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INDEPENDENT AUDITORS' REPORT
ON THE STANDALONE FINANCIAL STATEMENTS
TO THE MEMBERS OF HINDALCO INDUSTRIES LIMITED
We have audited the accompanying standalone financial statements of HINDALCO INDUSTRIES LIMITED ("the Company"), which comprise the Balance Sheet as at 31st March, 2015, the Statement of Profit and Loss, 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 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 specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014, Accounting Standard (AS)–30 to the extent it relates to Derivative Accounting, as prescribed by the Institute of Chartered Accountants of India and other accounting principles generally accepted in India. 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.
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.
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 standalone financial statements.
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, 2015, and its profit and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to Note No. 44 to the Financial Statements explaining that in compliance to the scheme of arrangement under Sections 391 to 394 of the Companies Act, 1956, approved by the Hon'ble Bombay High Court, vide order dated 29th June, 2009, the Management of the Company, during the year, has identified and adjusted provision for diminution in the carrying value of Investment in one of its Subsidiaries and in a Jointly controlled entity, amounting to Rs. 35 crore and impairment loss of Rs. 62.29 crore (net of deferred tax of Rs. 32.97 crore) related to one of its cash generating units, against Business Reconstruction Reserve. This has resulted in the profit before tax and profit after tax for the year being higher by Rs. 130.26 crore and Rs. 97.29 crore respectively. 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, 2015 ("the Order") issued by the Central Government of India in terms of sub–section (11) of Section 143 of the Act, 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 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 applicable Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the directors as on 31st March, 2015, taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2015, 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 Auditors' Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigation on its financial position in its financial statements – Refer Note Nos. 50A(a), c(iii), c(iv) and c(v) to the financial statements.
ii. The Company has long–term contracts including derivative contracts as at 31st March, 2015, for which there were no material foreseeable losses.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company, except a sum of Rs. 0.09 crore which are held in abeyance due to pending legal cases.
Annexure referred to in paragraph 1 under the heading "Report on Other Legal and Regulatory Requirements" of our report of even date
Re: Hindalco Industries Limited (the Company)
I. (a) The Company has maintained proper records showing full particulars including quantitative details and situation of Fixed Assets.
(b) As per the information and explanations given to us, physical verification of fixed assets has been carried out in terms of the phased program designed to cover all items over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, a portion of fixed assets has been physically verified by the Management during the year and no material discrepancies between books record and physical inventory has been noticed.
II. (a) Physical verification of inventory (except stocks in transit and stocks lying with third parties, confirmation for which has been obtained) has been conducted at reasonable intervals during the year, by the Management/outside agencies.
(b) In our opinion, the procedure of physical verification of inventories followed by the Management is 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. The discrepancies between the physical stock and book stocks, which are not significant, have been properly dealt with in the books of accounts.
III. The Company has not granted any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under Section 189 of the Companies Act, 2013.
IV. On the basis of checks carried out during the course of audit and as per the explanations given to us, we are of the opinion that there is adequate internal control system, commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Further, on the basis of our examination of the records of the Company and according to the information and explanations given to us, we have not observed any continuing failure to correct major weakness in such internal control system.
V. The Company has not accepted any deposit from the public.
VI. We have broadly reviewed the books of account maintained by the Company in respect of product, where pursuant to the rule made by the Central Government of India the maintenance of cost records has been prescribed under Section 148(1) of the Companies Act, 2013, and are of the opinion that, prima facie, the prescribed records have been maintained. We have, however not made a detailed examination of the records with a view to determine whether they are accurate or complete.
VII. (a) According to the information and explanations given to us and on the basis of our examination of the books of account, the Company is generally regular in depositing undisputed material statutory dues accrued in the accounts, including Provident Fund, Employee's State Insurance, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other statutory dues with the appropriate authorities. According to the information and explanations given to us and the records of the Company examined by us, no undisputed statutory dues as above were outstanding as at 31st March, 2015, for a period of more than six months from the date they became payable
(b) According to the information and explanations given to us, the dues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty, Service Tax, Value Added Tax and Cess which have not been deposited on account of any dispute and the forum where the dispute is pending as on 31st March, 2015 are as under :
(c) According to the information and explanations given to us, 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 thereunder have been transferred to such fund within time, except a sum of Rs. 0.09 crore which are held in abeyance due to pending legal cases.
VIII. The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses in the financial year and in the immediately preceding financial year.
IX. The Company has not defaulted in repayment of dues to Financial Institutions or Banks or Debenture holders.
X. In our opinion, the terms and conditions on which the Company has given guarantees for loan taken by others from banks or financial institutions are not prejudicial to the interest of the Company.
XI. According to the information and explanations given to us, the Company has applied term loans for the purpose for which they were obtained during the year.
XII. During the course of our examination of the books and records of the Company, carried out in accordance with the Generally Accepted Auditing Practice in India, 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 SINGHI & CO.
Firm Registration No. 302049E
Membership No. 53518
Date: 28th May, 2015