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Aluminium Industries Ltd.

BSE: 503928 Sector: Metals & Mining
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Aluminium Industries Ltd. (ALUMINIUMINDS) - Auditors Report

Company auditors report

To

The Members of ALUMINIUM INDUSTRIES LTD

Report on Financial Statements

We have audited the accompanying financial statements of ALUMINIUM INDUSTRIES LTD ("theCompany") which comprise the Balance Sheet as at 31" March 2016 theStatement of Profit and Loss and the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management’s Responsibilities for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 [the Act] with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

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

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

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the accounting policies usedand the reasonableness of the accounting estimates made by the Company’s Directorsas well as evaluating the overall presentation of the financial statements. •

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

Basis for Qualified Opinion:

(i) Attention is invited to Note No. 3 read with Note 2 (a) (iii) of Notes to Accountsregarding non conversion of Preference Share Capital to Equity Share Capital at Parcontrary to order of HON’BLE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR)dated 12.02.2014

(ii) Attention is invited to Note No. 3C regarding nonredemption of redeemablepreference shares which is in contravention to the provisions of Act;

Qualified Opinion: -

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effect of the matter described in the Basis for QualifiedOpinion paragraph the financial statements give the information required by the Act inthe manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India:

(a) In the case of the Balance sheet ofihe state of affairs of ALUMINIUM INDUSTRIESLTD as at 31" March 2016;

and

(b) in the case of the Statement of Profit & Loss Account of the loss for the yearended on that date.

(c) In the case of Cash Flow Statement of the cash flows for the year ended on thatdate.

Emphasis of Matter

(i) The accumulated losses of the Company have exceeded its entire net worth and itbecame a Sick

Industrial Company within the meaning of the Sick Industrial Companies [SpecialProvisions] Act 1985. The accounts have however been prepared by the management on a‘Going Concern’ basis as the Hon’ble BIFR has approved the scheme (SS- 14) on 12.02.2014. [Refer Note No. 26 read with Note 2 of Notes to Accounts]

(ii) Attention is invited to Note No. 29 regarding compilation of accounting details /information on the basis of records available at the suspended manufacturing units on bestefforts basis.

(iii) Attention is invited to Notes No. 32 regarding pending reconciliation and / orconfirmations of accounts of sundry debtors sundry creditors secured loans unsecuredloans banks and loans and advances given;

(iv) Attention is invited to Note No. 33 regarding non provisioning of interest/penalties as well as Liquidated damages on delay in repayment of installments of Secureddebts due to banks financial institutions and ARC during the reporting period;

(v) Attention is invited to Note No. 34 regarding non provisioning of interest/penalties in respect of Deferred & Arrear Sales Tax Work Contract Tax Excise &Customs Duty demands during the reporting period in view of the Scheme sanctioned by theHon’ble BIFR on 12.02.2014

Our opinion is not qualified in respect of this matter.

Report on Other Legal & Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 ["TheOrder’’] 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 a statement on the matters specifiedin paragraphs 3 and 4 of the Order.

2. As required by section 143 (3) of the Act we report that:

a) We have sought & obtained all the information and explanations to the extentavailable which to the best of our knowledge and belief were necessary for the purpose ofour audit;

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books [and proper returnsadequate for the purpose of our audit have been received from branches not visited byus.];

c) The Balance Sheet Statement of Profit & Loss and Cash Flow Statement dealt withby this report are in agreement with books of account [and with the returns received frombranches not visited by us.];

d) Except for the effects of the matter described in Para (iv) of Basis of QualifiedOpinion and the Balance Sheet and Statement of Profit and Loss and Cash FlowStatement dealt with by this report comply with the Accounting Standards referred to inSection 133 read with Rule 7 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014;

e) On the basis of written representations received from the Directors as on 31st March2016 and taken on record by the Board of Directors none of the directors of the Companyare disqualified as on 31st March 2016 from being appointed as a director as in terms ofSection 164 (2) of the Act.

f) With respect to the adequacy of the Internal Financial Controls over FinancialReporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B" and

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

i) The financial statements disclose the impact of pending litigations on the financialposition of the Company-Refer Note No. 25 to the Financial Statements.

ii) The company does not have any long-term contracts requiring a provision formaterial foreseeable losses.

iii) The company does not have any amounts required to be transferred to the InvestorEducation and Protection Fund. '

Place: Kochi For BALAKRISHNAN & CO
Date: 31st August 2016 Chartered Accountants
FRN. 011890S
CArBALAKRISHNAN M
(Partner) M.No.218798

ANNEXURE A’ TO THE INDEPENDENT AUDITOR’S

REPORT

The Annexure refers to in Independent Auditor’s Report to the members of theCompany on the Financial Statements for the year ended 31 st March 2016 we report that

1. a) The Company is in the process of updating its fixed assets records to showfull particulars including quantitative details and situation of fixed assets.

b) As informed to us no physical verification of assets was carried out by themanagement except at Switchgear Division Mannar Relays Division Trivandrum andMachinery Division Hyderabad and the differences noticed on physical verification carriedout has been properly dealt with in the books of accounts. We are unable to express anopinion with regard to discrepancies if any which may arise on physical verification ofthe assets at remaining units.

c) According to the information and explanations given to us and on the basis of theexamination of the records of the company The title deeds of the immovable properties ofthe Company are held in its name of the company.

2. In our opinion and according to the information & explanations provided to usthe inventory has been physically verified by the management at reasonable intervals. Thediscrepancies noticed on such verification (wherever carried out) as compared to bookrecords were not material in relation to the operations of the Company and the same havebeen properly dealt with in the books of account.

3. The Company has not granted any loan secured / unsecured to Companies FirmsLimited Liability Partnerships or other parties covered in the register maintained u/s.189 of the Companies Act 2013. In view of this sub clause (a) & (b) of clause 3 arenot applicable

4. In our opinion and according to the information and explanations given to us theCompany has not granted any loan investments guarantees and securities to the partiescovered u/s. 185 and 186 of the Act.

5. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposit from the public during the year to which thedirectives issued by the Reserve Bank of India and the provisions of Section 73 to 76 orany other relevant provision of the Act and Rules framed there under are applicable.

6. The Central Government vide Sec. 148 (1) of the Companies Act 2013 prescribedmaintenance of cost

records for all listed companies engaged in manufacturing. In our opinion the Companyis in the process of maintaining the cost records for the products of the Company asprescribed in the said rules.

7. a) The Company is generally regular in depositing with the appropriate authoritiesthe undisputed statutory dues viz Provident Fund Employees' State Insurance ProfessionalTax Service Tax Excise & Customs Duty Value Added Tax and other statutory dues withappropriate authorities during the year except in some cases there have been delaysranging up to 180 days in payment of statutory dues.

b) According to the information and records of the Company made available to us thedues outstanding in respect of Sales Tax / Custom Duty / Excise Duty / Cess which have notbeen deposited on account of various disputes of the Company are as under:

Name of Statute Nature of Dues Amount Rs. in Lakhs Period to which amount relates Forum where Dispute is Pending
Kerala Value added tax Act 2003 Kerala Value added tax 2.61 FY

2007-08

Commissi

oner

(Appeal)

Kerala Value added tax Act 2003 Central Sales Tax 160.94 From FY 2007-08 to FY 2013-14 Commissi

oner

(Appeal)

Custom Act 1962 Custom

Duty

745.79 From FY 1991-92 to FY 1994-95 Customs

Excise

and

Service

Tax

Appellate

Tribunal

8) In our opinion and according to the information and explanations given to us therepayment of dues to financial institutions banks or debenture holders are governed bythe Scheme Sanctioned by BIFR on 12.02.2014. There were delay in payment of installment toSecured lenders as per the Schedule of SS-14 and for the same the company has informedthat it has requested the respective secured lenders for waiver of liquidated damages onsuch delayed payment of installment.

9) The Company did not raise any money by way of Initial Public Offer or Further PublicOffer and Term Loans

during the year. Accordingly Paragraph 3 (ix) of The Order is not applicable.

10) In our opinion and according to the information and explanations given to us nomaterial fraud by the company or on the Company by its officers or employees has beennoticed or reported during the year.

11) In our opinion and according to the information and explanations given to us theCompany has paid/ provided for managerial remuneration in accordance with the requisiteapproval mandated by the provisions of Section 197 read with Schedule V to the Act.

12) in our opinion and according to the information and explanations given to us thecompany is not a Nidhi Company. Accordingly Paragraph 3 (xii) of the Order is notapplicable.

13) In our opinion and according to the information and explanations given to ustransactions with the related parties are in compliance with Section 177 and 188 of theAct where applicable and details of such transactions have been disclosed in the FinancialStatements as required by the applicable Accounting Standards.

14) In our opinion and according to the information and explanations given to us theCompany has raised money by way of Private Placement of Equity Shares to the extent of ?3898 Lakhs as per the Scheme Sanctioned by BIFR as on 12.02.2014 in accordance withSection 42 of the Act and were utilized for the purpose for which the fund were raised.

15) In our opinion and according to the information and explanations given to us thecompany has not entered into any non-cash transactions with directors or persons connectedwith them. Accordingly Paragraph 3 (xv) of the Order is not applicable.

16) The company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934. Accordingly Paragraph 3 (xvi) of the Order is not applicable.

Place: Kochi For BALAKRISHNAN & CO
Date: 31st August 2016 Chartered Accountants
FRN.011890S
CA. BALAKRISHNAN M
(Partner) M.No.218798

ANNEXURE B’ TO THE INDEPENDENT AUDITOR’S REPORT .

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013. ("the Act")

We have audited the internal financial controls over financial reporting of the Companyas of March 312016 in conjunction with our audit of the financial statements of theCompany for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of Internal FinancialReporting stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India [ICAI].These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company’s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013.

Auditors ’Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidanae Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor’s judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company’s internal financial controlssystem overfinancial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting .

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion and best of our information and according to the explanations given tous the Company is in the process of developing an adequate internal financial controlssystem over financial reporting and therefore we are unable to comment on theeffectiveness of such internal financial controls over financial reporting were operatingas at March 312016 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of Internal FinancialReporting stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the ICAI.

Place: Kochi For BALAKRISHNAN & CO
Date: 31" August 2016 Chartered Accountants
FRN. 011890S
CA. BALAKRISHNAN M
(Partner) M.No.218798