INDEXSRCONTENTSPAGE NO
iMAIN PAGE
iiDECLARATION
iiiCERTIFICATE
ivACKNOWLEDGEMENT
1Chapter 1: IntroductionAims and objectivesNeeds and importance
of the studyScope of the studyLimitationsResearch methodology
2Chapter 2: Company Profile
3Chapter 3Auditors ReportAudit of share capital
5Chapter 5FindingsRecommendationsConclusions
6.Bibliography
Chapter 1IntroductionAuditThe general definition of an audit is
a planned and documented activity performed by qualified personnel
to determine by investigation, examination, or evaluation of
objective evidence, the adequacy and compliance with established
procedures, or applicable documents, and the effectiveness of
implementation. The term may refer to audits in accounting,
internal controls, quality management, project management, water
management, and energy conservation.Auditing is defined as a
systematic and independent examination of data, statements,
records, operations and performances (financial or otherwise) of an
enterprise for a stated purpose. In any auditing the auditor
perceives and recognizes the propositions before him for
examination, collects evidence, evaluates the same and on this
basis formulates his judgment which is communicated through his
audit report. The purpose is then to give an opinion on the
adequacy of controls (financial and otherwise) within an
environment they audit, to evaluate and improve the effectiveness
of risk management, control, and governance processes.DEFINITION OF
AUDITINGVarious persons such as the owners, shareholders,
investors, creditors, lenders, government etc. use the final
account of business concern for different purposes. All these users
need to be sure that the final accounts prepared by the management
are reliable. An auditor is an independent expert who examines the
accounts of a business concern and reports whether the final
accounts are reliable or not. Different authorities have defined
auditing as follows.International auditing guidelines defines the
auditing as auditing is an independent examination of financial
information of any entity with a view to expressing an opinion
thereon.Objectives of Audit Basic objective of auditing is to prove
true and fairness of results presented by profit and loss account
and financial position presented by balance sheet. Its objectives
are classified into two groups which are given below:A. Primary
Objectives of AuditThe main objectives of audit are known as
primary objectives of audit. They are as follows:1. Examining the
system of internal check.2. Checking arithmetical accuracy of books
of accounts, verifying posting, costing, balancing etc.3. Verifying
the authenticity and validity of transactions.4. Checking the
proper distinction of capital and revenue nature of transactions.5.
Verifying whether all the statutory requirements are fulfilled or
not.6. Proving true and fairness of operating results presented by
income statement and financial position presented by balance
sheet.B. Subsidiary Objectives of AuditThese are such objectives
which are set up to help in attaining primary objectives. They are
as follows:1) Detection and prevention of errorsErrors are those
mistakes which are committed due to carelessness or negligence or
lack of knowledge or without having vested interest. Errors may be
committed without or with any vested interest. So, they are to be
checked carefully. 2) Detection and prevention of fraudsFrauds are
those mistakes which are committed knowingly with some vested
interest on the direction of top level management. Management
commits frauds to deceive tax, to show the effectiveness of
management, to get more commission, to sell share in the market or
to maintain market price of share etc. Detection of fraud is the
main job of an auditor.3) Under or over valuation of stockNormally
such frauds are committed by the top level executives of the
business. So, the explanation given to the auditor also remains
false. So, an auditor should detect such frauds using skill,
knowledge and facts.4) Other objectives To provide information to
income tax authority. To satisfy the provision of company Act and
to have moral effect.
Basic principle of Auditing
1) Integrity, objectivity and independenceThe auditor should be
honest and sincere in his audit work. He must be fair and
objective. He should also be independent.2) ConfidentialityThe
auditor should keep the information obtained during audit,
confidential. He should not disclose such information to any third
party. He should, keep his eyes and ears open but his mouth shut.3)
Skill and competence The auditor should have adequate training,
experience and competence in Auditing. He should have a
professional qualification (i.e. be a Chartered Accountant) and
practical experience. He should be aware of recent developments in
the field of auditing such as statement of ICAI, changes in company
law, decisions of courts etc.4) Working papersThe auditor should
maintain working papers of important matters to prove that audit
was conducted with due care according to the basic principles.5)
PlanningThe auditor should plan his audit work. He should prepare
an audit programmed to complete the audit efficiently and in
time.6) Audit evidenceThe report of the auditor should be base on
evidence obtained in the course of audit. The evidence may be
obtained through vouching of transactions, verification of assets
and liabilities, ratio analysis etc.7) Evaluation of accounting
system and internal controlThe auditor should ensure that the
accounting system is adequate. He should see that all the
transaction has been properly recorded. He should study and
evaluate the internal controls.8) Opinion and reportThe auditor
should arrive at his opinion on the account based on the audit
evidence and submit his report. The opinion may be unqualified,
qualified or adverse. The audit report should clearly express his
opinion. Law should require the content and form of audit
report.
Joint Stock CompanyA joint Stock company is a business entity
where different stakes can be bought and owned by shareholders.
Each shareholder owns company stock in proportion, evidenced by his
or her shares (certificates of ownership). This allows for unequal
ownership of a business with some shareholders owning a larger
proportion of a company than others. Shareholders are able to
transfer their shares to other existence of the company.In modern
corporate law, the existence of joint-stock company is often
synonymous with incorporation (i.e. possession of legal personality
separate from shareholders) and limited liability (meaning that the
shareholders are only liable for the companys debts to the value of
money they invested in the company). And as a consequence
joint-stock companies are commonly known as corporations or limited
companies.How the auditor would conduct the audit of a joint stock
companyAn auditor has to study the Company Law so as to familiarize
himself with his rights and duties. There are provisions in the law
in regard to issue of Share Capital, preparation of Memorandum of
Association and Articles of Association, appointment of Director
and Managing Directors, issue of Prospectus and other important
matters which an auditor has to study for the successful conduct of
a companys accounts.Preparation by the Auditor before AuditThe
auditor should go through the following preliminaries before he
begins his actual work:1. To see that his appointment is in
order;2. Inspection of documents books and registers;3. Inspection
of contracts;4. Study of previous years Balance Sheet and Auditors
Report;5. Obtaining a schedule of books and persons handling
them;6. Study of internal check system; and7. Certificate of
incorporation and commencement of business.1. To see that his
Appointment is in order(a) If he is appointed as the first (newly
appointed) auditor of the company by the Board of Directors, he
should ask for a copy of the resolution by the Directors ealizable
his appointment.(b) If he is appointed in place of a retiring
auditor, he should enquire from the retiring auditor whether due
notice was served and the provisions of section 225 were complied
with or not. It would be a breach of professional etiquette if he
does not enquire from him in writing about the circumstances which
led to his removal.I If he is appointed by the shareholders at the
Annual General Meeting, he should obtain a copy of the resolution.
He should inform the Registrar within 30 days of the receipt of the
appointment letter in writing that he has accepted or refused to
accept the appointment. He should ensure that proper notice or
nomination was given, otherwise his appointment will be invalid.The
auditor should correspond in writing with the previous auditor,
informing the latter of the fact of his appointment.(d) If he is
appointed to fill a casual vacancy caused by the death of the
previous auditor, he should obtain a copy of the resolution passed
by the Directors so as to ensure that his appointment is valid.(e)
Under section 224(6) of the Companies Act, a General Meeting of the
shareholders should be called to appoint a new auditor in place of
the auditor who has resigned. Thus, the vacancy caused by the
resignation has to be filled by the company in a General Meeting
and not by the Board of Directors.The auditor should see that his
appointment is regular under such circumstances. He should,
however, enquire from the auditor who has resigned, about the
circumstances in which he has resigned and then decide whether he
should accept the appointment or not.2. Inspection of Documents,
Books and RegistersDocuments:1. Memorandum- (1) Under the
provisions of section 13 of the Companies Act, the Memorandum of
every company shall state:(a) the name of the company with Limited
as the last word of the name in the case of a public limited
company and with Private Limited as the last words of the name in
the case of a private limited company;(b) The State in which the
registered office of the company is to be situated;I In the case of
a company in existence immediately before commencement of the
Companies (Amendment) Act, 1956, the objects of the
company.Articles of Association:Under section 26, every company is
required to have the Articles of Association. The Articles of
Association of a company limited by shares may adopt all or any of
the regulations of Table A in Schedule I.The Articles of
Association contain regulations to control the internal
administration of the company, viz., regulation for day-to-day
work, relationship between its members, their rights and
responsibilities, etc. Since the Articles of Association are framed
by the company for its use, they may be altered by a special
resolution as and when necessary, subject to the provisions of the
Companies Act and to the conditions contained in its
Memorandum.Prospectus:Matters to be stated and reports to be set
out in Prospectus are given in section 56 of the Companies Act. A
Prospectus is issued with the objective of inviting public to
purchase the share of the company. Ordinarily, all matters dealt
with above in the Articles of Association are found in the
Prospectus.3. Inspection of Contracts:Next, the auditor should
examine the contracts which have been entered into between a
company and other parties, e.g.(i) Contracts with the vendors of
any property.(ii) Contracts with the brokers and underwriters.(iii)
Contracts with the promoters for the preliminary expenses,
etc.Usually, brief particulars about such contracts are given in
theThe auditor should see that the Statement of Particulars is
correct and transactions relating to such contracts have been
properly recorded in the Books of Accounts.4. Study of Previous
Years Balance Sheet and Auditors Report:When the auditor is
appointed in place of retiring auditor, he should examine the
Balance Sheet of the last year and also the Report of the auditor
appointed last year to be familiar with any relevant matter raised
by the previous auditor. He should ensure that the objections or
qualifications raised in the previous Audit Report have been duly
met by the company.Besides this, he may also examine the Directors
Report to the members containing the recommendations of the
Directors in respect of the appropriation of profits made last
year. This is very important.
5. Obtaining a Schedule of Books and Persons handling them:The
auditor should, then, get a list of the persons employed to
maintain accounts of the company and also of books maintained by
them. This will help him in the successful conduct of the audit
whenever he needs some information and explanations, and
difficulties can, thus, be met easily.6. Study of Internal Check
System:This is another significant part of an auditors duty to
obtain a detailed statement from the Directors of the Company about
the system of the internal check in operation. This will enable him
to note down the shortcomings of the accounting system and the
procedure followed by the company.7. Certificate of Incorporation
and Commencement of Business:A public limited company is not
allowed to commence business unless a certificate entitling the
company to commence business is granted. A private company is
entitled to commence business and exercise borrowing powers
immediately after incorporation. The auditor should examine the
certificate and see that the company has commenced business after
it is granted.
Objective of the StudyThe major objectives of the resent study
are to know about audit of ultratech cement limitedTo study about
auditing of joint stock companyTo know about ultratech cement
limited.To study the auditors report and audit of share capital of
the company.
Scope of StudyThe scope of the study is limited to the audit of
Ultratech cement Limited. Study objective is to study the audit
procedures of Ultratech cement Limited.
Limitation of StudyThe time period of the study was not
sufficient to measure the audit of Ultratech cement Limited
effectively and reach to a more valid conclusion.Lack of accurate,
centralized and statewide information
Research MethodologyResearch Research means search for facts in
order to find answers to certain questions or to find solutions to
certain problems. It is often referred to as scientific inquiry or
scientific investigation into a specific problem or situation. This
is because the search for facts should be made by scientific method
rather than by arbitrary method. The scientific method uses
systematic rational approach to search for facts, whereas, the
arbitrary method attempts to find answers to questions on the basis
of imagination and ones own beliefs and judgments.William C. Emory
in his book Business Research Methods defines research as any
organized inquiry designed and carried out to provide information
for solving a problem. Methodology In simple terms methodology can
be defined as, it is used to give a clear cut idea on what the
researcher is carrying out his or her research. In order to plan in
a right point of time and to advance the research work methodology
makes the right platform to the researcher to mapping out the
research work in relevance to make solid plans.More over
methodology guides the researcher to involve and to be active in
his or her particular field of enquiry. Most of the situations the
aim of the research and the research topic wont be same at all time
it varies from its objectives and flow of the research but by
adopting a suitable methodology this can be achieved.Right from
selecting the topic and carrying out till recommendations research
methodology drives the researcher in the right track. The entire
research plan is based on the concept of right methodology.More
over through methodology the external environment constitutes the
research by giving a depth idea on setting the right research
objective, followed by literature point of view, based on that
chosen analysis through interviews or questionnaires findings will
be obtained and finally concluded message by this research.On the
other hand from the methodology the internal environment
constitutes by understanding and identifying the right type of
research, strategy, philosophy, time horizon, approaches, followed
by right procedures and techniques based on his or her research
work. In other hand the research methodology acts as the nerve
center because the entire research is bounded by it and to perform
a good research work, the internal and external environment has to
follow the right methodology process.
Research MethodologyResearch methodology is a set of various
methods to be followed to find out various information regarding
market strata of different products. Research methodology required
in every industry for acquiring knowledge of their products.Sources
of DataThere are two types of data namely primary data and
secondary data.Primary dataPrimary data refers to those data that
are collected newly and they are not used earlier. The researcher
has to gather the primary data freshly for the specific study
undertaken by him.Secondary dataThe secondary data refers to those
data which were gathered for some other purpose and are already
available in the firms internal records and commercial trade or
government publications.This project is based on secondary data
which is collected from internet and various books.
Data Collection:The required data for the study are basically
secondary in nature and the data are collected from the audited
reports of the Ultratech cement Limited which includes auditors
report, last year profits and loss and Balance sheet and Capital
structure of Ultratech cement and pattern of share capital of the
company.CHAPTER 2COMPANY PROFILEUltraTech
TypePublicBSE:532538
IndustryBuilding materials
Founded1983
HeadquartersMumbai,Maharashtra,India
Key peopleO P Puranmalka, Director
ProductsCements
RevenueUS$3.7billion (201112)[1]
ProfitUS$450million (201112)[1]
ParentGrasim Industries
SloganEngineer's Choice
Websitewww.ultratechcement.com
Date of Establishment24-08 2000
Revenue3836.41 ( USD in Millions )
Market Cap807737.4600372 ( Rs. in Millions )
Corporate AddressB Wing, Ahura Centre ,2nd Floor, Mahakali Caves
Road ,Andheri (East)Mumbai-400093,
Maharashtrawww.ultratechcement.com / www.adityabirla.com
Management DetailsChairperson- Kumar Mangalam BirlaMD- O P
PuranmalkaDirectors- Adesh Gupta, Arun Adhikari, D D Rathi, G M
Dave, J P Nayak, Kumar Mangalam Birla, M Damodaran, N J Jhaveri,
Nirmalya Kumar, O P Puranmalka, R C Bhargava, Rajashree Birla,
Rajiv Dube, Renuka Ramnath, S B Mathur, S K Chatterjee, S Misra, S
Rajgopal, Sukanya Kripalu, V T Moorthy, Y M Deosthalee
Business OperationCement & Construction Materials
BackgroundUltratech Cement was incorporated in 2000 as Larsen
& Toubro. Later itwas demergedand acquired by Grasim and was
renamed as Ultra Tech Cement in 2004. Today Ultatech cementa part
of Aditya Birla group, is the countrys largest exporter of cement
clinker. UltraTech Cement Limited has an annual capacity of 52
million tonnes. It manufactures and markets Ordinary Portland
Cement, Po
FinancialsTotal Income- Rs. 206088.4 Million ( year ending
Mar2014)Net Profit- Rs. 21444.7 Million ( year ending Mar2014)
Company SecretaryS K Chatterjee
Bankers
AuditorsDeloitte Haskins & Sells, GP Kapadia & Co,
Deloitte Haskins & Sells, GP Kapadia & Co, Deloitte Haskins
& Sells, GP Kapadia & Co, Deloitte Haskins & Sells, GP
Kapadia & Co, Deloitte Haskins & Sells, GP Kapadia &
Co, GP Kapadia & Co, SB Billimoria & Co, SB Billimoria
& Co, GP Kapadia & Co, GP Kapadia & Co, SB Billimoria
& Co, Sharp & Tannan, Sharp & Tannan, Deloitte Haskins
& Sells LLP, GP Kapadia & Co.
INTRODUCTION:-UltraTech Cement Limitedis leading cement
companyand the countrys largest exporter of cement clinker based
inMumbai,India.It has an annual capacity of 23.1 million tonnes. It
manufactures and markets Ordinary Portland Cement, Portland Blast
Furnace Slag Cement and Portland Pozzalana Cement. It also
manufactures ready mix concrete (RMC). The export markets span
countries around the Indian Ocean, Africa, Europe and the Middle
East. It is part of Grasim Group.UltraTech Cement Limited has five
integrated plants, six grinding units and three terminals two in
India and one in Sri Lanka.UltraTechs subsidiaries are Dakshin
Cement Limited, UltraTech Cement Lanka (Pvt.) Ltd. and UltraTech
Cement Middle East Investments Limited
MISSION & VISION:- Vision of the company: To be a premium
global conglomerate with a clear focus on each business. To become
world most big company of cement and concrete.
Mission of the company: To deliver superior value to the
customers, shareholders, employees and society at large. KUMAR
MANGALAM BIRLA says our goal is to become a US $65 billion group by
2015 from US $30 billion company today.we expect company to
contribute significally to this growth and earnings.
HISTORY:- 2001 -Grasim acquires 10 per cent stake in L&T.
Subsequently increases stake to 15.3 per cent by October 2002
-Durgapur grinding unit 2002 -Grasim increases its stake in L&T
to 14.15 per cent -Arakkonam grinding unit -The Grasim Board
approves an open offer for purchase of up to 20 per cent of the
equity shares of Larsen & Toubro Ltd (L&T), in accordance
with the provisions and guidelines issued by the Securities &
Exchange Board of India (SEBI) Regulations, 1997. 2003 The board of
Larsen & Toubro Ltd (L&T) decides to demerge its cement
business into a separate cement company (CemCo). Grasim decides to
acquire an 8.5 per cent equity stake from L&T and then make an
open offer for 30 per cent of the equity of CemCo, to acquire
management control of the company 2004 Completion of the
implementation process to demerge the cement business of L&T
and completion of open offer by Grasim, with the latter acquiring
controlling stake in the newly formed company UltraTech 2006
-Narmada Cement Company Limited amalgamated with UltraTech pursuant
to a Scheme of Amalgamation being approved by the Board for
Industrial & Financial Reconstruction (BIFR) in terms of the
provision of Sick Industrial Companies Act (Special Provisions) -
Formerly known as Ultratech Cemco Limited. The Group's principal
activities are to manufacture and market clinker and cement in
India2009 -UltraTech to absorb Samruddhi to form India's biggest
cement firm -Ultratech to be the lead sponsors of Rajasthan Royals
-UltraTech to consider Grasim merger proposalCHAPTER 3 FINANCIAL
STATEMENTS
Balance Sheet of UltraTech Cement------------------- in Rs. Cr.
-------------------
Mar '14Mar '13Mar '12Mar '11Mar '10
12 mths12 mths12 mths12 mths12 mths
Sources Of Funds
Total Share Capital274.24274.18274.07274.04124.49
Equity Share Capital274.24274.18274.07274.04124.49
Share Application Money0.000.000.000.001.99
Preference Share Capital0.000.000.000.000.00
Reserves16,823.2714,960.6412,585.7510,392.004,482.17
Networth17,097.5115,234.8212,859.8210,666.044,608.65
Secured Loans2,389.352,147.342,012.091,531.12854.19
Unsecured Loans2,483.432,315.341,796.041,103.94750.33
Total Debt4,872.784,462.683,808.132,635.061,604.52
Total
Liabilities21,970.2919,697.5016,667.9513,301.106,213.17
Mar '14Mar '13Mar '12Mar '11Mar '10
12 mths12 mths12 mths12 mths12 mths
Application Of Funds
Gross Block25,004.3121,320.1618,962.7517,899.858,078.14
Less: Revaluation Reserves0.000.000.000.000.00
Less: Accum.
Depreciation9,132.478,197.807,328.576,499.603,136.46
Net Block15,871.8413,122.3611,634.1811,400.254,941.68
Capital Work in Progress2,041.633,505.371,896.63681.83259.37
Investments5,391.675,108.723,788.773,730.321,669.55
Inventories2,368.362,350.472,035.941,956.52821.70
Sundry Debtors1,281.021,017.24765.96602.29215.83
Cash and Bank Balance277.50142.66188.19144.7983.73
Total Current Assets3,926.883,510.372,990.092,703.601,121.26
Loans and Advances2,521.992,161.942,633.531,478.53374.92
Fixed Deposits0.000.000.000.000.00
Total CA, Loans &
Advances6,448.875,672.315,623.624,182.131,496.18
Deferred Credit0.000.000.000.000.00
Current Liabilities6,810.766,642.065,454.516,119.951,992.60
Provisions972.961,069.20820.74573.48161.01
Total CL &
Provisions7,783.727,711.266,275.256,693.432,153.61
Net Current Assets-1,334.85-2,038.95-651.63-2,511.30-657.43
Miscellaneous Expenses0.000.000.000.000.00
Total Assets21,970.2919,697.5016,667.9513,301.106,213.17
Contingent Liabilities6,257.152,599.533,645.822,558.35420.26
Book Value (Rs)623.45555.65469.22389.21370.05
Standalone Profit & Loss account------------------- in Rs.
Cr. -------------------
Mar '14Mar '13Mar '12Mar '11Mar '10
12 mths12 mths12 mths12 mths12 mths
Income
Sales Turnover20,279.8020,174.9418,313.1313,312.587,729.13
Excise Duty0.000.000.000.00686.31
Net Sales20,279.8020,174.9418,313.1313,312.587,042.82
Other Income329.04305.00371.87155.45122.71
Stock Adjustments-106.98118.19-21.2661.854.59
Total Income20,501.8620,598.1318,663.7413,529.887,170.12
Expenditure
Raw Materials4,492.584,204.603,600.472,750.751,593.03
Power & Fuel
Cost4,135.424,298.944,303.973,125.171,430.91
Employee Cost1,014.63968.35831.04665.16250.28
Other Manufacturing Expenses0.000.000.000.0097.42
Selling and Admin Expenses0.000.000.000.001,653.57
Miscellaneous Expenses6,712.296,145.765,408.974,167.2548.58
Preoperative Exp Capitalised0.000.000.000.00-4.02
Total Expenses16,354.9215,617.6514,144.4510,708.335,069.77
Mar '14Mar '13Mar '12Mar '11Mar '10
12 mths12 mths12 mths12 mths12 mths
Operating Profit3,817.904,675.484,147.422,666.101,977.64
PBDIT4,146.944,980.484,519.292,821.552,100.35
Interest319.17209.71223.86272.52124.11
PBDT3,827.774,770.774,295.432,549.031,976.24
Depreciation1,052.26945.37902.56765.73388.08
Other Written Off0.000.000.000.000.00
Profit Before Tax2,775.513,825.403,392.871,783.301,588.16
Extra-ordinary items0.000.000.000.000.13
PBT (Post Extra-ord
Items)2,775.513,825.403,392.871,783.301,588.29
Tax631.041,169.97946.68379.07495.05
Reported Net Profit2,144.472,655.432,446.191,404.231,093.24
Total Value
Addition11,862.3411,413.0510,543.987,957.583,476.74
Preference Dividend0.000.000.000.000.00
Equity Dividend246.82246.70218.82164.0974.69
Corporate Dividend Tax41.9542.0036.0027.0012.41
Per share data (annualised)
Shares in issue
(lakhs)2,742.412,741.802,740.652,740.421,244.87
Earning Per Share (Rs)78.2096.8589.2651.2487.82
Equity Dividend (%)90.0090.0080.0060.0060.00
Book Value (Rs)623.45555.65469.22389.21370.05
AUDITORS REPORTINDEPENDENT AUDITORS' REPORTTO THE MEMBERS OF
ULTRATECH CEMENT LIMITEDReport on the Financial StatementsWe have
audited the accompanying financial statements ofULTRATECH CEMENT
LIMITED("the Company"), which comprise the Balance Sheet as at
March 31, 2014, the Statement of Profit and Loss and the Cash Flow
Statement for the year then ended, and a summary of the significant
accounting policies and other explanatory information, in which are
incorporated the Returns for the year ended on that date audited by
the branch auditors of the Company's branches at Jafrabad, Magdalla
and Ratnagiri.Management's Responsibility for the Financial
StatementsThe Company's 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
notified under the Companies Act, 1956 ("the Act") (which continue
to be applicable in respect of Section 133 of the Companies Act,
2013 in terms of General Circular 15/2013 dated September 13, 2013
of the Ministry of Corporate Affairs) and in accordance with the
accounting principles generally accepted in India. 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' ResponsibilityOur 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 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 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 Company's internal control. An
audit also includes evaluating the appropriateness of the
accounting policies used and the reasonableness of the accounting
estimates made by the 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.OpinionIn our opinion and to the best
of our information and according to the explanations given to us,
the aforesaid financial statements give the information required by
the Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in
India:(a) in the case of the Balance Sheet, of the state of affairs
of the Company as at March 31, 2014;(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.Emphasis of MatterWe draw attention to Note 30(b) to the
financial statements which, describes the uncertainty related to
the penalty of Rs. 1,175.49 crores imposed by the Competition
Commission of India for alleged cartelization by certain cement
manufacturing companies including the Company, for which, based on
a legal opinion, no provision has been made. Our opinion is not
qualified in respect of this matter.Report on Other Legal and
Regulatory Requirements1. As required by the Companies (Auditor's
Report) Order, 2003 ("the Order") issued by the Central Government
in terms of Section 227(4A) 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:(a) 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.(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 and proper returns
adequate for the purposes of our audit have been received from the
branches not visited by us.(c) The reports on the accounts of the
branches at Jafrabad, Magdalla and Ratnagiri, audited by the branch
auditors appointed under Section 228 of the Act, have been
forwarded to us and have been properly dealt with by us in
preparing this report.(d) 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 and with the
returns received from the branches not visited by us.(e) In our
opinion, the Balance Sheet, the Statement of Profit and Loss, and
the Cash Flow Statement comply with the Accounting Standards
notified under the Act (which continue to be applicable in respect
of Section 133 of the Companies Act, 2013 in terms of General
Circular 15/2013 dated September 13, 2013 of the Ministry of
Corporate Affairs).(f) On the basis of the written representations
received from the directors as on March 31, 2014 taken on record by
the Board of Directors, none of the directors is disqualified as on
March 31, 2014 from being appointed as a director in terms of
Section 274(1)(g) of the Act.ANNEXURE TO THEINDEPENDENT AUDITORS'
REPORT(Referred to in paragraph 1 under 'Report on Other Legal and
Regulatory Requirements' section of our report of even date of
UltraTech Cement Limited for the year ended March 31, 2014.)Having
regard to the nature of the Company's business/activities/results
during the year, clauses (x) regarding cash loss incurred by the
Company, (xiii) regarding chit fund, nidhi/mutual benefit
fund/societies and (xiv) regarding dealing or trading in shares,
securities, debentures and other investments, of paragraph 4 of the
Order, are not applicable to the Company.(i) In respect of its
fixed assets:a. The Company has maintained proper records showing
full particulars, including quantitative details and situation of
fixed assets.b. The Company has a program of verification of fixed
assets to cover all the assets in a phased manner over a period of
three years which, in our opinion, is reasonable having regard to
the size of the Company and nature of its assets. Pursuant to the
program, certain fixed assets were physically verified by the
Management during the year. According to the information and
explanations given to us, no material discrepancies were noticed on
such verification.c. 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.(ii) In respect of
its inventories:a. As explained to us, inventories were physically
verified during the year by the Management at reasonable intervals.
In respect of inventories lying with third parties, confirmations
have been obtained from those parties and in respect of goods in
transit subsequent goods receipt have been verified or
confirmations have been obtained from those parties.b. In our
opinion and according to the information and explanations given to
us, the procedures of physical verification of inventories followed
by the Management were reasonable and adequate in relation to the
size of the Company and the nature of its business.c. 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.(iii) According to the information and explanations
given to us, the Company has neither granted nor taken any loans,
secured or unsecured, to/ from companies, firms or other parties
covered in the Register maintained under Section 301 of the
Companies Act, 1956 ("the Act").(iv) In our opinion and according
to the information and explanations given to us, there is an
adequate internal control system commensurate with the size of the
Company and the nature of its business with regard to purchases of
inventory and fixed assets and the sale of goods and services.
During the course of our audit, we have not observed any major
weaknesses in such internal control system.(v) To the best of our
knowledge and belief and according to the information and
explanations given to us, there were no contracts or arrangements,
particulars of which needed to be entered in the Register
maintained under Section 301 of the Act.(vi) According to the
information and explanations given to us, the Company has not
accepted any deposit from the public during the year in terms of
the provisions of Sections 58A and 58AA or any other relevant
provisions of the Act.(vii) In our opinion, the Company has an
adequate internal audit system commensurate with the size and the
nature its business.(viii) 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 Act 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.(ix) According to the information and explanations
given to us, in respect of statutory dues:(a) The Company has been
regular in depositing undisputed statutory dues, including
Provident Fund, Investor Education and Protection Fund, Employees'
State Insurance, IncomeTax, SalesTax, Value Added Tax, Wealth Tax,
Service Tax, Custom Duty, Excise Duty, Cess and other material
statutory dues applicable to it with the appropriate
authorities.(b) There were no undisputed amounts payable in respect
of Provident Fund, Investor Education and Protection Fund,
Employees' State Insurance, Incometax, Sales Tax, Value Added Tax,
Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and other
material statutory dues in arrears as at March 31, 2014 for a
period of more than six months from the date they became
payable.(x) In our opinion and according to the information and
explanations given to us, and based on the records of the Company,
the Company has not defaulted in the repayment of dues to financial
institutions, banks and debenture holders.(xi) In our opinion and
according to 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.(xii) In our opinion and according to the information
and explanations given to us, the terms and conditions of the
guarantees given by the Company for loans taken by subsidiaries
from banks or financial institutions are not, prima facie,
prejudicial to the interest of the Company.(xiii) 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, other than temporary
deployment pending application.(xiv) 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, we report that
funds raised on shortterm basis have, prima facie, not been used
during the year for longterm investment.(xv) According to the
information and explanations given to us and the records examined
by us, during the year, the Company has not made preferential
allotment of shares to parties and companies covered in the
Register maintained under Section 301 of the Act.(xvi) According to
the information and explanations given to us, during the period
covered by our audit report, the Company has not issued any
debentures.(xvii) During the year, the Company has not raised money
by public issues.(xviii) 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 nor have we been informed of such case by
the management.
ForDELOITTE HASKINS & SELLS LLPChartered Accountants(Firm
Registration No. 117366W/W100018)Rajesh K.
HiranandaniPartnerMembership No.36920ForG.P. KAPADIA &
CO.Chartered Accountants(Firm Registration No.104768W)Atul B.
DesaiPartnerMembership No.30850Mumbai, April 23, 2014
AUDIT OF SHARE CAPITAL
Capital Structure (UltraTech Cement)
PeriodInstrumentAuthorized CapitalIssued Capital- P A I D U P
-
FromTo(Rs. cr)(Rs. cr)Shares (nos)Face ValueCapital
20132014Equity Share280274.2427424138710274.24
20122013Equity Share280274.1827417991710274.18
20112012Equity Share280274.0727406530110274.07
20102011Equity Share280274.0427404166510274.04
20092010Equity Share130124.4912448707910124.49
20082009Equity Share130124.4912448587910124.49
20072008Equity Share130124.4912448587910124.49
20062007Equity Share130124.4912448587910124.49
20052006Equity Share130124.412439862110124.4
20042005Equity Share130124.412439862110124.4
20032004Equity Share130124.412439862110124.4
20022003Equity Share30302999999313
Employees Stock Options Scheme - 2013 (ESOS - 2013)Feb 2,
2015UltraTech Cement Ltd has informed BSE that The Nomination,
Remuneration and Compensation Committee of the Board of Directors
of the Company has approved grant of 6,280 stock options at an
exercise price of Rs. 3,122/- per stock option, exercisable Into
the same number of equity shares of Rs. 10 each and 2,218
restricted stock units, at an exercise price of Rs. 10/- each
exercisable into the same number of equity shares of Rs. 10/- each
to eligible employees of the Company under the ?Employees Stock
Option Scheme - 2013? (ESOS - 2013).
Subject to the Securities and Exchange Board of India (Employees
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 and the terms of the ESOS - 2013, the stock options will vest
in 4 equal installments after one year of the grant and restricted
stock units will vest after three years from the date of grant
which shall be exercisable within a period of 5 years from the date
of vesting
Options on un-issued share capitalUltratech cement has a
capacity of 53 mt (50 mt in India) and has a diversified presence
across India. Ultratech is currently operating at 82% utilization
and controls 17% market share in India. Ultratech is expanding its
capacity by 20% (9.2 mt) over the next two years with expansions
targeted at regions where Ultratech is capacity-constrained i.e
eastern India and Maharashtra. Ultratech is also in the process of
increasing its vertical integration on captive power from 80% to
100% and additionally implement 45 MW of Waste heat recovery
capacity. (targeting Maharashtra) to be EPS accretive from FY15.We
expect Ultratechs utilization to increase in northern and southern
regions but reduce in western and central regions. Majority of the
unused capacity lies in the southern region. Utilization in the
north region is also expected to pick up as the demand
recovers.Ultratech is expanding its Malkhed capacity in Karnataka
by 4.4 mt with two grinding units one at Hotgi in Maharashtra (1.8
mt) and second at Malkhed. The grinding unit at Malkhed is already
ready and the trial runs have started. We expect commercial
operations to start for the clinker plant by end of FY14 .Given
Ultratech is already running at 100% utilization in Maharashtra,
the Karnataka expansion should provide volume growth for Ultratech.
We expect Karnataka expansion to just break even for Ultratech in
FY14, the given supply pressure is high in the western region.In
its expansion capex, Ultratech is increasing vertical integration
on captive power from 80% to 100% with 50 MW of thermal power
expansion. Additionally, 45 MW of Waste heat recovery expansion
should help bring down power cost for Ultratech. Saving per unit of
power with thermal power will be about Rs1/unit whereas with Waste
heat recovery, saving per unit should be about Rs3.5/unit.
Therefore, as these power plants get commissioned over FY14, total
savings on normal utilization should be about Rs1.2 bn or adds
Rs32/t to consolidated EBITDA.
CHAPTER 4 FINDINGS SUGGESTION & CONCLUSIONFINDINGS AND
SUGGESTIONSBased upon the time spent by me in this project,
following findings and recommendations can be suggested for
increasing sales and effectiveness of Ultra Tech Cement: What
matters for most of the cement buyers is the price of the cement
and then the quality. Ultra Tech Cement usually costs 4-5 Rs.
Higher than the other counterparts. So the buyers, too much extant
not interested in buying Ultra Tech cement. This extra price is the
main reason behind lower sales. Therefore, Ultra Tech need to take
some serious steps to reduce the selling price somehow. The second
thing is that a good percentage of buyers is still unaware of the
fact that Ultra Tech cement is the changed name of Birla cement.
Birla cement had a very good image and it is still very popular
among the customers. But people are not so much sure about Ultra
Tech cement. So Ultra Tech need to take some steps to make people
familiar with the Birla cement and Ultra Tech relation because this
will bring the old Birla loyal customers to Ultra Tech cement. The
number of retailers and sub dealers for Ultra Tech cement is very
less as compared to the main competitors ACC, J.K. etc.So Ultra
Tech need to be oriented in this direction. They need to increase
the no. of retailers as much as possible. Although Ultra Tech has
taken a right step with the retailer registration scheme to
increase the no. of retailers. but this scheme needs some
improvements. For ex-margin for the retailers can be increased, we
can assure them some gifts also. While working, I saw that the main
condition for this new scheme was that the retailer will not sell
any other brand of cement. Most of the retailers refused the scheme
due to this particular reason. So Ultra Tech needs to give them
some relaxation in this case. Many of the Ultra Tech dealers used
to shop other type of building materials along with cement, in the
same shop. This should not be permitted by Ultra Tech. Because
selling of these building materials is more profitable than cement,
so the cement selling becomes less important for these dealers.
They dont give proper attention to the company officials and also
to the various schemes of increasing sales. This in turn brings
reduced sales to the company Ultra Tech Cement has market image of
a modern cement with very good quality. It should try to encash
this image. Its mainly the younger section of people who care about
quality first and then the price. So Ultra Tech needs to give
proper attention to the youngsters. May be, they are not the cement
buyers at present but future possibility lies with them.Ultra Tech
also should have a check on the upcoming threat of imported cement
from Pakistan. The import of cement from Pakistan has just started
and very quickly it has become successful in the southern markets.
The main reason behind this success is the lower price. The Pak
cement brands like Lucky, Mapple Leaf and Elephant costs 10-15 Rs.
Lesser than the local Indian brands. Ultra Tech which is already
facing charges of higher price needs to be prepared for this.Some
of the Ultra Tech dealers complained that they are losing the
customers loyal to their shops, due to the high price of the cement
provided by them. So at some point, the dealers are not satisfied
with the company. This need to be taken seriously by UltraTech.
Some more incentive schemes should be introduced for the dealers
and also the frequency of visits from company officials need to be
increased.CONCLUSIONIt has succinctly analyzed the present state of
affairs at UltraTech cement and thus identified its strengths and
problem areas through a variety of tools. While its raw material
sourcing, financial and human resource pools are sources of
competitive advantage, UltraTech has to improve in terms of fuel
costs in order to beat ACC to the top position in the low margin
industry. This can also be achieved by leveraging futuristic trends
like branded retailing, exports and new products like ready
concrete mix.According to me ULTRATECH company is really performing
well. And it really has vast era to grow and become the worlds
leading cement manufacturer. This company really has potential to
become rally good company by its production capacity and its human
resource.
BIBILOGRAPHY
https://www.google.co.in/?gfe_rd=cr&ei=xhIMVczNLKLO8geL6ID4Bw&gws_rd=ssl#q=ultratech+cement
http://www.ultratechcement.com/
http://adityabirla.com/Businesses/Profile/ultratech-cement-limited
http://www.moneycontrol.com/india/stockpricequote/cement-major/ultratechcement/UTC01
http://profit.ndtv.com/stock/ultratech-cement-ltd_ultracemco
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