Annexure to the Independent Auditors' Report
 

(Referred to in paragraph 1 under "Report on Other Legal and Regulatory Requirements" section of our report of even date)

  1. Having regard to the nature of the Company's business / activities / results during the year, clauses (xiii) and (xiv) of paragraph 4 of the Order are not applicable to the Company.
  2. In respect of its fixed assets:
    1. The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets;
    2. The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification;
    3. The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company.
  3. In respect of its inventories:
    1. As explained to us, the stock of finished goods (other than a significant part of the spare parts held for sale) and work-in-progress in the Company's custody have been physically verified by the Management as at the end of the financial year, before the year-end or after the year-end, and in respect of stocks of stores and spares, the aforesaid spare parts held for sale and raw materials in the Company's custody, there is a perpetual inventory system and a substantial portion of the stocks have been verified during the year. In our opinion, the frequency of verification is reasonable. In case of materials and spare parts held for sale lying with the third parties, certificates confirming stocks have been received in respect of a substantial portion of the stocks held during the year or at the year-end;
    2. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business;
    3. In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.
  4. In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:
    1. The Company has granted unsecured loans aggregating Rs. 194.36 crores to two parties during the year. At the year-end, the outstanding balances of such loans granted aggregated Rs. 711.07 crores (number of parties - three) and the maximum amount involved during the year was Rs. 794.46 crores (number of parties - four).
    2. The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interest of the Company having regard to the business relationship with the Company to whom loans have been granted.
    3. The receipts of principal amount have been as per stipulations. However, there have been delays in receipts of interest.
    4. There are no overdue amounts in respect of principal amount outstanding. In respect of overdue interest amounts of more than rupees one lakh remaining outstanding as at the year-end, except in respect of interest outstanding from a subsidiary company for which the provision has been made, the Management has taken reasonable steps for the recovery of the overdue interest amounts.
    5. In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

    6. The Company has not taken loans from parties during the year. At the year-end, the outstanding balances of such loans taken aggregated Rs. Nil (number of parties Nil) and the maximum amount involved during the year was Rs. 0.26 crores (number of parties - one).
    7. The rate of interest and other terms and conditions of such loans taken are, in our opinion, prima facie not prejudicial to the interests of the Company.
    8. The payments of principal amounts and interest in respect of such loans are regular.
  5. In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there exists an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.
  6. In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:
    1. The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered.
    2. Where each of such transaction is in excess of rupees five lakhs in respect of any party, and having regard to the para (v) above, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time.
  7. In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to the deposits accepted from the public. According to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.
  8. In our opinion, the Company has an adequate internal audit system commensurate with the size and the nature of its business.
  9. We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209 (1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.
  10. According to the information and explanations given to us in respect of statutory dues:
    1. 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, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. With regard to the contribution under the Employees' Deposit Linked Insurance Scheme, 1976 (the Scheme), we are informed that the Company has its own Life Cover Scheme, and consequently, an application has been made seeking an extension of exemption from contribution to the Scheme, which is awaited.
    2. There were no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at March 31, 2013 for a period of more than six months from the date they became payable.
    3. Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited as on March 31, 2013 on account of disputes are given below:
Name of
Statute
Nature of Dues Forum where
Dispute is Pending
Period to which the Amount Relates Amount Involved
(Rs. in crores.)
Income tax Income tax Commissioner (Appeals) 2003-04 to 2009-10 44.97
Income tax Appellate Tribunal 2007-08 3.40
Central Excise Laws Excise Duty & Service Tax Tribunal 1993-94, 1999-00, 2002-03, 2004-05 to 2012-13 2249.15
Excise Duty & Service Tax Commissioner (Appeals) 1984-85, 1995-96, 2003-04, 2006-07, 2010-11, 2011-12, 2012-13 83.13
Excise Duty & Service Tax Additional Commissioner 2012-13 0.66
Excise Duty & Service Tax Joint Commissioner 2012-13 0.21
Excise Duty & Service Tax Deputy Commissioner 2012-13 0.04
Excise Duty & Service Tax Asst. Commissioner 2012-13 0.09
Sales Tax Laws Sales Tax Supreme Court 1995-96 13.01
Sales Tax High Court 1984-85 to 1988-89, 1990-91, 1993-94, 1994-95, 1997-98, 1999-00, 2005-06 to 2007-08 18.83
Sales Tax Tribunal 1988-89, 1989-90, 1995-96, 1998-99, 1999-00, 2000-01, 2004-05, 2007-08, 2010-11 7.21
Sales Tax Commissioner (Appeals) 1996-97, 1998-99, 2001-02 0.20
Sales Tax Joint Commissioner 1997-98, 1999-00, 2001-02 to 2008-09 222.33
Sales Tax Additional Commissioner 1988-89, 1989-90, 1995-96, 1997-98, 2005-06 to 2009-10, 2012-13 19.46
Sales Tax Deputy Commissioner 1979-80, 1986-87, 1991-92, 1992-93, 1994-95 to 1997-98, 2000-01, 2003-04, 2005-06, 2008-09 3.68
Sales Tax Assistant Commissioner 1986-87, 1988-89, 1990-91, 1995-96, 1997-98, 1999-00, 2010-11 1.06
Sales Tax Trade Tax Officer 1995-96, 1996-97, 1998-99 to 2000-01, 2006-07 1.83
  1. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year.
  2. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to financial institutions, banks and debenture holders.
  3. Based on our examination of the records and the information and explanations 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.
  4. In our opinion and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions.
  5. In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were obtained.
  6. In our opinion and according to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, as at March 31, 2013, we report that funds raised on short term basis of Rs. 8,439.39 crores have been used during the year for long-term investment. Further the Company has explained that steps are being taken to augment long term funds.
  7. According to the information and explanations given to us, 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.
  8. According to the information and explanations given to us, during the period covered by our audit report, the Company has not issued any secured debentures.
  9. According to the information and explanations given to us, during the year covered by our audit report, the Company has not raised any money by public issue.
  10. To the best of our knowledge 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 DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm Registration No. 117366W)

N. VENKATRAM

MUMBAI, May 29, 2013 Partner
(Membership No. 71387)