Cost Accounting Records Rules 2011 Cost Audit Report

Cost Accounting Records Rules 2011 & Cost Audit Report Rules 2011 A PRESENTATION BY ATISH KUMAR AGRAWAL ATISH AGRAWAL & CO. COST ACCOUNTANTS 9831662685 033 -30863147

Historical Background Ø Relevant Provisions of Company Law (for Cost accounting and Cost Audit introduced in 1965) � Section 209(1)(d) – Every company shall keep at its registered office proper books of account with respect to: ---in the case of a company pertaining to any class of companies engaged in production, processing, manufacture or mining activities, such particulars relating to utilization of material or labour or to other items of cost as may be prescribed. If such class of companies is required by the Central Government to include such particulars in the books of account. Section 233 B – Audit of cost Records. (1) Where in the opinion of the Central Government it is necessary so to do in relation to any company required under clause (d) of sub – section (1) of section 209 to include in its books of account the particulars referred to therein, the Central Government may, by order , direct that an audit of cost accounts of the company shall be conducted in such manner as specified in the order by an auditor(who shall be a cost accountant within the meaning of the Cost and Works Accountants Act …………) � �

Shortcomings of earlier Mechanism � Separate Rules for each industry/product � Too much emphasis on government mandated form. Leaving no room for flexibility with the company management. � More than one rule for multi product companies � A compliance view rather than converting it into management tool � No mechanism in MCA know all companies presently covered under CARR

. . contd…Shortcomings of earlier Mechanism � Selective and ad hoc approach led to a sense of discrimination � No cost audit orders in many industries/companies � Companies were required to submit multiple cost audit reports for each unit and each product separately � Existing Report Rules / Formats – needed simplification � Multiple appointment of cost auditors for a company having multiple products under audit � Selective coverage did not give any advantage

Notification dated 3 -06 -2011 Companies (Cost Accounting Record) Rules 2011 � These rules shall apply to every company …. . engaged in production, processing, manufacturing, or mining activities…. � wherein net worth of the company on the last date of immediately preceding financial year exceeds five crores of rupees; or � aggregate value of the turnover… in preceding year exceeds rupees twenty crore ; or � It is a listed company � All such companies shall keep cost records w. e. f. 01 -04 -2011

…Contd. . Notification dated 3 -062011 � Cost records shall be maintained in accordance with generally accepted cost accounting principles and cost accounting standards � Cost records and cost statements, maintained under these rules shall be reconciled with audited financial statements for the financial year � Compliance Report for yr. 2011 -12 onward, (certified by cost accountant in XBRL format) attached with FORM A XBRL to be filed with MCA

Notifications and orders by MCA 11/04/2011 - Simplified Procedure for appointment of cost auditors Ø 02/05/2011 - Cost Audit Order on every company engaged in bulk drugs, Formulations, Fertilizer, Sugar, Industrial Alcohol, Electricity, Petroleum, Telecommunications where � The aggregate value of net worth exceeds Rs. 5 crore, or � The aggregate value of the turnover exceeds Rs. 20 crores, or � The company’s equity or debt securities are listed or in the process of listing on any stock exchange in India or abroad Ø

Notifications and orders by MCA 03/05/2011 ammended on 30/06/2011 - Cost Audit Orders on every company engaged in cement, Tyres & Tubes, Steel, Insecticides , Paper, Glass, Paints & Varnishes and Aluminums where � Where the aggregate value of turnover made by the company exceeds Rs. 100 crores, or � The company’s equity or debt securities are listed or in the process of listing on any stock exchange in India or abroad Ø Includes Intermediate or Allied Products Ø Products/Activities linked to respective chapters of Central Excise Tariff Act, 1985 Ø

Notifications and orders by MCA � 02/05/2011 - Industry specific cost audit orders (as it stands today) Telecommunication Industry Cost accounting Records((Telecommunication Industry) Rules 2011 Petroleum Industry Cost Accounting Records (Petroleum Industry) Rules 2011 Electricity Industry Cost Accounting Records (Electricity Industry) Rules; 2011; Sugar Industry Cost Accounting Records (Sugar Industry) Rules; 2011 Fertilizer Industry Cost Accounting Records (Fertilizer Industry) Rules 2011 Pharmaceutical Industry Cost Accounting Records (Pharmaceutical Industry) Rules 2011

Notifications and orders by MCA � 30/06/2011 -industry specific cost audit orders on: 1. Cement 68 2. Tyres & Tubes 3. Steel 4. Paper 5. Insecticides 6. Glass 7. Paints & Varnishes 8. Aluminum Chapter 25, 38 and Chapter 40 Chapter 72 and 73 Chapter 47 and 48 Chapter 38 Chapter 70 Chapter 32 Chapter 76

Notifications and orders by MCA � 24/01/2012 -industry specific cost audit orders on: Jute, cotton, silk, woolen or CETA blended fibers/textiles 2. Edible oil seeds and Oils (incl. Vanaspati) 3. Packaged food products 1. 4. Organic & Inorganic Chemicals and 39 5. Coal & Lignite 6. Mining & Metallurgy of ferrous & non- ferrous metals 77) 7. Tractors & other motor vehicles (incl. automotive components) 8. Plantation Products 9. Engineering machinery (incl. electrical & electronic products) Chapters 50 to 63 of Chapters 12 and 15 Chapters 2 to 25 (except Chapters 5, 6, 14, 23 and 24) Chapters 28, 29, 32, 38 Chapter 27 Chapters 26 and 74 to 83 (except Chapters 76 and Chapters 84, 85 and 87 Chapters 8, 9, 21 and 40, Chapters 84 and 85

Notifications and orders by MCA Effect of industry specific cost audit orders issued on 24/01/2012: � All company specific cost audit orders issued prior to 31/03/2011 stands withdrawn with effect from financial year commencing on or from 01/04/2012 � All companies who were issued company specific orders but are covered under dated 02/05/11 or 30/06/11 or 24/01/12 shall comply with industry specific order � Companies to which industry specific orders are not applicable will comply with earlier company specific order till 31/03/12 Ø

Additional Industries covered vide Order dated 06 -112012(aplicable w. e. f. financial year starting from 1 -012013 and onward) � -Vegetable Saps or Products � Alcoholic Beverages � Food Residuals or Prepared Animal Feed � Unmanufactured or Manufactured Tobacco � Tobacco Products � Albuminoidal Substances, Starches, Glues and Enzymes � Essential Oils � Personal Care Products � Explosives � Fireworks, Matches and Combustible Materials � Photographic and Cinematographic Goods � Raw Hides, Skins and Leather � Leather Products � Wood and Wood Products � Footwear and Parts thereof � Headgear and Parts thereof � Ceramic Products � Pearls, Diamonds, Stones and Jewellery Articles � Railway Rolling Stock

Contd. -2 - Additional Industries Covered vide order dated 06 -112012 � Parts of Railway Rolling Stock � Railway Track Fixtures and Fittings � Containers � Non-powered Aircraft and parts thereof � Aircraft , Spacecraft and parts thereof � Parachutes and Roto chutes � Ships and Boats � Floating Structures � Optical Instruments and parts thereof � Photographic and Cinematographic equipments � Measuring Instruments and parts thereof � Surgical or Medical Instruments and parts thereof � Clocks or Watches or parts thereof � Musical Instruments and Parts thereof

Contd. . 3… Additional Industries covered vide order dated 6 -112012 � Medical or Vehicular or other Furniture and Mattress and Parts thereof � Lights and Fittings � Prefabricated Buildings � Toys, games and sports Equipments � Stationery Items � Miscellaneous manufactured articles

Salient Features of New Structure Modified cost audit report & appointment structure ü Simplification of complex and bulky reports ü Detailed product – wise cost statements to remain with the company ü Unit –wise product-wise reports no longer necessary ü Protection of confidentiality and reduction in compliance cost ü Simplified appointment procedure ü

New Appointment Procedure A cost accountant defined under Section 2(1)(b) of CWA Act holding a full- time certificate of practice can be appointed as cost auditor. Ø A firm can also be appointed Ø Audit Committee to ensure that cost auditor is free from any disqualifications specified under Sections 233 B(5) OR 226(4) or 266(5) Ø Cost auditor to submit: § Consent letter specifying that he is not disqualified under Section 224(1 -B), and Ø § He is at arm’s length relationship with the company

. . contd…New Appointment Procedure ü Company to e-file application for approval of appointment in Form 23 C along with ü Copy of Board Resolution ü Copy of consent letter from cost auditor ü Approval deemed to be granted if no query received from Government within 30 days of receipt of appointment letter in Form 23 D

Due Date of Appointment of Cost Auditor for the financial year 201314 is 30 th June 2013 without late fees � In case of delays in filing applications with the Central Government � Period of Delay Additional Fee Payable � Upto 30 days Two times of normal fee � 30— 60 days Four times of normal fee � 60— 90 days Six Times of normal fee � More than 90 Nine times of normal fee

Disclosure by Company in Annual Report Company to disclose in its annual report of each relevant financial year: ü Full particulars of cost auditor ü Due date of filling cost audit report ü Actual date of filling cost audit report ü For companies where constitution of Audit Committee is not required to be made, the functions to be discharged by the board ü

Features of Cost Accounting Records Rules 2011 � Applicable to every company including a foreign company engaged production, processing, manufacturing or mining wherein: � The aggregate value of net worth as on the last date of the immediately preceding financial year exceeds Rs. 5 crore, or � The aggregate value of the turnover made by the company from all products or activities during the immediately preceding financial year exceeds Rs. 20 crore , or � The company’s equity or debt securities are listed or in the process of listing on any stock exchange in India or abroad

Features of Cost Accounting Records Rules 2011 � Not applicable to body corporate governed by a special Act � Supersedes 36 Cost Accounting Records Rules out of 44 issued till date � Not applicable to following activities or products covered under individual Cost Accounting Records Rules notified on 7 th December 2011 Pharmaceuticals Sugar Telecommunications Electricity Industry Fertilizers Petroleum Industry

Compliance report under CARR Every company to which Companies (Cost Accounting Records) Rules 2011 shall submit a Compliance Report ü From 2011 -12 for every financial year commencing on or after 01/04/2011 ü To be filed, provided all the products /activities of the company, excluding the exempted categories, are not covered under cost audit ü Within 180 days from close of financial year ü Anexures to be certified by a “Cost Accountant” ü Report to be approved by the Board of Directors ü

Features of Companies (Cost Audit Report) Rules 2011 Revised Cost Audit Report Rules issued superseding Cost Audit Report Rules 2001. ü Applies to every company in respect of which cost audit has been ordered by the Central Government under section 233 B of the Companies Act, 1956 ü Annexure to cost audit report to be approved by the Board of Directors before submitting the same to the central government by the cost auditor. ü Audited Annexure to be signed by the Company Secretary and at least one Director or two directors in absence of Company Secretary on behalf of the company. ü

Highlights of recent reform measures To ensure uniformity, companies to follow; � Generally Accepted Cost Accounting Principles, and � Cost Accounting Standards issued by ICAI to the extent these are relevant and applicable. Ø It entails: � Understanding the process of manufacture and stages involved for production of the final product � Proper identification, allocation and apportionment of labour and overheads and absorption thereof of products � Identification of costs that are directly allocable to each product/activity or those requiring apportionment. Ø

Highlights of Recent Reform Measures(1) � Cost Audit Report Rules, 2001 containing very detailed and complex formats replaced with simplified Report Rules. � Threshold turnover limit for audit of cost records enhanced. � From Rs. 10 crores to 20 crores for regulated industries and � From Rs. 10 crores to Rs. 100 crores for all other industries. � Practice of issuing company by company cost audit orders dispensed with. � To fulfill the industry’s demand for removal of ad hoc and discriminatory approach, and � To fulfill the requirement of various Government

Highlights of Recent Reform Measures. . contd. . (2) Filing of unit wise and product wise cost audit reports dispensed with ü Major step in protecting disclosure of confidential cost details ü Reduces compliance cost ü Reduces size of report ü Industry’s twin issues –(a)confidentiality and (b) cost of compliance-fully addressed. ü Prior approval procedure for appointment of cost auditors simplified-automatic approval after 30 days from the date of filing of Form 23 C ü

Master Circular 2/2011 � Specified number of companies for the purpose of section 233(B) read with section 224(IB) of the Companies Act, 1956 is to be computed for a given financial year with reference to : � The number of companies wherein he has been appointed as the cost auditor, including those wherein he is proposed to be appointed for which he has given his consent. � The number of companies in respect of which cost audit reports have not been submitted and have become overdue shall also be taken into account for the purposes of ceiling under section 224(1 B).

Master Circular 2/2011(contd. ) �A cost auditor cannot be appointed as an internal auditor for the company for the same period he is conducting cost audit. � Where the firm is appointed as cost auditor, the cost audit report has to be signed by any one of the partners conducting cost audit with his membership number. � If cost audit is conducted for the first time, cost auditor to mention that previous years' figures are as provided by the management. � A cost auditor would attend meetings of audit committee as an invitee and shall not be member or have any voting right.

Master Circular 2/2011(contd. ) �A cost auditor shall be deemed to have concluded his appointment for the relevant financial year as soon as he renders a report to the Central Government in accordance with the Cost Audit Report Rules, as applicable, with a copy to the company. � Cost Auditor's obligation to answer queries from the MCA arising out of review of cost audit reports would not debar him from accepting another appointment as cost auditor of a company provided the specified number of companies contemplated in section 224(1 B) is not exceeded.

Clarification-General Circular 67/2011 � The new Cost Accounting Records Rules, 2011 (common & 6 Industry specific) are not applicable to companies engaged in: � A company yet to commence commercial operation. � Ancillary products/activities of companies incidental to their main operation (i. e. products � /activities that do not constitute their main line of business) � Where the total turnover from the sale of each such ancillary products/activities do not exceed 2%of the total turnover of the company or � Rs. 20 crore , whichever is lower � Required details of all such ancillary products/activities to be maintained under a miscellaneous group and disclosed appropriately.

Clarification-General Circular No, 67/2011 dated 30. 11. 2011 � The new Cost Accounting Record Rules, 2011(Common & 6 Industry specific)are not applicable to companies engaged in: � Wholesale Trading/Retail Trading/Banking/Financial/Leasing/Investment/Insu rance/Education/Healthcare/Tourism/Travel/Hospit ality/Recreation/Transport Services/Professional Consultancy/IT and IT Enabled Services/Research & Development/Postal/Courier Services

Clarification- General Circular 67/2011 � Cost Audit Order dated 02/05/2011, 30/06/2011, 24/01/2012, 06/11/2012 not applicable to � Own manufactured products consumed exclusively by the company for subsequent products/activities subject to cost audit � Hundred percent Export Oriented Units-no domestic sale � “Intermediate products” mean such product that have already undergone partial manufacturing /production process and are used as inputs of the final products of the industries � “articles or allied products thereof” refer to such articles or allied products that are produced either wholly or predominantly(not less than 50% by volume)by using the listed products as their primary inputs.

Clarification- General Circular 67/2011 � Coverage for only such items falling under relevant chapters of CET as constitute intermediate & Allied Products of the industry mentioned in the Cost Audit Order and all other items not related to the industry are not covered. Examples: � Paints and Varnish Industry (Chapter 32 of CET)tanning or dyeing extracts, tanning & their derivatives, dyes, pigments & other coloring matters, putty & other mastics, printing inks, etc. � Tyres and Tubes industry (Chapter 40 of CET)natural or synthetic or reclaimed rubber, compounded rubber, hard rubber thread or cord , conveyer or transmission belts , articles of rubber.

Clarification- General Circular 67/2011 �Examples of Intermediate Products-clinker for cement , pulp for paper , sponge iron & pig iron for steel. �Allied Products of�Cement: include cement bricks , sleepers , pipes �Paper: include cartons , boxes , bags , registers; �Steel: include ingots blooms, billets, slabs, beams, angles, tees , channels, �Clarification under general Circular No. 67/2011 applies equally to specific Cost Accounting Records Rules issued for 6

Clarification-General Circular 68/2011 �A company having multiple cost auditors for audit of only one product of the company: � Consolidated cost audit report may be prepared � Contain qualifications, reservations or suggestions if any, given by all the cost auditors. � Company may designate any one of the cost auditors responsible for the consolidation and filing the same with the Central Government.

Clarification-General Circular 68/2011 �A company having more than one product under cost audit and which has appointed either same or separate cost auditors: �Individual cost auditors may submit separate cost audit report for each product group, or �Submit only one consolidated report containing details of each product under audit separately for which Company may designate any one of the cost auditors or appoint a cost auditor responsible for the consolidation and filing the same with the Central Government as per the procedure provided above

Clarification- Construction Industry � General Circular No. 67/2011 of 30/11/11 -if a company is engaged in the construction business as a contractor or a sub-contractor and is paid only for the job work or conversion charges, then the company will not be covered under companies (Cost Accounting Records) Rules, 2011 � Hence, only such contractors or sub-contractors who are doing purely labour jobs [i. e. without using own materials]and are thus paid either the job work charges or the conversion charges, will remain outside the purview of the companies (Cost Accounting Records Rules, 2011)

Clarification- construction industry �All companies engaged in the construction business either as contractors or as subcontractors, who undertake jobs with the use of own materials shall be required to maintain cost records and file a compliance report. • All companies engaged in the development of residential, commercial or industrial estates or engaged in the construction of any infrastructural facilities would be covered under the Companies (Cost Accounting Records) Rules, 2011

Compliance Report & Cost Audit Report Product A: Under Cost Audit Product B: Under cost Audit Own Generation of Electricity: 100% Cost audit report to be filed for Product A and B. No Compliance Report to be filed consumed for production of Product A and B Product A: Not under Cost Audit Product B: Not under Cost Audit Own Generation of Electricity: 100 consumed for production of Product A and B Compliance report to be filed for the company as a whole Product A: Under Cost Audit. Product B: under Cost Audit. Own Generation of Electricity: Generating Plant deemed to be captive generating plant as per Electricity Rules and part of generation is sold outside Cost audit report to be filed for Product A and B Compliance Report to be filed for the company as a whole.

Compliance Report & Cost Audit Report Product A: under Cost Audit Product B: Cost Audit is application but Consumed exclusively for production of Product A Own Generation of Electricity: 100 Consumed for production of Product A and B Cost Audit Report to be filed for product A. No Separate cost audit report for Product B. No compliance Report to be filed Product A: Under cost Audit Product B: Cost Audit is applicable but Consumed exclusively for production of Product A Own Generation of Electricity : Generating Plant deemed to be captive generating plant as per Electricity Rules and part of generation is sold outside. Cost Audit Report to be filed for Product A. No separate cost Audit Report for Product B Compliance Report to be filed for the Company as a whole

Compliance Report & Cost Audit Report Product A: Under Cost Audit Product B: Under Cost Audit Own Generation of Electricity : Generating plant is not a captive generating plant as per Electricity Rules. Cost Audit Report to be filed for Product A, Product B and Electricity Generation Activity. No compliance report to be filed. Product A: Under Cost Audit Product B: Not Under Cost Audit Own Generation of Electricity : Generating plant is not a captive generating plant as per Electricity Rules. Cost Audit Report to be filed for Product A and Electricity Generation Activity. Compliance report to be filed for company as a whole.

Some FAQs Whether separate Form 23 C is required to be filed by a company having two or more different types of products covered under Cost Audit? Ø The company would be required to file individual Form 23 C for each product under cost audit even if the same auditor is appointed for all the products. Whethere is any sequence of filing compliance report and cost audit report for a company which is required to file both? Ø Compliance Report and Cost Audit Report are mutually exclusive to each other and it does not make any difference as to which report is submitted first.

Some FAQ, s Can the same individual sign Compliance Report and/or Annexure to Cost Audit Report, if otherwise qualified? § Company Secretary of a company who is also a Cost Accountant. ? § Director of a company who is also a cost accountant signing as Director as well as Cost Accountant. ? Ø The same individual cannot sign the same report in two different capacities.

Some FAQ, s A Cost Accountant is in full time employment is also holding part time certificate of practice. Whether he can certify the compliance report of group companies and other companies? The Cost Accountant can certify the Compliance Report of the Company in which he is in full time employment. He cannot certify the compliance report of any other company within the same group or that of any other company.

Annexures to Cost Audit Report � Annexure 1 General Information 1. CIN or GLN of the company 2. Name of the company 3. Registered office address 4. Corporate office address 5. E Mail address of the company 6. Company’s financial year to which the Cost Audit Report Relates 7. Name, address, membership number and e-mail address of the Cost auditor 8. SRN Number and date of Filing of Form 23 C with the Central government 9. Date of Board of Directors meeting wherein the Annexure to the cost audit report were approved. 10. No. of Audit Committee meetings held by the company, and attended by the Cost Auditor during the year.

Cost Audit Report Disclosures � Annexure 2. � Cost Accountant � � � � � Policy covering, inter alia, the following areas: Identification of cost centres/cost objects and cost drivers. Accounting for material cost including packing materials, stores and spares etc. , employee cost , utilities and other relevant cost components. Accounting, allocation and absorption of overheads. Accounting for Depreciation/Amortization. Accounting for by-Products/joint- products, scarps, wastage etc. Basis for inventory valuation. Methodology for valuation of inter-unit /inter company and related party transactions. Treatment of abnormal and non-recurring costs including classification of other non-cost items. In case the company has adopted IFRS, variations(if any) in treatment of Cost accounting arising out of adoption of IFRS in Financial Accounting. Other relevant cost accounting policy adopted by the company.

Annexure 3 PRODUCT GROUP DETAILS (for the company as a whole) Sno. A Name of each Product Group Manufactured product groups 1. 2. Sub Total(A) B Services Group 1. 2. Sub Total(A) C Trading Activities(product Group-wise) 1. 2. Sub Total(A) D Other Incomes E Total Income as per Audited Annual Report(A+B+C+D) Names of Products/ Activities included in the Product Group Net Sales (net of taxes, duties, etc. ) (Rs. Lakh) Covered under Cost Audit (Yes/No)

Annexure 4 QUANTITATIVE INFORMATION (for each product group separately) Particulars 1. Available Capacity (a) Installed Capacity (b) Capacity enhanced during the year, if any (c) Capacity available through leasing arrangements, if any (d) Capacity available through loan license / third parties (e) Total available Capacity 2. Actual Production (a) Self manufactured (b) Produced under leasing arrangements (c) Produced on loan license / by third parties on job work (d) Total Production 4. Production as per Excise Records 4. Capacity Utilization (in-house) 5. Stock Purchased for Trading (a) Domestic Purchase Unit Current Year Previous Year

(b) Imports (c) Total Purchases 6. Stock & Other Adjustments (a) Change in Stock of Finished Goods (b) Self / Captive Consumption (incl. samples etc. ) (c) Other Quantitative Adjustments, if any (wastage etc. ) (d) Total Adjustments 7. Total Available Quantity for Sale [2(e) + 5(c) - 6(d)] 8. Actual Sales (a) Domestic Sales (manufacturing) (b) Domestic Sales (trading) (c) Export Sale (manufacturing) (d) Export Sale (trading) (e) Total Quantity Sold

Annexure 5. ABRIDGED COST STATEMENT (for each product group separately) Sn o. Particulars 1 Materials Consumed (specify details) a) Indigenous Purchased b) Imported c) Self Manufactured / Produced 2 Process Materials/Chemicals (specify) 3 Utilities (specify details) 4 Direct Employees Cost 5 Direct Expenses 6 Consumable Stores & Spares 7 Repairs & Maintenance 8 Quality Control Expenses 9 Research & Development Expenses 10 Technical know-how Fee / Royalty, if any 11 Depreciation/Amortization 12 Other Production Overheads 13 Total (1 to 12) Units Quantity Rate Amount Rate C. Y. Rate P. Y.

14 Add/Less: Work-in-Progress Adjustments 15 Less: Credits for Recoveries, if any 16 Primary Packing Cost 17 Cost of Production/Operations (12 + 13 to 17) 18 Increase/Decrease in Stock of Finished Goods 19 Less: Self/Captive Consumption (incl. Samples, etc. ) 20 Other Adjustments (if any) 21 Cost of Production/Operation of Goods/Services Sold (17 + 18 to 20) 22 Administrative Overheads 23 Secondary Packing Cost 24 Selling & Distribution Overheads 25 Interest & Financing Charges 26 Cost of Sales (21 + 22 to 25) 27 Net Sales Realization (Net of Taxes and Duties) 28 Margin [Profit/(Loss) as per Cost Accounts] (27 - 26)

Annexure 6. OPERATING RATIO ANALYSIS (for each product group separately) Sno. Particulars Units Ratio of operating expenses to cost of sales % 1 Materials (incl. Process Materials) Cost % 2 Utilities Cost % 3 Direct Employees Cost % 4 Direct Expenses % 5 Consumable Stores & Spares % 6 Repairs & Maintenance Cost % 7 Depreciation / Amortization Cost % 8 Packing Cost % 9 Other Expenses % 10 Stock Adjustments % 11 Production Overheads % 12 Administrative Overheads % 13 Selling & Distribution Overheads % 14 Interest & Financing Charges % 15 Total % Current year Previous Year-1 Previous Year-2

Annexure 7. PROFIT RECONCILIATION (for the company as a whole) Sno. Particulars 1 Profit or Loss as per Cost Accounting Records (a) For the audited product groups (b) For the un-audited product groups 2 Add: Incomes not considered in cost accounts: (a) (specify) (b) 3 Less: Expenses not considered in cost accounts: (a) (specify) (b) 4 Add: Overvaluation of closing stock in financial accounts 5 Add: Undervaluation of opening stock in financial accounts 6 Less: Undervaluation of closing stock in financial accounts 7 Less: : Overvaluation of opening stock in financial accounts 8 Adjustments for others, if any (specify) 9 Profit or Loss as per Financial Accounts Current year Previous Year-1 Previous Year-2

Annexure 8. VALUE ADDITION AND DISTRIBUTION OF EARNINGS (for the company as a whole) Sn o. Particulars Value Addition: 1 Gross Sales (excluding returns) 2 Less: Excise duty, etc. 3 Net Sales 4 Add: Export Incentives 5 Add/Less: Adjustment in Finished Stocks 6 Less: Cost of bought out inputs (a) Cost of Materials Consumed (b) Process Materials / Chemicals (c) Consumption of Stores & Spares (d) Utilities (e. g. power & fuel) (e) Others, if any Total Cost of bought out inputs Current year Previous Year-1 Previous Year-2

7 Value Added 8 Add: Income from any other sources 9 Earnings available for distribution Distribution of Earnings to: 1 Employees as salaries & wages, retirement benefits, etc. 2 Shareholders as dividend 3 Company as retained funds 4 Government as taxes (specify) 5 Others, if any (specify) Total distribution of earnings

Annexure 9 FINANCIAL POSITION AND RATIO ANALYSIS (for the company as a whole) Sn o. Particulars Units A. Financial Position Rs/Lakh 1 Paid-up Capital Rs/Lakh 2 Reserves & Surplus Rs/Lakh 3 Loans (secured & unsecured) Rs/Lakh 4 (a) Gross Fixed Assets Rs/Lakh (b) Net Fixed Assets Rs/Lakh (a) Total Current Assets Rs/Lakh (b) Less: Current Liabilities & Provisions Rs/Lakh (c) Net Current Assets Rs/Lakh 6 Capital Employed Rs/Lakh 7 Net Worth Rs/Lakh B. Financial Performance 1 Cost of Production Rs/Lakh 2 Cost of Sales Rs/Lakh 5 Current year Previous Year-1 Previous Year 2

3 Net Sales Rs/Lak h 4 Value Added Rs/Lak h 5 Profit before Tax (PBT) Rs/Lak h C. Profitability Ratios 1 PBT to Capital Employed (B 5/A 6) % 2 PBT to Net Worth (B 5/A 7) % 3 PBT to Net Sales (B 5/B 3) % 4 PBT to Value Added (B 5/B 4) % D. Other Financial Ratios 1 Debt-Equity Ratio % 2 Current Assets to Current Liabilities % 3 Valued Added to Net Sales % E. Working Capital Ratios 1 Net Working Capital to Cost of Sales excl. depreciation Months 2 Raw Materials Stock to Consumption Months 3 Stores & Spares to Consumption Months 4 Work-in-Progress Stock to Cost of Production Months

Annexure 10. RELATED PARTY TRANSACTIONS (for the company as a whole) Sno. 1 2 3 4 5 6 7 8 Name & Address of the Related Party Name of the Product / Service Group Nature of Transacti on (Sale, Purchase, etc. ) Quantity Transfer Price Amount Normal Price Basis adopted to determine the Normal Price

Annexure 11 RECONCILIATION OF INDIRECT TAXES (for the company as a whole) Particulars Total Clearances Domestic Export Stock Transfers (Net) Others, if any Total Duties/Taxes Payable Duties/Taxes Paid Cenvat/VAT Credit Utilized - Inputs Cenvat/VAT Credit Utilized - Capital Goods Assessable Value Excise Duty Service Tax Cess & Others VA T

Cenvat/VAT Credit Utilized - Input Services Cenvat/VAT Credit Utilized - Others Total Paid through PLA/Cash Total Duties/Taxes Paid Duties/Taxes Recovered Difference between Duties/Taxes Paid and Recovered Interest/Penalty/Fines Paid

FORM -III Performance Appraisal Report 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. (Indicative list of areas to be covered in the report) Capacity Utilization Analysis Productivity/Efficiency Analysis. Utilities/Energy Efficiency Analysis. Key-costs & Contribution Analysis. Product/Services Profitability Analysis. Market/Customer Profitability Analysis. Working Capital & Inventory Management Analysis. Manpower Analysis. Impact of IFRS on the Cost structure, Cash. Flows and Profitability. Application of Management Accounting Tools.

Filing of Cost Audit Report �Cost Audit Report (converted in XBRL format) duly approved by board has to be filed (as an attachment with FORM 1 XBRL) with MCA �Digital signature of director(authorized by board) as well as digital signature of Cost Accountant have to be affixed with the form

ACKNOWLEDGEMENT generated by MCA(on filing) �Acknowledgement generated by the system(with specific SRN number and date) is evidence that the Audit Report has been filed with MCA on specific date. �Hard copy(as well as soft copy) of this acknowledgement should preferably be preserved by the company for future reference and record. �Hard copy(as well as soft copy) of Form 1 -XBRL (duly signed)should also preferably be preserved by the company for future reference and record.

Thank You Atish Kumar Agrawal Atish Agrawal & Co. Cost Accountants 1, British Indian Street (New Building) 1 st Floor, Room No- 104, Kolkata-700 069 Mobile: 9831662685/8481965465 Phone: 033 -30863147 E Mail: atishkragrawal@gmail. com Associate Office- Delhi