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Auditor Report of The Ramco Cements Ltd.

Mar 31, 2015

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

Management''s Responsibility for the Standalone Financial Statements

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

3.1 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 thereunder.

3.2 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.

3.3 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.

3.4 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

4. 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 March 31,2015 and its Profit and its Cash flows for the year ended on that date.

Emphasis of Matter

5. We draw attention to Note No. 28.13 regarding imposing of penalty of Rs.258.63 Crores on the company by the Competition Commission of India for alleged cartelization with select cement manufacturers. The Company has filed an appeal against the order before Competition Appellate Tribunal. The Company believes that it has got a good case and has not considered any provision as necessary. Our opinion is not qualified in respect of this matter.

Report on Other Legal and Regulatory Requirements

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

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

6.2.1 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.

6.2.2 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.

6.2.3 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 accounts.

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

6.4 On the basis of the written representations received from the

directors as on March 31,2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2015 from being appointed as a director in terms of Section 164 (2) of the Act.

6.5 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:

6.5.1 The details of the pending litigations and its impact on the Financial Statements have been disclosed in the Note No 28.4 to 28.26.

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

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

ANNEXURE TO THE AUDITOR''S REPORT

Annexure referred to item no. 6.1 of paragraph ''Report on Other Legal and Regulatory Requirements'' paragraph of our Independent Auditors Report of even date:

In our opinion and to the best of knowledge and belief and as per the information and explanation given to us and on the basis of books and records examined by us in the normal course of audit, we report that:

1. Fixed Assets

1.1. The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.

1.2. The management at reasonable intervals has physically verified the fixed assets of the company and no material discrepancies were noticed on such verification.

2. Inventories

2.1. Management has conducted physical verification of its inventory at reasonable intervals.

2.2. The procedure for physical verification of inventory followed by the management is reasonable and is adequate in relation to the size of the Company and the nature of its business.

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

3. Loans and Advances

3.1. The Company has granted loan aggregating to Rs.7.40

crores (PY: Rs.219.00 crores) during the year to one party listed in the Register maintained under Section 189 of the Act. The maximum outstanding at any time during the year Rs.7.40 crores (PY: Rs. 51.00 crores) and the amount outstanding as on March 31, 2015 is Rs.7.40 crores (PY: Nil)

3.2. The receipt of the Principal amounts and the Interest wherever applicable are regular; and

3.3. There are no overdue amounts in respect of the loans granted to the parties listed in the register maintained under Section 189 of the Act.

4. 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 for the sale of goods and services. We have not observed any major weakness in the internal control system during the course of the audit.

5. The Company has not accepted any deposits within the meaning of Companies (Acceptance of Deposits) Rules 2014, from the public during the year. The Deposits accepted by the Company before the Commencement of the Act have been repaid as per the provisions of Section 74 of the Act except unclaimed deposits amounting to Rs.0.07 Crores. No order has been passed by the Company Law Board or the National Company Law Tribunal or by any court or by any other Tribunal against the Company.

6. The Company is maintaining the accounts and records which have been specified by the Government of India under Section 148(1) of the Act.

7. Undisputed and disputed taxes and duties

7.1. The company is regular in depositing undisputed statutory dues including provident fund, employee''s 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 provident fund, employee''s state insurance, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other statutory dues were in arrears as at March 31, 2015 for a period of more than six months from the date they become payable.

7.2. The Disputed Statutory dues aggregating to Rs.592.95 crores (PY: Rs.349.50 crores) that have not been deposited on account of matters pending before appropriate authorities are as under:

Sl. Name of the Statute Forum where dispute is Rs. In Crores No pending

1 Income Tax Act High Court 13.21

2 Sales Tax Act Appellate Tribunal 5.52

High Court 0.02

3 CST Act High Court 0.07

4 VAT Act Assistant/ Deputy 5.15 Commissioner, Appeals

Assessing Authority 4.47

Appellate Tribunal 0.45

High Court 77.71

5 Central Excise Act & Asst./Deputy/Additional 295.40 Cenvat Credit Rules Commissioner

Commissioner, Appeals 1.03

Appellate Tribunal 140.52

High Court 4.85

Supreme Court 15.50

6 Customs Act High Court 29.05

Total 592.95

7.3. The amounts which were required 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 there under have been transferred to such fund within time.

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

9. The Company has not defaulted in repayment of dues to financial institutions, banks or debenture holders during the year.

10. Based on the information and explanation given to us, the terms and conditions of the guarantee given by the Company to related parties -

a. Ramco Systems Limited - Guarantee given Rs.250.00 crores (PY: Rs.325.00 crores) {since reduced as on date of report to Rs.25.00 Crores}; Loans outstanding Rs.250.00 crores (PY: Rs.325.00 crores) {outstanding as on date of report Rs.4.66 Crores};

b. Sandhya Spinning Mill Limited - Guarantee given Rs.34.38 crores (PY: Rs.59.38 crores); Loans outstanding Rs.7.94 crores (PY: Rs.17.02 crores);

c. Thanjavur Spinning Mill Limited - Guarantee given is Rs.68.00 crores (PY: Rs. 83.00 crores); Loan outstanding Rs.51.02 crores (PY: Rs.66.71);

d. Raja Charity Trust - Guarantee given Rs. 100.00 crores (PY: Rs.100.00 crores); loans outstanding Rs.34.46 crores (PY: Rs.28.00 crores);

e. Ramco Windfarms Limited - Guarantee given is Rs.23.50 crores (PY: NIL): Loan outstanding Rs.22.26 crores) (PY: NIL);

to secure loans availed from banks by the respective Companies, are not prejudicial to the interest of the Company.

11. The Company has raised Term loans during the year and these have been applied for the purposes for which they were raised.

12. No material fraud on or by the Company has been noticed or reported during the course of audit.

For M.S.Jagannathan & N.Krishnaswami For CNGSN & Associates LLP Chartered Accountants Chartered Accountants Firm registration No. 001208S Firm Registration No. 004915S K.Srinivasan C.N.Gangadaran Partner Partner Membership No. 021510 Membership No. 011205

Chennai 29-May-2015


Mar 31, 2014

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

Management''s Responsibility for the Financial Statements

The 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") read with General Circular 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors'' Responsibility

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

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

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

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the 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.

Emphasis of Matter

We draw attention to Note No 28.13 regarding imposing of penalty of Rs 258.63 Crores on the company by the Competition Commission of India for alleged cartelisation with select cement Manufacturers. The Company has filed an appeal against the order before Competition Appellate Tribunal. Based on the legal opinion, the company has not considered any provision as necessary. 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"), as amended, 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 :

2.1. 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;

2.2. 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;

2.3. 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;

2.4. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with General Circular No 15/2013 dated 13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act 2013; and

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

ANNEXURE TO THE AUDITORS'' REPORT

Annexure referred to in item no. 1 of paragraph ‘Report on Other Legal and Regulatory Requirements''.

In our opinion and to the best of knowledge and belief as per the information and explanation given to us and on the basis of the books and records examined by us in the normal course of audit, we report that:

1. Fixed assets

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

1.2. The management at reasonable intervals has physically verified the fixed assets of the company and no material discrepancies were noticed on such verification.

1.3. The fixed assets disposed during the year were not substantial and therefore, do not affect the going concern assumption.

2. Inventories

2.1. The management has conducted physical verification at reasonable intervals in respect of its inventory.

2.2. The procedure for physical verification of inventory followed by the management is reasonable and is adequate in relation to the size of the company and the nature of its business.

2.3. The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. Loans and advances

3.1. The company has granted loans aggregating to Rs.219.00 crores (PY: Rs.162.00 crores) during the year to 1 party listed in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding at any time during the year was Rs. 51.00 crores (PY: Rs.68.25 crores) and the amount outstanding as on 31st March 2014 was Nil (PY: Rs.13.75 crores).

3.2. The rate of interest and other terms and conditions of loans given by the company referred to paragraph 3.1 above are not, prima facie, prejudicial to the interest of the company.

3.3. The payment of the principal amounts and the interest wherever applicable are regular.

3.4. The loans granted were repaid during the year. There is no overdue amount with respect to above loans.

3.5. The company has taken loans aggregating to Rs.10.18 crores (PY: Rs. 24.27 crores) from 1 party listed in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding at any time during the year was Rs.14.38 crores (PY: Rs.10.88 crores) and the outstanding as on 31st March 2014 was Rs.8.84 crores (PY: Rs 8.90 crores).

3.6. The rate of interest and other terms and conditions of loan taken by the company are not, prima facie, prejudicial to the interest of the company.

3.7. The loans given/taken by the company are repayable on demand and have been received/paid on demand.

4. The company has an internal control system which is adequate and is commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. We have not observed any major weaknesses in internal controls system during the course of the audit.

5. Section 301 contracts

5.1. Particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been so entered in the register required to be maintained under that section.

5.2. The transactions made in pursuance of contracts and arrangements referred to in 5.1 above and exceeding value of Rs. 0.05 crores have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has accepted deposits from the public and the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under, where applicable have been complied with.

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

8. The cost accounts and the records prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 have been made and maintained.

9. Statutory dues

9.1. The company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities.

According to the information and explanation to us, no undisputed amount payable in respect of Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax and other material statutory dues were in arrears as at 31 March 2014 for a period of more than 6 months from the date they became payable.

9.2. The disputed statutory dues aggregating to Rs 349.50 crores (PY Rs. 251.53 crores ) that have not been deposited on account of matters pending before appropriate authorities are as under:

Amount Sl No Name of the statute Forum where dispute is pending (Rs. in Crores)

1 Income Tax Act High Court 13.21

2 Sales Tax Act Assistant/ Deputy Commissioner, Appeals 0.88

Assessing Authority 2.30

Appellate Tribunal 0.31

High Court 0.56

3 CST Act Assistant/ Deputy Commissioner, Appeals 0.05

Assessing Authority 0.09

High Court 0.25 4 VAT Act Assistant/ Deputy Commissioner, Appeals 28.77

5 Central Excise Act & Cenvat Asst./Deputy/Additional Commissioner 185.21 Credit Rules

Commissioner, Appeals 1.29

Appellate Tribunal 75.58

High Court 1.86

Supreme Court 8.54

6 Customs Act High Court 30.60

Total 349.50

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

11. The company has not defaulted in repayment of dues to financial institutions, banks or debentures holders during the year.

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

13. The company is not a chit fund/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 in 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. Based on information and explanations given to us, the terms and conditions of the guarantee given by the Company to related parties ([Ramco Systems Limited – Guarantee given Rs.325.00 crores (PY Rs.233.00 crores); Loans outstanding Rs.325.00 crores (PY Rs.233.00 crores)]; [Sandhya Spinning Mills Limited – Guarantee given Rs.59.38 crores (PY Rs.59.38 crores); Loans outstanding Rs.17.02 crores (PY Rs.26.32 crores)], [Thanjavur Spinning Mills Limited – Guarantee given Rs.83.00 Crores (PY Rs.58.00 crores); Loans outstanding Rs.66.71 Crores (PY Rs.41.29 crores)]; [Raja Charity Trust - Guarantee given Rs.100.00 crores (PY NIL); Loans outstanding Rs.28.00 crores (PY NIL)]; to secure loans availed from banks by the respective companies, are not prejudicial to the interests of the Company.

16. The Company has raised term loans during the year and these have been applied for the purposes for which they were raised.

17. The funds raised on short-term basis have not been used for long-term investment.

18. 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. The company has no outstanding amount under Debentures that require creation of security/charge during the year.

20. The company has not raised any money by way of public issues during the year.

21. No material fraud on or by the company has been noticed or reported during the course of our audit.

For M.S. JAGANNATHAN & N. KRISHNASWAMI For CNGSN & ASSOCIATES

Chartered Accountants Chartered Accountants

Firm Registration No.: 001208S Firm Registration No.: 004915S

P.SANTHANAM C.N GANGADARAN

Partner Partner

Membership No.: 018697 Membership No.: 011205

Chennai

22nd May, 2014


Mar 31, 2013

Report on the Financial Statements

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

Management''s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of 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.

Auditors'' Responsibility

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

An audit involves performing procedure 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 statement 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.

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

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

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s Report) Order, 2003 ("the Order") as amended, 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 :

2.1. 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;

2.2. 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;

2.3. 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;

2.4. in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956; and

2.5. 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 are disqualified as on March 31, 2013, from being appointed as a director in terms of clause (g) of sub-section(1) of Section 274 of the Companies Act, 1956.

ANNEXURE TO THE AUDITORS'' REPORT

Annexure referred to in item no. 1 of paragraph ''Report on Other Legal and Regulatory Requirements''.

In our opinion and to the best of knowledge and belief as per the information and explanation given to us and on the basis of the books and records examined by us in the normal course of audit, we report that:

1. Fixed assets

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

1.2. The management at reasonable intervals has physically verified the fixed assets of the company and no material discrepancies were noticed on such verification.

1.3. The fixed assets disposed during the year were not substantial and therefore, do not affect the going concern assumption.

2. Inventories

2.1. The management has conducted physical verification at reasonable intervals in respect of its inventory.

2.2. The procedure for physical verification of inventory followed by the management is reasonable and is adequate in relation to the size of the company and the nature of its business.

2.3. The company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book records were not material.

3. Loans and advances

3.1. The company has granted loans aggregating to Rs.162.00 crores (PY Rs.104.75 crores) during the year to 1 party listed in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding at any time during the year was Rs.68.25 crores (PY Rs.20.00 crores) and the amount outstanding as on 31-Mar-2013 was Rs.13.75 crores (PY Rs.13.00 crores)

3.2. The rate of interest and other terms and conditions of loans given by the company referred to paragraph 3.1 above are not, prima facie, prejudicial to the interest of the company.

3.3. The payment of the principal amounts and the interest wherever applicable are regular.

3.4. There is no overdue amount with respect to above loans.

3.5. The company has taken loans aggregating to Rs.24.27 crores (PY Rs. 20.26 crores) from 1 party listed in the register maintained under section 301 of the Companies Act, 1956. The maximum outstanding at any time during the year was Rs.10.88 crores (PY Rs.5.88 crores) and the outstanding as on 31-Mar-2013 was Rs.8.90 crores (PY Rs.1.53 crores).

3.6. The rate of interest and other terms and conditions of loan taken by the company are not, prima facie, prejudicial to the interest of the company.

3.7. The loans given/taken by the company are repayable on demand and have been received/paid on demand.

4. The company has an internal control system which is adequate and is commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. There are no major weaknesses in internal controls system

5. Section 301 contracts

5.1. Particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been so entered in the register required to be maintained under that section

5.2. These transactions exceeding value of Rs. 0.05 crores have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6. The company has accepted deposits from the public and the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under, where applicable have been complied with.

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

8. The cost accounts and the records prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 have been made and maintained.

9. Statutory dues

9.1. The company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees'' State Insurance, Income-tax, Sales-tax, Wealth tax, Service tax, Custom Duty, Excise Duty, Cess and other statutory dues with the appropriate authorities.

9.2. The disputed statutory dues aggregating to Rs.251.53 crores (PY Rs.187.86 crores) that have not been deposited on account of matters pending before appropriate authorities are as under: Amount Sl NoName of the statute Forum where dispute is pending (Rs. in Crores)

1 Income Tax Act High Court 13.21

2 Sales Tax Act Assistant/ Deputy Commissioner, Appeals 0.11

Appellate Tribunal 0.01

High Court 0.55

3 CST Act Assistant/ Deputy Commissioner, Appeals 0.24

High Court 0.23

4 VAT Act Assistant/ Deputy Commissioner, Appeals 2 5.92

5 Central Excise Act & Cenvat Asst./Deputy/Additional Commissioner 111.94 Credit Rule

Commissioner, Appeals 11.33

Appellate Tribunal 78.92

High Court 1.86

Supreme Court 7.21

Total 251.53

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

11. The company has not defaulted in repayment of dues to financial institutions, banks or debentures holders.

12. The company has not granted any loans or 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 in 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. Based on information and explanations given to us, the terms and conditions of the guarantee given by the Company to related parties ([Ramco Systems Limited - Guarantee given Rs.233.00 crores (PY Rs.145.00 crores); Loans outstanding Rs.233.00 crores (PY Rs.145.00 crores)]; [Sandhya Spinning Mills Limited - Guarantee given Rs.59.38 crores (PY Rs.59.38 crores); Loans outstanding Rs.26.32 crores (PY Rs.35.62 crores)], [Thanjavur Spinning Mills Limited - Guarantee given Rs.58.00 Crores (PY Rs.58.00 crores); Loans outstanding Rs.41.29 Crores (PY Rs.48.00 crores)]; to secure loans availed from banks by the respective companies, are not prejudicial to the interests of the Company.

16. The Company has raised term loans during the year and these have been applied for the purposes for which they were raised.

17. The funds raised on short-term basis have not been used for long-term investment.

18. 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. The company has no outstanding amount under Debentures that require creation of security/charge.

20. The company has not raised any money by way of public issues during the year.

21. No material fraud on or by the company has been noticed or reported during the year.

For M.S. JAGANNATHAN & N. KRISHNASWAMI For CNGSN & ASSOCIATES

Chartered Accountants Chartered Accountants

Firm Registration No.: 001208S Firm Registration No.: 004915S

K. SRINIVASAN C.N GANGADARAN

Partner Partner

Membership No.: 021510 Membership No.: 011205

Chennai

30th May, 2013


Mar 31, 2012

1. We have audited the attached Balance Sheet of Madras Cements Ltd., Rajapalayam as at 31st March, 2012, the Statement of Profit and Loss and Cash Flow Statement for the year ended on that date annexed thereto, summary of significant accounting policies and other explanatory information. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. As required by the Companies (Auditor's Report) Order, 2003, as amended by the Companies (Auditor's Report) (Amendment) Order 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we have annexed hereto 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 in paragraph 3 above, we report that:

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

ii. In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of 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. As per representations made by the company and its Directors, no Director is disqualified from being appointed as a 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 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 the Cash Flow Statement, of the cash flows of the company for the year ended on that date.

ANNEXURE TO THE AUDITORS' REPORT

With reference to paragraph 3 of our report to the members of Madras Cements Ltd. of even date, in our opinion and to the best of knowledge and belief and as per the information and explanation given to us and on the basis of the books and records examined by us in the normal course of audit, we report that:

1. Fixed assets

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

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

c. The fixed assets disposed during the year were not substantial and therefore the going concern status of the company has not been affected.

2. Inventories

a. The management has conducted physical verification at reasonable intervals in respect of its inventory.

b. The procedure for physical verification of inventory followed by the management is reasonable and is 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 were not material.

3. Loans and advances

a. The company has granted loans aggregating to Rs.104.75 crores during the year (maximum outstanding at any time during the year - Rs.20.00 crores, outstanding as on 31st March 2012 - Rs.13.00 crores) to 1 party listed in the register maintained under section 301 of the Companies Act, 1956.

b. The rate of interest and other terms and conditions of loans given by the company are not, prima facie, prejudicial to the interest of the company.

c. The payment of the principal amounts and the interest wherever applicable are regular.

d. There is no overdue amount with respect to above loans.

e. The company has taken loans aggregating to Rs.20.26 crores (maximum outstanding at any time during the year - Rs.5.88 crores, outstanding as on 31st March 2012 - Rs 1.53 crores) from 1 party listed in the register maintained under section 301 of the Companies Act, 1956.

f. The rate of interest and other terms and conditions of loan taken by the company are not, prima facie, prejudicial to the interest of the company.

g. The loans given/taken by the company are repayable on demand and have been received/paid on demand.

4. The company has an internal control system which is adequate and is commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. There are no major weaknesses in internal controls system.

5. Section 301 contracts

a. Particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been so entered in the register required to be maintained under that section.

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

6. The company has accepted deposits from the public and the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under where applicable have been complied with.

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

8. The cost accounts and the records prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 have been made and maintained.

9. Statutory dues

a. The company is regular in depositing 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 statutory dues with the appropriate authorities.

b. The disputed statutory dues aggregating to Rs.187.86 crores that have not been deposited on account of matters pending before appropriate authorities are as under

Sl. No. Name of the statute Forum where dispute is pending Amount (Rs in crores)

1 Income Tax Act High Court 13.21

2 Sales Tax Act Assistant / Deputy Commissioner, Appeals 0.64

Appellate Tribunal 0.01

High Court 0.55

3 CST Act Assessing Authority 0.37

Assistant / Deputy Commissioner, Appeals 0.03

High Court 0.23

4 VAT Act Assistant / Deputy Commissioner, Appeals 8.70

High Court 5.36

5 Central Excise Act & Assistant / Deputy / Additional Commissioner 84.72 Cenvat Credit Rules Commissioner, Appeals 6.20

Appellate Tribunal 60.44

High Court 0.19

Supreme Court 7.21

Total 187.86

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

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

12. The company has not granted any loans or 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 in 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. Based on information and explanations given to us, the terms and conditions of the guarantee given by the Company to parties consisting of related parties ([Ramco Systems Limited - Guarantee given Rs.145.00 crores; Loans outstanding Rs.145.00 crores]; [Sandhya Spinning Mills Limited - Guarantee given Rs.59.38 crores; Loans outstanding Rs.35.62 crores], [Thanjavur Spinning Mills Limited - Guarantee given Rs.58.00 Crores ; Loans outstanding 48.00 Crores]) to secure loans availed from banks by the respective companies are not prejudicial to the interests of Madras Cements Ltd.

16. The Company has raised new term loans during the year and these have been applied for the purposes for which they were raised.

17. The funds raised on short-term basis have not been used for long-term investment.

18. 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. The company has no outstanding amount under Debentures that require creation of security/charge.

20. The company has not raised any money by way of public issues during the year.

21. No fraud on or by the company has been noticed or reported during the year.

For M.S. JAGANNATHAN & N. KRISHNASWAMI For CNGSN & ASSOCIATES

Chartered Accountants Chartered Accountants

Firm Registration No. 001208S Firm Registration No. 004915S

K. SRINIVASAN C.N. GANGADARAN

Partner Partner

Membership No. 21510 Membership No. 11205

Chennai

24-05-2012


Mar 31, 2011

1. We have audited the attached Balance Sheet of Madras Cements Ltd., Rajapalayam as at 31st March, 2011, the Profit and Loss Account and 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 by the Companies (Auditors Report) (Amendment) Order 2004, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we have annexed hereto 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 in paragraph 3 above, we report that:

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

ii. In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of 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 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. As per representations made by the company and its Directors, no Director is disqualified from being appointed as a 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 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, 2011;

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

ANNEXURE TO THE AUDITORS REPORT

With reference to paragraph 3 of our report to the shareholders of Madras Cements Ltd. of even date, in our opinion and to the best of our knowledge and belief and as per the information and explanation given to us and on the basis of the books and records examined by us in the normal course of audit, we report that:

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

(b) The management at reasonable intervals has physically verified the fixed assets of the company and no material discrepancies were noticed on such verification.

(c) The fixed assets disposed during the year were not substantial and therefore the going concern status of the company has not been affected.

ii (a) The management has conducted physical verification at reasonable intervals in respect of its inventory.

(b) The procedure for physical verification of inventory followed by the management is reasonable and is 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 were not material.

iii (a) The company has granted loans aggregating to Rs.112.20 crores (maximum outstanding at any time during the year Rs.20.00 crores, outstanding as on 31st March, 2011 - Rs.12.00 crores) to 1 party listed in the register maintained under section 301 of the Companies Act, 1956.

(b) The rate of interest and other terms and conditions of loans given by the company are not, prima facie, prejudicial to the interest of the company.

(c) The payment of the principal amounts and the interest wherever applicable are regular.

(d) There is no overdue amount with respect to above loans.

(e) The company has taken loans aggregating to Rs.9.06 crores (maximum outstanding at any time during the year Rs.3.73 crores, outstanding as on 31st March, 2011 - Rs 1.99 crores) from 1 party listed in the register maintained under section 301 of the Companies Act, 1956.

(f) The rate of interest and other terms and conditions of loan taken by the company are not, prima facie, prejudicial to the interest of the company.

(g) The loans given/taken by the company are repayable on demand and have been received/paid on demand.

iv The company has an internal control system which is adequate and is commensurate with the size of the Company and nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. There are no major weaknesses in internal control system.

v (a) Particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been so entered in the register required to be maintained under that section.

(b) These transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi The company has accepted deposits from the public and the directives issued by the Reserve Bank of India and the provisions of section 58A and 58AA or any other relevant provisions of the Act and the rules framed there under where applicable have been complied with.

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

viii The cost accounts and the records prescribed by the Central Government under clause (d) of sub-section (1) of section 209 of the Companies Act, 1956 have been made and maintained.

ix (a) The company is regular in depositing 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 statutory dues with the appropriate authorities.

(b) The disputed statutory dues aggregating to Rs.148.76 crores that have not been deposited on account of matters pending before appropriate authorities are as under

Amount Sl. Name of the statute Forum where dispute is pending (Rs. in No. crores)

1 Income Tax Act High Court 13.21

Assessing Authority 0.04

2 Sales Tax Act Assistant Commissioner, Appeals 4.35

Appellate Tribunal 2.38

High Court 0.87

Assessing Authority 0.50

3 CST Act Assistant Commissioner, Appeals 0.03

Appellate Tribunal 0.10 High Court 0.02

4 VAT Act High Court 5.36

Assistant / Additional Commissioner 57.51

5 Central Excise Act & Cenvat Credit Rules Commissioner, Appeals 14.48

Appellate Tribunal 42.51

High Court 0.19

Supreme Court 7.21

Total 148.76

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

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

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

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

xiv The company is not dealing in 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.

xv The terms and conditions of the guarantee given by the Company for loans taken by others from banks or financial institutions are not prima facie prejudicial to the interests of the company.

xvi The Company has raised new term loans during the year and these have been applied for the purposes for which they were raised.

xvii The funds raised on short-term basis have not been used for long-term investment.

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

xix The company has no outstanding amount under Debentures that require creation of security/charge.

xx The company has not raised any money by way of public issues during the year.

xxi No fraud on or by the company has been noticed or reported during the year.

For M.S.JAGANNATHAN & N. KRISHNASWAMI For CNGSN & ASSOCIATES Chartered Accountants Chartered Accountants



K. SRINIVASAN C.N. GANGADARAN Partner Partner Membership No. : 21510 Membership No. 11205 Firm Registration Number:001208S Firm Registration Number:004915S



Chennai 25-5-2011

 
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