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Auditor Report of Sree Rayalaseema Hi-Strength Hypo Ltd.

Mar 31, 2016

INDEPENDENT AUDITOR’S REPORT

To

The Members of

Sree Rayalaseema Hi-Strength Hypo limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of Sree Rayalaseema Hi-Strength Hypo limited (the Company), which comprise the Balance Sheet as at 31st March, 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information for the year then ended.

Management’s Responsibility for the Standalone Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (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 prescribed under section 133 of the Act, as applicable.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under and the Order under section 143 (11) of the Act.

We conducted our audit of the standalone financial statements in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

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 31st March, 2016, and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

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

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

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

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

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards prescribed under section 133 of the Act, as applicable.

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

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in Annexure A.

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

(i) There are no pending litigations which would impact the financial position of the company ;

(ii) The Company has no foreseeable losses on long-term contracts and has no derivative contracts outstanding as at 31st March,2016;

(iii)The company has no dues required to be transferred to the Investor Education and Protection Fund;

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

Annexure to Independent Auditors’ Report

(referred to in Paragraph 2 of the section on “Report on other legal and regulatory requirements” of our Report of even date)

Sl.

No.

Ref.to

CARO

Report by Independent Auditors

1

3(i)

Fixed Assets

3(i)(a)

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

3(i)(b)

As explained to us, all 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 nature of its assets. No material discrepancies were noticed on such physical verification

3(i)(c)

According to the information and explanations given to us and the records exsamimed by us and based on the examination of sale deeds, conveyance deeds, encomberance certificates verified to us, we report that, the title deeds comprising all the immovable properties of lands and buildings which are free hold, are in the name of the company as at the balance sheet date except the following.

Sl No.

Particulars of immovable property, location & other details

Gross block as at the Balance sheet date

Net Block as at the balance sheet date

Remarks

1

Land located at Gondiparla, Kurnool Survey No. 16 admeasuring 2.02 acres

237,576

237,576

As per the information given to us, this was received in scheme of amalgamation. Change of title is under process.

2

Land located at manjawadi, Laxmapuram,Tamilnadu Survey No. 38/1A, 38/5A, 38/ 3A1, 143P.Ac admeasuring 6.340 acres

357,772

357,772

As per the information given to us, this was received in scheme of amalgamation. Change of title is under process.

3

Land located at kaluvekkam, Tiruporur, Tamilnadu Survey No. 245-2B, 217 admeasuring 3.0 acres

1,492,627

1,492,627

As per the information given to us, this was received in scheme of amalgamation. Change of title is under process.

4

Land located at Konapapapeta,U.Kothapally Mandal,East Godavari District Survey No. 263/2, 263/3 admeasuring 16.60 acres

2,330,990

2,330,990

As per the information given to us, this was received in scheme of amalgamation. Change of title is under process.

5

Land located at Nenam Village, East Godavari District Survey No. 306, 301, 301/1, 301/2, 302/2 admeasuring 51.858 acres

4,254,639

4,254,639

As per the information given to us, this was received in scheme of amalgamation. Change of title is under process.

Sl.

No.

Ref.to

CARO

Report by Independent Auditors

2

3(ii)

Inventories

As explained to us, the inventories has been physically verified during the year by the management at regular intervals .In our opinion, the frequency of such verification is reasonable.

3

3(iii)

3(iii)(a)

whether the terms and conditions of the grant of such loans are not prejudicial to the company''s interest;

3(iii)(b)

whether the schedule of repayment of principal and payment of interest has been stipulated and whether the repayments or receipts are regular;

3(iii)(c)

if the amount is overdue, state the total amount overdue for more than ninety days, and whether reasonable steps have been taken by the company for recovery of the principal and interest;

4

3(iv)

Loans, guarantees, securities to and investments in other companies

in respect of loans, investments, guarantees, and security whether provisions of section 185 and 186 of the Companies Act, 2013 have been complied with. If not, provide the details thereof

5

3(v)

Acceptance of deposits

The company has not accepted any deposits and hence paragraph 3(5) of the order is not applicable to the company.

6

3(vi)

Maintenance of cost records

The maintenance of cost records as specified by the Central Government Under Section 148(1) of the companies Act, 2013(The Act) is applicable to the company for the Financial Year ending 31.03.2016 we have broadly verified the cost records maintained by the company under Section 148(1)of the Act and we are of the opinion that, prima facie the prescribed accounts and cost records have been maintained. We are, however, not required to and not carried out any a detailed examination of such accounts and records with a view to determining whether they are or complete or accurate.

Sl.

No.

Ref.to

CARO

Report by Independent Auditors

7

3(vii)

Statutory Dues

3(vii)(a)

According to the records examined by us, the company is regular in depositing with appropriate authorities undisputed statutory dues including Provident fund, Employee state insurance, Sales tax, Service tax, Customs duty, Excise duty, Value added tax, cess and other statutory dues where ever applicable. According to the information and explanation given to us no undisputed arrears of statutory dues were outstanding except Advance Income tax as on the last date of the financial year for a period of more than six months from the date they became payable.

3(vii)(b)

According to the information and explanation given to us there are no material dues of statutory dues of Income tax, sales tax, Service tax, Customs duty, Excise duty, Value added tax, cess and other dues have not been deposited on account of any dispute however the following dues of excise duty, service tax, and income tax have not been deposited by the company on account of pending disputes as detailed here under.

Sl.

No.

Name of the Statute

Nature of dues

Total

Amount

Rs.

Period to which the amt.relates

Forum where dispute is pending

1

Central Excise Act,1944

Alleged Wrong availment of CENVAT credit for some input Services

364,324

2008-09

Appeal filed with Service Tax Dept. Pending before Comm. Appeals, Guntur

2

Central Excise Act,1944

Disallowance of CENVAT Credit

3,219,175

2006-09

Appeal pending before Additional

Commissioner Tirupati

3

Central Excise Act,1944

Disallowance of CENVAT Credit

2,066,352

2009-10

Appeal pending before Additional

Commissioner Tirupati

4

Central Excise Act,1944

Disallowance of CENVAT Credit on input services

3,058,889

2010-11

Appeal pending before Additional

Commissioner Tirupati

5

Service Tax, 1944

Non Payment of service tax on lease rentals

1,208,860

2010-11

Dept. Appeal pending before Commissioner Appeals, Guntur

6

Central Excise Act,1944

Alleged Wrong availment CENVAT credit on Customs duty

3,252,002

2010-11

Appeal pending before Additional

Commissioner Tirupati

7

Central Excise Act,1944

Alleged Wrong availment of CENVAT credit for some input Services

2,764,347

2010-11

Appeal pending before Commissioner of Central Excise, Tirupati

Sl.

No.

Name of the Statute

Nature of dues

Total

Amount

Rs.

Period to which the amt.relates

Forum where dispute is pending

8

Service Tax, 1944

Non Payment of service tax on lease rentals

473,819

2010-11

Appeal pending before Assistant

Commissioner Kurnool

9

Central Excise Act,1944

Alleged Wrong availment CENVAT credit on Customs duty

2,554,120

2011-2

Appeal pending before Commissioner of Central Excise, Tirupati

10

Central Excise Act,1944

Alleged Wrong availment CENVAT credit on input Services

4,083,289

2012-13

Appeal pending before Commissioner of Central Excise, Tirupati

11

Central Excise Act,1944

Alleged Wrong availment CENVAT credit on receipt of various input Services

129,845

2012-13

Appeal pending before Assistant

Commissioner Kurnool

12

Central Excise Act,1944

Alleged non Payment of service tax on lease rentals on leased assets

800,354

2011-12

2012-13

Appeal pending before Additional Comm. of Central Excise, Tirupati

13

Central Excise Act,1944

Alleged Wrong availment CENVAT credit on input Services

2,253,557

2012-13

Appeal pending before Additional Comm.of Central Excise, Tirupati

14

Central Excise Act,1944

Alleged Wrong availment CENVAT credit on input Services

4,021,464

2012-13

2013-14

Appeal pending before Additional Comm. of Central Excise, Tirupati

15

Central Excise Act,1944

Alleged Wrong availment CENVAT credit in respect of various input Services

825,993

2013-14

Appeal pending before Additional Comm. of Central Excise, Tirupati

16

Central Excise Act,1944

Alleged Wrong availment of CENVAT credit on input Services Alleged Wrong

2,936,292

2013-14

Appeal pending before Additional Comm. of Central Excise, Tirupati

17

Central Excise Act,1944

Alleged Wrong availment of CENVAT credit on input Services

1,497,273

2014-15

Appeal pending before Additional Comm. of Central Excise, Tirupati

18

Service Tax, 1944

Non Payment of service tax on lease rentals

194727

2013-14

Appeal pending before Additional Comm. of Central Excise, Tirupati

19

The income Tax Act,1961

Disallowance of amount as expenditure under section 14A

304,719

2008-09

Appeal pending before ClT (appeals) Hyderabad

20

Service Tax, 1944

Non Payment of service tax on lease rentals

9,185

2014-15

Appeal pending before Deputy Commissioner Kurnool

21

Central Excise Act,1944

Alleged Wrong availment of CENVAT credit in respect of various input Services

3,037,489

2014-15

Appeal pending before Additional Commissioner of Central Excise, Tirupati

22

Central Excise Act,1944

Alleged Wrong availment of CENVAT credit in respect of various input Services

397,789

2014-15

Appeal pending before Additional Commissioner of Central Excise, Tirupati

Sl.

No.

Ref.to

CARO

Report by Independent Auditors

8

3(viii)

Defaults in repayments to Financial Institutions/Banks/Debenture holders

The company has borrowed Term loans and working capital loans from banks and has not issued any debentures. According to the information and explanation given to us and based on our verification the company, in our opinion has not defaulted in the payment/repayments of loans or borrowings to the banks.

9

3(ix)

Initial public offer/further offer

In our opinion and according to the information and explanation given to us, the company has not made any initial public offer or further public offer of securities (including debt instruments) and the term loans have been applied by the company during the year for the purposes for which they are raised.

10

3(x)

Frauds by or on the company

Based upon the audit procedures performed and to the best of our knowledge and according to the information and explanation given to us by the management, we report that no fraud by the company and no material fraud on the company by its officers or employees has been noticed are reported during the course of our audit.

11

3(xi)

Managerial Remuneration

The company has paid/provided managerial remuneration to its whole time director during the year and in our opinion and according to the information and explanation given to us such managerial remuneration is according with the provisions of section 197 of the Act read with schedule V to the Act.

12

3(xii)

Nidhi company

In our opinion and according to the information and explanation given to us, the company is not a nidhi company and hence paragraph 3(xii) of the order is not applicable to the company.

13

3(xiii)

Transactions with Related parties

As explained to us and as per records of the company, in our opinion the transactions with related parties are in compliance with provision of section 177 and section 188 of the Act and the details have been disclosed in the financial statements as required by the applicable accounting standards.

14

3(xiv)

Preferential allotment u/s 62 or private placement u/s 42 of the Act

According to the records of the company it has not made any preferential allotment of shares or private placement of shares or fully/partly convertible debentures during the year under report. Accordingly paragraph 3(xiii) of the order is not applicable to the company.

15

3(xv)

Non-cash transactions with directors u/s 192 of the Act

According to the records of the company, the company has not entered during the year in to any non cash transactions with directors or directors of its subsidiaries or associate companies or persons connected with him and hence provisions of Sec 192 of the Act and paragraph 3(xv) of the Order is not applicable to the company.

16

3(xvi)

Registration u/s 45-1A of RBI Act,1934

The company is not required to be registered under section 45-1A of the Reserve bank of India Act, 1934 and hence paragraph 3(xvi) of the order is not applicable to the company.

for S.T. Mohite & Co.,

Chartered Accountants

Regn. No. 011410S

Sd/-

Place: Kurnool M.T. Sreenivasa Rao

Date : 30th May, 2016 Membership No. 015635


Mar 31, 2015

We have audited the accompanying financial statements of Sree Rayalaseema Hi- Strength Hypo Limited (hereinafter referred to as "the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Profit and Loss Statement, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013("the Act") with respect to the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. The responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the 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

Our responsibility is to express an opinion on these financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

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

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

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

Opinion

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order, 2015 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, based on the comments in the auditors' reports of the Holding company, subsidiary companies, associate companies and jointly controlled companies incorporated in India, we give in the Annexure a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section143(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 books of account.

(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

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

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

i. The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements.

ii. The Company has made Provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, and as required on long-term contracts including derivative contracts.

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

Annexure to Independent Auditors' Report

(referred to in Paragraph 1 of the section on "Report on other legal and regulatory requirements" of our Report of even date)

Sl. Ref.to No CARO Report by Independent Auditors

1 3(i) Fixed Assets

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

3(i)(b) As explained to us, all 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 nature of its assets. No material discrepancies were noticed on such physical verification.

2 3(ii) Inventories

3(ii)(a) As explained to us inventories have been physically verified during the year by the management at reasonable intervals during the year. In our opinion, the frequency of suchverification is reasonable.

3(ii)(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

3(ii)(c) The Company has maintained proper records of inventories.

As per the information and explanation given to us, no material discrepancies were noticed on physical verification.

3 3(iii) Loans to parties covered by Sec.189 of the Companies Act,2013

The Company has not granted any loans, secured or unsecured, but paid deposit of share application money to companies or other parties covered in the register maintained under Section 189 of the Companies Act, 2013.Hence clause 3(iii)(a) and (b) are not applicable.

4 3(iv) Adequacy of Internal control procedures

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

5 3(v) Acceptance of public Deposits

According to the information and explanations given to us, the Company has not accepted any deposit from the public. Accordingly, the provisions of Clause (v) of paragraph 3 of the CARO 2015 are not applicable to the Company.

6 3(vi) Maintenance of cost records

3(vi)(a) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules, 2014 prescribed by the Central Government under Section 148(1)(d) of the Companies Act, 2013 and we are of the opinion that, prima facie, the prescribed accounts and cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whethe they are accurate or complete.

7 3(vii) Statutory Dues

3(vii)(a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Employees' State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, duty of Customs, Duty of Excise, Value Added Tax, Cess and other statutory dues 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 March 31, 2015 for a period of more than six months from the date of becoming payable.

3(vii)(b) According to the information and explanations given to us, there are no material dues of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess have not been deposited on account of any dispute. However, the following dues of Excise duty, Service Tax and Income Tax have not been deposited by the comapny on account of pending disputes as detailed hereunder:.

Sl Name Nature of Total No. of the dues Amount Statute Rs.

1 Central Excise Alleged Wrong availment 364,324 Act,1944 of CENVAT credit for some input Services

2 Central Excise DisallowanceofCENVAT 3,219,175 Act,1944 Credit

3 Central Excise Disallowance of CENVAT 2,066,352 Act,1944 Credit

4 Central Excise DisallowanceofCENVAT 3,058,889 Act,1944 Credit on input services

5 Service Tax, Non Payment of service 1,208,860 1944 tax on lease rentals

6 Central Excise AllegedWrong availment 3,252,002 Act,1944 CENVAT credit on Customs duty

7 Central Excise AllegedWrong availment 2,764,347 Act,1944 CENVAT credit on input Services

8 Service Tax, Non Payment of service 473,819 1944 tax on lease rentals Kurnool

9 Central Excise AllegedWrong availment 2,554,120 Act,1944 CENVAT credit on input Services

10 Central Excise AllegedWrong availment 4,083,289 Act,1944 CENVAT credit on input Services

11 Central Excise AllegedWrong availment 129,845 Act,1944 CENVAT credit in respect of various input Services

12 Service Tax, Alleged non Payment of 800,354 1944 service tax on lease rentals on leased assets

13 Central Excise AllegedWrong availment 2,253,557 Act,1944 CENVAT credit on input Services

14 Central Excise AllegedWrong availment 4,021,464 Act,1944 CENVAT credit on input Services

15 Central Excise AllegedWrong availment 825,993 Act,1944 CENVAT credit in respect of various input Services

16 Central Excise Alleged Wrong availment 2,936,292 Act,1944 CEIWAT credit on input Services

17 Central Excise AllegedWrong availment 1,497,273 Act,1944 CEIWAT credit on input Services

18 Service Tax, Non Payment of service 194,727 1944 tax on lease rentals

19 The income Disallowance of amount 304,719 Tax Act,1961 as expenditure under section 14A

Sl Name period to Forumwhere No. of the which the dispute is Statute amt.relates pending

1 Central Excise 2008-09 Appeal filed with Act,1944 Service Tax Dept. Pending before Comm. Appeals, Guntur

2 Central Excise 2006-09 Appeal pending before Act,1944 Additional Commissioner Tirupati

3 Central Excise 2009-10 Appeal pending before Act,1944 Additional Commissioner Tirupati

4 Central Excise 2010-11 Appeal pending before Act,1944 Additional Commissioner Tirupati

2010-11 Dept. Appeal pending 5 Service Tax, before Commissioner 1944 Appeals, Guntur

2010-11 Appeal pending before Additional 6 Central Excise Commissioner Tirupati Act,1944 2010-11 Appeal pending before Commissioner of Central 7 Central Excise Excise, Tirupati Act,1944 2010-11 Appeal pending before Assistant Commissioner 8 Service Tax, 1944 2011-2 Appeal pending before Commissioner of Central 9 Central Excise Excise, Tirupati Act,1944 2012-13 Appeal pending before Commissioner of Central 10 Central Excise Excise, Tirupati Act,1944 2012-13 Appeal pending before Assistant Commissioner 11 Central Excise Kurnool Act,1944 2011-12 Appeal pending before 2012-13 Additional Comm. of 12 Service Tax, Central Excise, Tirupati 1944

13 Central Excise 2012-13 Appeal pending before Act,1944 Additional Comm.of Central Excise, Tirupati

14 Central Excise 2012-13 Appeal pending before Act,1944 2013-14 Additional Comm. of Central Excise, Tirupati

15 Central Excise 2013-14 Appeal pending before Act,1944 Additional Comm. of Central Excise, Tirupati

16 Central Excise 2013-14 Appeal pending before Act,1944 Additional Comm. of Central Excise, Tirupati

17 Central Excise 2014-15 Appeal pending befor Act,1944 Additional Comm. of Central Excise, Tirupati

18 Service Tax, 2013-14 Appeal pending before 1944 Assistant Commissioner Kurnool

19 The income 2008-09 Appeal pending before Tax Act,1961 CIT (appeals) Hyderabad

3(vii)(c) According to the records of the Company, there are no amounts that are due to be transferred to the Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made thereunder has been transferred to such fund within time.

8 3(viii) Erosion of Net worth & Cash losses incurred

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

9 3(ix) Defaults in repayments to Financial Institutions/ Banks/Debenture holders

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 and debenture holders.

10 3(x) Guarantees given for loans to others

The Company has given guarantees for loans taken by others from banks and financial institutions. According to the information and explanations given to us, we are of the opinion that the terms and conditions thereof are not prima facie prejudicial to the interest of the Company.

11 3(xi) End-use of funds from Term loans

The Company has raised new term loans during the year. The term loans outstanding at the beginning of the year and those raised during the year have been applied for the purposes for which they were raised.

12 3(xii) Frauds on or by the Company

In our opinion and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year.

for S.T. Mohite & Co., Chartered Accountants Regn. No. 011410S Sd/- Place: Kurnool M.T. Sreenivasa Rao Date : 29th May, 2015 Membership NP.r015635


Mar 31, 2014

We have audited the accompanying financial statements of Sree Rayalaseema Hi-Strength Hypo Limited ("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 a summary of significant accounting policies and other explanatory information.

2. 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 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.

3. 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 audit opinion.

4. 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 31st March, 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.

5. Report on Other Legal and Regulatory Requirements

5.1. 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.

5.2. 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 subsection (3C) of section 211 of the Companies Act, 1956;

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

Annexure to Independent Auditors'' Report

(referred to in Paragraph 4 of our Report of even date)

Sl.No. Ref. to Report by Auditors of the Company CARO

1 4(i) Fixed Assets

4(i)(a) The company is generally maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.

4(i)(b) We are informed that the company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the business of the company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by the management during year and no material discrepancies were noticed on such verification.

4(i)(c) In our opinion and according to the information and explanations given to us, the company has disposed off some of fixed assets which is not substantial to affect going concern concept.

2. 4(ii) Inventories

4(ii)(a) As explained to us, the Finished Goods and Stocks-in -process in the company''s custody have been physically verified by the management at the end of the financial year and in respect of raw materials, stores and spares there is a perpetual inventory system and physical verification programme to cover all items atleast once during the financial year. In our opinion, the frequency of the physical verification is reasonable.

4(ii)(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of the inventory followed by the management were generally reasonable and adequate in relation to the size of the company and the nature of its business.

4(ii)(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book records are not material having regard to the size of the operations of the company and have been properly dealt in the books of accounts.

3. 4(iii) Loans to / from parties covered by Sec.301 of the Companies Act, 1956

4(iii)(a) In our opinion and according to the information and explanations given to us, the to (d) company has/had not granted ''loans'' but paid interest-free advance for subscription of shares to a Company and Rent Deposit to two Companies, all of whom are covered in the Register maintained U/s 301. The maximum amount involved during the year is Rs.830.90 lakhs and the same is outstanding at the end of the year.

The terms for receipt of principal and steps to be taken for recovery of principal and interest are not applicable.

4(iii)(e) In our opinion and according to the information and explanations given to us, the to (g) Company has not taken any loans, secured or unsecured from any company, firms or other parties covered in the register maintained u/s 301 of the Companies Act, 1956. Hence furnishing details required by 4(iii)(e) to (g) are not applicable.

4. 4(iv) Adequacy of Internal control procedures

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 purchase of inventory, fixed assets and for sale of energy/services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanation given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5 4(v) Register under Sec.301 of the Co. Act, 1956

4(v)(a) To the best of our knowledge and belief and according to the information and explanations given to us, the transactions made in pursuance to such contracts to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956 have been entered.

4(v)(b) According to the information and explanations given to us, the transaction made in pursuance to such contracts or arrangements entered in the Register maintained under Sec.301 of the Companies Act, 1956 and exceeding the value of Rs.5 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.

6 4(vi) Acceptance of Public Deposits

As per the records examined by us and according to the information and explanations given to us, the company has not accepted any deposits from the public. Hence, compliance under Sec.58A and 58AA of the Companies Act, 1956 is not applicable to the Company.

7 4(vii) Internal Audit System

The internal audit function is carried out by a firm of independent Chartered Accountants appointed by the management and is commensurate with the size of the Company and the nature of its business.

8 4(viii) Maintenance of cost records

Cost Auditor has been appointed for the financial year 2013-14 and cost audit is in progress. We have broadly examined the books of accounts and records maintained by the company pursuant to the Rules prescribed by the Central Govt. for the maintenance of cost records u/s section 209(1)(d) of the Companies Act, 1956, in respect of all products of the company and are of the opinion that prima facie the prescribed accounts and records maintained. However, we have not made detailed examination of the records with a view to determine whether they are accurate.

9 4(ix) Statutory Dues

4(ix)(a) The company has generally been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues material in amount with appropriate authorities as on the Balance sheet date.

4(ix)(b) According to the information and explanations given to us and the records examined by us, the particulars of Service Tax, Excise Duty, Income Tax as on 31.3.2014 which have not been deposited on account of dispute pending are as under:

Sl. Name of Nature of dues Total Period to No. the Statute Amount which Rs. the amt. relates

1 Central Alleged Wrong availment 8,96,117 2007-08 Excise Act, of CENVAT credit for 1944 some input services

2 Central Alleged Wrong availment 3,64,324 2008-09 Excise Act, of CENVAT credit for 1944 some input services

3 Central Disallowance of CENVAT 32,19,175 2006-09 Excise Act, credit 1944

4 Central Disallowance of CENVAT 20,66,352 2009-10 Excise Act, credit 1944

5 Central Disallowance of CENVAT 30,58,889 2010-11 Excise Act, credit on input services 1944

6 Service Tax, Non payment of service 12,08,860 2010-11 1944 tax on lease rentals

7 Central Alleged Wrong availment 32,52,002 2010-11 Excise Act, CENVAT credit on 1944 Customs duty

8 Central Alleged Wrong availment 27,64,347 2010-11 Excise Act, CENVAT credit on 1944 input services

9 Central Alleged Wrong availment 25,54,120 2011-12 Excise Act, CENVAT credit on 1944 input services

10 Central Alleged Wrong availment 40,83,289 2012-13 Excise Act, CENVAT credit on 1944 input services

11 Service Tax, Non payment of Service 8,00,354 2011-12 1944 Tax on lease rentals on 2012-13 leased assets

12 Central Alleged Wrong availment 22,53,557 2012-13 Excise Act, CENVAT credit on 1944 input services

13 Central Alleged Wrong availment 40,21,464 2012-13 Excise Act, CENVAT credit on 2013-14 1944 input services

14 The Income Disallowance of amount 3,04,719 2008-09 Tax Act, as expenditure under 1961 section 14A



Name of the Statute Forum where dispute is pending

Central Excise Act, 1944 Appeal filed with Service Tax Dept. pending before CESTAT

Central Excise Act, 1944 Appeal filed with Service Tax Dept. pending before Comm. Appeals, Guntur

Central Excise Act, 1944 Appeal pending before Additional Comm., Tirupati

Central Excise Act, 1944 Appeal pending before Additional Comm., Tirupati

Central Excise Act, 1944 Appeal pending before Additional Comm., Tirupati

Service Tax, 1944 Appeal pending before Comm., Appeals, Guntur

Central Excise Act, 1944 Appeal pending before Comm., Appeals, Tirupati

Central Excise Act, 1944 Appeal pending before Comm., of Central Excise Tirupati

Central Excise Act, 1944 Appeal pending before Comm., of Central Excise Tirupati

Central Excise Act, 1944 Appeal pending before Comm., of Central Excise Tirupati

Service Tax, 1944 Appeal pending before Additional Commissioner of Central Excise, Tirupati

Central Excise Act, 1944 Appeal pending before Additional Commissioner of Central Excise, Tirupati

Central Excise Act, 1944 Appeal pending before Additional Commissioner of Central Excise, Tirupati

The Income Tax Act, 1961 Appeal pending before CIT (appeals) Hyderabad



10 4(x) Erosion of Net worth & Cash losses incurred

There are no accumulated losses at the end of year and the company has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 4(xi) Defaults in repayment to FIs/Banks/Debenture holders

Based on our examination of records and according to the information and explanation given to us, the Company has not defaulted in repayment of dues to financial institutions or banks or debenture holders as at the balance sheet date.

12. 4(xii) Maintenance of records for loans granted against securities

According to the information furnished to us and verified by us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence clause 4(xi) of the Order is not applicable to the Company.

13. 4(xiii) Special Statute – Nidhi/Mutual Benefit Fund/Chit Fund Companies

Based on our examination of the records and information and explanation given to us, the company is not a Chit fund or a Nidhi/Mutual Benefit Fund/Society. Therefore, the provisions of clause 4(xiii) of the order are not applicable to the company.

14. 4(xiv) Records for investments by the company dealing or trading in securities

Based on our audit procedures and according to the information and explanation given by the management, the Company is not dealing in or trading in shares, debentures and other securities. Hence, the provisions of this para are not applicable to the Company.

15. 4(xv) Guarantees given for loans by others

According to the information explanation given by the management, the company has given guarantee aggregating to Rs.1052 lakhs (outstanding as on 31.03.2014 is Rs.230.21 lakhs) for loans taken by two associate Companies from bank or financial institutions. The terms of such guarantees are not prejudicial to the Company.

16. 4(xvi) End use of funds for Terms loans

In our opinion and according to the information and explanations given to us on an overall basis the term loans have been applied for the purpose for which they have been obtained.

17. 4(xvii) Usage of short term funds for long-term investments

According to the information and explanations given to us and overall examination of Balance Sheet of the company, we report that no funds raised on short term basis have been used for long term investments.

18. 4(xviii) Preferential allotments to parties covered by Sec.301 of the Companies Act, 1956

During the year, the Company has allotted Equity shares on preferential basis, upon conversion of warrants, to a Company covered in the Register maintained under section 301 of the Companies Act, 1956 consequent. The price at which these equity shares and warrants were issued has been determined as per SEBI(ICDR) Regulations, 2009 which, in our opinion, is not prejudicial to the interest of the Company.

19 4(xix) Securities or charges for Debentures issued

The company has not created any securities or charge in respect of debentures as the company has not issued any debentures during the year.

20 4(xx) End use of monies raised by public issues

The Company has not raised any money by way of public issue during the year. But during the year under review, the company made a preferential allotment and disclosed the utilization of the proceeds on such issue in the Balance Sheet.

21 4(xxi) Frauds on or by the Company

During the course of our examination of the books and records of the company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given, we have not come across any instances of material fraud on or by the company, noticed or reported during the year.

for S.T. Mohite & Co., Chartered Accountants (Regn. No. 0114105)

Sd/- Place : Kurnool M.T. Sreenivasa Rao Date : 30 May, 2014 Proprietor/ Membership No.015635


Mar 31, 2013

1. Report on the Financial Statements

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

2. 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 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.

3. 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 audit opinion.

4. 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/ loss 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.

5. Report on Other Legal and Regulatory Requirements

5.1. 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.

5.2. 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 subsection (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 section 274(1)(g) of the Act.

1 4(i) Fixed Assets 4(i)(a) The company is generally maintaining proper records to show full particulars including quantitative details and situation of all fixed assets.

4(i)(b) We are informed that the company has formulated a programme of physical verification of all the fixed assets over a period of three years which, in our opinion, is reasonable having regard to the size of the business of the company and nature of its assets. Accordingly, the physical verification of the fixed assets has been carried out by the management during year and no material discrepancies were noticed on such verification.

4(i)( c) In our opinion and according to the information and explanations given to us, the company has disposed off some of fixed assets which is not substantial to affect going concern concept.

2 4(ii) Inventories 4(ii)(a) As explained to us, the Finished Goods and Stocks-in-process in the company''s custody have been physically verified by the management at the end of the financial year and in respect of raw materials, stores and spares there is a perpetual inventory system and physical verification programme to cover all items atleast once during the financial year. In our opinion, the frequency of the physical verification is reasonable.

4(ii)(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of the inventory followed by the management were generally reasonable and adequate in relation to the size of the company and the nature of its business.

4(ii)(c) In our opinion and according to the information and explanations given to us, the company is maintaining proper records of inventory. The discrepancies noticed on verification between physical stocks and book records are not material having regard to the size of the operations of the company and have been properly dealt in the books of accounts.

3 4(iii) Loans to / from parties covered by Sec.301 of the Companies Act, 1956

4(iii)(a) In our opinion and according to the information and explanations given to(d) to us, the company has paid interest-free advance for subscription for shares to 3 Companies and Rent Deposit to another company, all of whom are covered in the Register maintained U/S 301. The maximum amount involved during the year is Rs.378.55 lakhs and the same is outstanding at the end of the year.

The terms for receipt and steps to be taken for recovery of principal and interest are not applicable.

4(iii)(e) In our opinion and according to the information and explanations given to (g) to us, the Company has not taken any loans, secured or unsecured from any company, firms or other parties covered in the register maintained U/S 301 of the Companies Act, 1956. Hence furnishing details required by 4(iii)(e) to (g) are not applicable.

4 4(iv) Adequacy of Internal control procedures

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 purchase of inventory, fixed assets and for sale of energy/services. Further, on the basis of our examination of the books and records of the Company, and according to the information and explanation given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the aforesaid internal control system.

5 4(v) Register under Sec.301 of the Companies Act, 1956

4(v)(a) To the best of our knowledge and belief and according to the information and explanations given to us, the transactions made in pursuance to such contracts to be entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956 have been entered.

4(v)(b) According to the information and explanations given to us, the transaction made in pursuance to such contracts or arrangements entered in the Register maintained under Sec.301 of the Companies Act, 1956 and exceeding the value of Rs.5 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.

6 4(vi) Acceptance of Public Deposits

As per the records examined by us and according to the information given to us, the company has not accepted any deposits from the public. Hence, compliance under Sec.58A and 58AA of the Companies Act, 1956 is not applicable to the Company.

7 4(vii) Internal Audit System

The internal audit function is carried out by a firm of independent Chartered Accountants appointed by the management and is commensurate with the size of the Company and the nature of its business.

8 4(viii) Maintenance of cost records

Cost Auditor has been appointed for the financial year 2012-13 and cost audit is in progress. We have broadly examined the books of accounts and records maintained by the company pursuant to the Rules prescribed by the Central Govt. for the maintenance of cost records U/S 209(1)(d) of the Companies Act, 1956, in respect of all products of the Company and are of the opinion that prima facie the prescribed accounts and records maintained. However, we have not made detailed examination of the records with a view to determine whether they are accurate.

9 4(ix) Statutory Dues

4(ix)(a) The company has generally been regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees State Insurance, Income Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues material in amount with appropriate authorities as on the Balance sheet date.

10 4(x) Erosion of Net worth & Cash losses incurred

There are no accumulated losses at the end of year and the company has not incurred cash losses in the financial year ended on that date or in the immediately preceding financial year.

11 4(xi) Defaults in repayment to FIs/Banks/Debenture holders

Based on our examination of records and according to the information and explanation given to us, the Company has not defaulted in repayment of dues to any loans and in repayment of dues to financial institutions or banks or debenture holders as at the balance sheet date.

12 4(xii) Maintenance of records for loans granted against securities

According to the information furnished to us and verified by us, the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities and hence clause 4(xi) of the Order is not applicable to the Company.

13 4(xiii) Special Statute – Nidhi/Mutual Benefit Fund/Chit Fund Companies

Based on our examination of the records and information and explanation given to us, the company is not a Chit fund or a Nidhi/ Mutual Benefit Fund/Society. Therefore, the provisions of clause 4(xiii) of the order are not applicable to the company.

14 4(xiv) Records for investments by the company dealing or trading in securities

Based on our audit procedures and according to the information and explanation given by the management, the Company is not dealing in or trading in shares, debentures and other securities. Hence, the provisions of this para are not applicable to the Company.

15 4(xv) Guarantees given for loans by others

According to the information explanation given by the management, the company has given guarantee aggregating to Rs.1052 lakhs (outstanding as on 31.03.2013 is Rs.370.75 lakhs) for loans taken by two associate Companies from bank or financial institutions. The terms of such guarantees are not prejudicial to the Company.

16 4(xvi) End use of funds for Terms loans

In our opinion and according to the information and explanations given to us on an overall basis the term loans have been applied for the purpose for which they have been obtained.

17 4(xvii) Usage of short term funds for long-term investments

According to the information and explanations given to us and overall examination of Balance Sheet of the company, we report that, no funds raised on short term basis have been used for long term investments.

18 4(xviii) Preferential allotments to parties covered by Sec.301 of the

Companies Act, 1956

During the year, the Company has allotted Equity shares on preferential basis to a Company covered in the Register maintained under section 301 of the Companies Act , 1956 consequent upon conversion of warrants. The price at which these equity shares and warrants were issued has been determined as per SEBI(ICDR) Regulations, 2009 which, in our opinion , is not prejudicial to the interest of the Company .

19 4(xix) Securities or charges for Debentures issued

The company has not created any securities or charge in respect of debentures as the company has not issued any debentures during the year.

20 4(xx) End use of monies raised by public issues

The Company has not raised any money by way of public issue during the year. But during the year under review, the company made a preferential allotment and disclosed the utilization of the proceeds on such issue in the Balance Sheet.

21 4(xxi) Frauds on or by the Company

During the course of our examination of the books and records of the company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given, we have not come across any instances of material fraud on or by the company, noticed or reported during the year. For S.T. Mohite & Co., Chartered Accountants

( R e g n. N o . 011410 S) Sd/-

Place : Kurnool M.T. Sreenivasa Rao

Date : 30th May, 2013 Proprietor / Membership No.15635


Mar 31, 2010

1. We have audited the attached Balance Sheet of Sree Rayalaseema Hi-Strength Hypo Limited.,as at 31 st 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 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 by the Companies (Auditor’s Report) (Amendment) Order 2004, issued by the Central Government of India in terms of subsection (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in the paragraphs 4 and 5 of the said order to the extent applicable.

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

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

iii) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account.

iv) In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the Accounting Standards referred in Section 211 (3C) of the Companies Act,1956 to the extent applicable.

v) On the basis of the written representations received from the Directors,as on 31.03.2010, 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 director in terms of clause(g) of sub-section (1) of section 274 of the Companies Act, 1956.

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

a) In the case of Balance Sheet, of the state of the affairs of the Company as at 31st March, 2010

b) In the case of Profit and Loss Account,of the Profit 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 AUDITORS REPORT Annexure referred to in paragraph 3 of



Auditors Report of even date on the Accounts of Sree Rayalaseema Hi-Strength Hypo Ltd.,for the year ended 31st March, 2010.

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

(b) Some of the fixed assets have been physically verified by the management during the year in accordance with a phased programme and verification of fixed assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification. As informed that the programme is such that all the fixed assets will get physically verified once in three years time. In our opinion, the verification programme is reasonable having regard to the size of the Company and the nature of the fixed assets.

(c) The fixed assets disposed off during the year, in our opinion,do not constitute substantial part of fixed assets of the Company. And such disposal has,in our opinion, not affected the going concern status of the Company.

2. (a) The inventories of the Company have been physically verified by the Management during the year at reasonable intervals.

(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 inventories and the discrepancies noticed on physical verification of stocks as compared to book records, which in our opinion, were not material, have been properly dealt with in the books of account.

3. (a) According to the information and explanations given to us, the Company has

not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act,1956. b) The Company has not availed unsecured loans from any company,firm or other parties in the register maintained under Section 301 of the Companies Act 1956.

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 with regard to purchase of Inventory,fixed assets and for the sale of goods. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal controls with regard to purchase of inventory, fixed assets and for the sale of goods.

5. (a) According to the information and explanations given to us and our examination

of records, 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 Companies Act, 1956 and exceeding the value of Rs. 5,00,000/- in respect of any party during the year have been at prices which are reasonable having regard to prevailing market prices at the relevant time.

6. In our opinion and according to the information and explanation given to us, the Company has not accepted any deposits from the public specified under the Provisions of Section 58 A and 58AA of the Companies Act,1956 and the companies (Acceptance of Deposits) Rules, 1975.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business and it was informed that no material irregularities were noticed by the internal auditors during the period of audit.

8. The Company has maintained cost records under section 209(1)(d) of the Companies Act, 1956 in regard to the manufacture of chemical product of Sulphuric Acid. We have broadly reviewed the books of accounts maintained relating to manufacturing of Sulphuric Acid and we are of the opinion that, prima facie, the prescribed records have been made and maintained. We are not required to and accordingly have not, made a detailed examination of the records to determine whether they are accurate and completed.

To the best of our knowledge, Maintenance of cost records under section 209(1)(d)of the Companies Act, 1956 is not applicable for other chemical products of the Company.

9. (a) According to the information and explanation given to us, the Company is

regular in depositing with appropriate undisputed statutory dues including Provident 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, and

(b) No undisputed amounts payable in respect of income tax, wealth tax, sales tax, customs duty, service tax and cess are in arrears as at 31.03.2010 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of Income tax, custom duty, wealth tax, service tax, excise duty and cess which have not been deposited on account of any dispute. However,in respect of Sales Tax, Service Tax and P F Act there are disputed dues as per the following details.

Sl. Name of the Nature of dues Rs. in

No. Statute Lakhs

1. Service Tax Act Excess Credit 5.81

availed regarding

Service Tax

2. Providend Fund Damages for 7.81

Act delay in earlier

years

3. Sales Tax Act Sales Tax on 1.44

DEPB Scrips

and other matters

Sl. Name of the Period Foruam where

No. Statute dispute is pending

1. Service Tax Act 2007-08 Central Excise and Service

Tax Appellate Tribunal,

Bangalore.

2. Providend Fund Act 2007-08 Additional PF Commissioner

(South Zone) New Delhi.

3. Sales Tax Act 1999-03 Sales Tax

Appellate Tribunal,

Hyderabad.

10. As per the information and explanations given to us and an overall examination of the financial statements of the Company for the current and immediately preceding financial year, we report that the Company does not have any accumulated losses at the end of the current financial year and has not incurred cash losses in the current and immediately preceding financial year.

11. According to records of the Company, during the year the Company has not defaulted in the repayment of dues to financial institution or banks.

12. As per the information and explanation given 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 to any body during the year.

13. In our opinion, as the Company is not a chit fund or a nidhi or mutual benefit or society, the provisions of Clause 4 (xiii) of the Companies (Auditor’s Report)Order 2003 are not applicable to the Company for this year.

14. In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of Clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company.

15. The Company has given guarantees amounting to Rs.1200 Lakhs (amount outstanding Rs.775.90 Lakhs on 31-03-2010) for loans taken by two companies from Bank and Financial Institutions.

The terms and conditions of the guarantee are not prejudicial to the interest of the Company. As per the information given by the Company, the borrower is paying the instalment / interest as the case may be regularly to the lender.

16. According to the records of the Company, the Company has raised term loans during the year and were applied for the purpose for which the loan was obtained.

17. As per the information and explanations given to us and on an over all examination of the balance sheet and the cash flow statement of the Company, we are of the opinion that no funds raised on short term basis have been used for long term investment.

18. As per the information and explanations given to us, during the year the Company has made preferential allotment of shares to a company covered in the Register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during the year, which requires the creation of security or charge.

20. During the year the Company has not made any public issue for which the management has to disclose the end use of money raised through that public issue.

21. As per the representation given by the Company and relied on by us, no fraud on or by the Company has been noticed or reported during the year.



for S.T. Mohite & Co.,

Chartered Accountants

(Regn No 011410S)

Sd/-

M.T. Sreenivasa Rao

Place:Kurnool Proprietor

Date :May 28th, 2010 Membership No.15635

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