INDEX

SR

CONTENTS

MAIN PAGE

ii

DECLARATION

iii

CERTIFICATE

iv

ACKNOWLEDGEMENT

Chapter 1: Introduction

PAGE NO

Aims and objectives

Needs and importance of the study
Scope of the study
Limitations
Research methodology
2

Chapter 2: Company Profile

3

Chapter 3
Auditors Report
Audit of share capital

Chapter 5
Findings
Recommendations
Conclusions

6.

Bibliography

Chapter 1
Introduction
Audit
The 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 AUDITING
Various 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 Audit
The 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 Audit
These are such objectives which are set up to help in attaining primary objectives.
They are as follows:
1) Detection and prevention of errors
Errors 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 frauds
3

Frauds 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 stock
Normally 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 independence

The auditor should be honest and sincere in his audit work. He must be fair and
objective. He should also be independent.
2) Confidentiality
The 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 papers
The auditor should maintain working papers of important matters to prove that
audit was conducted with due care according to the basic principles.
5) Planning
The auditor should plan his audit work. He should prepare an audit programmed to
complete the audit efficiently and in time.
6) Audit evidence
5

The 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 control
The 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 report
The 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 Company

A 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 company
An 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 Audit
The 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; and
7. 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
BealizableB 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 Registers
Documents:
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.

10

(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 the
The 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.

11

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.

12

Objective of the Study

The major objectives of the resent study are to know about audit of ultratech
cement limited
To study about auditing of joint stock company
To know about ultratech cement limited.
To study the auditors report and audit of share capital of the company.

Scope of Study
The 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 Study
The 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

13

Research Methodology
Research
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.

14

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.

15

Research Methodology
Research 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 Data
There are two types of data namely primary data and secondary data.
Primary data
Primary 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 data
The 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.
16

CHAPTER 2
COMPANY PROFILE
UltraTech

Date of Establishment

24-08 2000

Revenue

3836.41
( USD
in Millions
Public
BSE:
532538 )

Type

Market Cap
Industry
Corporate Address
Founded
Headquarters
Key people
Products
Management Details
Revenue
Profit
Parent
Slogan
Website

807737.4600372 ( Rs. in Millions )

Building materials
B Wing, Ahura Centre ,2nd Floor, Mahakali
1983
Caves Road ,Andheri (East)Mumbai-400093,
Mumbai, Maharashtra, India
Maharashtra
www.ultratechcement.com
/
O P Puranmalka, Director
www.adityabirla.com
Cements
Chairperson Kumar
Mangalam
Birla
[1]
US$3.7 billion (201112)
MD O
P
Puranmalka
[1]
US$450- million
Directors
Adesh (201112)
Gupta, Arun Adhikari, D D

Rathi, G
M Dave,
J P Nayak, Kumar Mangalam
Grasim
Industries
Birla, M Damodaran, N J Jhaveri, Nirmalya
Engineer's Choice
Kumar, O P Puranmalka, R C Bhargava,
www.ultratechcement.com
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 Operation

Cement & Construction Materials

17

Background

Ultratech Cement was incorporated in 2000 as

Larsen & Toubro. Later it was demerged and
acquired by Grasim and was renamed as Ultra
Tech Cement in 2004. Today Ultatech cement a
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

Financials

Total Income - Rs. 206088.4 Million ( year

ending

Mar 2014)

Net Profit - Rs. 21444.7 Million ( year ending

Mar 2014)
Company Secretary

S K Chatterjee

Bankers
Auditors

Deloitte 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.

18

INTRODUCTION:UltraTech Cement Limited is leading cement company and the countrys largest
exporter of cement clinker based in Mumbai, 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.
19

 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

20

Limited. The Group's principal activities are to manufacture and market clinker
and cement in India
2009
-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 proposal
CHAPTER 3
FINANCIAL STATEMENTS

Balance Sheet of UltraTech Cement ------------------- in Rs. Cr. ------------------Mar '14

Mar '13

Mar '12 Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Total Share Capital

274.24

274.18

274.07

274.04

124.49

Equity Share Capital

274.24

274.18

274.07

274.04

124.49

Share Application Money

0.00

0.00

0.00

0.00

1.99

Preference Share Capital

0.00

0.00

0.00

0.00

0.00

Reserves

16,823.2 14,960.64 12,585.7 10,392.00 4,482.1

Sources Of Funds

21

7
Networth

17,097.5
1

5
15,234.82

12,859.8
2

7
10,666.04

4,608.6
5

Secured Loans

2,389.35 2,147.34 2,012.09 1,531.12 854.19

Unsecured Loans

2,483.43 2,315.34 1,796.04 1,103.94 750.33

Total Debt

4,872.78 4,462.68 3,808.13 2,635.06

Total Liabilities

21,970.2
9

19,697.50

16,667.9
5

13,301.10

1,604.5
2
6,213.1
7

Mar '14

Mar '13

Mar '12 Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Application Of Funds
Gross Block

25,004.3
1

Less: Revaluation Reserves 0.00

21,320.16
0.00

18,962.7
5
0.00

17,899.85
0.00

Less: Accum. Depreciation 9,132.47 8,197.80 7,328.57 6,499.60

Net Block

15,871.8
4

13,122.36 11,634.18 11,400.25

8,078.1
4
0.00
3,136.4
6
4,941.6
8

Capital Work in Progress

2,041.63 3,505.37 1,896.63 681.83

259.37

Investments

5,391.67 5,108.72 3,788.77 3,730.32 1,669.5

22

5
Inventories

2,368.36 2,350.47 2,035.94 1,956.52 821.70

Sundry Debtors

1,281.02 1,017.24 765.96

602.29

215.83

Cash and Bank Balance

277.50

144.79

83.73

Total Current Assets

3,926.88 3,510.37 2,990.09 2,703.60

Loans and Advances

2,521.99 2,161.94 2,633.53 1,478.53 374.92

Fixed Deposits

0.00

Total

CA,

Loans

Advances

&

142.66

0.00

188.19

0.00

0.00

6,448.87 5,672.31 5,623.62 4,182.13

1,496.1
8

Current Liabilities

6,810.76 6,642.06 5,454.51 6,119.95

Provisions

972.96

Total CL & Provisions

7,783.72 7,711.26 6,275.25 6,693.43

Net Current Assets

-1,334.85 -2,038.95 -651.63

-2,511.30 -657.43

Miscellaneous Expenses

0.00

0.00

Contingent Liabilities

1,069.20 820.74

0.00
19,697.50

0.00
16,667.9
5

0.00

0.00

0.00

21,970.2

0.00

Deferred Credit

Total Assets

0.00

1,121.2

573.48

13,301.10

0.00
1,992.6
0
161.01
2,153.6
1

0.00
6,213.1
7

6,257.15 2,599.53 3,645.82 2,558.35 420.26

23

Book Value (Rs)

623.45

Standalone Profit & Loss

account

555.65

469.22

389.21

370.05

------------------- in Rs. Cr. -------------------

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Income
Sales Turnover

20,279.80 20,174.94 18,313.13 13,312.58 7,729.13

Excise Duty

0.00

Net Sales

20,279.80 20,174.94 18,313.13 13,312.58 7,042.82

Other Income

329.04

305.00

371.87

155.45

122.71

Stock Adjustments

-106.98

118.19

-21.26

61.85

4.59

0.00

0.00

0.00

686.31

24

Total Income

20,501.86 20,598.13 18,663.74 13,529.88 7,170.12

Expenditure
Raw Materials

4,492.58

4,204.60

3,600.47

2,750.75

1,593.03

Power & Fuel Cost

4,135.42

4,298.94

4,303.97

3,125.17

1,430.91

Employee Cost

1,014.63

968.35

831.04

665.16

250.28

0.00

0.00

0.00

0.00

97.42

0.00

0.00

0.00

0.00

1,653.57

6,145.76

5,408.97

4,167.25

48.58

0.00

0.00

0.00

-4.02

Other

Manufacturing

Expenses
Selling

and

Admin

Expenses

Miscellaneous Expenses 6,712.29

Preoperative
Capitalised
Total Expenses

Exp

0.00

16,354.92 15,617.65 14,144.45 10,708.33 5,069.77

Mar '14

Mar '13

Mar '12

Mar '11

Mar '10

12 mths

12 mths

12 mths

12 mths

12 mths

Operating Profit

3,817.90

4,675.48

4,147.42

2,666.10

1,977.64

PBDIT

4,146.94

4,980.48

4,519.29

2,821.55

2,100.35

Interest

319.17

209.71

223.86

272.52

124.11

PBDT

3,827.77

4,770.77

4,295.43

2,549.03

1,976.24

Depreciation

1,052.26

945.37

902.56

765.73

388.08

25

Other Written Off

0.00

0.00

0.00

0.00

0.00

Profit Before Tax

2,775.51

3,825.40

3,392.87

1,783.30

1,588.16

Extra-ordinary items

0.00

0.00

0.00

0.00

0.13

2,775.51

3,825.40

3,392.87

1,783.30

1,588.29

Tax

631.04

1,169.97

946.68

379.07

495.05

Reported Net Profit

2,144.47

2,655.43

2,446.19

1,404.23

1,093.24

Total Value Addition

11,862.34 11,413.05 10,543.98 7,957.58

3,476.74

Preference Dividend

0.00

0.00

0.00

0.00

0.00

Equity Dividend

246.82

246.70

218.82

164.09

74.69

42.00

36.00

27.00

12.41

2,741.80

2,740.65

2,740.42

1,244.87

Earning Per Share (Rs) 78.20

96.85

89.26

51.24

87.82

Equity Dividend (%)

90.00

90.00

80.00

60.00

60.00

Book Value (Rs)

623.45

555.65

469.22

389.21

370.05

PBT

(Post

Extra-ord

Items)

Corporate Dividend Tax 41.95

Per share data (annualised)
Shares in issue (lakhs)

2,742.41

26

AUDITORS REPORT
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF ULTRATECH CEMENT LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of ULTRATECH
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 Statements
The 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' Responsibility
27

Our responsibility is to express an opinion on these financial statements based on

our audit. We conducted our audit in accordance with the Standards on Auditing
issued by the Institute of Chartered Accountants of India. Those Standards require
that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and 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.
Opinion
In 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:
28

(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 Matter
We 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 Requirements
1. 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
29

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 THE INDEPENDENT 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
30

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

31

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.

32

(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.

33

(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.

34

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants
(Firm Registration No. 117366W/W100018)
Rajesh K. Hiranandani
Partner
Membership No.36920
For G.P. KAPADIA & CO.
Chartered Accountants
(Firm Registration No.104768W)
Atul B. Desai
Partner
Membership No.30850
Mumbai, April 23, 2014

35

AUDIT OF SHARE CAPITAL

Capital Structure (UltraTech Cement)

Period

Instrument Authorized Issued

From To

Capital

Capital

(Rs. cr)

(Rs. cr)

- PAI D U P-

Shares (nos) Face

Capital

Value
2013 2014

2012 2013

2011 2012

2010 2011

2009 2010

2008 2009

2007 2008

2006 2007

Equity
Share
Equity
Share
Equity
Share
Equity
Share
Equity
Share
Equity
Share
Equity
Share
Equity
Share

280

274.24

274241387

10

274.24

280

274.18

274179917

10

274.18

280

274.07

274065301

10

274.07

280

274.04

274041665

10

274.04

130

124.49

124487079

10

124.49

130

124.49

124485879

10

124.49

130

124.49

124485879

10

124.49

130

124.49

124485879

10

124.49

36

2005 2006

2004 2005

2003 2004

2002 2003

Equity
Share
Equity
Share
Equity
Share
Equity
Share

130

124.4

124398621

10

124.4

130

124.4

124398621

10

124.4

130

124.4

124398621

10

124.4

30

30

29999993

Employees Stock Options Scheme - 2013 (ESOS - 2013)

Feb 2, 2015
UltraTech Cement Ltd has informed BSE that The Nomination, Remuneration and
Compensation Committee of the Board of Directors of the Company has approved
37

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 capital
Ultratech 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.

38

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 & CONCLUSION

FINDINGS AND SUGGESTIONS

39

Based 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 exmargin 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.

40

 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.
CONCLUSION

41

It 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
42

 https://www.google.co.in/?
gfe_rd=cr&ei=xhIMVczNLKLO8geL6ID4Bw&gws_rd=ssl#q=ultratech+ce
ment
http://www.ultratechcement.com/
http://adityabirla.com/Businesses/Profile/ultratech-cement-limited
http://www.moneycontrol.com/india/stockpricequote/cementmajor/ultratechcement/UTC01
http://profit.ndtv.com/stock/ultratech-cement-ltd_ultracemco

43