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Auditor Report of Bata India Ltd.

Mar 31, 2016

We have audited the accompanying standalone financial statements of Bata India Limited ("the Company"), which comprises the Balance Sheet as at March 31, 2016, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial control that were operating effectively for ensuring the accuracy and completeness of the accounting records, 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.

Auditor''s Responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under. We conducted our audit in accordance with the Standards on Auditing, issued by the Institute of Chartered Accountants of India, as specified under Section 143(10) of the Act. 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 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 financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, 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 on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the standalone 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 of the state of affairs of the Company as at March 31, 2016, its profit, and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor''s report) Order, 2016 ("the Order") issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 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 best of our knowledge and belief were necessary for the purpose 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;

(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;

(e) On the basis of written representations received from the directors as on March 31, 2016, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2016, from being appointed as a director in terms of section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure 2" to this report;

(g) With respect to the other matters to be included in the Auditor''s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and 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 financial position in its financial statements - Refer Note 31 to the financial statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Annexure 1 referred to in paragraph 1 under the heading "Report on other legal and regulatory requirements" of our report of even datetp Re: Bata India Limited (the company)

(i)(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(i)(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(i)(c) According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment/ fixed assets are held in the name of the company.

(ii)(a) The management has conducted physical verification of inventory at reasonable intervals during the year and no material discrepancies were noticed on such physical verification.

(iii)(a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms, Limited Liability Partnerships or other parties covered in the register maintained under section 189 of the Companies Act, 2013. Accordingly, the provisions of clause 3(iii)(a), (b) and (c) of the Order are not applicable to the Company and hence not commented upon.

(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of section 185 and 186 of the Companies Act, 2013 are applicable and hence not commented upon.

(v) The Company has not accepted any deposits from the public.

(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under Section 148(1) of the Companies Act, 2013, for the products/services of the Company.

(vii)(a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales-tax, service tax, customs duty, excise duty, value added tax, cess and other material statutory dues applicable to it.

(vii)(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, service tax, sales-tax, custom duty, excise duty, value added tax, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(vii)(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, , service tax, custom duty, excise duty, value added tax and cess on account of any dispute, are as follows:

Amount Name of the statute Nature of the dues (Rs million )

Various State Sales Purchase tax dispute at 8.2 Tax Acts Faridabad

Revenue Recovery against Various State Sales non-payment of demand in 6.7 Tax Acts assessment

Tax in dispute u/s 92 of Central Various State Sales Sales Tax act regarding non 2.8

Tax Acts submission of forms.

Karnataka Sales Tax Unclaimed input tax credit 4.1 Act adjusted against VAT

Various State Sales Misclassification of Article for 9.7 Tax Acts VAT payment

Central Excise Excise duty demand on closing 1.5 Act,1944 balance of exempted footwear

Duty demanded for sale of footwear at domestic tariff 7.0 Cental Excise before Act,1944 commissioner concluded and order is pending.

Disallowance for trade discount Central Excise for sale of footwear to retail 2.8 Act,1944 outlet.

Excise duty demanded for Central Excise movement of raw material to 15.5 Act,1944 job worker without payment of duty.

Disallowing abatement® 40% Central Excise on MRP for institutional sales. 9.0 Act,1944 Sale of Industrial Boots and Mine Safety Boots.

Non-compliance of the condition of the notification Central Excise for marking MRP on factory 21.5 Act,1944 seconds cleared on payment of appropriate C.E. duty,

Exclusion of Sales tax @8% for Central Excise payment of an amount equal to Act,1944 8%/10% on exempted footwear 3.0 as per CCR 6(3)(b)

Disallowance of service tax input credit on input Finance Act, 1994 4.3 service availed for outward transportation

Duty Demand on account of short levy of customs duty Customs Act,1942 (anti-dumping duty) for which 10.8 hearing before commissioner concluded and order received



Name of the Statute Period to which the Forum where the amount relates dispute is pending Various State Sales Tax Acts 1984-1985 Supreme Court Various State Sales Tax Acts 1994-1995 1998-1999 STAT, Kerala 2000-2001 Various State Sales -1991-1992 High court, UP Tax Acts 2005-2006 to Joint Commissioner''s Karnataka Sales Tax Act 2008-2009 Appeal

Various State Sales Tax Acts 2005-06 to 2006-07 VAT for tribunal, Kerala Central Excise 1987-88 CESTAT- Kolkata Act,1944 Commissioner of Central Central Excise 1997-99 Excise, Chennai Act,1944 Central Excise 1995-97 CESTAT-Chennai Act,1944 Central Excise 2004 -05 to Act,1944 2005-06 CESTAT-Kolkata Central Excise 2007 Act,1944 2008 CESTAT-Kolkata 2009 2010 Central Excise Act,1944 July 2004 to CESTAT- Kolkata Jan 2008

Central Excise Act,1944 August 2004 to CESTAT- Kolkata Jan 2008

Finance Act,1994 2006-2010 Commissioner of Central Excise, Kolkata

Customs Act,1942 2001 CESTAT - Kolkata Finance Act,1994 April 2008 to may CESTAT- Chennai 2012 Customs Act,1942 1998-2003 CESTAT- Kolkata

Income Tax act,1961 2007-2008 High court, Kolkata

Income tax Act,1961 AY 2008-2009 to Commissioner of Income AY 2011-2012 Tax (Appeal)



(viii) The Company has neither taken any loan from financial institution or bank nor issued any debentures, therefore the provision of clause (viii) of the Order is not applicable, hence not commented upon.

(ix) According to the information and explanations given by the management, the Company has not raised any

money by way of initial public offer / further public offer / debt instruments and term loans hence, reporting under clause (ix) of the Order is not applicable to the Company and hence not commented upon.

(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the company or no material fraud on the company by the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.

(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) are not applicable to the Company and, not commented upon.

(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him.

(xvi) According to the information and explanations given to us, the provisions of section 45-IA of the Reserve Bank of India Act, 1934 are not applicable to the Company.

For S.R. Batliboi & Co. LLP

Chartered Accountants

ICAI Firm Registration Number: 301003E / E300005

per Sanjay Vij

Partner Place : Gurgaon Membership Number: 95169 Date : May 30, 2016


Dec 31, 2013

We have audited the accompanying financial statements of Bata India Limited ("the Company"), which comprise the Balance Sheet as at December 31, 2013, and the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management''s Responsibility for the Financial Statements

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 accounting principles generally accepted in India, including the Accounting Standards notified under the Companies Act, 1956 read with General Circular 15/2013 dated 13th September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013. 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.

Auditor''s Responsibility

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 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 entity''s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by 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 financial statements give the information required by the Companies Act, 1956 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2013;

(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

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 of India in terms of sub-section (4A) of section 227 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 purpose of our audit;

(b) In our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(c) The Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

(d) 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 Companies Act, 1956 read with General Circular 15/2013 dated 13th September 2013, issued by the Ministry of Corporate Affairs, in respect of Section 133 of the Companies Act, 2013;

(e) On the basis of written representations received from the directors as on December 31, 2013, and taken on record by the Board of Directors, none of the directors is disqualified as on December 31, 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

Annexure referred to in paragraph 3 of our report of even date Re: Bata India Limited (''the Company'')

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii) (a) to (d) of the Companies (Auditor''s Report) Order, 2003 (as amended) (the order) are not applicable to the Company and hence not commented upon.

(b) According to the information and explanations given to us, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii) (e) to (g) of the Companies (Auditor''s Report) Order, 2003 (as amended) (the order) are not applicable to the Company and hence not commented upon.

(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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company in respect of these areas.

(v) (a) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) In our opinion, the Company has an internal audit system commensurate with the size of the company and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, related to the manufacture of shoes and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales- tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the information and explanations given to us, no undisputed dues payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of the Nature of dues Amount Period to Forum where statute (Rs. million) which the dispute is amount relates pending

Various State Purchase Tax Dispute at 6.2 1984-85 Supreme Court Sales Tax Acts Faridabad

Various State Revenue recovery against 4.3 1994-95 STAT, Kerala Sales Tax Acts non-payment of demand 1998-99 in assessment 1999-00 2000-01

Various State Tax in dispute u/s 92 of 2.8 1991-92 High Court, UP Sales Tax Acts Central Sales Tax Act regarding non- submission of forms

Various State Misclassifi cation of Article 9.68 2005-06 to VAT Tax Tribunal, Sales Tax Acts for VAT Payment 2006-07 Kerala

Central Excise Excise Duty demand on 1.50 1987-88 CESTAT-Kolkata Act, 1944 closing balance of exempted footwear.

Central Excise Duty demanded for sale 7.03 1997-1999 Commissioner of Act, 1944 of footwear at domestic Central Excise, tariff area of which final Chennai hearing before commissioner concluded and order is pending

Karnataka Disallowance of adjustment of 2.8 2005-06 to Joint Commissioner Sales Tax Act unclaimed tax credit 2008-09 Appeals

Central Excise Disallowance for trade 2.75 1995-97 CESTAT-Chennai Act, 1944 discount for sale of footwear to retail outlet

Central Excise Excise duty demanded for 15.56 2004-05 CESTAT-Kolkata Act, 1944 movement of raw material 2005-06 to job worker without payment of duty

Central Excise Disallowing of abatement 9.00 2007 CESTAT, Kolkata Act,1944 @ 40% on MRP for 2008 Institutional Sales. Sale of 2009 Industrial Boots & Mines 2010 Safety Boots.

Central Excise Non compliance of the 21.48 July 2004 to CESTAT, Kolkata Act, 1944 condition of the notification Jan 2008 for marking MRP on factory seconds cleared on payment of appropriate C.E duty.

Central Excise Exclusion of sales tax 3.00 August 2004 to CESTAT, Kolkata Act, 1944 @ 8% for payment of an Jan 2008 amount equal to 8% /10% on exempted footwear as per CCR 6(3) (b).

Finance Act, Disallowance of Service tax 4.34 2006-2010 Commissioner of 1994 Credit on input service Central Excise, availed for outward Kolkata transportation

Customs Act, Duty demand on account of 10.34 2001 CESTAT-Kolkata 1942 short levy of customs duty (anti dumping duty) for which hearing before commissioner concluded and the order received.

Finance Act, Availment of wrong input 86.2 April 2008 to CESTAT, Chennai 1994 service tax credit May 2012

Customs Act, Wrong availment of 81.20 1998-2003 CESTAT-Kolkata 1942 concessional rate of customs duty etc. against which the hearing has not finalized as yet

Income Tax Short term capital gains 230.55 2007-08 High Court, Kolkata Act, 1961

Income Tax Disallowance of certain 13.67 2008-09 Commissioner of Act, 1961 expenditure (A.Y. 2009 -10) Income tax (Appeal)

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) The Company has neither taken any loan from financial institution or banks nor issued any debentures, therefore the provisions of clause 4(xi) of the Order not applicable, hence not commented upon.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The company has not raised any money by way of public issue during the year.

(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of any such case by the management.

For S.R. Batliboi & Co. LLP

ICAI Firm Registration No.: 301003E

Chartered Accountants

per Rajiv Goyal

Place of Signature : Gurgaon Partner

Date: February 12, 2014 Membership No.: 94549


Dec 31, 2012

1. We have audited the attached Balance Sheet of Bata India Limited (''the Company'') as at December 31, 2012 and also the Statement of Profit and Loss and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company''s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor''s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the CompaniesAct, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

i. 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;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

iii. The Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the Balance Sheet, Statement of Profit and Loss and Cash flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v. On the basis of the written representations received from the directors, as on December 31, 2012, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on December 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the CompaniesAct, 1956;

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the CompaniesAct, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2012;

b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and

c) in the case of Cash Flow Statement of the cash flows for the year ended on that date.

Annexure referred to in paragraph 3 of our report of even date Re: Bata India Limited

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) There was no substantial disposal of a part of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

(iii) (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Companies (Auditor''s Report) Order, 2003 (as amended) (the Order) are not applicable to the Company and hence not commented upon

(b) According to information and explanations given to us, the Company has not taken any loans, secured or unsecured, from companies, firms or other parties covered in the register maintained under section 301 of the CompaniesAct, 1956. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are not applicable to the Company and hence not commented upon.

(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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weakness or continuing failure to correct any major weakness in the internal control system of the Company in respect of these areas.

(v) (a) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order is not applicable to the Company and hence not commented upon.

(vi) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under, to the extent applicable, have been complied with. We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) In our opinion, the Company has an internal audit system commensurate with the size of the Company and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, related to the manufacture of Shoes and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, employees'' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities.

(b) According to the information and explanations given to us, no undisputed dues payable in respect of provident fund, investor education and protection fund, employees'' state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the records of the Company, the dues outstanding of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess on account of any dispute, are as follows:

Name of the Nature of dues Amount Period to Forum where statute (Rs. million) which the dispute is amount relates pending

Various State MRP-Tax on tax case 16.48 1987-88 to High Court, Chennai Sales Tax Acts 2001-02

Various State Purchase Tax Dispute at 5.10 1984-85 Supreme Court Sales Tax Acts Faridabad

Various State Revenue recovery against 6.70 1994-95 STAT, Kerala Sales Tax Acts non-payment of demand 1998-99 in assessment 1999-00 2000-01

Various State Tax in dispute u/s 92 of 2.78 1991-92 High Court, UP Sales Tax Acts Central Sales tax Act regarding non- submission of forms

Various State Misclassification of Article 21.38 2005-06 to High Court, Kerala Sales Tax Acts for VAT Payment 2006-07

Central Excise Excise Duty demand on 1.50 1987-88 CESTAT-Kolkata Act, 1944 closing balance of exempted footwear.

Central Excise Duty demanded for sale 7.03 1997-1999 Commissioner of Act, 1944 of footwear at domestic Central Excise, Tariff area of which final Chennai hearing before commissioner concluded and order is pending

Central Excise Disallowance for trade 2.75 1995-97 CESTAT-Chennai Act, 1944 discount for sale of footwear to retail outlet

Central Excise Excise duty demanded for 15.56 2004-05 CESTAT-Kolkata Act, 1944 movement of raw material to job worker without payment of duty

Central Excise Disallowing of abatement 9.00 2006 CESTAT,Kolkata Act,1944 @ 40% on MRP for 2007 Institutional Sales. Sale of 2008 Industrial Boots & Mines 2009 Safety Boots. 2010

Central Excise Non compliance of the 21.48 2008 CESTAT,Kolkata Act, 1944 condition of the notification for marking MRP on factory seconds cleared on payment of appropriate C.E duty.

Central Excise Exclusion of sales tax 3.00 2009 CESTAT,Kolkata Act, 1944 @ 8% for payment of an amount equal to 8% /10% on exempted footwear as per CCR 6(3)(b).

Finance Act, Disallowance of Service tax 4.34 2006-2010 Commissioner of 1994 Credit on input service Central Excise, availed for outward Kolkata transportation

Customs Act, Duty demand on account of 10.34 2001 CESTAT-Kolkata 1942 short levy of customs duty (anti dumping duty) for which hearing before commissioner concluded and the order received.

Customs Act, Wrong availment of 81.20 1998-2003 CESTAT-Kolkata 1942 concessional rate of customs duty etc. against which the hearing has not finalized as yet

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) The Company has neither taken any loan from financial institution or banks nor issued any debentures, therefore the provisions of Clause 4(xi) of the Order are not applicable, hence not commented upon.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Order are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments.Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) The Company did not have any term loans outstanding during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds have been raised on short-term basis.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the CompaniesAct, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) We have been informed that there have been cash and stock shortages at certain retail locations of Rs.2.11 million and Rs.8.22 million, respectively during the year under audit. The Company has recovered Rs.6.04 million against the said shortages and has made provision for the balance amount in the books of account. Necessary action, such as termination of concerned persons, filing of police complaint, etc. has been initiated by the Company in this regard.

For S.R.BATLIBOI & CO.

Firm Registration No.: 301003E

Chartered Accountants

per Rajiv Goyal

Place: Gurgaon Partner

Date: February 26, 2013 Membership No.: 94549


Dec 31, 2009

1. We have audited the attached Balance Sheet of Bata India Limited (the Company) as at December 31,2009 and also the Profit and Loss account and the cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

4. Furtherto our comments in the Annexure referred to above, we report that:

i. 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;

ii. 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;

iii. The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

iv. In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956.

v. On the basis of the written representations received from the directors, as on December 31, 2009, and taken on recordby the Board of Directors, we report that none of the directors is disqualified as on December 31, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi. In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

a) In the case of the balance sheet, of the state of affair so the Company as at December 31,2009;

b) in the case of the profit and loss account, of the profit for the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for the year ended on that date.

Annexure referred to in paragraph 3 of our report of even date Re: Bata India Limited

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year and no material discrepancies were identified on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification. -«¦¦.¦;¦

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and as such, clauses 4(iii) (a) to 4(iii) (d) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and as such, clauses 4(iii) (e) to4(iii) (g) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable

(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, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the company.

(v) (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) In respect of deposits accepted, in our opinion and according to the information and explanations given to us, directives issued by the Reserve Bank of India and the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the rules framed there under, to the extent applicable, have been complied with.

We are informed by the management that no order has been passed by the Company Law Board, National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained by the Company pursuant to the rules made by the Central Government for the maintenance of cost records under section 209(1 )(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained.

(ix) (a) Undisputed statutory dues including provident fund, investor education and protection fund, or employees state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it have generally been regularly deposited with the appropriate authorities.

Further, since the Central Governent has till date not prescribed the amount of cess payable under section 441 A of the Companies Act, 1956, we are not in a position to comment upon the regularity or otherwise of the company in depositing the same

(b) According to the information and explanations given to us, no undisputed dues payable in respect of provident fund, investor education and protection fund, employees state insurance, income-tax, wealth-tax, service tax, sales-tax, customs duty, excise duty, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.

(c) According to the information and explanation given to us and records of the Company, there are no dues of income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty and cess which have not been deposited on account of any dispute, other than following:

Name of the Nature of dues Amount (Rs statute in thousand)

Various State MRP-Tax on tax case 16,480 Sales Tax Acts

Various State Purchase Tax Dispute at 5,100 Sales Tax Acts Faridabad

Various State Revenue recovery against 6,700 Sales Tax Acts non payment of demand in assessment

Various State Tax in dispute u/s 92 of 2,780 Sales Tax Acts Central Sales tax Act regarding non-submission of forms

Various State Penalty for non payment 1,200 Sales Tax Acts of tax and non collection on "C" forms

Various State Appeal Against 1,400 Sales Tax Acts Assessment Order

Central Excise Excise Duty demand on 1,500 Act,1944 closing balance of exempted footwear.

Central Excise Excise duty on 18,970 Act, 1944 double textured fabric(rubberized textile)



Name of the Period to Forum where statue which the dispute is amount relates pending

Various State Sales Tax Acts 1987-88 to Sales Tax Tribunal 2001 -02 Appellate Authority, Tamilnadu

Various State Sales Tax Acts 1984-85 Supreme Court

Various State Sales Tax Acts 1994-95 CESTAT, Kerala

1998-99

1999-00

2000-01

Various State Sales Tax Acts 1991-92 High Court, UP

Various State 2002 CESTAT, Kolkata Sales Tax Acts

Various State 1985-87 High Court Sales Tax Acts

Central Excise Act, 1944 1987-88 CCE(Appeals) Kolkata

Central Excise Act, 1944 1990-1994 Supreme Court



Name of the Nature of dues Amount (Rs statute in thousand)

Central Excise Duty demanded for sale of 7,030 Act, 1944 footwear at domestic Tariff area of which final hearing before commissioner concluded and order is pending.

Central Excise Duty demanded on various 870 Act, 1944 chemicals used for processing of leather and subsequent clearance of said processed leather for manufacture of footwear (Exempted)

Central Excise Disallowance for trade 2,750 Act,1944 discount for sale of footwear to retail outlet

Central Excise Excise duty demanded on 5,040 Act, 1944 parts of footwear used captively in manufacture of exempted footwear

Central Excise Central Excise Duty Demanded 5,100 Act, 1944 for, clearance of "Defective Footwear" without payment of Central Excise Duty, after necessary re-processing of said footwear. The process treated as "MANUFACTURE"

Central Excise Excise duty demanded 18,790 Act, 1944 for movement of raw material to job worker without payment of duty

Central Excise Disallowing of abatement 7,470 Act,1944 @ 40% on MRP for Institutional Sales. Sale of Industrial Boots & Mines Safety Boots.

Central Excise Demand for alleged non reversal 5,440 Act,1944 of CENVAT credit on ceveted inputs and non payment of CE duty on finished goods on written off stock as per Balance sheet



Name of the Period to Forum where Statue which the dispute is amount relates pending

Central Excise Act, 1944 1997-1999 Commissioner of Central Excise, Chennai

Central Excise Act, 1944 2005 Commissioner, CCE Kolkata

Central Excise Act, 1944 1995-97 CESTAT-Chennai

Central Excise Act, 1944 2004-05 Additional Commissioner of Central Excise Kolkata

Central Excise Act, 1944 2004 CESTAT-Kolkata

Central Excise Act, 1944 2004-05 Commissioner (Appeal) Kolkata.

Central Excise Act, 1944 2006 CESTAT, Kolkata

2007

2008

Central Excise Act, 1944 2007 Commissioner, Kolkata.



Name of the Nature of dues Amount (Rs statute in thousand)

Central Excise Non compliance of the condition 21,480 Act, 1944 of the notification for marking MRP on factory seconds cleared on payment of appropriate C.E. duty.

Central Excise Exclusion of sales tax @ 8% 1,500 Act, 1944 for payment of an amount equal to 8%/10% on exempted footwear as per CCR 6(3)(b).

Customs Duty demand on account of 10,340 Act, 1942 short levy of customs duty (anti dumping duty) for which hearing before commissioner concluded and the order received.

Customs Wrong availment of 83,760 Act, 1942 concessional rate of customs duty etc. against which the hearing has not finalized as yet

Customs Adv. License No. P/W/3497630 100 Act, 1942 dt. 7.2.94



Name of the Period to Forum where Statue which the dispute is amount relates pending

Central Excise Act, 1944 2008 CESTAT, Kolkata

Central Excise Act, 1944 2009 Additional Commissioner of Central Excise- Kolkata

Customs Act, 1942 2001 Deputy Commissioner of Customs

Customs Act, 1942 1998-2003 CESTAT-Kolkata

Customs Act, 1942 2002 DGFT, Kolkata

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to bank. The Company had no outstanding dues in respect of debenture holders and financial institutions. I

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditors Report) Order, 2003 (as amended) are not applicable to the Company.

(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from bank or financial institutions.

(xvi) Based on information and explanations given to us by the management, the Company did not obtain any term loan during the year.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money by way of public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For S.R. BATLIBOI & CO.

Chartered Accountants

per Rajiv Goyal

Place: Gurgaon Partner

Date : 24th February, 2010 Membership No.: 94549



 
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