 5 above, read in conjunction with the Schedules annexed therewith 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:

a) in the case of the balance sheet, of the state of affairs of the Company as at 31st March, 2010;

b) in the case of the profit and loss account, of the Profit of the Company for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

Annexure to the Auditors Report: referred to in paragraph 3 of our report of even date, Re: KEERTHI INDUSTRIES LIMITED, HYDERABAD..

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

b) All the assets have not been physically verified by the management during the year, but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of the assets. No material discrepancies were noticed on such verification.

c) During the year, the Company has not disposed off any of its fixed assets that would affect the going concern status of the Company.

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

b) In our opinion, 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 is maintaining proper records of inventory. The discrepancies noticed on physical verification between the physical stocks and book records were not material.

3. a) The Company has not granted any unsecured loans to Companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Hence, clauses (iii) (a) to (d) of the said order are not applicable.

b) The Company had taken interest free unsecured loan from a Body Corporate covered in the register maintained under Section 301 of the Companies Act, 1956.Maximum amount involved and the year end balance was Rs.201.04 lakhs;and

c) In our opinion, the terms and conditions on which loans have been taken are not, prima-facie, prejudicial to the interest of the Company.

d) Time schedule for repayment has not been fixed. Hence we cannot offer any comment on the over dues.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and with regard to 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.

5. a) According to the information and explanations given to us by the Management, we are of the opinion that the particulars

of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in the register to be maintained under that section

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 have been made at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. The Company has not accepted deposits from the public. Hence the provisions of Section 58A, 58AA and other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits)Rules, 1975 are not applicable to the Company for the time being.

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

8. We have broadly reviewed the books of account relating to materials, labour and other items of cost maintained by the Cement Division of the Company pursuant to the Rules made by the Central Government for the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and are of the opinion that prime facie the prescribed accounts and records have been made and maintained. In respect of Electronics Division, the Central Government has not prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956.

9. a) According to the records, the Company is regular in depositing with appropriate authorities undisputed statutory dues including Provident Fund. Investor Education and Protection Fund, Employees State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty. Excise Duty and Cess were in arrears as at March 31, 2010 for a period of more than six months from the date they became payable.

c) According to the records of the Company and the information and explanations given to us, the dues of Sales Tax, Income Tax, Custom Duty. Wealth Tax. Service Tax, Excise Duty and Cess, which have not been deposited on account of any dispute are as follows:

STATEMENT OF DISPUTED DUES

S.No Name of the Nature of Amount Period to Statute Dues Rs. which the amount relates i) AP General Sales Tax Liability on 18,77,197 1990-91 Tax Act packing material & 1991-92

ii) Central Sales Tax Central Sales Tax 74,29,390 2003-04 & 2004-05

iii) Commercial Tax Central Sales Tax 6,20,112 1993-94 Department Govt. of Karnataka

iv) AP General Sales Central Sales Tax 30,25,213 Accounting year Sales Tax Tax Act 2000-2001, the Order was passed in the year 2007-08



S.No Name of the Due date Forum where Statute dispute is pending

i) AP General Sales Not Sales Tax Tax Act mentioned Appellate in demand Authority

ii) Central Sales Tax Not Appellate mentioned Dy.Commissioner in demand

iii) Commercial Tax Not Honourable High Department Govt. mentioned Court of of Karnataka in demand Karnataka

iv) AP General Sales Not AP Tax Act mentioned Tribunal. in demand

10. The Company has no accumulated losses as at the end of the financial year. The Company has not incurred any cash losses during the financial year covered by our audit and the immediately preceding financial year.

11. 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 institutions and Banks.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. 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 are not applicable to the Company.

14. The Company is not dealing or trading in shares, securities, debentures and other investments. Therefore, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 are not applicable to the Company.

15. According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

16. In our opinion and according to the information and explanations given to us the term loans were applied for the purpose for which the loans were raised.

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

18. During the year, 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.

19. During the year under report, the Company has not issued any debentures. Accordingly the provisions of clause 4(xix) of the above referred Order are not applicable to the Company. However, the Company is required to issue debentures pursuant to a Scheme of Arrangement u/s.391/394 of the Companies Act, sanctioned by the Hon"ble Andhra Pradesh High Court effective from 18.03.2010. In pursuance of this, the Company transferred Rs.7.70 Crores to debenture suspense and allotted debentures in the following year.

20. During the year, the Company has not made any public issue and therefore the question of disclosing the end use of money raised by public issue does not arise.

21. Based upon the audit procedures performed and according to the information and explanations given to us, we report that no fraud on or by the Company has been noticed or reported during the year.

for K.S.RAO & CO.

Chartered Accountants

Firms Registration Number: 003109S



(P. Govardhana Reddy)

Partner

Membership Number: 029193

Place: Hyderabad

Date : 30th August, 2010

 
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