INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BALMER LAWRIE & CO. LTD
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Balmer Lawrie &Co. Limited ("the Company") which comprise the Balance Sheet as at March 312016 and the Statement of Profit and Loss and Cash Flow Statement for the year thenended and a summary of significant accounting policies and other explanatory informationin which are incorporated the returns for the year ended on that date audited by theBranch Auditors of the Companys branches located under Northern region Westernregion and Southern region.
Managements Responsibility for the Financial Statements
The Companys Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under section 133 of the Act read with Rule
7 of the Companies (Accounts) Rules 2014. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified undersection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to thecompanys preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by the Companys Directors as well as evaluating theoverall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information
required by the Act in the manner so required and give a true and fair view inconformity 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 atMarch 312016;
(b) in the case of Statement of Profit and Loss of the Profit for the year ended onthat date; and
(c) in the case of the Cash Flow Statement of the cash flows for the year ended onthat date.
Emphasis of Matters
We draw attention to the following Notes to the financial statements which describethe uncertainty related to the outcome. Our opinion is not qualified in respect of thismatter.
a) Note No.26.7:- Trade receivables loans and advances and deposits for whichconfirmations are not received from the parties are subject to reconciliation andconsequential adjustments on determination/ receipt of such confirmation".
b) Note No. 26.29: A case of misappropriation of cash through wrong adjustments wasnoticed in one units of the company during the course of review of debtors in the month ofJanuary 2016. The company is presently undertaking a thorough reconciliation of therelevant outstanding. Based on preliminary in-house enquiry an amount of Rs. 34.58
Lakhs has now been identified as defalcated and the same is provided for in the books.The case has since been handed over to investigating agency and necessary further legalaction will be taken thereafter
a) Confirmation of outstanding balances of trade receivable claims recoverable variousadvances deposits trade payables and other liabilities was not available for ourverification
b) We did not audit the financial statements of three (3) Regions included in thestandalone financial statements of the Company whose financial statement reflect totalassets of Rs. 85746.89 lac as at 31st March 2016 and total revenue of Rs.231998.27 lac for the year ended on that date as considered in the standalone financialstatements. The. financial statements of these regions have been audited by the branchauditors whose reports have been furnished to us and our opinion in so far as it relatesto the amounts and disclosures included in respect of these Regions is based solely onthe report of such Branch auditors.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors Report) Order 2016 ("theorder) issued by the Central Government in terms of Section 143(11) of theAct we give in the "Annexure- A" a statement on the matters specified inparagraphs 3 and 4 of the order.
2. As required by section 143 (3) of the Act we report that:
a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit.
b) In our opinion proper books of accounts as required by law have been kept by theCompany so far as it appears from our examination of those books.
c) The reports on the account of the three (3) Regions of the Company audited undersection 143(8) of the act by Branch auditors have been submitted to us and have beenproperly dealt with by us in preparing this report.
d) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this report are in agreement with the books of accounts.
e) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
f) On the basis ofthe written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2016 from being appointed as a director in termsof Section 164 (2) of the Act.
g) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
h) With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i) The Company has disclosed the impact of pending litigations on its financialstatements- Refer Note 26.2(a) and (b) to the financial statements;
ii) The Company did not have any longterm contracts including derivative contracts forwhich there were any material foreseeable losses.
iii) There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
iv) As required by section 143(5) of the Act a statement on the matters specified asper directions given by the Comptroller & Auditor General of India is given in"Annexure- C".
For Dutta Sarkar & Co. Chartered Accountants
Membership No : 063052
Place : Kolkata
Date : 26th May 2016
ANNEXURE - 'A' TO THE INDEPENDENT AUDITORS REPORT AS REPORTED TO IN PARAGRAPH 1 OF OURREPORT OF EVEN DATE
i) In respect of its fixed assets:
a) The Company has generally maintained proper records showing full particularsincluding quantitative details and situation of the fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich plant and machinery are verified every year and other fixed assets are verified in aphased manner over a period of three years which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. As explained to us inaccordance with its programme plant and machinery and certain other fixed assets wereverified during the year and no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company title deeds of Immovable properties are held inthe Name of the Company except to the extent of the properties and values specified inNote No.26.1 (a) and (b).
ii) The inventory of the Company except goods in transit has been physically verifiedduring the year by the management. In our opinion having regard to the nature andlocation of inventory the frequency of verification is reasonable and no materialdiscrepancies were noticed on such verification.
iii) The Company has not granted any loans secured or unsecured to companies firms orother parties covered in the register maintained under section 189 of the Companies Act2013. Accordingly clauses 3(iii) (a) to 3(iii) (c) of the Order are not applicable.
iv) The Company has not given any loans guarantees securities or made Investmentswhich is required to be complied with the provisions of section 185 and 186 of theCompanies Act 2013.
v) The Company has not accepted any deposits according to the directives issued by theReserve Bank of India and the provisions of sections 73 to 76 or any other relevantprovisions of the Companies Act and the rules framed thereunder.
vi) We have broadly reviewed the cost record maintained by the Company in respect ofthe products of Grease and Lubricants Industrial Packaging & Leather Chemicals wherepursuant to the Companies (Cost records and Audit) Rules 2014 read with companies (Costrecords and Audit) Amendment Rules 2014 prescribed by the Central Government undersection 148 of the Companies Act 2013 and are of the opinion that prima facie theprescribed cost records have been maintained. We have however not made a detailedexamination of the cost record with a view to determine whether they are accurate orcomplete. To the best of our knowledge and according to the information and explanationsgiven to us the central government has not prescribed the maintenance of cost records forany other product of the Company.
vii) (a) The Company has generally been regular
in depositing undisputed statutory dues including provident fund employees stateinsurance income tax sales tax service tax duty of customs duty of excise valueadded tax cess and other statutory dues to the appropriate authorities and there was noamount due for more than six months as at the last day of the financial year.
(b) The disputed statutory dues of income tax sales tax service tax duty of customsduty of excise and value added tax aggregating to Rs. 10185.49 lac have not been depositedas mentioned in Note No.26.2(a) to the accounts showing the amounts involved and the forumwhere the dispute is pending.
viii) The Company has not defaulted in repayment of dues to any financial institutionsor Banks as at the Balance Sheet date and there is no debenture holder.
ix) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) and term loans during the year under audit. Hence thisclause is not applicable.
x) Attention is drawn to Note No. 26.29 where fraud has been detected on the Companyduring the year and according to the information and explanation given to us no fraud bythe Company has been noticed or reported during the year.
xi) By virtue of Article 7A of the Articles of Association of the company thePresident of India is entitled to determine terms and conditions of appointment of theDirectors. The inter alia includes determination of remuneration payable to the Whole-Time Directors. Hence this clause is not applicable.
xii) The Company is not a Nidhi Company. Hence this clause is not applicable.
xiii) According to the information and explanations provided to us and the records ofthe company examined by us the Company has not been able to comply with the requirementsof Section 177 in respect of composition of Audit Committee since independent directorson the board are yet to be appointed by the Government of India.
All transactions of the Company with related parties are in compliance with Section 188of Companies Act 2013 where applicable and the details have been disclosed in thefinancial statement in Note No. 26.20(i) and (ii) as required by the applicable accountingstandard.
xiv) The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Hence this clauseis not applicable
xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him. Hence this clause is not applicable.
xvi) The Company is not required to be registered under section 45 lA of the ReserveBank of India Act 1934. Hence this clause is not applicable.
| ||For Dutta Sarkar & Co. |
| ||Chartered Accountants |
| ||FRN: 303114E |
| ||Mainak Chakrabarti |
| ||Partner |
| ||Membership No : 063052 |
|Place : Kolkata || |
|Date : 26th May 2016 || |
ANNEXURE - 'B' TO THE INDEPENDENT AUDITORS REPORT
Report on the Internal Financial Controls under Paragraph (i) of Sub -section 3 ofsection 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of BALMERLAWRIE & CO. LIMITED ("the Company") as of 31st March 2016 inconjunction with our audit of the financial statement of the Company for the year ended onthat date.
Managements Responsibility for Internal Financial Controls
The Companys management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential component of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to Companys policies the safeguardingof its assets the prevention and detection of fraud and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.
Our responsibility is to express an opinion on the Companys internal financialcontrol over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAl and deemed tobe prescribed under section 143(10) of the companies Act 2013 to the extent applicableto an audit of internal financial controls both applicable to an audit of InternalFinancial Controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and whethersuch controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal controls system over financial reporting and their operating effectiveness.Our audit of internal financial controls over financial reporting assessing the riskwhether material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedure selecteddepends on the auditors judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Regions internal financial controlssystem over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A Companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A Companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of record that in reasonable detail accurately and fairly reflect thetransaction and disposition of the assets of the Company; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financial statementin accordance with generally accepted accounting principles and that receipts andexpenditures of the Company are being made only in accordance with authorisation ofmanagement and directors of the Company; and (3) provide reasonable assurance regardingprevention and or timely detection of unauthorised acquisition use or disposition of theCompanys assets that could have material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion of improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projection of any evaluation of internal financial controls over financial reportingmay become inadequate because of changes in condition or that the degree of compliancewith the policies or procedures may deteriorate.
According to the information and explanations given to us and based on our audit thefollowing material weakness have been identified as at March 312016;
a) Internal Financial Control over credit authorization in the areas where there arecash transaction (SBU- Tours &Travels [T&T]) needs strengthening. While analysingthe gaps it was observed that preventive control ensuring independence of cash andaccounting function in implant office needs improvement.
A material weakness is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the companys annual or interim financialstatements will not be prevented or detected on a timely basis.
During the year under audit the company has initiated a process of havingcomprehensive model for the streamlining the internal control including internal controlover financial reporting incorporating RCM and gap tracking with a description of theobjective process and risk thereof. On walkthrough of the model for testing and makingreview of adequacy and effectiveness of the system of control in place some gaps havebeen identified both in adequacy of design and effectiveness. This is however under theactive process of meeting the gaps with effectivity.
In our opinion except for the effects/possible effects of the material weakness/asdescribed above on the achievement of the objectives of the control criteria the Companyhas maintained in all material respects adequate internal financial controls overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as of March 312016 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the "Institute of Chartered Accountants of India".
We have considered the material weakness/as identified and reported above indetermining the nature timing and extent of audit tests applied in our audit of theMarch 312016 standalone financial statements of the Company and these materialweakness/as does not/do not affect our opinion on the standalone financial statements ofthe Company.
| ||For Dutta Sarkar & Co. |
| ||Chartered Accountants |
| ||FRN: 303114E |
| ||Mainak Chakrabarti |
| ||Partner |
| ||Membership No : 063052 |
|Place : Kolkata || |
|Date : 26th May 2016 || |